The FTSE100 is still failing to provide shareholders with adequate information on ethics, with just 22 per cent including ethical performance metrics in their latest annual reports, reveals research by the Chartered Institute of Internal Auditors (the Institute).
The proportion providing shareholders with this specific information is down slightly on the previous year, when 23 per cent of FTSE100 companies did so.
The Institute explains that shareholders are keen to see monitoring and reporting of ethical performance, because it is a valuable indicator of a company’s oversight of key risks affecting overall financial performance. It also provides a vital gauge of whether corporate social responsibility (CSR) values are being upheld.
Other stakeholders including regulators, customers and employees, as well as governments and NGOs such as campaign groups are also increasingly interested in greater transparency over corporate ethics and behaviours.
The research does reveal evidence of widespread awareness of the importance of ethical issues, with almost all (94 per cent) the FTSE100 alluding to ethical values as part of the narrative of their annual reports – the same proportion as last year.
The Institute says stakeholders may also benefit from seeing performance targets on ethics, so that progress can be tracked year-on-year.
However, the Institute says that when mentioning their commitment to ethics, clear explanation and specific detail of what this means in practice are often lacking, with many companies continuing to use vague terminology e.g simply referring to their “integrity” or “values”.
Institute chief executive, Dr Ian Peters, says, “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.”