Surveys on Business Ethics, 2012 - Institute of Business Ethics

Business Ethics Briefing
Issue 30, February 2013
<strong>Surveys</strong> on Business Ethics, 2012
This Briefing looks at the findings of selected surveys on business ethics issues
published in the last year.
IBE: Attitudes of the British Public to Business Ethics 2012
“A substantial decline in the proportion of the public saying that British business
generally behaves ‘very’ or ‘fairly’ ethically”
Ipsos MORI have been commissioned
annually on behalf of the IBE to survey
the British public on their attitudes to
ethics in business. Three questions
were asked through face-to-face
interviews in September 2012 among a
representative sample of 991 British
adults (aged 16 years and above).¹
When asked “How ethically do you
think British business generally
behaves?”, nearly half of the British
public (48%) believed business behaves
very (3%) or fairly (45%) ethically, a drop
of 10 percentage points from 2011 (58%)
(see Figure 1). The sharpest drop, of 19
percentage points, was among 35-54 year
olds (down to 47%). There was also a
significant drop of 16 percentage points in
the proportion of those with children
saying business behaves ethically (down to
47%). The group least likely to believe that
business behaves ethically was the socio -
economic group C2DE (42%).
Figure 1. Q “How ethically do you think British business generally behaves?”
Base: 991 GB adults 16+ , 14-26 September 2012, trends: c. 1000 British Public each year asked face-to-face
1. Complete findings at www.ibe.org.uk
Source: Ipsos MORI
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Page 2 <strong>Surveys</strong> on Business Ethics, 2012
The IBE survey also examines attitudes towards
ethics in business over time. There remain mixed
views on how ethically business behaves
compared with 10 years ago.
A quarter (25%) say business behaves the
same as it did ten years ago (a decline of 5
percentage points from the 2011 figure).
Just over a quarter (28%) of the public think
British business behaves more ethically now
than 10 years ago (the same proportion as
2011).
The same proportion (28%) in 2012 think
business behaves less ethically now than 10
years ago – similar to the 2011 proportion of
29%.
The results for subgroups of the population show
that graduates are the group most likely to think
business is behaving more ethically now than ten
years ago (41%). Similar to Q1, those from socioeconomic
group C2DE were the least likely to
believe business is behaving more ethically than
ten years ago (19%). Only 21% of those aged 55+
believe business is behaving more ethically than
ten years ago, a significantly lower proportion
than younger age groups.
When the British public were asked “In your view
of company behaviour, which two or three of
these issues most need addressing?”, ‘Executive
pay’ (34%) and ‘Corporate tax avoidance’ (27%)
came out top (See Figure 2).
‘Executive pay’ was the issue most commonly
identified, as has been the case since 2008. Those
surveyed were asked about a new issue in 2012 -
‘Corporate tax avoidance’ and just over a quarter
(27%) said that this most needs addressing.
‘Discrimination in treatment of people’ came
third (22%) – a similar proportion as in 2011
(21%).
These were closely followed by ‘Bribery and
corruption’ (20%), ‘Employees being able to
speak out about company wrongdoing’ (20%)
and ‘Fair and open pricing of products and
services’ (15%)
Base: 991 GB adults 16+ , 14-26 September 2012, trends: c. 1000 British Public each year asked face-to-face
Source: Ipsos MORI
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Page 3 <strong>Surveys</strong> on Business Ethics, 2012
A significant drop was seen for ‘Environmental
responsibility’ from being the 4 th most
mentioned (20%) in 2011 to equal 7 th in 2012
(down 6 percentage points to 14%), as is the case
for ‘Harassment and bullying in the workplace’
which was down 4 percentage points from 2011
to 14%. ‘Openness with information’ and
‘Sweatshop labour’ were both down 5
percentage points from 2011 to 13% and 12%
respectively. ‘Advertising and marketing
practices’ came next and was the one area that
was significantly more likely to be mentioned in
2012 than the year before (11% selected this
issue in 2012, up five percentage points from 6%
in 2011). ‘Human rights’ saw little change at a
drop of one percentage point to 11% but ‘Workhome
balance for employees’ dropped by 7
percentage points to 10%, and ‘Safety and
security in the workplace’ was down by 5
percentage points to 9%. Finally, ‘Treatment of
suppliers’ remained at a similar level to 2011,
selected by 6%.
Edelman: Trust Barometer, 2013
“Trust in business increases globally”
There were some significant differences between
subgroups of the population.
As in 2011, women (18%) were significantly
more likely than men (11%) to say ‘Harassment
and bullying’ in the workplace was an issue
that needed addressing.
Graduates (37%) were significantly more likely
than the total sample (27%) to select
‘Corporate tax avoidance’, ‘Environmental
responsibility’ (25% compared to 14% of the
total sample) and ‘Work/home balance’ (17%
compared to 10% of the total sample) as issues
that needed addressing.
Men (17%) were significantly less likely than
the total sample (20%) to say being able to
‘Speak out about wrongdoing’ needs
addressing.
Full summary available: http://bit.ly/ZAnQ3L
At the end of 2012, the 13th annual Edelman
Trust Barometer surveyed more than 31,000
respondents in 26 markets around the world and
measured their trust in institutions, industries
and leaders. This online survey included 1,000
members of the general population in each
market and a number of members of the
informed public 2 (500 in US & China and 200 in all
other countries).
Overall, trust in business has increased 5
percentage points since the 2012 survey with
more than half (58%) of respondents globally
saying they would trust business “to do what is
right” and 17% trusting business “a great
deal” (up from 14% in 2012).
Business leaders however, saw a minimal
increase in trust levels as globally only 43% of the
informed public trust CEOs as credible spokes-
people. In the UK the figure was even lower at
only 39%. Globally, only 18% of the general
population trust business leaders to “tell the
truth” and 19% say they trust them to “make
ethical and moral decisions”.
For the seventh year, technology (77%) and, for
the fourth year, automotive (69%) remain the
most trusted industries. Of the 11 industries
included in the survey, banking (50%) and
financial services (50%), continued to bring up the
rear.
In 2013 the Barometer looked for the first time at
the differences in trust in big business and small
business to do what’s right. Significant differences
in perceptions of the two were noted. Globally,
informed publics trusted big business more than
small business (70% vs. 62%). An inverse
relationship of trust exists between developed
2 “Informed publics” met the following criteria: college-educated; household income in the top quartile for their age in their country;
read or watch business news/ media at least several times a week; follow public policy issues in the news at least several times a week.
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Page 4 <strong>Surveys</strong> on Business Ethics, 2012
and emerging markets as developed countries
place greater trust in small business over big
business (76% vs. 53%).
The survey identified 16 specific attributes which
build trust and grouped these into five
performance clusters. Of most importance to the
public when deciding whether or not to trust a
company was engagement (59%), closely
followed by integrity (58%) and products and
services (54%). Purpose and operations were of
least importance with 47% and 39% respectively
of the sample considering them important when
it came to trusting a business. In reality however,
business is failing to meet these expectations and
a gap between expectations and business
practice was found for all 16 activities.
Full report available at: http://bit.ly/11K3t8o
Ernst & Young 12 th Global Fraud Survey: Growing Beyond - a place for integrity, 2012
“24% of respondents said bribery/corrupt practices have increased because of the economic
downturn”
More than 1,700 interviews with chief financial
officers and heads of legal, compliance and
internal audit were carried out to obtain their
views on fraud, bribery and corruption risk and
establish how their organisations are working to
mitigate them. These were conducted in 43
countries between November 2011 and February
2012 and the results highlighted important issues
for boards of directors.
The survey found that bribery and corruption are
widespread, with 39% of respondents reporting
that bribery or corrupt practices occur frequently
in their countries. Compared to Ernst and Young’s
11 th Global Fraud Survey (2011), respondents
were increasingly willing to make cash payments
to win or retain business (15% versus 9% in 2011)
and 5% of respondents would consider misstating
financial performance, versus 3% in the 2011
survey. Nearly a third (30%) were willing to use
entertainment to win or retain business and a
generally weak control environment was revealed
with nearly a quarter (24%) responding that there
were no clear penalties for breaking company
anti-bribery and corruption (ABC) policies.
There is a visible lack of training with less than
half (46%) of CFOs and only 42% of total
respondents having attended ABC training. While
46% of total respondents agree that company
management are likely to cut corners to meet
targets, CFOs have an even more pessimistic view
(52%). Using third parties in new markets was
identified as a key risk, yet 44% of respondents
reported that background checks were not being
performed in this area.
Full report available at: http://bit.ly/LdsBHU
The Network 3 : 2012 Corporate Governance and Compliance Hotline Benchmarking
Report: Industry Report
“After a two-year decline, incident reporting rates are on the increase”
This survey looks at how comprehensive
governance, risk and compliance (GRC)
programmes are impacting corporate behaviour.
It is a statistical study of 599,162 compliance
incidents reported to The Network’s hotlines
throughout the five-year period covering 2007 to
2011. In 2011, 129,199 incident reports were
taken from 1,128 organisations representing
15,052,215 employees. The incident reports had
been received from a wide variety of people
associated with each organisation including
employees, ex-employees, vendors, shareholders
3. “The Network” provide integrated governance, risk and compliance (GRC) software solutions including an anonymous reporting hotline
to companies around the globe.
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Page 5 <strong>Surveys</strong> on Business Ethics, 2012
and the public. The majority of incident reports
originated in North America, with a substantial
number of reports originating from an
“Unknown” location.
While there was a steady increase in 2007 and
2008 in overall incident reports, that rate fell in
2009 and 2010 to a five-year low of 8.1 per 1,000
employees. In 2011, the incident rate rose to 8.6,
most significantly in organisations with between
20,011 - 50,000 employees. On average over the
past five years, organisations with fewer than
5,000 employees experienced the highest number
of reported incidents.
Although phone-based reporting is the most
popular method for incident capture (85%), the
popularity of reporting via the web grew from
10.3% in 2010 to 13.9% in 2011. Only around 1%
of reports made in 2011 came in through
alternative methods such as email or fax.
Over the past five years, there have been small
fluctuations in whether or not participants
notified management of their concerns prior to
making their hotline report. Consistently, since
2007, 70 – 73% of incidences have not been
reported to a manager first, indicating a
preference among the majority of employees to
use a reporting mechanism other than a face-toface
conversation with management. In 2009 and
2010 across all industry categories, participants
are equally divided in choosing to reveal or not
reveal their identity when submitting an incident.
In 2011 however, the scales tipped to 52% of
participants choosing to reveal their identity.
In 2011, the distribution of case outcome results
was nearly identical to the 2010 results, with 67%
of all reports warranting an investigation and only
16% not doing so. Of the 67%, 41% resulted in a
corrective action being taken.
Read the full report at: http://bit.ly/14v8qRk
Dow Jones: State of Anti-Corruption Compliance Survey, 2012
“Corruption concerns are increasingly impacting companies’ decisions about forming or expanding
business partner relationships and conducting business in emerging markets”
This survey interviewed more than 300
compliance professionals at companies across key
industries worldwide. It revealed an increase from
2011 in the percentage of companies that have
stopped or delayed business endeavours with
partners (60% of respondents) and entrance or
expansion in emerging markets (48% and 47%
respectively) due to concerns about violating anticorruption
regulations. Entrance to emerging
markets was most impacted, with slowdowns in
business activities increasing by nearly 10
percentage points over 2011.
A rise in the use of anti-corruption programmes
was shown with 83% of companies stating that
they had a programme in place versus 74% in
2011. Western Europe saw the largest increase in
the implementation of anti-corruption
programmes over the past two years while North
America and Asia-Pacific regions trailed behind.
The survey showed that due diligence is
increasingly focused on uncovering government
connections within potential business partners,
with nearly two-thirds of respondents including
this check in their preliminary due diligence, an
increase of 9 percentage points from 2011.
However, despite its growing importance,
companies are still struggling with due diligence
in a more heavily regulated environment and as a
result, only half feel very confident in their
programmes. The majority of companies (43%)
only update their due diligence programmes on
an event-driven basis, such as when new
reputation issues or government sanctions arise,
while about 40% of companies update their due
diligence at least every two years.
A high percentage (44%) of compliance
professionals suspected that their company had
lost contracts to unethical competitors.
Full report available at: http://bit.ly/Kax8tg
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Page 6 <strong>Surveys</strong> on Business Ethics, 2012
Association of British Insurers Report on Board Effectiveness: Updating progress,
promoting best practice, 2012
“The number of women being appointed to boards is increasing”.
A survey of FTSE 350 company secretaries was
conducted by the ABI to provide an update on the
current state of reporting and best practice in
three key areas of improving board effectiveness:
board diversity, succession planning and board
evaluation.
The survey showed the number of women being
appointed to boards has increased over the last
year. In 2012 over 26% of FTSE 100 and over 30%
of FTSE 250 board appointments were women
compared with 19% and 12% respectively in the
2011 report. Consequently over 17% of FTSE 100
and nearly 12% of FTSE 250 board members are
women, compared with 14% and 8% respectively
in 2011. However, the number of women in
executive director positions remains low: less
than 7% of FTSE 100 and less than 5% of FTSE 250.
The level of disclosure on gender diversity is
improving as almost 64% FTSE 100 and over 38%
of FTSE 250 companies provided a material
statement in their annual report. This compares
with 19% and 7%, respectively, in 2011’s report.
Full report available: http://bit.ly/11AQxC0
Proskauer Rose LLP: Social Media in the Workplace Around the World 2.0, 2012
“Only about one-third of employers currently provide training on appropriate use of social media.”
Over the past two years, Proskauer Rose LLP and
their global partners have collected nearly 250
responses from multinational businesses detailing
their social media policies and practices. Their
research shows that compared to 2011 employers
now have more positive attitudes towards social
media, particularly for non-business use. This
year, more than 40% of employers considered it
an advantage to allow employees to use social
media for both business and non-business use.
Last year, the figure was less than a third (30%).
The number of employers that allow all
employees access to social media sites at work for
non-business use remains at around half, and
about one-quarter of businesses allow some
employees access to social media sites at work for
non-business use.
There has been an increase in the number of
employers that monitor usage of social media
sites, from 27% to 36%, and the number of
employers that have dedicated social media
policies has increased from 55% to 69%. Similar to
2011 almost half of all employers have had to deal
with misuse of social media by employees (or
former employees).
Despite this, only about one-third of employers
currently provide training on appropriate use of
social media.
Just over one-quarter of employers block
employee access to social media and about onethird
of businesses have had to take disciplinary
action against an employee for misuse of social
media.
Full report available at: http://bit.ly/SXn78Q
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Page 7 <strong>Surveys</strong> on Business Ethics, 2012
Other <strong>Surveys</strong> of Interest
University of Greenwich: UK Attitudes to Whistleblowing, 2012
The research, conducted in October 2012 using a
random sample of 2,000 British adults aged 18+,
shows 4 out of 5 Britons think that people should
be supported for revealing serious wrongdoing,
even if it means revealing inside information.
However, under half of the respondents (47%)
thought whistleblowing is an acceptable thing to
do in our society.
Of the 54% of respondents who were identified as
an employee or organisation member, 75% also
indicated that if they observed wrongdoing, they
would feel personally obliged to report it to
someone in their organisation.
Full report available at: http://bit.ly/XcFv2Z
Ethics Research Council: National Business Ethics Survey, 2011
This update to the seventh US National Business
Ethics Survey (NBES) which interviewed a
nationally representative sample of 4,683
employees at all levels was issued in 2012. The
original 2011 NBES revealed that nearly half (45%)
of employees observe misconduct each year. The
majority (65%) of those who observe misconduct
report it. Unfortunately, more than one in five
(22%) employees who reports perceives
retaliation for doing so. The update revealed that
in the last five years, there has been an 83%
increase in the rate of retaliation, but reporting
has only increased by 12%.
Full update available: http://bit.ly/WLy4Mi
Kroll FCPA Benchmarking Report: Compliance Officers Assess Bribery Risk at US
Multinationals, 2012
For this report 139 senior corporate compliance
executives from companies ranging in size from
$100m to over $10bn in revenues per year were
interviewed by phone from July 2011 to February
2012.
The survey found that despite considerable
investment in anti-bribery compliance, the
majority (69%) of large-company corporate
compliance officers are ‘highly’ or ‘moderately’
exposed to risk related to anti-bribery regulations.
Many are falling short on best practices with
respect to third party screening, facilitating
payments, and political donations. It also found
that executives within the pharmaceutical
industry expressed more concern about the
impacts of global anti-bribery enforcement than
their counterparts in the financial, energy,
technology and communications sectors.
Full report available at: http://bit.ly/KWOP2d
Epitype: Brand Values Index 2012 - FTSE 100, 2012
This study is a repeat of one done in 2009 looking
at trends and changes over time for brand values
within the FTSE 100. In 2009, ‘Integrity’ was the
most popular brand value with 36 companies
within the FTSE 100 claiming that it was one of
their values.
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Page 8 <strong>Surveys</strong> on Business Ethics, 2012
In 2012 ‘Integrity’ was again the most popular
brand value with 30 organisations within the FTSE
100 claiming it to be one of their values.
Interestingly there were 5 new entries into the
top 10 brand values: ‘Excellence’, ‘Open’, ‘Safe’,
‘Accountability’ and ‘Collaboration’.
Full report available: http://bit.ly/WysuR1
Chartered Global Management Accountant: Managing Responsible Business – A
Global Survey on Business Ethics, 2012
This survey gathered responses from a global
total of 1,966 members from the Chartered
Institute of Management Accountants and
American Institute of Chartered Public
Accountants. It focused on four business ethics
challenges around culture, accounting practices,
dilemmas and pressures about behaving
unethically and concerns and prioritisation of
ethical issues within companies.
The study reported that 80% of organisations
surveyed provided a code of ethics to guide
employees about ethical standards in their work,
up from 72% in 2008. When respondents were
asked how relevant various ethical issues were to
their organisations, bribery had risen from 6th to
3rd in the rankings of issues of concern, reflecting
the intensifying of anti-bribery and corruption
legislation.
Full report available: http://bit.ly/JyYXQD
AFA LLC: Corporate Social Responsibility: Who's Responsible? Finding an Organisational
Home for an Increasingly Critical Function, 2012
A questionnaire, focusing on how executives
develop, measure and report the results of their
CSR initiatives was sent to senior executives at
Fortune 1000 companies and generated 77
responses on behalf of the companies, with 26%
of those responses representing Fortune 100
companies.
Overall, 88% of respondents cited company
reputation as a factor in CSR decision-making and
this was followed by the company’s competitive
positioning and social consciousness, which 71%
of respondents mentioned. A significant 86% of
respondents say CSR is either very or extremely
important to the mission of their companies.
The study also evaluated what issues CSR
initiatives focus on. Respondents said
environmental issues were a top focus (96%),
followed by health issues (68%), educational
issues (59%), human rights (55%) and labour
issues (50%).
Summary available : http://bit.ly/TTQF8o
Labaton Sucharow LLP: Corporate Integrity at a Crossroads: United States & United
Kingdom Financial Services Industry Survey, 2012
Around 500 professionals, evenly split across the
United States and the United Kingdom, who were
working in various segments of the financial
services industry were surveyed and asked about
personal ethics, corporate culture and possible
misconduct.
Nearly a quarter of respondents believed that
financial services professionals may need to
engage in unethical or illegal conduct in order to
be successful and a worrying 16% of respondents
said they would use information for insider
trading if they could get away with it.
Full report available: http://bit.ly/PNiv8u
24 Greencoat Pl., London, SW1P 1BE Tel: (020) 7798 6040 www.ibe.org.uk Charity No.1084014