Report: Boards must pay more attention to ethics, whistleblowing and culture

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The latest Director Sentiment Survey says that more comprehensive reporting on ethical matters and conduct incidents needed…

Produced by The Institute of Directors and ASB, the report, which provides a snapshot of issues, challenges and insights from the director community, finds board focus on ethical reporting, whistleblowing and Speak Up initiatives lacking. 

“The board’s role in overseeing culture has been in the spotlight following a number of recent governance reviews, including the Australian Royal Commission into Misconduct in the Banking, Superannuation and Financial Services Industry, the FMA/RBNZ banking and life insurer reviews, and investigations into bullying in the sport sector and sexual misconduct in the legal sector,” says the report.

Although the majority (77%) of directors say their board monitors and regularly discusses the culture of the organisation, only 43% say they actually receive comprehensive reporting from management about ethical matters, conduct incidents and follow-up actions. 

“Given the number of high-profile bullying cases and the increased focus on sexual harassment in the workplace, including the #MeToo movement, it is surprising that only just over half of boards discussed workplace bullying in the last 12 months and only 35% discussed sexual harassment,” says the report. 

“The effects of conduct risk can be devastating for victims and also severe for organisations and should be on the risk radar of all boards.”

According to the report, just 52% of boards are discussing workplace bullying, and only 62% have discussed workplace mental health. 

“All boards need to ensure robust monitoring of organisational culture and conduct, and that the right processes are in place for potential issues to be raised,” says the Institute. “This includes ensuring there are effective Speak Up provisions and whistleblowing systems in place.”

The report also says that, given the grave potential ramifications of inappropriate conduct, it is “concerning” to see a drop in the number of boards that are discussing whistleblowing and how their organisation makes Speak Up provisions effective.

“Whistleblowing systems and Speak Up provisions help promote and support an ethical workplace culture, yet only 35 percent of boards – down from 44 percent in 2018 – have discussed whistle-blowing and how the organisation makes Speak Up provisions effective in the last 12 months.”

“Boards play a critical role in holding management to account on transparency and accountability in relation to ethical behaviour within the workplace, and all boards need to ensure that there is appropriate processes in place for issues to be raised.”

“It’s critical that all boards have the information they need to assess and monitor ethical matters and conduct risk on a regular basis. However, just 54 percent – down from 55 percent in 2018 – of directors agreed their board has assessed ethics risks, while only 43 percent – down from 46 percent in 2018 – agreed they receive comprehensive reporting from management about ethical matters, conduct incidents, and the actions taken to address them.”

“Boards are tasked with ultimate responsibility for organisational culture and have a key role in leading and overseeing ethics and conduct risk.” 

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