FTSE100 failing to provide adequate ethics information

FTSE100 companies are not doing enough to provide shareholders with detailed information on ethics, according to the Chartered Institute of Internal Auditors (the Institute).

Research by the Institute revealed that only 22% of the FTSE100 included ethical performance metrics in their latest annual reports, down 1% from last year.

Although the research indicated a high level of awareness of the importance of ethical issues, with 94% of the FTSE100 referencing ethical values in their annual reports, the information was often lacking in detail.

The Institute recommended introducing ethics performance targets to remedy the problem, allowing progress to be tracked annually in a measurable fashion.

Shareholders expressed a strong desire to see ethical performance being monitored and reported in more detail. They stressed the value of this information as it can provide insight into a company’s oversight of key risks and indicates a company’s commitment to corporate social responsibility (CSR). Many stakeholders are also keen to see a greater level of transparency in corporate ethics.

Institute chief executive, Dr Ian Peters, said: “FTSE100 companies are clearly aware of the need to address ethics as an issue, but there’s still very little assurance that this is translating into meaningful, targeted action.

“Many shareholders and other stakeholders are likely to be unimpressed if they feel that a company is merely paying lip-service to ethical values – not least because of the significant adverse impact ethical failings could have on  reputation  and financial revenues.

“Calls for greater transparency on large corporates’ ethical performance are only going to get louder. Major corporates, particularly those with multinational interests and global supply chains, need to be seen to be taking the lead and mitigating risks, as issues such as working conditions, modern slavery, corruption, fair trade and environmental concerns continue to loom large.”

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