What would you do? Ethics Index 2021 reveals increasingly cynical, untrusting nation

After record highs last year, our perception of Australia as an ethical society has fallen in 2021 with drops recorded across most industries, occupations and sectors, a new report released by Governance Institute of Australia today has found.

The Ethics Index 2021 — a survey of 1000 people’s attitudes to ethical conduct across society — has recorded an Ethics Index Score of 45, down from the five-year high of 52 in 2020.

The Ethics Index Score is a crunching of data from the entire Ethics Index to quantify people’s perception of the level of ethical behaviour.

COVID-19: The ethics of lockdowns, vaccinations, and the return to the office  

The Ethics Index found that as a nation, we are overwhelmingly in favour of masks in the office (net score 54) and vaccinations in the workplace (32, up from 21 in 2020), but curfews (15, down from 41 last year) and continued international border closures (42, down from 67) are increasingly unpopular options.

“We have had almost two full pandemic years now, but each of these years has thrown up its own distinct set of ethical challenges – and responses,” Governance Institute CEO Megan Motto said.

“Last year, we placed vast amounts of trust in our governments, scientists and health and emergency service workers during the initial waves of lockdown – and our trust was rewarded as we saw, in many cases, COVID-19 numbers settling, lockdown lifting and the resumption of most activities. The Ethics Index skyrocketed to a five-year high of 52.

“However, 2021 has been a very different year. We have seen major fluctuations in approaches to managing the virus, stronger debate around when to lockdown – and when to open up, and we were all thrown by a new variant of the virus. It has been a tumultuous and anxious locked down year with greater uncertainty. It seems this is reflected in a dip in the latest Ethics Index which has dropped to 45.”

Most – and least – ethical occupations and sectors 

Holding strong this year, the top three occupations for perceived ethical behaviour are fire services (net score 85), nurses (80), ambulance services (79).

In fifth place, GPs registered a fall after a strong year in 2020, dropping from 80 to 71.

At the bottom of the list for ethical behaviour are federal politicians (-22, down from -3), real estate agents (-14, down from -2), directors of foreign companies operating in Australia (-12, down from -4). Lawyers, state and local politicians and directors of foreign companies operating in Australia also sit in the bottom 10, and all saw drops compared to last year.

The ethical behaviour of broad sectors also saw some significant drops this year.

The biggest declines were registered for government (5, down from 16) and media, which now sits at the bottom of the list (-17 down from -3). Health (72), education (62) and charities/ NFPs (51) registered as the top three most ethical sectors.

Corruption, influence and executive pay: Top ethical issues for corporate Australia 

Corruption continues to be the top issue relating to unethical behaviour in business (with 59% of respondents stating it as the top issue). Misleading and deceptive advertising increased from 45% to 51% to become the second leading issue, and company tax avoidance is the third top issue at 47%.

CEOs are seen as the most influential on ethics within an organisation (net score 71), then the board of directors (69) and senior management (64). The general workforce (12) and activist groups (7) are least influential.

Overall Australians see high levels of CEO pay (at $600,0000 and above) as increasingly unethical (net score of -28, down from -18 for companies of up to 5000 employees), with all CEO pay levels measured seeing drops in ethical perception 2021.

What next? 

The biggest ethical challenge in the next 12 months is expected to be balancing freedom of movement and individual liberties with ongoing efforts to contain the spread of COVID-19, ie: mask wearing, social distancing, lockdowns, vaccination passports (54%, up from 44% in 2020).

Climate change is the top third future ethical challenge, after balancing the challenges of COVID-19, and increasing local manufacturing. Most Australians feel there is an ethical obligation for organisations to act on climate change, even if it reduces profits (87%), results in job losses (88%) or lower jobs in the future (88%).

Ms Motto said the results of this year’s Ethics Index serve as a firm reminder that ethics – one of the key tenets of good governance – must stay firmly on the radar, even in times of immediate crisis.

“Even in times of turmoil, good ethics need to be upheld to help position us for what’s around the corner. Good ethical conduct is especially under scrutiny by the community and other stakeholders during crisis. It is during a crisis that your ethical or moral core is most exposed.” 

Ethical governance expert and author of Governance Institute's Ethics, Culture and Governance short course David Burfoot, said the Index shows that achieving milestones against COVID-19 does not forgive perceived ethical failures by our leaders in other areas.

“The Index’s reflection of a drop in trust in our federal politicians along with strong community concern about corruption and inappropriate influence should be a reminder of this,” Mr Burfoot said.

“Trust in our institutions to act ethically increases our combined and individual wealth and wellbeing. Global research is clear on this. The significant drop in trust gauged by the Ethics Index this year makes rebuilding trust as much an economic as social imperative for our country, and particularly our leaders.”

Mr Burfoot has outlined the following five ways to help ensure good ethics are on your organisation’s radar.

Checklist - How to promote ethical governance in your organisation:

  • Know why you’re here: Know your organisation’s social purpose and make this the foundation of your ethics and compliance framework. A genuine commitment to your purpose, values and principles helps drive a culture that nurtures ethical conduct. Make it as relevant to the board’s strategic work (e.g., the Board Charter) as to staff conduct (e.g., the Code of Conduct). Check out Principle 3 of the ASX Corporate Governance Principles and Recommendations for guidance.
  • Know thyself: Test where your organisation currently is in relation to its commitment to its ethics. Bring together information you already have, e.g., from employee engagement surveys, whistle-blower reports, compliance breaches, sick leave data with more targeted staff surveys and/or focus groups etc to gauge the strength of your ethical culture. Are there ‘shadow’ values threatening ethical decision making?
  • Act: Create a ‘culture plan’ that details what your organisation is including in its strategic plan to bring it from where it is to having the culture it aspires to have. Give someone responsibility to take it forward. As it is as much a strategic as a conduct issue, the lead department does not have to be Human Resources. In fact, there are good reasons why other areas may be better positioned for this responsibility.
  • Build ethical intelligence: Build the ability of your people to make ethical decisions without downgrading compliance responsibilities. More organisations are moving to ‘Codes of Ethics’ and away from the traditional Codes of Conduct model. The former focuses more on how to make ethical decisions in uncertain situations consistent with the corporate philosophy, than housing all the organisation’s rules and regulations. Many corporations have developed their own ethical decision-making model. The explosion of technology is one of the reasons staff are increasingly facing unique ethical challenges and these models can help.
  • Get into your time: Engage staff in a process of continuously re-interpreting what their corporate values mean in terms of actual behaviour reflecting the community’s current expectations, rather than the social mores of past decades.

Find out more and download the Ethics Index 2021

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