54% of finance professionals feel under pressure to compromise their ethical standards, according to a report released by the Chartered Institute of Management Accounts (CIMA). The third annual ‘Managing Responsible Business’ report, which polled 2,498 professionals across the world, found that the proportion of Pakistan based workers reporting such pressure moved from 51% in 2012 to 54% in 2015. Worryingly, a 38% of respondents agreed those who report concerns about unethical behavior are seen as troublemakers by management.
The top causes of pressure to compromise standards of ethical business conduct for finance professionals were: working with colleagues from different functional areas within the organisation (49%); meeting reporting deadlines (44%); and compiling management accounts (39%).
Commenting on the report’s findings, Tanya Barman, Head of Ethics at CIMA said: Profit and ethics are not two opposing aims. A responsible and well-run business is more likely to survive in the long-term. However, our latest Managing Responsible Business report shows that many finance professionals are facing pressure to condone poor practice of their colleagues or to behave unethically themselves. The report highlights that we are still struggling to work our way through a crisis of culture within business, and we need to maintain our focus. Our study shows that we can no longer afford to think of ethical performance in business as just a compliance issue.
The report highlighted that although the majority of organisations have codes of ethics, only 36% of respondents confirmed that their organisations collect ethical management information (EMI). This is despite an increase in demand for data on ethical business practices, particularly from the investor community, 30% of whom are users of EMI.
Tanya said: A lost reputation can destroy a business overnight. To guard against this, organisations need to collect and interpret information about ethical performance, so the company can tell when it’s on the right track and when it’s about to walk off a cliff-edge. Leaders should also consider adopting integrated reporting – narrative reports which provide information on areas such as ethics to both management and stakeholders. Finally, boards need to keep a close eye on this area.
The report found that countries where members face the highest levels of pressure to compromise professional ethics are: Sri Lanka (61%), Malaysia (58%) and Pakistan (54%).
Conversely, respondents in the UK, US and Ireland reported the lowest levels of pressure, but still noted an increase of 12%, 7% and 5% respectively since 2012. India reversed this trend, falling to 45% from 51% in 2012.
Tanya Barman said: There is a clearly a gap in implementation that needs to be filled by skilled professionals using methods such as integrated reporting. Management accountants have a unique skill set that enables them to not only gather data but also analyse and interpret it, particularly through integrated reporting and as such have a critical role to play in identifying risks and safeguarding the organisation from unethical practice.
Globally, four-fifths (80%) of finance professionals said they had a particular role in managing ethical performance, and 78% feel business has a role in addressing global issues such as climate change and poverty.
The report also highlighted human rights abuse as a business issue of increasing concern, with 68% of respondents believing it to be an issue of relevance, up from 55% in 2008. However, whilst the awareness of the issue is growing, many firms are failing to implement the corresponding processes, for example just 13% reported having conducted due diligence on human rights when entering new contracts.