Ethics have become critical to stakeholder trust and talent attraction, according to insurance brokerage firm Gallagher’s “Surfing the Ethical Behavior Wave in Business” report.
Investors, employees, and consumers examine a business's environmental, social, and governance efforts in addition to its financial performance. According to Lisanne Sison, Gallagher’s managing director of enterprise risk management, complying with regulations is inadequate.
“Doing business ethically means more than just focusing on profit. It's about ensuring that your work aligns with your values and regulatory requirements and that you can trust the organization to do the right thing, even in the absence of specific, documented guidance,” Sison said in a statement published by Reinsurance Business Canada.
The report said corporate actions should align with core values to cultivate an ethical culture, especially when public perception can affect business outcomes. Gallagher’s global chief ethics officer, Tom Tropp, added that businesses are increasingly pressured to take public stands on values.
“People are starting to question what companies are doing for the world and its inhabitants. I believe it's crucial for companies to publicly demonstrate what they stand for,” he said in a statement. “If you ask a company whether it's ethical, the answer will likely be 'yes.' However, the next step should be to ask for a definition of what its ethics are.”
Increased internet and social media access complicates businesses’ ability to consistently maintain ethical behaviour since individuals can easily share information about companies and their behaviours, particularly those of large companies.
“Studies I've seen recently indicate that executive and senior leaders are more likely to declare that their company has a strong ethical culture than are individual contributors and front-line employees. This is a gap in alignment that can lead to risks for those organizations,” Sison said.
Ray Iardella, Gallagher’s vice president of investor relations, warns businesses to ensure that their presentation is internally aligned with their culture.
“When companies are trying to present themselves in the best light, there can be a difference between how they present themselves externally and what is embedded in their culture,” Iardella said. “In my experience, companies that are overly aggressive about trying to present themselves as super ethical or super focused on sustainability really aren't doing all the things that should be integral to their organizations.”