Every year for the past decade, BSR has surveyed sustainability leaders at our global member companies on the State of Sustainable Business, in a collaboration with Globescan. To mark our 10th year and reflect the shifting global agenda, we have updated the list of corporate sustainability priorities we track: ethics/ integrity and diversity/ inclusion just appeared on our list for the first time.
Significantly, they vaulted straight to the top two priorities for sustainability efforts over the next 12 months, with corporate integrity taking the lead spot. That these two issues are now viewed as priorities in the sustainability agenda reflects a momentous shift in how they are understood and perceived inside organizations.
If we were simply surveying ethics and compliance leaders, the focus on corporate integrity would not be a surprise. But our survey focuses on what keeps a sustainability (or corporate responsibility) team awake at night. The responses therefore reflect a new understanding in the business community that questions of company ethics and values are no longer confined to the compliance function. Moreover, integrity questions are viewed as concerning far more than bribery, fraud, and corruption. This is why senior executives at companies are grappling with how to better define corporate integrity.
As I’ve argued before, we are in an era of hyper-transparency in which non-disclosure agreements and other confidentiality mechanisms are no match for employee email leaks and protests. Companies cannot count on maintaining a reliable boundary between public and private communications. At the same time, concern is burgeoning over lobbying and corporate influence in politics, as was recently highlighted by revelations about Michael Cohen’s sizable retainers from global companies.
From the other direction, public pressure for big brands to take a position on such policy issues as immigration and gun control is increasing; in that light, our survey showed considerable reservations as to whether the new “CEO activism” can be effective. Growth in concern over issues such as tax avoidance and offshore ownership structures will surprise those who have considered these issues too dry and technical to pique public interest.
Questions over the ethical implications of technological advances such as AI are just starting to hit home; companies identified AI as a high-priority trend, though they are (so far) less concerned about inequality, migration, and other roiling societal shifts.
Finally, the #MeToo movement has set off a growing wave of employee investigations, inspired a new “Weinstein” clause in due diligence, and suggested larger questions about the abuse of power and the availability of opportunity in companies today. Still, companies seem to be struggling to drive meaningful change in the wake of #MeToo, with 41 percent of respondents reporting no new approach to gender issues in the workplace.
It’s easy to see that the ethics and compliance team has an important role in tackling these new and emerging corporate integrity questions. But companies I speak with sometimes find it hard to clarify internal roles and responsibilities, especially when addressing an issue that requires collaboration with such other departments as HR, government affairs, corporate affairs, legal, and even marketing.
Similarly, while third-party due diligence has historically focused on litigation, bankruptcies, and other “hard” indicators of risk, any meaningful evaluation of a company’s track record and reputation must now include issues such as how it treats its suppliers and employees — and how it impacts the health and well-being of the communities in which it operates. This necessitates more than blacklist checks and “red flag” media reviews.
The compliance community has long contended that ethical issues are of central importance to mainstream business. Our survey shows clearly that this message is getting across. At the same time, though, the very meaning of ethics and integrity is shifting with the public’s expectations of business.
The future will make ethics and compliance roles ever higher-profile and mission-critical; success will require collaboration to drive change across the organization. One piece of good news: Today’s sustainability teams are ready and willing to help.
Alison Taylor, pictured above, is managing director of advisory services at BSR, a non-profit consultancy and company network focused on sustainability and CSR and a professor at Fordham Law School and the Gabelli Business School. She’s the author of the working paper, The Five Levels of an Ethical Culture. In addition to the FCPA Blog, she writes for the Harvard Business Review and for Quartz, among others. Her article, “5 Signs Your Organization Might Be Headed for an Ethics Scandal,” appeared in the December 18, 2017 of the Harvard Business Review. She can be contacted here.