Tags: Corporate governance, Communication & Engagement, Code of Ethics , Ethical Values, Training
In the final blog of the series we round up with IBE’s Mark Chambers.
The latest report, Embedding Business Ethics: 2020 report on corporate ethics policies and programmes, includes the findings of a sample of nearly 250 listed companies across Europe and the insights from surveys and in-depth interviews with ethics and compliance professionals. It gives a vital insight on how ethics are embedded in large organisations and highlights some key trends that are evident over the years.
There is much that is encouraging, reflecting many organisations having moved from a mainly compliance-based approach to one where ethics are at the heart of decision making. Engagement by boards has been a critical driver of this progress. 82% of respondent companies now have a board committee or a sub-committee that is responsible for ethics. There has also been vast progress with developing and adopting codes of ethics, with 87% of respondent companies now having a publicly available code.
Yet there are some surprising findings in the latest report which indicate that there is still more to be done. Following years of steady improvement, the number of respondents who state that ethics, values and culture are regular items on the board agenda of their companies has fallen from 86% in 2016 to 69%. Worryingly, two-thirds of the respondent companies that don’t have ethics on the board agenda also don’t have a dedicated committee or sub-committee looking at ethics on the board’s behalf.
Whilst staff on a day to day basis will look to their line manager for guidance, boards play a vital role in setting a shared and consistent corporate culture based on ethical values. If ethics and culture are not on the board agenda, it is essential that board members are engaged and aware. Our report shows that only 46% of respondents provide mandatory ethics training to their board members and, for most companies, ethics only plays a small part in board effectiveness reviews and individual director appraisals. There is also a risk that what the board is seeing is not aligned with internal communications to staff; only 37% use the same indicators for the board and for staff communications.
Our report also highlights the challenges that ethics professionals have in raising levels of ethics awareness at a board level. It is often not appropriate to use the same ethics training for board members as for staff. More effective is to run awareness sessions to highlight the main ethical issues that the business is facing. A brave board would go much further and prepare for a serious ethical dilemma in the same way as any other crisis, running realistic scenario exercises to help recreate the challenging circumstances in which they might need to address a real-life ethical issue.
Individual board members can help enormously by seeking out and actively engaging with the ethics professionals in their organisations, adding ethics to their board agendas and seeking out the cultural indicators that will give them the insight they need as to how embedded and effective their ethics programme really is. Rolling out a code is not enough; staff at all levels need to be empowered to do good things, confident that their concerns can be raised openly without fear of retaliation and knowing that their concerns will be properly addressed.
Great progress has been made but boards must not ease off. Individual leadership from board members will be key to maintaining progress.
Read the report...
This report is the ninth in the triennial series looking at corporate ethics policies and programmes. It is the IBE’s longest-running survey series, and continues to give valuable insights into how companies run their ethics programmes.
01 Apr 2020
Associate Director - Governance, IBE, firstname.lastname@example.org
Mark brings 30 years of experience from a successful career in business to help grow the IBE’s interaction with boards, regulators and policy makers.
After graduating in Zoology from Oxford University, Mark re-trained as a lawyer and spent his early years at Slaughter and May in their London and New York offices before moving into business. During his career, he managed world-class global functions responsible for governance, legal and regulatory risk management in large, complex, regulated businesses. He was General Counsel & Group Company Secretary at RSA Insurance Group and at Worldpay Group, and held senior positions at American Express and GE Capital. He retired as Deputy Group Company Secretary of HSBC in 2018 to pursue a second career, which also includes non-executive and advisory work. Mark is a former member of the CBI’s Financial Services Committee.
For many years, Mark has had a successful career as a charity trustee, most recently as Chair of Amref Health Africa and prior to that as a trustee of WWF, where he chaired the Audit Committee and oversaw the development of the charity's exemplar new headquarters building. Mark was a finalist in the 2014 Sunday Times Non-Executive of the Year Awards.
The truth of the matter is that you always know the right thing to do. The hard part is doing it. – General H. Norman Schwarzkopf