Tags: Speak Up, Communication & Engagement, Code of Ethics , Monitoring & Accountability
As we launch the latest IBE report, Embedding Business Ethics: 2020 report on corporate ethics policies and programmes, Will O’Connor discusses the research aspects of the report in this week’s blog.
The new edition of the IBE report on ethics policies and programmes in large listed companies has been published today, 01 April 2020. In preparation for today's launch, we shared a preview of the results with some of our supporters and colleagues, asking them to comment on how these results relate to their practical experience in the field of business ethics.
This week, we talked to Will O’Connor, Research Assistant at the IBE. Will joined the IBE in October 2019 as an intern after concluding his studies for an MA in Corruption and Governance at Sussex University where he also undertook a research internship for Transparency International UK, researching the facilitation of transnational corruption and money laundering by UK professional services providers. He initially joined the IBE as an intern, tasked with compiling a bibliography and report on money laundering for the Professionals Against Corruption group, he became research assistant and is involved in a wide range of research and advisory projects.
One component of the research that informed the publication was desktop research into the publicly available Codes of Conduct of 242 major companies listed in the UK, Germany, France, Italy and Spain. What have we learnt from this
Perhaps the most obvious takeaway from these findings is that British companies are much less likely to publish their core values and codes of ethics compared to their German, French, Italian and Spanish counterparts. Of the 242 companies in the sample, just 31 do not have a publicly available code of ethics. Of these, 25 were British. Even after adjusting for the fact that the sample contained a larger number of British companies, they remain significantly less likely to publish these documents.
However, the 211 codes that were available vary greatly in length, style and quality of content. Across all 5 countries, the average length was about 24 pages. The longest code was 90 pages long, while the shortest was just one page long. I’m not trying to suggest that there is a perfect number of pages for such documents, but it is hard to believe that a one pager pdf can include all the information that people need about the ethics of a large listed company.
For example, the IBE encourages the inclusion of a statement from senior leadership accompanied by a photograph and signature in the Code of Ethics. This component alone should occupy almost a whole page. This feature was common, but not universal, amongst the codes we surveyed.
Another component of the desktop research involved evaluating companies’ annual reporting for their coverage of ethical issues. What have we learnt from this?
The extent to which companies reported on their ethical obligations and standards varied dramatically, as did the manner and context in which ethical topics were included. Many companies produce integrated reports which contain reporting on corporate responsibility and environmental sustainability issues as well as financial performance. Others produce separate CSR reports or sustainability reports, reserving the main annual report purely for financial performance reporting.
Both models have their merits; the IBE simply advocates for as much ethics reporting as possible. This should be included in the main annual report regardless of whether a separate CSR, ESG, or sustainability report is also published. Ideally, reporting on corporate culture and ethics should be framed in terms of the core ethical values that underpin how an organisation makes decisions and carries out its business.
Previous editions of this survey did not include desktop research on ethics reporting, so it is difficult to compare to previous figures, but anecdotally I would say that the process of conducting the research revealed a noticeable tendency in the last 2 or 3 years for companies to move towards the ‘integrated reporting’ model.
What has this research shown us about the way large companies try to embed ethics in their corporate culture?
The organisations we studied exhibited a range of approaches to incorporating ethical considerations into their business practices. The function responsible for ethics varies from company to company. We observed examples of various departments being responsible for business ethics, including standalone ethics departments, compliance, legal, and risk management, among others.
Organisations’ approaches to Speak Up varied significantly. Only a very small minority appeared not to have a Speak Up channel, or at least no public reference to one. Among the majority that do provide information about their Speak Up processes, some used third party reporting services while some handled complaints entirely internally. Some companies provided multilingual Speak Up services. Almost all companies who make reference to the existence of a whistleblowing function give at least some level of reassurance that retaliation is unacceptable.
Some companies choose to demonstrate more transparency around the reporting process than others, for example including graphics detailing the mechanics of the reporting process; addressing questions like, ‘who will be informed?’, ‘will the complainant remain anonymous’, ‘at what stage can complainants expect a response’, and so on.
The sample companies’ standards in the various areas outlined in the IBE Business Ethics Frameworks illustrate the broad spectrum of quality in corporate ethics programmes; we found many examples of good practice, but sadly poor standards too.
Read the report...