New York (March 8, 2004) -- New governance standards have caused corporate boards worldwide to become more involved in companies’ ethics programs, according to a report from The Conference Board.
According to the Conference Board survey, 97 percent of boards have some form of ethics program, but depending on where the company is located, the board of directors’ role in the program differs. Outside of the U.S. and Western Europe, nearly all company ethics programs were established by the board of directors, while the figure for U.S. programs launched by board resolution is lower (66 percent).
While general legal developments were most often cited as a relevant factor for greater board scrutiny of ethics programs in the U.S, in the U.K., India, and Western Europe, survey participants often cited “enhancement of reputation” as a reason behind directors’ involvement in ethics issues. In Japan, “laws, regulation and/or rules relevant to business” were cited most often.
Compared with other regions and countries, reputational risk was of relatively little importance to U.S. boards. Only 20 percent of U.S. participants said it was a most relevant factor, while 75 percent of respondents in India, 62 percent in the U.K., and 46 percent in Western Europe cited reputational risk as a most relevant factor.
Nearly 90 percent of all survey participants ask board members to adhere to the company’s code of ethics. The Conference Board said the somewhat lower percentages for the U.S. (82 percent) and Western Europe (83 percent) may be due to the fact that in those countries not all directors are company employees, so their conduct may not be governed by the employee code.
Although nearly three-quarters of survey participants believe that board members should be trained in ethics/compliance programs, the response rate of varies considerably. For example, a total of 94 percent of the Japanese participants had this view, but director ethics training was endorsed by only 42 percent of Western European respondents.
The report, sponsored by Microsoft Corp., is based on a global survey of 165 company boards.
-- WebCPA staff
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