Business ethics is the term used to refer to all moral and ethical practices implemented by companies for the purpose of employee care, and societal impact. Though ethics have always been an essential consideration for many companies, the focus on this concept has grown significantly in recent years, as consumers become more discerning about which brands they do business with.
Today’s customers believe the companies they buy from should reflect their own personal values and beliefs. As such, many consumers will refuse to purchase anything from a brand without a solid approach to ethical behavior. Now ethical consumer spending is at an all-time high, organizations are under more pressure to demonstrate their commitment to business ethics.
The following business ethics statistics will offer a crucial insight into the ethical aspects of running a successful company in 2022.
Business Ethics Statistics
1. Global ESG (Environmental, Social, and Governance) assets will reach a value of $140.5 trillion by 2025.
Recent reports from Bloomberg show Environment, Social, and Governance assets among businesses are set to reach a value of around 140.5 trillion by 2025.
The findings of the report, conducted by McKinsey and the Global Sustainable Investment Alliance, suggest companies are investing more into ESG solutions as a result of the pandemic, and a rising focus on sustainability and ethical business operations on a global scale.
2. Over a third of employees believe the ethical standards in their organization have improved since the pandemic
The “Ethics at Work” study in 2021 by the Institute of Business Ethics revealed some important discoveries about internal ethics in the workplace. Around a third of employees (37%) say the ethical standards in their organization have improved since the pandemic. Only 8% believe ethical standards have gotten worse.
More than half of employees are now in organizations with a comprehensive ethics program (57%), and around 86% of employees say honesty is practiced frequently or constantly in their organization. This is in an increase from 79% in 2018.
While only around 17% of employees are aware of misconduct in their organization at present, 53% of staff say their companies have a “Speak Up” program in place.”
3. In 2020, 1 in 5 US employees were in workplaces with strong ethical cultures
The annual Ethics.org research into the power of ethics in business environments found around 1 in 5 employees were working for a company with a strong ethical culture in 2020, This was a massive increase from only 1 in 10 employees in the same situation in 2000.
Globally, around 14% of employees say they’re working with organizations with a high ethical culture. Unfortunately, there are some significant issues in the workplace too. Around 29% of employees said they felt pressure to compromise their standards in 2020.
4. ESG data spending is growing by 20% year-over-year
Spending on Environmental, Social, and Governance data used to empower companies in the quest to pursue better ethical business initiatives is increasing. According to a study by Substantive Research, investment groups are increasing their budgets in ESG data, to learn more about the kind of sustainability initiatives they need to leverage to perform ethically.
According to the report, the pandemic has pushed social issues and ethics to the forefront, with topics like human rights, equality, and product safety becoming more important for everyone.
5. 1 in 5 retailers drop suppliers due to sustainability concerns
“Reshaping Retail”, a report issued by the corporate banking arm of Barclay’s corporation, revealed that a fifth of the largest retailers in the UK canceled contracts with suppliers on the grounds that they weren’t meeting with environmental, social, and governance standards (ESG).
The most common reason for eliminating contracts with suppliers was the use of materials that did not meet sustainability criteria. Companies were also concerned about suppliers failing to provide employees with the correct working conditions.
Retailers are also increasingly requesting suppliers join sustainability certification schemes to prove they’re meeting standards. However, only around 28% of retailers joined a new scheme in the last year.
6. Around 8 in 10 employees now report misconduct
The Ethics.org report on ethics and compliance in 2020 found around 8 in 10 employees worldwide now report misconduct when they encounter it in a business environment. In the US and globally, the most common forms of observed misconduct included lying and favoritism.
Unfortunately, there seems to be a growing issue with retaliation in response to employees reporting misconduct too. Around 61% of global employees report experiencing retaliation. The problem is even greater in the US, with 79% of employees reporting retaliation.
7. Two-fifths of employees experience retaliation after reporting misconduct
Research revealed in the “Ethics at work” study by IBE indicates around 57% of employees on average (among the respondents in the 10 countries surveyed) will speak up about misconduct. Countries like the UK and Switzerland had the most issues encouraging teams to speak out.
In this report, the IBE also found around 34% of employees were concerned speaking out about ethical problems would put their job at risk. Another 34% said they believed their companies wouldn’t act even if they did speak up.
A significant 43% of employees who said they had reported misconduct in the past also revealed they had experienced retaliation as a result.
8. 83% of organizations say ethics and compliance considerations shaped their response to the challenges of the pandemic
According to a study by LRN on ethics and compliance standards in business during 2022, around 83% of surveyed organizations say ethics and compliance considerations have shaped their response to the challenges of the pandemic.
Another 66% of the people from the survey agreed their senior staff members used ethics and compliance considerations in their decision-making strategies during the pandemic.
9. Less than 3% of suppliers to large businesses have emissions targets in place
Sustainability and the reduction of emissions are important considerations in business ethics. Unfortunately, research from the CDP in 2022 found only around 3% of suppliers to large corporations have science-based emissions targets in place.
The analysis found that around 56% of suppliers have no targets in place at all, indicating a significant problem with achieving ethical standards. According to the CDP, the current pace of adopting sustainability efforts would mean it took more than 10 years to ensure suppliers reach their targets.
10. Companies spend around 11% of their turnover to improve credentials
The Barclays banking study into reshaping retail indicates an increasing focus on ESG and ethical practices among investors, workers, and the general public. On average, companies are spending around 11% of their turnover just to improve their credentials.
Additionally, 79% of retailers say they believe long-term improvements to the ESG credentials of the supply chain will be crucial to their success in the long term. Although Barclays’s study notes there may be a cost attached to tightening such standards in business, the evidence suggests customers will pay more for products that meet stringent ethical and sustainable requirements.
Customers will pay up to 4.55% more on average for ethical products.
11. Only around 38% of businesses are engaging with suppliers on ethical strategies to prevent climate change
A study conducted by the CDP in 2022 found only around 38% of end-user businesses are currently working with their suppliers to reduce their impact on the climate. Around 47% of downstream companies, such as retailers, and manufacturers, have begun to look beyond first-tier suppliers on deforestation risks.
For around 71% of suppliers who reported reduced emissions during the study, the results were promising – translating to a cost saving of around $29 billion. The CDP has also noted that businesses could risk additional costs (worth around $120 billion) to their supply chains if they fail to respond to climate and environmental risks in the next five years.
12. Only 49% of companies prioritized their ethics and compliance programs in 2022 to make them more user-friendly
An annual report on ethics and compliance strategies by LRN revealed some significant weaknesses in business ethics efforts in recent years. According to the report, only 49% of respondents prioritized their E&C program by making it more user-friendly and employee-focused.
Furthermore, the study revealed only 40% of organizations indicated their ethics and compliance team had strengthened risk controls in the last year to address privacy, and cybersecurity issues. Around 35% of respondents said the company had simplified or modified compliance procedures to help employees meet new challenges, and only 25% said they were offering ethics training to teams.
On the plus side, many companies did report the expected negative effects of the pandemic on ethics and compliance strategies have diminished.
13. 63% of customers want to see more ethical practices from companies
Barclays’ study on ethical business and sustainability in the retail landscape shows retailers are beginning to show a higher awareness of the level of influence imposed on them by regulators and customers. Around 63% of customers surveyed in the study said they want to see the industry make further sustainable and ethical changes.
Around 50% of customers said they want to see the government do more to maintain a more ethical landscape. What’s more, 52% of consumers said the ethical and sustainable credentials of a business will be an essential factor for them when choosing what to purchase.
14. 40% of customers in the UK say businesses act ethically
According to the “Attitudes of the British Public to Business Ethics” report from 2021 by IBE, around 40% of the public think businesses behave ethically. However, 67% feel charities act in an ethical manner. Less well-regarded for ethical practices are politicians (20%) and the media (23%).
The IBE also found certain ethical dilemmas were more concerning to the British public than others. For instance, an important ethical issue for 47% of respondents was corporate tax avoidance. However, businesses’ responsibility for their impact on the environment is the second most important concern for all generations at 29%.
15. Ethical spending grew to £121.91 billion in the UK in 2020
A report from the Co-Operative brand released in 2021 highlighted the rising theme of ethical consumerism in the United Kingdom. According to the report, ethical spending hit a value of around £121.91 billion in 2020, an increase of around 23.7% from the year before.
In the report, ethical consumerism was defined as the personal allocation of funds towards a company or service provider invested in helping to address a specific issue, like the environment, social justice, or animal welfare.
According to the Co-Op, ethical spending per household had increased to around £2,189 in 2020, a rise of around 113% from 2010.
16. Around 49% of consumers have begun to buy from or increased their purchases of companies because they trust them.
The Institute of Business Ethics and PWC introduced a report in 2021 showing the importance of trust in business environments. According to this report, consumers, and employees both say they feel more capable of trusting businesses now than before the pandemic.
Around 49% of consumers say they have started buying from or increased their purchases from a company because they trust the brand. Another 33% of consumers said they have paid more because they trust the business.
The report also revealed around four out of five employees report trusting the company they work for more than they did before the pandemic.
17. Companies with ethical programs see more honesty (91% vs 79%) in the workplace
According to the IBE “Ethics at Work” report for 2021, organizations with ethical programs in place see better results overall. Employees in companies with a comprehensive ethics program and guidelines to follow are more likely to say honest is practiced frequently or always at work (91% compared to 79%).
The IBE report also found employees in companies with ethical programs and guidelines were more likely (89% compared to 43%) to say senior management professionals took ethics seriously in their organization.
Employees aware of an ethics program in their business were also more likely to have raised their concerned about any misconduct they were aware of (72% compared to 36%) and they were more likely to be satisfied with the outcomes of the report (80% compared to 26%).
And that’s a wrap!
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Whether you’re a business owner, potential employee, or just want to be more informed about the world of business ethics, we hope this was helpful for you!
Business ethics are a key part of running any successful organization. And if you don’t have them, other people will notice—and it might even have a negative effect on your bottom line.
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