Fewer than two-thirds of the FTSE 350 companies that have a code of ethics have one judged to be “good”, according to new research from a think tank.
The Institute of Business Ethics says a survey finds just half (54%) of companies in the FTSE 100 and 250 have publicly available codes of ethics. Of those, only 57% could be described as sufficient.
Breaking it down, there is a significant split between the two FTSE indices: just 40% of FTSE 250 members have publicly available codes of ethics, compared with 90% among the UK’s largest 100 listed companies.
While the general trend worries the IBE, there is even more concern about protection for whistleblowers. The survey found that only half of the FTSE 100 members’ codes contained an assurance that staff reporting poor ethical behaviour would be protected.
‘The right thing for the right reasons’
Ian Peters, director of the Institute of Business Ethics, says this shows there is room for improvement, even where big firms accept the importance of a code.
“Although the number and quality of codes among FTSE 100 companies is improving, too many fail to include protections for staff who feel they need to raise concerns. Worryingly, there are several FTSE 250 organisations, which are among the country’s biggest businesses, without a publicly available code of ethics.
“A code of ethics should be the cornerstone for any organisation, ensuring it’s doing the right thing for the right reasons. Any business without a code available for public scrutiny needs to up its game or risk the loyalty and support of both staff and customers.”
The IBE says the quality of codes across the FTSE 350 varied “ greatly”. On a scale of one to ten, the average score for a FTSE 100 code was 6.9, while for FTSE 250 codes it was 6.3. Seven is considered the benchmark for an ‘acceptable or good’ standard.
Average scores have, however, improved for the FTSE 100 by around 10%.
Codes are graded based on language and tone, user friendless, whether is a Speak Up policy and leadership (endorsement by senior management).
The IBE says one of the big areas companies need to improve is ”tone and content of the language”. It recommends “actionable guidance”, such as providing a decision-making tool for employees.
In March, the IBE called on FTSE 100 companies to provide their employees with tools, including decision-making frameworks, that would help them to make better ethical decisions.
Retail was said by the IBE at the beginning of the year to be the sector struggling most with ethics, having attracted the highest number of adverse ethics stories in the press.