Global Accountant has interviewed Tanya Barman on what is the most topical subject: Ethics. Tanya Barman, defines in her own way what ethics mean to her and generalises the concept to make understanding more easy to those who find them selves in a dilemma when faced with right or wrong!
What is your responsibility at CIMA?
is responsible for CIMA’s ethics and responsible business programme for its members and students. Prior roles include responsible business, organisation development and international management positions in both commercial and non-profit organisations in UK, USA, South Africa and Asia.
What does ethics mean to you?
It is doing the right thing and acting with integrity. What does that mean? A good test is would you feel uncomfortable if others knew your actions? How would it look in the papers, or if someone you respected knew. Chances are if it doesn’t feel right – it’s not right. Or, put another way, do you want to be a good example or a horrible warning? Think of Enron – now most famous as an ethics case; a case study on how not to conduct business.
Is ethical behaviour good or bad for business?
Performing and trading ethically in the long term is increasingly shown to be good for business.
You could make strong returns, and a lot of money, in the short term but it may not be based on a sound business model – there may be high risks, it could well breach best practice, regulation or be illegal. Think of some of the big companies that disappeared virtually overnight. There are certain actions that, if they were in the public domain, could ruin a business’ reputation and brand. That’s “a road to ruin” – as a recent report on risk management spells out (link)
What is your view on speculative wealth creation as a an ethical issue?
There is an ongoing debate about speculation and its effect on the markets and overall global economy. In essence, speculation is transactions made with the sole purpose of making a profit from changes in price (which could go up or down). Some may argue this is gambling. Others dispute that.
Recently speculation has been in the spotlight in relation to energy prices, the property bubble, currency fluctuation and in relation to food prices. Critically, it is argued that money can be made by the speculators (the individuals, firms and funds) but unrelated parties can lose out, with potentially high political-economic costs. It is this that makes it an area of ethical concern and debate. At present speculation on food prices is a focus area. Prior to the G20 meeting last year 450 prominent global economists signed a letter raising this, asserting “With around 1 billion people enduring chronic hunger worldwide, action is urgently needed to curb excessive speculation and its effects on global food prices”. There is still no resolution on the issue.
What should be of concern is that the value of the global derivatives market is currently estimated to be at a staggering $1.4 quadrillion. That’s 16 zeros or a thousand million million. No one is quite sure what that means.
With the ever growing competition, companies are under pressure to find the lowest-cost providers and typically are free to look globally to find them. How does this effect those who are doing business in countries which do not share the same ethical values as others or simply local customs are considered illegal in the UK? How can businesses manage this risk?
It is true that there is not a level playing field in relation to business conduct globally. But increasingly there is debate, and importantly regulation and legislation, around these issues, and some of it, such as the UK Bribery Act and US Foreign Corrupt Practices Act, can have global reach. In relation to the FCPA, some global firms are paying fines in the $US billions for ethical transgressions.
In research for an upcoming report, we have found that in some of the rapidly emerging markets, the adoption of codes and systems to address ethical concerns in organisations we surveyed are at a high of 80%. This is a good sign. However, having the policies in place has often overtaken corporate cultural change. In a more global business environment, many multinational organisations are facing greater pressure to adopt more stringent ethical practices, not least from the investors. However, these may conflict with the local practices and challenges faced in particular countries. Globally we have seen public dissent against corporate and government misdemeanors. Collective action on the ground can help counter unethical practice and this is growing. United Nations Global Compact local chapters can be worth joining to better understand what other firms are doing. www.globalcompact.org The Institute of Business Ethics also has guidelines on company codes and practice. www.ibe.org
Do Financial Markets care about ethics?
There are a growing number of global investors who do care. They believe that progressive companies understand that long-term value is enhanced by embedding long-term sustainability considerations into their business strategy and the value of disclosure to investors. This will help capital to be allocated to more sustainable, responsible companies and strengthen the long term sustainability of financial system. Signatories to the United National Principles for Responsible Investment (PRI) are increasing every year and they are exploring the issues around the short term nature of the market. Click here to go to the Sensible Stock Exchange website.
Can Management Accountants help businesses make ethical decisions? How?
Global management accountants can be highly effective in playing what CIMA believe is a key role in supporting ethical business, not least with the growing importance of integrated reporting www.theiirc.org. Drawing on both their training and understanding of professional ethics, as well as their skills in obtaining, analysing and acting upon management information, they are equipped to guide their organisations to long-term sustainability and success.
Does CIMA have an ethical policy that its members and trainees can refer to in a situation of need for guidance? Where can they find this?
CIMA members and students are required to comply with the CIMA code of ethics and to adopt the fundamental principles to their working lives. If they don’t comply they can lose their professional standing. CIMA has a range of resources, reports, blogs, case studies and videos to assist them, including our new animation outlining the code. Click here to go to the CIMA Ethics website.