ethical lens - cima ethics... · edelman trust barometer edelman intelligence released their annual...
TRANSCRIPT
ETHICAL LENS
CIMA ROUNDUP OF RESPONSIBLE BUSINESS ISSUES - FEBRUARY 2017
1 · www.cimaglobal.com/ethicallens
IN THIS ISSUE
Ethical Due Diligence in Recruitment
Promoting Internal Trust
World’s Most Ethical Companies
Edelman Trust Barometer
Better business means a better world
ETHICS ARE IMPORTANT TO ME BECAUSE...
‘They help us decide what is right, and what is wrong. This helps us decide how to act and behave, in both our social and professional lives. Employers place a huge emphasis on ethics, and that’s why it features so heavily in the CIMA syllabus’
Shane Balzan,
Head of Syllabus Development- Management Accountant
2 · Ethical Lens
NEWS
Accountancy plays major role in UN Global Goals
IFAC have identified eight Sustainable Development Goals where the
accountancy profession, professional accountants working in business and the
public sector have the most significant part to play. This new global agenda for
sustainable development and further guidance is laid out in a new report for the
profession.
» Read the full report here
REPORTS & EVENTS
Recruiting Ethically
CIMA partnered with the Institute of
Business Ethics to provide guidance on
ways that businesses can recruit
ethically: Ethical Due Diligence in Hiring
and Assessing Professional
Accountants. This guidance highlights
how there are many stages to
conducting ethical due diligence in
recruitment: some include: identifying
values, involvement of HR, pre-screening, interview process,
and a pre-offer screening. It also includes a case study and
statements from Britvic GB, and Metro Bank.
»Access the full CGMA report here
Promoting Internal Trust
What does trust mean? What are the warning signs of a
breakdown in trust in organisations? What are the roles
of accountants in business?
These were some of the
topics of discussion during
the roundtable hosted by St
Paul’s Institute and CIMA as
part of an ongoing joint
programme on ethical
culture. The discussion report Internal Trust: Building
alliances from within explores the subject of trust and
how to create structures that encourage stronger
working relationships and alliances.
» Access the full report here and see related work here
UN Forum on Business & Human Rights
The fifth annual UN Forum took place in November 2016 in Geneva bringing together
business and human rights practitioners from different sectors to highlight challenges
in implementing the UN Guiding Principles on Businesses and Human Rights.
CIMA Executive Vice President – Academics, Noel Tagoe spoke in a panel discussion on “How accountants can assure
respect for human rights”. The session was chaired by NED, and IESBA member Claire Ighodaro and other panellists included
Paul Druckman; NED and capital market performer, Richard Karmel, Managing Partner at Mazars LLP and Ian Peters, Chief
Executive Chartered Institute of Internal Auditors. The session focused on ways accountants can exercise and increase their
influence to drive for respect of human rights within their organisation. See the CGMA article on what accountants are doing.
» More on the Human Rights forum can be found here
January 2017 · 3
IFAC
Latest from the IFAC Global Knowledge Gateway
The IFAC Global Knowledge Gateway provides insight, ideas and information from around the globe, related to ethics, governance, sustainability and a range of other areas. You can find out more about the Gateway in this short YouTube animation.
Latest on the Global knowledge Gateway: read about new IFAC appointed President Rachel Grimes; what will drive accounting in Africa; Financial Accounting Standards Board improvements to revenue recognition; fraud and corruption and the 2016 IESBA Handbook. Also find out about the global events hosted by the European Federation of Accountants and Auditors for SMEs and the Global Ethics Summit.
NOCLAR: In July this year responsibilities responding to the non-compliance with laws and regulations (NOCLAR) will come into force. As this impacts on all CIMA students and professionals you should familiarise yourself on proposed actions.
» Visit the IFAC Global Gateway
REPORTING
Ethisphere 2016: World’s Most Ethical
Companies
In January 2017 the
Ethisphere Institute
published the World’s Most
Ethical Companies 2016:
Special Research Report.
The report looks at three main areas including: processes and
practices of leading companies; the impact of a transparent
and open culture and enabling ethical leadership. These
areas allow a clearer understanding of how leading
companies are gaining competitive advantage. Assessment
of culture and programmes are seen to be increasing.
The report includes info-graphics and one highlights that the
top five risks for organisations in 2016 were anti-corruption
bribery; conflict of interest; privacy; gifts and entertainment
and financial integrity and fraud which are key areas for
accountants.
» The full report can be purchased here and the info-graphic
data can be found here
CIMA Centre of Research
Excellence
CIMA’s South African
Research Centre of
Excellence (CoE)
awarded Elmar Venter
with a research grant
which allowed him to
conduct research on
Early Evidence on the Economic consequences
associated with Integrated Report Quality.
The research was sponsored by many companies
including KPMG, Barclays, and Liberty and exemplifies
strong levels of international collaboration.
The study concludes using integrated reporting models
has positive economic benefits. This could lead to
better presentation of information and a considerable
change in organisations decision-making processes.
» Find the summary research paper here and the full
paper here
4 · Ethical Lens
Aligning incentives in creating ethical
culture
Transparency International (TI)
identify some of the risks around
incentivising opportunities to align with
positive behaviours.
Investigating Ethics highlights the
incentives Wells Fargo and
Volkswagen had to miss-sell and miss-
inform.
It explores ways that incentives can be
better managed so scandals like Wells Fargo and
Volkswagen are not repeated. Both organisations decided
that the small minority of people acting wrongly and
unethically were isolated cases with isolated individuals. TI
finds that simply removing the specific people involved in the
scandal does not solve or deter others from doing the same
thing.
The report states that there are five key steps to embedding
ethical behaviour that include:
1) Ensuring strong culture and values 2) Risk assessing 3) Designing ethical incentives 4) Embedding ethical incentives 5) Monitoring and evaluating
» Access the full Transparency International report here
Financial Service managers urged
to be ethical The report Good Leadership launched by Chartered Insurance Institute and Chartered Management Institute investigates the ethical culture of management within the financial services industry. The authors of the report suggest that managers are aware they could do better at defining the ethical position of their organisation. Some of the reasons for poor ethical standards at work are due to: 1. Links between a managers personal background
and ethical behaviours 2. Managers behaving more ethically in their home
life than at work 3. Financial service leaders suppressing empathy
becoming less concerned with outcomes The report calls for financial services to provide good leadership through nine steps. Some of them include:
Developing a culture that engages the spirit of regulation
Rewarding and recognising ethical behaviour
Promoting diversity through recruitment and promotions
Creating an open culture to discuss issues
» The full report can be found here
January 2017 · 5
RESPONSIBLE BUSINESS
Correlation between human rights
and anti-corruption
The UN Global Compact indicate
that companies can benefit from
integrating human rights and anti-
corruption considerations in their
compliance programs in their 2016
report: Linking Human Rights and
Anti-Corruption Compliance.
Both human rights and corruption
pose similar risks to companies
which can have detrimental effects to a business’s reputation
and finances. Some of the common challenges presented
would be detecting misconduct in the supply chain and
compelling due diligence on business partners.
It is very possible to successfully implement human rights and
anti-corruption compliance which will positively contribute to
corporate sustainability and profitability.
» Find more information on it here
Anti-bribery tightened in France
In response to the Organisation for Economic Co-
Operation and Development (OECD) the French
Parliament have introduced new anti-corruption
legislation. It will have an impact on organisations
internationally whom will be forced to act ethically and
conduct fairer business. This will be including French
public officials and those in international organisations.
The legislation aims to protect individuals from financial
fraud and contains elements concerning capital
speculation and bankruptcy as reported by Forbes. As
stated by GoodCorporation the new legislation focuses
on four key areas:
1. French company’s legal obligation in implementing anti-corruption compliance programmes
2. Creating a new anti-corruption agency that focuses on detecting and preventing corruption
3. Extending French authorities power to prosecute and sanction corruption cases outside France
4. Protecting and defining whistleblowers
There are fiscal consequences for companies that fail to
set up compliance programmes, and the anti-corruption
agency can implement fines of up to €1 million.
» Read more about the GoodCorporation here
Edelman Trust Barometer
Edelman Intelligence released their annual trust and credibility survey, 2017 Edelman Trust
Barometer. Concerningly findings revealed the largest-ever drop in trust across institutions of
government, business, media and NGOs.
The percent of trust in business institutions has decreased since 2016. Trust in government and
media is still considerably low by comparison. The Barometer reveals that in 12 of 28 countries,
business is distrusted. Developing internal trust within organisations will be imperative in order for the
public to develop trust for business organisations.
The Barometer also reveals that the public want to see “increased regulation for business and [are] largely supportive of a
number of anti-business policies”. In particular 53% of respondents do not feel “financial market reforms have achieved their
intended effect of increasing economic stability”, this further reinforces the pressure on businesses.
The report indicates that businesses can take actions that both increase its profits as well as improve the economic and social
conditions in the community of where it operates. This can be best achieved by some of the following: treating employees
well; practicing ethical business; responsibly addressing issues and communicating frequently and honestly.
» The full press release can be found here and the report can be found here
6 · Ethical Lens
Better business means a better world
The past 30 years has seen significant global social improvements and
technological progress noted by the Business and Sustainable
Development Commission.
The Commission released the report Better Business, Better World
suggesting that our current model of development is deeply flawed and
in need of great change.
The report offers a positive alternative for businesses where they will
set their business strategy and transform markets in line with the UN Sustainable Development Goals (SDGs).
Some of the goals include: no poverty, zero hunger, good health and well-being, quality education and gender equality.
Achieving these goals would create a world that is “comprehensively sustainable: socially fair, environmentally secure;
economically prosperous; inclusive; and more predictable”.
The research conducted highlights how there is a dependency between business and Global Goals; how one will not be able
to develop without the success of the other. The Commission state that achieving the “Global Goals would open up US$12
trillion of market opportunities in four economic systems” and whilst it will involve risk, it will open up new opportunities,
drive innovation and enhance reputation.
The Commission highlight six actions business leaders can take to transform markets, some include:
Building support for Global Goals
Pushing for a financial system oriented towards longer-term sustainable investment
Rebuilding trust between businesses
» Access the executive summary and the full report here
See also IFAC’s new report on the accountancy professional’s role in the SDGs (page two). CIMA has also worked with the
UN Global Compact UK outlining the important of human rights issues business.
Rachel Grimes; IFAC President
In an interview with Acuity Magazine, the newly
appointment IFAC President, Rachel Grimes
highlighted that one of the main of the main challenges
facing the accountancy profession globally is the
acceptance of the accounting standards.
During her tenure, the president wants to also focus on
holding onto and attracting talented people. She aims
at making accountancy acknowledged as ‘the most
ethical profession around the globe and one that even
more people want to be part of’.
» Read the full article here
January 2017 · 7
Can your organisation declare itself conflict-free?
Do you how easy is it for organisations to declare they have a conflict-free
supply chain?
Surprisingly difficult. Research conducted by Harvard Business Review found
that global companies and those that have a dispersed supply chain are less
likely to declare their products conflict-free.
Many companies rely heavily on outsourcing as a way to save time and money.
This reliance on a globally dispersed supply chain means that companies can
struggle to definitively identify where certain products come from.
In 2010 the United States Congress passed the Dodd-Frank Wall Street Reform and Consumer Protection Act in order
mandate companies on the American stock market to disclose whether their products contain conflict minerals. The Harvard
Business Review analysis of the reports submitted found that ‘1% of the companies were able to declare that their products
were conflict-free beyond a reasonable doubt’, of the remaining ‘19% declared that they had no reason to believe their
products contained conflict minerals, and 80% admitted that they were unable to determine their [products] origin’.
Transparency in the supply chain is more important than ever, every management accountant plays an important role in
protecting human rights.
» Read the full Harvard Business Review article here
Purpose can drive business profit
This was the conclusion of the event held by Blueprint for
Better Business looking at whether businesses can be
purposeful and successful.
The talk illustrated how many organisations are at the start of
their purpose journey, figuring out the ‘why’; why the firm exists
why it does what it does, and why it deserves to exist. Some
of these businesses include, PwC, BT and easyJet. The
discussion illustrated that in order for businesses to be
purpose driven it will require time, vulnerable leadership and
strong middle management.
A business with a purpose is not only an investment
opportunity but also a valuable key performance indicator
(KPI) as supported by academia from the London School of
Business.
» Read the full article here
8 · Ethical Lens
Can you beat the corruption test?
Better your knowledge about bribery
and the risk of corruption with this
five question quiz by the Journal of
Accountancy. It’s a key global issue
that makes up 35% of reported fraud
cases according to the Association
of Certified Fraud Examiners.
With ever increasing communication,
it’s very easy to be misinformed, but as management
accountants you have a duty to know right from wrong. Also
access further CIMA ethics resources to help develop your
wider knowledge.
» Take the quiz here and read our anti-bribery guidance
Davos 2017: Role of reporting in
reversing trust failures
Given the dramatic global changes in 2016, much of
delegate discussion at the World Economic Forum
meeting in Davos this year was how businesses can
respond to the challenges from the growing loss of
trust, anti-globalisation sentiment and its political
consequence.
According to Richard Howitt, CEO of the IIRC, it
reinforced the belief that the current corporate reporting
system has to change, if the growing trust deficit is to
be reversed. He also highlighted the salience of a new
World Business Council for Sustainable Development
report that shows risk management fails to properly
address wider long-term risks. Entitled ‘First Steps to
Integration’ the headline finding was that in more than
one-in-three companies, none of the risks identified in
sustainability reports were contained in the risks
registered and addressed in their annual reports.
This reflects CIMA’s recent findings that there has been
a dramatic fall in specific human rights reporting in
FTSE100 annual reports, whilst platitudes have
increased in light of the growing concern around
business’s role in human rights abuses.
» Read the Integrated Reporting here
Corruption is rising globally, fuelling populist movements and risk
Transparency International warn that the world in 2016 showed how systemic
corruption and social inequality reinforce each other, leading to popular
disenchantment with political establishments and providing a fertile ground for
the rise of populist politicians.
The interplay of corruption and inequality also feeds populism. When traditional
politicians fail to tackle corruption, people grow cynical. Increasingly, people are
turning to populist leaders who promise to break the cycle of corruption and
privilege. Yet this is likely to exacerbate – rather than resolve – the tensions that
fed the populist surge in the first place.
In its report Corruption Perceptions Index 2016, released in January, Transparency International (TI) says that 69% of the
176 countries scored below 50, on a scale from zero (perceived to be highly corrupt) to 100 (perceived to be very clean),
exposing how massive and pervasive public sector corruption is around the world. This year, more countries declined in the
index than improved, showing the need for urgent action.
» Read the full Corruption Perception 2016 and linkages between corruption, inequality and populism here
January 2017 · 9
What do you think about Ethical Lens? Share your thoughts in our feedback survey or contact [email protected]
MORE FROM CIMA ETHICS
Overview of the Code of Ethics
For a quick overview of the CIMA Code of Ethics, watch our animation here.
It outlines the importance and value of the Code, and provides an outline
of the three parts, including what the Code means for CGMA designation
holders.
» Watch the full animation here
Ethics e-tools
Use the ethics e-tools to better understand what to do if presented with an
ethical conflict.
The student e-tool has been updated in line with the 2017 Cert BA syllabus,
which includes practice sample questions for the BA4 paper, Fundamentals
of Ethics, Corporate Governance and Business Law.
» Find both of the e-tools here
HELPLINES AND RESOURCES
CIMA Ethics Helpline This free confidential helpline offers ethical guidance
and assistance with applying the Code of Ethics,
available to all CIMA members and students.
Ethics Webcasts
Access all CIMA webcasts and responsible business
videos. They include interviews, animations, seminars
and guidance on ways that CIMA members have dealt
with ethical dilemmas.
UK Legal Helpline
LAW Express - for CIMA members and students in the UK and
Europe. This service gives access to information online at no
charge, and a low cost professional legal advice phone-line.
Find information about CIMA’s helplines and support at
www.cimaglobal.com/helplines
Access the Code and all ethics resources at
www.cimaglobal.com/ethics
Alternatively, send your ethics query in an email to