Australians View Business, Banks, Politicians As Unethical

Australians consider big business, banks and politicians to be unethical, while charities were seen as highly ethical, a new study of the nation’s ethics and corporate culture has found.

The Governance Institute of Australia’s inaugural Ethics Index survey of more than 1,000 people found a gap between the desired and actual level of ethics. Australian society overall was seen as “somewhat ethical”, with a score of 39, while the importance of ethics was rated at 74.

The report suggested that certain sectors contribute to the “ethical deficit”. The banking, finance and insurance sectors, and all levels of government had “significantly negative” ratings on ethics.

Charities and Not for Profits, however, were perceived as “very ethical”, with scores above 70, along with the health and education sectors.

Medical and social welfare charities rated highest in the sector, both with a score of 75, followed by RSLs, amateur sports clubs, Indigenous charities, professional sports clubs and unions.

The majority of people surveyed also considered chief executives and directors to be more unethical than not, despite playing a key role in setting standards within companies.

“The message from the index is clear, boards and the c-suite need to lift their game,” the Governance Institute chief executive Steven Burrell said.

“The role of leadership in promoting ethical conduct in the business sector is viewed as crucial by 82 per cent of Australians, and these leaders are seen to have the key role in influencing ethical behaviour, but neither they nor their organisations are perceived to be very ethical.”

While laws, regulations and financial penalties were seen to influence ethical behaviour, the “tone from the top”, set by executives was considered more important.

The top five ethical issues in businesses were perceived as corruption at number one (69 per cent), followed by company tax avoidance (61 per cent), misleading and deceptive advertising (59 per cent), workplace bullying (50 per cent), and discrimination and executive pay (both 49 per cent).

“The survey results suggest that companies should also pay attention to how transparent and accountable they are on these issues,” Burrell said.

The index also found that the greater scrutiny placed on companies listed on the stock exchange correlated with higher perceived standards of corporate ethics, which Burrell said highlighted the importance of transparency.

“This suggests that the transparency and accountability obligations they are subject to allow for greater insight into their behaviours and conduct than is possible for private and foreign companies that are not subject to the same disclosure requirements,” he said.

“Regulatory oversight, financial penalties and scrutiny by activists groups are not seen to have the same degree of importance in relation to ethical conduct as corporate leadership and those accountability and transparency frameworks.”

However, whistleblowers were seen to have an important role in corporate Australia, with 80 per cent of respondents responding that they were an “essential element” in driving ethical behaviour.

Burrell said the study would help corporations benchmark their progress in achieving higher ethical standards.

“This new annual gauge of public perceptions of corporate ethics will for the first time provide a measure of how successful they are in meeting that challenge,” he said.