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Businesses divided on implications of COVID-19 crisis for company ethics

As businesses start to look beyond the COVID-19 crisis, the EY Global Integrity Report 2020 reveals divisions on the repercussions for company ethics as a result of the pandemic.

The findings are part of a survey of almost 3,000 respondents from 33 countries up to February 2020, analysing the ethical challenges companies face in turbulent times. An additional 600 employees across all levels of seniority were surveyed at the height of the COVID-19 crisis in April in companies across six countries - China, Germany, Italy, the UK, India and the US.

The vast majority (90%) of respondents surveyed during the crisis believe that disruption, as a result of COVID-19, poses a risk to ethical business conduct, but there is a concerning disparity between boards, senior management and employees on the implications for compliance. While 43% of board members and 37% of senior managers surveyed believe the pandemic could lead to change and better business ethics, only 21% of junior employees appear to agree.

The survey highlights that signs of an integrity disconnect at different levels within organisations were evident even before the pandemic with more than half of board members (55%) believing management demonstrate professional integrity, but only 37% of junior employees sharing the same sentiment. In addition, over half of board members (55%) believe there are managers in their organisation who would sacrifice integrity for short term gain.

“We are in the middle of the fastest transformation the global economy has ever experienced," said Andrew Gordon, EY Global Forensic & Integrity Services leader. "Extreme pressures can lead to moral and ethical decisions that organisations must respond to at speed and under increased scrutiny. Leaders must have confidence that their employees at all levels will act with integrity. Yet, tone from the top is important, and we can clearly see that some employees do not have faith that their boards and senior leaders will be making the right choices. Now is the time to ensure that leaders act in a way that demonstrates to all their stakeholders a commitment to doing the right thing now, next and beyond.”

Lack of trust and data integrity continue to hinder business efforts

Even before the COVID-19 pandemic, the majority (53%) of junior employees were not very confident that their management abides by relevant laws, codes of conduct and industry regulations. In addition, 13% of all respondents appeared prepared to ignore ethical misconduct by third parties to boost their career or pay, with the figure rising to 20% among board members.

In addition, four times more board members and senior management (12%) said they would be willing to accept a bribe, compared to junior employees (3%). Furthermore,14% of board directors and 15% of senior managers would be willing to mislead external parties such as regulators.

The survey found that companies were overconfident about their data protection policies, with 86% of those surveyed stating that their organisation is doing everything needed to protect the privacy of customer data. Despite this, 59% of respondents admitted to not training employees on applicable data privacy regulations, such as the GDPR (General Data Protection Regulation).

Some of these challenges have been magnified, as a direct result of the pandemic. Aside from worsening market conditions, 33% of respondents, surveyed at the height of the COVID-19 crisis in April, said that disruption to traditional working patterns and an increase in remote working is the top risk to the ethical conduct of their organisation. In addition, 28% of respondents thought disruption to supply chains and reductions in employee benefits and compensation (24%) posed heightened risks to their company’s ethics. 

“Lack of trust and integrity was already a challenge before COVID-19, but the pandemic has heightened some of these risks," commented Gordon. "What is important now is how organisations deal with this risk, what action they take, and what frameworks they put in place.”

Demonstrating integrity pays off

Despite these turbulent times, respondents to the main survey believe that operating with corporate integrity can create major benefits for organisations, including strengthening reputation (50%), attracting new customers (41%) and retaining talent (40%).

“As businesses begin to reframe their future, the pandemic must be a catalyst for change," said Gordon. "Senior management must take the lead and ensure the right approach against unethical conduct by putting integrity at the centre of operations and assessing their corporate culture and strength of compliance programs. Organisations that commit to doing the right thing, even when nobody is watching, will emerge from this pandemic stronger and more united.”

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This item appears in the following sections:
Control & Compliance in Operations
Corporate Governance
COVID-19
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