Shareholders wrong to turn a blind eye to ethical standards

Shareholders need to take a more proactive position on business ethics and demand a more detailed briefing on the steps being taken to prevent reputational damage, say responsible business advisors GoodCorporation.

Monday’s report by the Chartered Institute of Internal Auditors revealed that only 8 per cent of FTSE 100 firms show a metric of ethical performance in their annual report.

Michael Littlechild, director of GoodCorporation comments: “We routinely interview shareholders as part of our audits of responsible business behaviour and the lack of concern for ethics is very noticeable.  Shareholders admit that they only take an interest in ethical codes of conduct and environmental issues once a problem has occurred.

“Failures in ethical conduct can lead to both real and reputational damage with potentially huge consequences, not just for businesses, but for shareholder returns and the wider community. To build a stronger economy with sustainable returns, shareholders need to place a value on ethical performance and hold businesses to account if it is not managed and monitored appropriately.

“The implementation of the Bribery Act has focussed attention on anti-corruption practices and this is clearly vital. But it has also meant that there has been a shift in focus away from other areas of ethical conduct such as conflict of interest, illegal work practices and environmental mismanagement. All of which have led to high profile scandals in the last 12 months alone. Rather than leaving questions about ethics until after the horse has bolted, shareholders should scrutinise the ethical practice of corporates in order to fully protect their investment.”

Posted December 2011

 

 

Notes to Editors:

  1. Leo Martin and Michael Littlechild are available for interviews, briefings or written comment
  2. GoodCorporation works with multinationals, FTSE 100 companies and SEMs to help measure, manage and implement responsible business practices.  Our clients include 12 FTSE 100 and 4 CAC40 organisations including GDF-SUEZ, Total SA, Centrica, BG plc, BBC Worldwide, Shire plc, BAE Systems, FTSE4Good, Telefónica and Xstrata.
  3. For further information visit http://www.www.goodcorporation.com

 

Media Enquiries:

Sally McGeachie 020 8877 5300

[email protected]