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Study: Ethics in business makes sense

Thursday, January 31 13:52:41

Irish business leaders believe that high ethical standards in business is not just good practice, it creates real value for their businesses and secures future sustainability.

This is one of many key conclusions contained in a new report issued today by Chartered Accountants Ireland and Praesta Ireland.

The Art of Ethical Leadership report outlines the results of a survey of Irish business leaders, including Irish Chartered Accountants and reveals that many organisations have responded to business and reputation risk by investing in ethics training programmes and codes of conduct, a policy frequently driven from the top.

It found that three out of four respondents stated that their organisation's code of business ethics helps safeguard their reputation while 41pc stated that having a company code of ethics helps to secure long-term shareholder value.

Almost 40pc of organisations offer a helpline/hotline for employees and over 80pc of survey respondents say they provide a means for their staff to raise ethical concerns or ask questions about their code on a confidential basis.

Almost 70pc of organisations have a code of business ethics in place and nearly 60pc of organisations have a dedicated senior staff member who monitors the effectiveness of the ethics code.

As well as the results of the survey, today's publication also includes a review of contributions from leading commentators on ethical best practice and the reality of ethical decisions for business leaders.

Launching the report today, Ronan Nolan, Vice President, Chartered Accountants Ireland said: "Today's report indicates that corporate codes of ethics are now playing a much more significant role in business governance in Ireland. It is encouraging that corporate executives are acknowledging that a robust policy of good business behaviour based on non-negotiable core values, is essential to the sustainability of any business. Senior business leaders are realising the moral and business impetus for a code of conduct. Reinforcing transparent, efficient management practices not only safeguards a company's reputation but, significantly, creates long-term value for shareholders. "

Caitriona Murphy, Chairman, Praesta Ireland, commented: "If confidence and trust are to be restored in Irish business, a stronger adherence to ethics and business probity must be forged. We need to have confidence that our business directors and professionals are working to the highest ethical standards, and that staff are empowered and have the courage to draw attention to lapses of ethics, should they arise. This confidence is critical to ensuring public trust in financial reporting and business practices, and even to ensuring the future sustainability of businesses themselves."

Mr Nolan noted, however, that not every organisation surveyed had developed an ethics programme or had a code of ethics in place for its employees, so much work remains to be done. "We don't have to look to the distant past to recall the damaging effect which risks to integrity can have on the financial performance of a company. For this reason, boards must give greater time in their agendas for discussion of matters of probity and adherence to the highest ethical standards. And at a management level, practical training should be provided to staff for a code to be truly effective. This report is designed to help board members to seriously consider their role in shaping business ethics, maintaining governance and matching the talk of ethical behaviour with real action."