Magazine article Financial Management (UK)

Business Ethics: CIMA Members Are Well Placed to Manage Their Firms' Ethical Performance and Integrate Ethical Goals into Corporate Strategy

Magazine article Financial Management (UK)

Business Ethics: CIMA Members Are Well Placed to Manage Their Firms' Ethical Performance and Integrate Ethical Goals into Corporate Strategy

Article excerpt

From organic food to Fairtrade T-shirts and from hybrid cars to recycled packaging, companies and consumers are becoming more switched on to the impact of business on society and the environment. A new survey of 1,300 finance professionals by CIMA and the Institute of Business Ethics (IBE) has found that 84 per cent believe that businesses have a moral obligation to help tackle global problems such as climate change and poverty.

Many organisations recognise the importance of having an ethical culture, yet they still often fail to manage their ethical performance. Almost every industry has been touched by scandal. Most recently, banks have been denounced for pursuing high-risk trading strategies, global companies have been implicated in corruption and western retailers have been accused of allowing their suppliers to use child labour. A number of companies, eager to show their corporate social responsibility credentials, have responded by publicly embracing ethical and green agendas, but is it all mere rhetoric--a fancy PR exercise to show that they are tackling global concerns alongside the pursuit of profit? In some cases at least, the answer is yes. Companies are only superficially addressing the impact of their activities on the environment, local communities and other stakeholders.


According to the CIMA/IBE research, many organisations are still failing to back up their ethical commitments with action. Nearly three-quarters (72 per cent) of respondents reported that their firms had a code of ethics, but that relatively few trained or incentivised employees to uphold these standards. Four out of ten respondents felt that ethical standards were not fully monitored or evaluated at work. Such findings suggest that companies aren't approaching ethical performance management as systematically as they treat other elements of the business.

There are signs that companies are starting to realise that ethical performance is a serious part of their business that, if not properly managed, can damage their reputation. But still only about a third of respondents said that they collected or reported information to manage performance against ethical standards. Almost half of those whose companies didn't collect such information believed that their organisations would benefit if they were to start doing so.

So why are management accountants only rarely helping to monitor the ethical aspects of corporate performance? While many say that they contribute to the ethical culture of their workplace by doing their jobs in a professional manner, relatively few are involved in collecting or analysing ethical management information. In fact, of those who said that they did contribute to managing their companies' ethical performance, only 16 per cent gathered such information, 16 per cent analysed it and 15 per cent reported it.

But measurement is only part of what needs to be done. Corporate social responsibility and ethical performance must be an integral part of organisational strategy. According to the CIMA/IBE survey, few companies see ethical standards as a strategic issue yet. For example, they are still much more likely to be taking action to reduce their carbon footprints than to be integrating environmental concerns or opportunities into their business plans.

The strategic focus of CIMA accountants makes them particularly well placed to take control of this issue. Although accountants in business can play an invaluable role in measurement and management, they are also in a strong position to ensure that a company's strategy reinforces and reflects its ethical aspirations. As well as managing performance against ethical standards, they can integrate ethics into strategy development and business planning.

As companies start embedding ethical goals into their business, the finance function will need to get more involved. Nearly three-quarters of the finance professionals surveyed said that ethical performance management would be part of their role within the next two to three years. …

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