Tags: Corporate governance
- New Institute of Business Ethics guidance, developed in consultation with senior business leaders, calls on company boards to put ethical culture at the top of their agenda.
- Guidance highlights the importance of embedding an ethical culture through recruitment, training and pay policies.
- New guidance follows research showing two-thirds of Britons don’t believe businesses operate ethically.
The UK’s leading business ethics experts have called on boards of directors to put ethical culture at the top of the agenda in new guidance published today, following consultation with senior business leaders.
The Institute of Business Ethics (IBE) has published guidance on how company boards can promote an ethical culture following consultation with businesses across the country and guided by an advisory group chaired by former 3i Group, Rio Tinto and Tullow Oil chairman Simon Thompson. The new guidance encourages boards to consider ethical behaviour in appointments and promotions and to provide board members, senior leadership and the workforce with training to embed the company’s purpose and values.
Members of the advisory group supporting the development of the new guidance include abrdn chairman Sir Douglas Flint, Travis Perkins chair Jasmine Whitbread, Co-op Group non-executive and Shakespeare’s Globe chair Dr Margaret Casely-Hayford, Schroders company secretary Graham Staples and Serco director of business compliance and ethics Robert Smith.
The new guidance follows polling released by the IBE in July showing that just one in three Britons believe companies operate ethically.
The guidance encourages boards to lead by example, to make ethical behaviour a priority when considering recruitment, promotions and remuneration, and to ensure that ethical risks are taken into consideration in major operational and strategic decisions. The IBE has previously stressed the importance of boards identifying and monitoring ethical risks and ensuring staff and other stakeholders can raise and escalate concerns about unethical behaviour and practice.
The IBE found in May that only one in two FTSE 100 and FTSE 250 companies have publicly accessible codes of ethics, of which two-thirds were judged to be of good quality. Half of the FTSE 100 codes of ethics did not include written assurances of protection for staff raising concerns about ethical behaviour.
Dr Ian Peters MBE, Director of the Institute of Business Ethics, said:
“A positive ethical culture supports good decision-making and allows a business to show it is committed to doing the right thing for the right reasons. That’s fundamental if you’re going to retain staff, maintain a positive workplace environment, and ensure customer loyalty.
“Research we conducted earlier this year shows the public is unconvinced that many companies operate ethically. The guidance we’ve published, working with some of the country’s most experienced business leaders, is intended to help boards with one of their most challenging responsibilities – how to set and embed an ethical culture.”
Simon Thompson, Chairman of the IBE advisory group on board ethical culture, said:
“An ethical culture is a source of competitive advantage, promoting high standards of business conduct and integrity and building trust and loyalty with customers, staff and other stakeholders. Companies face increasingly complex and varied ethical challenges as expectations about the role of business in society continue to evolve. All the contributors to this guidance have had to manage a significant ethical issue at some point in their board careers. The guidance is based on that experience and intended to support other board members as they seek to promote an ethical business culture within their own companies.”
Mark Babington, Executive Director of Regulatory Standards at the Financial Reporting Council, said:
“Boards can show real leadership in embedding a positive ethical culture across their company. This is welcome guidance that underlines the importance of culture being at the top of every boardroom agenda.”
For further information or comment from Simon Thompson or Dr Ian Peters MBE please contact iNHouse Communications:
(T) 020 7240 7338
Out of Hours contact: Chris Rogers, 07720 054189