Does your employer have a Code of Ethics? 80% of respondents globally to our recent CGMA survey acknowledged their organisation did. We also noted an increase in organizations who have ethical training, reporting hotlines and up to a quarter of firms have incorporated upholding ethical practice as part of reward and recognition systems.
Conversely around the world there appears to be an increase in pressures to act unethically from within the business, and the survey shows in comparison to a 2008 CIMA survey that leadership are less engaged with the ethics agenda.
So what gives? Read any major company’s annual report and you’ll be sure to find heart-warming quotes from the CEO and Board on their commitment to ethics and, as it increases in importance, the wider sustainability agenda. Yet only a minority of companies are actually collecting and reporting on such data by way of evidencing such commitment. Pressures from wider society are clearly increasing, putting the spotlight on corporate behavior no doubt prompting such platitudes and stated values.
Yet deeper within the business there seems to be a disconnect with up to a third of CGMAs facing pressure over the last year to undermine their organisations’ ethical standards, with pressure felt most in some emerging markets.
Luckily the majority of CGMAs stand up, and if need be report unethical practices, despite the challenges they face. And a significant majority recognize they have a very particular role to play in upholding ethical standards. For CGMAs compliance with their respective institute’s code of ethics is central to their professional standing.
Research and activity in the field of business ethics and sustainability, the growing influence of investors, consumers, employees and wider society, all point to the necessity of embedding wider ethical considerations into strategy and performance measurement. The last few years have highlighted the costs of acting unethically, with a spate of business failures, high public distrust and now, increasingly, public protest against corporate and government misdemeanours. This has been global from New York to London to Hong Kong Occupy with protestors having taken to the street.
The Arab spring had its roots in protest against corruption. When public sector is on the take there is another party who is giving. Sometimes that party is big business. Business plays a critical role in contributing to the growth and success of economies, but also has potential to do damage. With the growth of social media and community activism it doesn’t take much to be in the public eye for the wrong reason with huge costs to reputation and brand. The roll call of business’ being front page news for unethical behavior seems to be accelerating. Wouldn’t you rather be associated with a good example than a horrible warning?
This CGMA survey report explores not only the importance placed on business ethics, ethical performance and ethical management within organisations, but also on the specific role played and challenges faced by our individual members and students wherever they are in the world.
The increase in non-financial information and the value of integrated reporting is being recognised by leading companies as a key contributor to not only assessing a company’s position in the present, but how it is positioned for the future.
With the backing of a strong ethical culture, Chartered Global Management Accountants (CGMAs) can be highly effective in playing what we believe is a key role - drawing on both their training and understanding of professional ethics, as well as their skills in obtaining, analysing and acting upon management information - to guide their organisations to long-term sustainability and success.
Tanya Barman, Head of Ethics, CIMA
Read the report and access related tools and support at www.cgma.org/ethics