The guidelines Guidance on Ethics for Board Members compiled by the Fraud and Integrity Working Committee emphasise the importance of ethics and integrity in corporate governance.
Beyond regulatory compliance, maintaining an ethical business culture and a higher degree of accountability is vital for Board Members and senior management, fostering trust among stakeholders and offering a competitive advantage in today's conscious environment.
Reputation risk has become more topical than ever, and prevention is key. Integrity, transparency, and accountability are key to long-term success.
The guidelines include the following key takeaways:
- Tone from the top: Board members and managers must lead by example, demonstrating ethical behaviour and integrity. Their actions shape the company culture and set expectations for all employees.
- Adopt and publish corporate values and ethical standards: Establishing a formal code of conduct that defines the company's purpose, values, and expected behaviours is fundamental. Regular training and clear communication help embed these principles into the company’s culture, ensuring that all employees understand and uphold them.
- Identify, monitor and mitigate ethical risks and stakeholders’ satisfaction: Board members and senior management must identify potential ethical risks, such as stakeholder dissatisfaction or high staff turnover, and implement remediation plans. Open communication channels, such as "speak-up" platforms for raising concerns, are essential for addressing ethical issues.
- Keep a watchful eye for mismatch between words and actions: There must be consistency between a company’s ethical standards and its financial goals. Board members should monitor remuneration policies to prevent creating incentives for unethical behaviour.
- Deal appropriately with misconduct: Misconduct should lead to appropriate consequences, and systemic issues should be corrected. Ethical culture is strengthened by recognising, rewarding, and promoting individuals who consistently demonstrate integrity and moral decency.