Business leaders are worried that worsening economic conditions are driving up financial crime and putting vulnerable customers at risk, according to a new survey from the Institute of Business Ethics (IBE).  

The Ethical Risks 2024 survey shows that economic conditions – such as the cost of living crisis, high energy prices, and high rate of inflation – are the highest-ranked ethical risk factor for businesses, according to the survey of 1,051 UK business leaders.*

The financial squeeze can also be seen to drive many of the other risks weighing on bosses’ minds. Fraud was the third highest-ranked risk this year, just after data protection and privacyTheft/improper spending of company money (including expenses) and false accounting and reporting also appeared in the top 10 (7th and 10th), well above many other ethical issues, such as the environment.

Commenting on this, Institute of Business Ethics director, Ian Peters, said: “While fraud is an ongoing challenge for many organisations, tough economic conditions put greater pressures on organisations and individuals – giving rise to unethical behaviours like financial crime.”

Beyond the bottom line, business leaders are worried about the economic impact on customers. Treatment of vulnerable customers and fair treatment of customers (including pricing and complaints) were the 5th and 6th highest-ranked risk factors overall. Notably, neither factor was in the top 10 risks for larger businesses, but both the retail sector and small and medium-sized businesses ranked concern for vulnerable customers and fair treatment of customers highly.

Ian Peters said: “Larger organisations may be making a mistake by placing the fair treatment of customers at a lower priority than other issues. Customers are unlikely to believe businesses’ claims to be ethical if they have a poor experience with them.

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“While industries like financial services are under increasing pressure from regulators to demonstrate their focus on the needs of customers, especially the most vulnerable, concern for customers should really come from within a business and be embedded into a code of ethics.”

The ethical treatment of employees was also a concern. Health and safety was 4th on the list and fair pay and employment conditions were in 9th place. Remuneration and reward, however, were down at 25th on the list.

“When it comes to their own remuneration, business leaders are at risk of being out of touch on this issue,” says Peters. “The IBE’s Attitudes of the British Public to Business Ethics survey shows the British public is consistently concerned about pay, especially executive pay.”

Surprisingly, contribution to climate change and wider environmental impact of business operations, and of products and services were generally quite far down the list of ethical priorities for most businesses (22nd and 34th respectively). The exception was in the manufacturing sector where contribution to climate change was ranked in the top three risks, reflecting the particular challenge of businesses with carbon intensive operations, especially in sub-sectors such as automotive and aerospace.

IBE’s Ethical Risks 2024 survey enables organisations to compare their ethical risk analysis to others and provides a broader understanding of the ethical risks faced by business leaders.

In this survey, “ethical risk” refers to risks that could affect the ability of the organisation to live up to its ethical values and standards, undermining trust and reputation and threatening financial and operating performance.