How teachers promote moral development of the youth in this society?

It may help to think about this question in terms of Kohlberg's stages of moral development. The post-conventional stage includes social contract orientation and universal ethical principles.

So, teachers reinforce the social contract orientation by creating classroom rules. These rules are created in hopes of maintaining a safe and structured learning environment. Thus, students are rewarded and punished for following (or not following) the rules. This mirrors the concept of laws.

The final stage, universal ethical principles, is tricky because very few people consistently act ethically. However, teachers promote the development of students in this fashion by allowing students to experiment in viewing a problem or situation from the perspective of another. A great teacher will create problems that students can solve for themselves.