Ethical Lens June 2012

June 2012

Ethics shouldn’t be hard, yet many businesses are struggling – stay on top and keep yourself up to date on the latest on ethics and sustainability issues with Ethical Lens.

DIRECTORS MESSAGE

Ethics are important to me because… “…making good decisions and doing the right thing are the keystone of successful organisations. CIMA provides the training, lifelong learning and ethics framework to support both.”

Emma Cunis, Executive Director, Global Corporate relations

NEWS Ethics animation In April CIMA launched an animation that explains the code of ethics, and how it can be applied to an ethical dilemma. The animation has had a lot of good feedback, and was received positively online. It is useful in work and educational settings to raise discussion with teams about ethics. How will you use the animation? Watch it here

Animation by Simeon Tennant, watch it at www.cimaglobal.com/ethics

REPORTS Corporate governance report The report The Invisible Elephant and the Pyramid Treasure, authored by John Knights and produced by CIMA and Tomorrow‟s Company was launched at the end of May. This report charts the journey towards becoming a „transpersonal leader‟. Transpersonal leadership is the development of a leader beyond their personal ego in order to fully consider and act on the needs of all stakeholders. The report suggests that this type of leadership is a better fit for the future, and the concept has been developed from 13 years of experience of working with senior leaders. Access the full report here

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June 2012 Managing Responsible Business In October last year, CIMA conducted a global survey on business ethics. More than 2000 CIMA and AICPA members and students from 80 markets completed the survey. A great majority were students. The replies from this survey have now been collated and analysed, and published in the CGMA report Managing Responsible Business. The key findings include 1) Lip service to ethics – there are more policies in place today, but at the same time an increased pressure to act unethically 2) The tone from the top is failing to increase confidence 3) There is a need for an increase in analysing and reporting on ethical and non-financial information to support the business 4) Both CIMA and AICPA members recognise their specific roles in upholding ethical pressure Download the report for free between now and August at the CGMA website: www.cgma.org/ethics EVENTS Asia In early May breakfast briefings on the CGMA Ethics report were held in Kuala Lumpur and Singapore. In Malaysia Tanya Barman was joined by En Mohd Yany from the Malaysia Institute of Integrity (IIM) and Nancy Fortner at Fortner Consulting to discuss the findings. The IIM is prioritising business ethics at a national level, and Nancy Fortner highlighted the importance of organisational culture and leadership to promote an ethical environment.

In Singapore, corporate governance expert from the NUS Business School, Professor Mak Yuen Teen outlined an ongoing case of bribery to highlight the type of activity that finance professionals face. The lively panel discussion involved guests Thomas Thomas, Executive Director of the Singapore Compact of Corporate Responsibility, and Simon Wright, lecturer in Sustainability and Responsible Business at Nottingham University Business School, who also raised the issues that wider sustainability issues could only be truly embedded through responsible business.

See CGMAâ€&#x;s from around the world discuss the report here

Breakfast Forum Malaysia, top from left, Mr En Mohd Yany, Chair Dr YC Lee and Ms Irene Teng. Bottom from left, Mr Derek Barnes, CIMA President Harold Baird, Nancy Fortner and Ms Tanya Barman

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June 2012 CORPORATE RESPONSIBILITY & SUSTAINABILITY Breaking the glass In February Sandra Rapacioli posted a blog about the lack of women in Britain‟s boardrooms – the 2015 goal of 25% women is still distant. The CIMA report Breaking Glass: strategies for tomorrow’s leaders discuss strategies for success in leadership. Although the report shows how women are struggling to get to where they are, in parts of Asia and Middle East in particular, it is positive to see how dialogue and other approaches can assist getting stronger female leadership on a global scale. This article from China Daily, published to coincide with the international women‟s day, discuss challenges for women breaking the glass ceiling (or perhaps rather glass-door) in Asia.

Risk In her recent blog, Gillian Lees posted a piece about corporate governance and risk. New research, presented in the report Tomorrow‟s Corporate Governance shows that it is usually „soft‟ and not „hard‟ risks that cause a real crisis, „soft‟ risks meaning the human dimension of business. That is to say, that even if figures collapse, a good approach from leaders and employees, a well established corporate culture, transparency and communication can save an organisation from loss of reputation and distrust.

Global corporate governance In a recent article in The Guardian, sustainability pioneers discuss how government leaders should work together for sustainable development, and how businesses are in a good position to help realising this goal.

According to Jo Confino, there is not enough collaboration at the moment. There is a tendency “to act defensively when politics are involved and the short-sighted nature of the election cycle are all reasons for this reluctance to act”. Read the full article and watch a video about global corporate governance here INTEGRATED REPORTING All Africa A recent story on the All Africa website explain how businesses in Southern African countries that are taking part of the International Integrated Reporting Commission‟s (IIRC‟s) pilot programme will have to do much more than work on regulations to succeed. For integrated reporting to work it is crucial that businesses take a good look at their corporate governance, culture, and stakeholder inclusiveness – to name a few examples. Reana Rossouw, author of the article, pointed out that many companies were struggling with this. Although the process of delivering their first integrated report was painful for many, according to Rossouw participants saw benefits with adopting the framework. Learn more about the IIRC and the integrated reporting at their website IIRC.org

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June 2012 ETHICS & BUSINESS Whistleblowing Research shows that about 70% of FTSE 100 companies “are risking financial and reputational damage caused by public disclosures of information”. 69 of the 100 companies had failed to display any information at all about whistleblowing or the equivalent. The rest, while having services in place, often struggled to make them easy to find. Without any general standards it is not clear cut how to make it easy for people to blow the whistle. Read more here “Commercial irregularities” Adidas has revealed that commercial irregularities in their India branch could be hitting the accounts by up to £100 million. No further details have been given of what these irregularities are. This might seem secretive, but according to this story in the Economic Times, it is uncommon that multinational corporations such as Adidas give any details at all.

Accounting fraud The camera giant Olympus have admitted to hiding losses for more than a decade. A Bloomberg article reports that their market value has fallen almost 50% since October last year, when Michael Woodford was fired as chief executive and the scandal was uncovered. Olympus recently came out with a statement that they will work on strengthening their corporate governance.

Top executives involved in corruption Although not an entirely new story, the WalMart scandal is one all business can learn from. The Mexico-branch of Wal-Mart – at the time a success story - was found to be involved in bribery and corruption in order to dominate the market. Not only was the bribery discovered, investigators also found that top executives had actively been taking part in covering up bribes paid out. The sum amounted to more than $24 million. Read the entire case study in the New York Times.

Heftier fines The Telegraph recently reported that the “big four” auditors will face tougher punishments for misconduct by the accountancy regulator Financial Reporting Council (FRC), after PwC was given a £1.4 million fine earlier this year.

CEO with false resume Scott Thompson recently stepped down as CEO of Yahoo after it was revealed that he had inaccurately claimed he had a degree in computer science on his resume. According to an article in Mashable Business, it was not the incorrect resume, but the fact that Mr Thompson did not admit his mistake but instead blamed it on a headhunting firm that lead to his resignation in mid May. $2 billion in losses JPMorgan disclosed that they have significant trading losses of $2 billion due to complex and speculative investments made by its traders. This poses questions about risk assessment and regulation. Ina Drew, chief investment officer at JPMorgan, have resigned. According to the New York Times, she failed “to stop the complex bet before it spiraled into a huge loss”.

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June 2012 US President Obama used this as an example of why there is a need for financial reform. He pointed out that if this would have happened at another less profitable bank, the state might have had to bail it out. Follow this link to see Obama‟s comments on this event, or read more in the NY Times CIMA ETHICS AGENDA Global guidance line CIMA has teamed up with Expolink to provide an anonymous and confidential globally available helpline. The service supports members and students in deciding next steps with regard to an ethical concern, and also to guide you to other potential areas of support. Visit our helplines and support page: www.cimaglobal.com/helplines Ethics resources CIMA has an extensive ethics resource bank available for its members, students or anyone else who finds 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: 0800 358 7663 +44 (0)20 8849 2303 ethics@cimaglobal.com

Global Guidance Line Expolink – free from any telephone in your country 24 hours a day, 7 days a week: +(xx*) 800 3838 4000 *insert your country‟s international access code +44 (0)1249 661957 www.cimaglobal.com/helplines

UK Legal Helpline LAW Express - for CIMA members and students in the UK. Gives access to information online for no charge and a low cost professional legal advice line: 0800 092 1980 www.cimaglobal.com/helplines

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

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