FTSE100 companies have been failing to provide investors with clear measures of ethical standards, according to a Chartered Institute for Internal Auditors’ (CIIA) study.
While 91% of the FTSE100 refer to high standards, ethics and integrity in their annual reports, only 8% were found to provide a specific metric on their ethical performance, the CIIA reported.
The lack of metrics has prevented investors from getting a realistic idea about the risk of exposure to scandals of a certain company or whether it is improving in a particular area or getting worse.
CIIA also discovered that about a half, 56%, of FTSE100 companies declared ethical code or policy in their annual reports, but just 3% gave specific information to prove that their employees have read and understood that code.
A further 4% of companies have provided figures of the percentage of the employees who have undergone training on proper ethical standards. Only one company said it has monitored its employees’ ethical awareness, but did not explain how.
The CIIA said recent months have highlighted how poor corporate ethics standards can impact on a company’s bottom line.
“These scandals, as well as legal and regulatory developments, mean that ethics are of increasing importance to mainstream investors,” said the professional body.