Ethics linked to better business performance
Those companies which build a culture of ethics are more likely to succeed financially, a ground-breaking multinational survey of CFOs carried out by ACCA and CFO Research Services shows. The report, the first of its kind to compare Europe, the US and South-East Asia reveals wide regional variations in companies’ approaches to ethics.
The report, Corporate Ethics and the CFO, surveys 230 European CFOs but draws on findings from two companion reports to cover the world’s three largest economic regions. In each market, respondents report that ethics has a higher priority within their companies than five years ago. CFOs say that a strong commitment to building an ethical culture has had a beneficial effect on business performance, particularly in terms of staff morale and motivation, but also in boosting external relationships with investors, customers and analysts.
While the survey did not specifically aim to examine whether there was a causal link between strong ethical focus and good business performance, it did reveal strong evidence of a correlation between the two. The European CFOs in those companies that had outperformed the others financially believed their boards had given more consideration to ethical issues, such as staff training and ethics processes than the lesser-performing ones. This covered each of the 22 ethical policy and practice areas identified.
US companies were ahead of other regions in devising and implementing specific processes – written ethics and whistle-blowing policies, employee training and ethics committees were all more widespread in the US. Asian companies were further ahead on certification systems to ensure compliance, however and CFOs there took a more active role in talking to employees about ethical performance.
Only a quarter of CFOs said they were responsible on a day-to-day basis for ethical practice in their companies. Most agreed that overall strategy was a CEO or shared board responsibility.
Richard Aitken-Davies, ACCA deputy president said: ‘This report reveals some fascinating comparisons. US CEOs are noticeably more confident about their ethical performance than other regions, but the backdrop there, with the shadow of Enron, the Sarbanes-Oxley requirements, the Corporate Fraud Task Force and the threat of Federal Sentencing Guidelines for wrong-doers represents more of a ‘push factor’ than other regions face. Nonetheless the US CFOs are much more definite on their belief that good ethical practices boost share prices and enhance competitive advantage.’
He added: ‘We are encouraged that ethics is universally regarded as more important within companies than in 2002, and that in the last three years most boards have considered a range of ethical issues and implemented many policies. But there is still much to do. A quarter of survey respondents in Europe lacked written ethical codes, while the number of companies that have implemented a process for providing assurance on adherence to agreed policies was modest - and the number having this externally verified was smaller still.
‘This is an area where CFOs must take the lead. They have a crucial role to play not only in ensuring probity in financial stewardship but also setting the right ethical example for the rest of the organisation to follow. ACCA itself has recently unveiled its new syllabus which puts professionalism and ethics at the heart of our new qualification – this followed a worldwide consultation exercise in which business played a major part. This, together with our survey shows that the will is there amongst CFOs to maintain the increased ethical focus post-Enron.’
To download Corporate Ethics and the CFO and the companion US and Asia reports please click on the links under 'related documents'.
For media enquiries please contact:
Ian Welch, ACCA head of corporate communications
+44 (0)20 7059 5729 or +44 (0)7739 862928