Ethical Lens - February 2012

February 2012

New year and new challenges - Welcome to the February 2012 edition of CIMA’s e-bulletin, where we bring to you a selection of global and local news on ethics and sustainability issues.

DIRECTORS MESSAGE

Ethics are important to me because… “…integrity and appropriate transparency is essential to preserve the fabric of society; this applies to all walks of life- be it in the world of management accountancy or in our private lives…”

Charles Tilley, Chief Executive

NEWS Proposed changes to the IFAC code of ethics: The International Ethics Standards Board of Accountants (IESBA) are currently consulting on proposed changes to the code addressing conflicts of interest. Read more here, or visit www.IFAC.org for the full proposal. Email any comments by 29th February to CIMA, ethics@cimaglobal.com with „Conflict of interest‟ in the subject line and confirm if you are a member or student and which country you reside in. Alternatively, respond directly to IFAC electronically via their website by 31 March 2012.

Chartered Global Management Accountant (CGMA), the new global designation for management accountants powered by AICPA and CIMA, was launched at the end of January. Through the year, we will work closely together in promoting and supporting ethical business practice globally. Find out more about AICPA‟s activities in supporting ethics here, and articles will be appearing regularly on www.CGMA.org.

EVENTS Thought Leadership In November last year CIMA held a sustainability event, promoting new CIMA sponsored sustainability reports. Over 100 members registered to attend. Among others, Professor Jan Bebbington – also a key note speaker at the CIMA World Conference - introduced the work around the report Strategic responses to global climate change, and Andrew Mead from Accenture presented the report he had worked on together with CIMA‟s Sandra Rapacioli, Sustainability performance management: how CFOs can unlock value. This report is featured in this issue of Ethical Lens.

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February 2012 CIMA World Conference The 2011 CIMA World Conference Business in tomorrow’s world – a sustainable future took place in Cape Town. Speakers such as Mervyn King (chairman of the IIRC) and Geoff Rothschild (director of government and international affairs at the Johannesburg Stock Exchange), were lined up to make this an enriching event. Over 500 delegates from all over the world took part. Read a summary in Financial Management, or Insight. Gillian Lees blog also summarises key leanings.

REPORTS Accenture/CIMA: Sustainability can drive significant business benefits. Yet in many organisations, its value is not fully realised. Robust sustainability performance management, driven by the CFO and their finance team, is the key to unlocking this value. “CIMA members can translate sustainability into real numbers that impact financial performance, and are well placed to support the integration of sustainability across the business”, says CIMA‟s Sandra Rapacioli. This report produced in conjunction with Accenture, Sustainability performance management: how CFOs can unlock value, outlines the five key steps to creating an effective sustainability strategy.

Fact or fiction: A roundtable was organised in Poland, continuing the Fact or fiction journey around the globe. These roundtables explore opportunities and challenges that finance transformation is creating and how this links to independence and objectivity for the finance function and its professionals.

Roundtables have taken place in the UK, Singapore and Poland. Together with an upcoming session in South Africa, these will be featured in a global report later in Poland roundtable the year. In the Warsaw roundtable, the growth of management accounting in Poland was discussed and how the profession is still being understood. The discussion turned to the strengths in technical skills and the relative gap in, and increasing demand for, soft skills – such as communication, influencing and listening. Read more about the findings in this article from Insight.

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February 2012 Other reports: Visit CIMA‟s Thought Leadership pages for more reports, the most recent ones are: Management control for sustainability strategy and Building world class businesses for the long term: challenges and opportunities.

CORPORATE RESPONSIBILITY & SUSTAINABILITY Creating value: Over last year, Tomorrow‟s Value Lecture series - a collaboration between CIMA and the think and do tank Tomorrow‟s Company - has held a number of successful events in London and India. The series focuses on tomorrow‟s value – what value is, why it is important and how it is created.

Tomorrow‟s value was launched in India in November. Hosted by Tata, the theme was Success through corporate sustainability – strategy, leadership and reporting. The event was featured in the CNBC India Business Hour Show. Read about the highlights of the year and see a video interview with Tomorrow‟s Company‟s Mumbai, India: Anant Nadkarni of Tata, John chief executive Tony Manwaring in Knights of LeaderShape, Tony Manwaring, CEO of Tomorrow‟s Company and Charles Tilley Insight.

Corporate culture and sustainability A recent working paper from Harvard Business School, the Impact of a corporate culture of sustainability on corporate behavior and performance, compared a sample of 180 US-based companies. Over

an 18-year period, those classified as high-sustainability companies dramatically outperformed the low-sustainability ones in terms of both stock market and accounting measures. According to a further article in the Guardian Newspaper, “high-sustainability organisations were characterised by a governance structure that explicitly and directly took into account the environmental and social performance of the company, in addition to financial performance”.

Poland and Europe 2020 The Ministry of Economy in Poland has produced a paper – Corporate social responsibility in Poland – as a part of their National reform programme for Europe 2020. This paper maps out the importance of corporate responsibility and introduces a number of new initiatives, from reporting, to environment and education. They are giving corporate responsibility and business ethics a push in education, introducing the importance of good values and long term thinking from the start.

Ethics Series Cass Business School has produced a short series of video interviews about business ethics. In ten short episodes they meet with academics and leading practitioners to talk about different aspects, challenges and developments of the ethics of business. Find all the episodes online here.

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February 2012

INTEGRATED REPORTING International Integrated Reporting Council The IIRC is currently developing an International Integrated Reporting Framework, with the hope that integrated reporting will become a global standard. Nick Topazio, CIMA‟s head of corporate reporting, was recently interviewed in the Accountant, highlighting the challenges of merging financial and non-financial data into one report in a comprehensible way. “CIMA aims to help organizations achieve sustainable success,” Topazio explains, “this requires effective strategic planning and decision-making that takes into account all of the material factors affecting the resilience of future cash flows including economic, social, ethical and environmental elements; it is this interplay between reporting and internal decision–making that makes the integrated reporting initiative is so interesting”. Visit Nick Topazio‟s blog for more news and views on financial reporting.

Integrating Australia A recent article in the Business Spectator says that Australian companies are interested in integrated reporting, but, as elsewhere, find it challenging to find the right measurements for environmental and social goals. The majority of the businesses in Australia that have applied some form of integrated reporting are in the corporate sector. Three Australian organizations (NAB, Stockland and bankMECU) are taking part in the IIRC‟s Pilot Programme.

ANTI BRIBERY United Nations Global Compact In October 2011 the UK UNGC held its third quarterly meeting, this time anti-corruption and the UK Bribery Act was on the agenda. The main focus of the discussion was the importance of extra-territorial anticorruption legislation and what legislation such as the Bribery Act means in practice for private businesses around the globe. Read the report Anti-Corruption: ExtraTerritorial Legislation and Ground Realities from the meeting for more detail, or learn more about the application of the 10th UNGC principle in the paper Reporting guidance on the 10th principle against corruption.

UK Bribery Act and CIMA CIMA have three essential resources online to help you understand the UK Bribery Act and what it means for you and your business.

South Asia A recent report from Transparency International has found that people in South Asia perceive an increase in corruption. The report states that 39% of people report paying a bribe in the past year. Despite this, they see a positive change in people‟s minds, where 81% agree that ordinary people can make a positive difference in the struggle to fight corruption.

In India the fight against corruption continues. As stated in the Transparency International report above, 54% of people in India report paying a bribe in the last

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February 2012 year. The Lokpal bill for anti-corruption has not yet been passed by the upper house of parliament. Meantime, anti-corruption campaigner Anna Hazare is criticizing the bill, arguing that it will not be effective enough. Read more in this article from Times of India, or this reporting from BBC News.

Blowing the whistle In December last year the Wall Street Journal reported on a survey of 1000 Americans about wrongdoing in the workplace, peopleâ€&#x;s willingness to report and knowledge of where to turn. A striking 78% claimed that they would report misconduct if they could remain anonymous. The Securities and Exchange Commission (SEC) of America have recently enforced a new Whistleblower Programme designed not only to protect, but also to reward, individuals who report misconduct. Read the executive summary of the survey from Labaton Soucharow.

CIMA ETHICS AND SUSTAINABILITY AGENDA Ethics blog Head of ethics Tanya Barman writes a blog for all CIMAâ€&#x;s employees, members and students about the latest on ethics, corporate culture and good business practice.

Ethics 2011 In 2011 we had a total of 129 calls to our Ethics helpline, which is an increase from the year before. Most active callers were Accountants in Business, who made up 55% of the calls. Misleading reporting and conflict of interest were the most reoccurring issues. We have also noted that the majority of the calls were from the UK. To meet this increasing demand of guidance in ethics we will launch a global guidance line in the second quarter of 2012. This line will be available 24/7.

Ethics resources CIMA has an extensive ethics resource bank available for its members, students or anyone else who would find it useful. We have a collection of articles, webcasts, case studies and reports, all kept up to date. Access the resources here.

Find us at www.cimaglobal.com/ethics

CIMA ethics helpline This free confidential helpline offers ethical guidance and how the code of ethics can be applied to CIMA members and students:

UK Legal Helpline LAW Express - for CIMA members and students.

Gives access to information online for no charge and a low cost professional legal advice line:

0800 358 7663 +44 (0)20 8849 2303 ethics@cimaglobal.com

0800 092 1980 www.cimaglobal.com/helplines

Please contact us with feedback or with any ethics/sustainability stories or issues you wish to highlight: camilla.hedborg@cimaglobal.com

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