Ethical lens october 2013

ETHICAL LENS October 2013

Reputational risks involved with unethical behaviour are receiving increasing attention by financial leaders globally. A damaged reputation takes a long time to restore, and could impact not only on the individuals involved but also on the wider organisation and stakeholders. There are ample examples of companies that have taken a reputational hit when failing to uphold ethical standards – learn from bad examples and best practice in this issue of Ethical Lens.

Ethics are important to me because…

“They underpin both conduct and work and are important drivers of best practice for all professionals; high standards of ethical behaviour go hand in hand with professionalism and reinforce trust and confidence in both individuals and the profession.”

Gail Stirling, Executive Director Governance and Professional Standards

NEWS Ethics reflection e-learning tool | CIMA has recently launched an ethics CPD e-learning tool. Despite your best efforts to act ethically Doing the right thing: challenges sometimes arise, and as a Imagine that business is professional you therefore need to be slowing down and your prepared to handle ethical conflicts. As the manager is pressuring you tool will show, there is not always a clear way to present more optimistic forecasts – and offering to resolve an ethical conflict, and you an incentive to do so. professionals may still be facing pressures What would you do? despite having made a well thought through decision and acted according to their Code of Ethics. Created with input from members globally, and available to the wider business community, this tool allows you to practice ethical decision making through seven scenarios of global scope, loosely based on real events. 

www.cimaglobal.com/ethicstool

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REPORTS The boardroom and risk | This recent report from CIMA and Tomorrow’s Company focuses on the increasing attention to risk management from boards, but suggests they may be blind to or lack understanding of some key risks. 

Access the report, or read this recent post

from the CGMA blog

Resilient business models | This new CGMA report looks at how business models function and the factors that contribute to their success and failure. With a holistic view of their organisation, management accountants are well placed to understand this link between the business model and commercial success. 

Zambian national accounting conference | In August, the accountancy professions in Zambia, which include CIMA, the ACCA and the Zambian Institute of Chartered Accountants (ZICA), jointly hosted an annual business conference.

Corporate governance and ethical behaviour were topics that came up often in different presentations. A session facilitated by CIMA’s head of ethics on acting under pressure and how professional accountants manage ethical issues followed a session from PwC on the importance of governance and public accountability in Zambia. A roundtable discussion was also held which will result in a joint CIMA and Institute of Directors report on embedding an ethical culture in Zambian business.

Access the report

EVENTS Ethical leadership event in South Africa | At an event hosted by the Performance Hub in Johannesburg in August, CIMA’s head of ethics spoke about the CGMA survey findings. It brought together both CIMA members and other business executives to discuss the links between trust, ethical leadership and high performing cultures.

The event kicked off Performance Hub’s first thought leadership platform Think! Tank on how to achieve, manage and sustain high performance in South Africa. 

Visit the Performance Hub’s website

IFAC Podcast with meeting highlights from IFAC’s ethical committee | This ten-minute brief from the IESBA meeting in June raises the main points made: the structure of the Code, responding to a Suspected Illegal Act, and strategy and work plan. 

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Listen to the podcast

<IR> 100 pilot participants | As Deutche Börse th became the 100 organisation to participate in the IIRC’s pilot programme in last month an article in Triple Pundit reports that more US organisations need to join in. Currently, the UK is the country with the most organisations in the pilot programme, followed by Brazil.

G4 | In May the Global Reporting Initiative (GRI) launched G4, its fourth generation of Guidelines.

An article on CSR Wire by Ralph Thurm, founder of the management consultancy Ahead, reports that G4 is asking for more transparency and places a greater focus on supply chain than its predecessor. To conclude Thurm suggests that G4 have the potential to produce better reports, but underlines that it all depends on implementation by the companies who use the framework.

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SUSTAINABILITY AND INTEGRATED REPORTING

Read the article in Triple Pundit

<IR> background papers | These five papers were prepared by Technical Collaboration Groups including CIMA and other leading organisations, with input from participants from a range of industries and countries. The headlines include: Business Model, Capitals, Connectivity, Materiality, and Value Creation.

 Access the <IR> background papers

Sustainability reporting | A recent survey by Ernst & Young about the value and future of sustainability reporting shows how benefits to the business include both tangible (such as reduction of waste or energy) and intangible (such as the building of public trust and reputation) ones. Further, it reports that investors and analysts tend to consider external assurance ‘a vital part of a company’s sustainability reporting process’. 

Read the report

Visit the GRI website, or read more in this post on CSR Wire

ETHICS AND BUSINESS Supply chain risks webcast | The Supplier Ethical Data Exchange (SEDEX), jointly with the United Nations Global Compact (UNGC), are currently launching a series of webinars on supply chain issues in different regions. Already available to view online are webinars with a focus on Africa and South and South East Asia markets, and two more are scheduled for October-November focused on South America and China. 

Access the webcasts

New anti-corruption law: Brazil | A new anticorruption law will come into force in early 2014 in Brazil. This comprehensive law applies to companies and individuals, international or domestic, for corruption of public officials or governmental bodies. This law applies even when the act is committed outside Brazilian borders, following on other extraterritorial bribery and corruption legislation like the UK Bribery Act and the FCPA. 

Learn more about the new legislation on Mondaq.com

www.cimaglobal.com/ethicallens |3

Corruption in global supply chains | Issues resulting from long supply chains where organisations lack oversight of their operations and business partnerships have been in the spotlight over the past year, with events such as the horse meat scandal in Europe and factory fire in Bangladesh. However there is not only a risk of sustainability and health and safety – but also of corruption and bribery. The UK Bribery Act (and FCPA in the US), which makes corruption abroad both illegal and punishable, mitigates risks of organisations in the UK looking the other way if their operations abroad take or give bribes. In June it was reported that the Serious Fraud Office (SFO) was actively investigating two cases, with more to come, and in August their first prosecution were announced, against three individuals involved with a £23m fraud. 

Read more about corruption risk in global value chains at Thomson Reuters Foundation, or about recent UK Bribery Act cases in the Financial Times

such as labour standards and rights. Shawn Miller, from Citi, told the Guardian that ‘social and human rights issues are often emotive, and they are sometimes very hard to explain, unlike some environmental issues… but I think the Equator and UN Guiding Principles do provide a framework and language for businesses to speak about human rights.’ 

Ethical leadership | Accountancy SA (South Africa) recently published a special feature on ethical leadership, raising three overall factors in order for an ethical programme to be successful, namely: a visible commitment by the top; rigorous communication of the values to the organisation; a shown decisiveness, visibility and swift response when responding to unethical conduct. 

Reputational risk and impact of social media | A recent CGMA survey revealed that nearly 25% of respondents worldwide worked for an organisation that had suffered from a serious reputational failure. Instant communication via social media casts a harsher spotlight than before, and financial leaders globally said they placed more focus on reputational risks today than in previous years. 

Read more in Financial Management and this blog on CGMA.org

Finance and human rights | The Equator Principles is a risk management framework used by financial institutions for ‘determining, assessing and managing environmental and rd social risk in projects’. The 3 generation of guidelines was launched earlier this year, and for the first time includes human rights. This is helpful to developers when approaching issues 4|Ethical Lens October 2013

Visit the website for the Equator Principles, the UN Guiding Principles or read the article in the Guardian

Read the full article in Accountancy SA

Ethics and behaviours in corporate governance | This review from the Institute of Business Ethics (IBE) investigates the ethical aspects of corporate governance regulation and guidance in the EU. As a result of the 2008 financial crisis board practices and corporate governance has been in the spotlight, but the review suggests that there is a ‘general lack of ethical language in corporate governance provisions’ at a pan-EU level. Despite weak guidance on EU level, the review highlights that there are individual member states which are beginning to place more focus on issues related to ethics and behaviours with regards to corporate governance. 

Access the review

International attitudes to corruption | This joint Control Risks and the Economist Intelligence Unit survey report, based on responses from general counsels, senior corporate lawyers and heads of compliance in more than 300 companies globally, revealed that ‘international companies have disturbing gaps when it comes to dealing with the dangers of bribery and corruption’. Further, the report suggested that there was greater risk of ‘operational bribery’ – of dealing with customs and completing projects on time - than what would be considered ‘classic’ bribery related to winning business. 

Whistle blowing trends: India | Research by ASSOCHAM and Ernst & Young revealed that whistle blowing mechanisms are not commonly used by Indian businesses to prevent fraud and other misconduct. In absence of whistle blowing lines employees are more likely to raise issues via informal channels. Once the new Companies Bill is passed, more rigorous mechanisms will be put in place, enabling employees to effectively report. A recent article in the CIMA India Newsletter by Kirstin Matthewson, Expolink, suggests that although whistle blowing is still in its early stages in India, cultural change is on its way and attitudes to speaking up and making people accountable are changing.

Access the report 

Water Stewardship | Do you know how much rd water you need for operations to run? The 3 Quarterly Meeting of the UNGC UK Network meeting addressed this question with water risks and stewardship on the meeting agenda.

Speakers Cate Lamb, CDP, and Stuart Orr, the WWF, both agreed that to successfully address this risk there is a need for more transparency and cooperation, between companies and communities, public and private, and suppliers. It was raised that although more companies are recognising the risks attached to water usage, this has not fully translated into strategy and there is a lack of board level oversight. 

Visit the UNGC website, or read more about water stewardship from the WWF

Read more in the CIMA India Newsletter (JuneJuly 2013), or India Education Diary . Also read about the Companies Bill in the Times of India

Conflict of interest | It was recently reported in the UK media that Deloitte have been handed a record fine of £14m for a conflict of interest which occurred when advising on the buying of the car manufacturer MG Rover. The accountancy profession took a reputational hit as a result of the financial crisis, and ethical behaviour and explicit codes of ethics are key to restoring this trust. Earlier this year CIMA and St Paul’s Institute hosted a seminar on the importance of good people and ethical cultures in the work place – with a webcast scenario tool available online. 

Read more in the Guardian, or access the webcast scenario tool from the Good People event

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MORE FROM CIMA ETHICS Ethics Support Guide | Looking for resources but not sure where to find them? This guide provides an overview of all the ethics support and resources available, it also includes suggestions of how to incorporate these in events and training activities. 

Access the Ethics Support Guide

Good People tool and webcast | The contents of this tool were produced for a joint seminar of CIMA and St Paul’s Institute earlier this year.

The seminar commenced with a role play scenario - asking the audience what they would do if they were under pressure from a senior colleague to do something they felt was unethical. The scenario is available to view on the CIMA website. CIMA has also made the Facilitator’s Notes and the Scenario Script available for download. The tool lends itself to practicing ethical decision-making in wider groups of colleagues or fellow students. 

www.cimaglobal.com/GoodPeople

Sustainability and responsible business webcast | In May CIMA’s head of ethics Tanya Barman and an expert panel discussed the future of sustainable business in a Forum at the Singapore Stock Exchange. The main topics have been framed in five short webcasts, which can be used to inform a discussion or frame the questions for individuals or groups to explore sustainability and ethical business issues in more detail. 

www.cimaglobal.com/SGXsustainability

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HELPLINES AND SUPPORT 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.

Global Guidance Line | This service, aimed at CIMA members and students outside the UK, allows the caller to discuss a concern and get help to decide next steps and other potential areas of support. This is not a substitute for technical or legal advice, operators speak multiple languages, it is open 24/7 and the caller will remain anonymous.

UK Legal Helpline | LAW Express - for CIMA members and students in the UK. This service gives access to information online for no charge and a low cost professional legal advice 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 query in an email to ethics@cimaglobal.com

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