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.
