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FTSE 100 fail to provide ethical information to shareholders, according to CIIA

The FTSE 100 is failing to provide shareholders with appropriate information on ethics, according to a research by the Chartered Institute of Internal Auditors (CIIA). Only 22% of FTSE 100 companies have included ethical performance metrics in their latest annual reports which is slightly less than last year when 23% of them had such disclosures, CIIA’s research has found.

According to CIIA, shareholders are interested in seeing how ethical performance is monitored and reported because they see it as a key indicator of how companies manage risks affecting financial performance. The research found that FTSE 100 companies are aware of the importance of ethical issues, as 94% of them refer to ethical values in their annual reports. But CIIA lamented that when FTSE 100 companies mention ethics they use vague terminology such as “integrity” and “values”, and it lacks clear explanation and specific detail of what this means in practice.

Ian Peters, CIIA’s chief executive 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, he added. “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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