FIRST PRINCIPLE

Incorporate compliance and integrity objectives into your business Strategy

Including compliance and integrity objectives in the business strategy ensures that leadership is dedicating appropriate resources to and is supervising the compliance programme. This improves the likelihood that leaders, employees and the company will adhere to ethical standards when conducting business, particularly in high-risk geographic or business areas.

Profit and compliance should not be treated as conflicting with one another. The key way to avoid this is to integrate compliance and integrity objectives in a company’s business strategy.

AN ETHICAL PREMIUM MAY AMOUNT TO BETWEEN 10 AND 14%

Stock prices of companies, recognized as the World’s Most Ethical Company® exceeded in growth, compared to those of a group of companies with large market capitalisation, by 14.4% in five (5) years, and by 10.5% in three (3) years.

Ethical companies are also more resistant in times of crisis and are quicker at leaving a crisis behind.
(Source: Ethisphere, World’s Most Ethical Companies)

Recommended indicators for the first principle

Indicators proving that the principle is implemented in business operations:

  • The mission and vision statement and description of relationships with the key stakeholders include an ethical note, with which the leadership sets a corporate integrity standard for business operation, at all levels of decision-making and for overall corporate behaviour.
  • Responsibility for the monitoring and implementation of the compliance programme is formally assigned to one or more senior executives, with sufficient independence and resources.
  • Key and company specific compliance and integrity risk areas are identified in terms of the geographical area of operation, type of products or services, structure of the supply chain, etc..
  • Business strategies are defined to address key areas of these risks.
  • Questions from compliance and integrity risk areas are included in the agendas of strategic and leadership sessions and are regularly addressed in business decision-making.

Indicators proving that the leadership is making progress in implementing the principle in the company’s business practices

  • How many times is compliance and integrity a subject of discussion at strategic leadership level?
  • In what manner are compliance and integrity concerns addressed in strategic and business planning decision making?
  • How are measures for managing compliance and integrity risk areas monitored?
  • How many failures to implement these measures are recorded?