EY Global Integrity Report 2022
/The EY Global Integrity Report 2022 reveals how a focus on governance can help reimagine corporate integrity.
In brief
More companies than ever value corporate integrity, but many professionals say the pandemic has made it difficult to carry out business with integrity.
The EY Global Integrity Report 2022 reveals a growing gap between what senior leaders assert is important and what they are prepared to do for individual gain.
Businesses are adopting new reporting methods that improve rigor and transparency and bring opportunities to leverage advanced analytics for risk mitigation.
Corporate integrity is highly valued among senior executives and employees worldwide. A record 97% of respondents to the EY Global Integrity Report 2022 agree that integrity is important. More companies are investing in integrity training and have published statements of organizational values or conduct codes. Responding to societal expectations, businesses are also adopting corporate and social responsibility standards and environmental, social and governance (ESG) measures that demonstrate their commitment to those sentiments.
However, the report reveals that senior management is often overconfident in the effectiveness of its corporate integrity programs. The report exposes a disconnect between what respondents say they consider important and the types of fraudulent conduct they would be willing to overlook or engage in for personal gain. The survey also shows that the pandemic has created additional challenges, with more than half of respondents saying that standards of integrity have stayed the same or worsened during the past 18 months.
“Integrity is a difficult concept to define, as companies face different ethical dilemmas. It’s about making the intangible tangible, about committing to the interdependence of business and society by embedding integrity into the culture and behaviors of the organization,” says Katharina Weghmann, Partner, Forensic & Integrity Services, Ernst & Young GmbH. A progressive integrity agenda goes beyond restrictive compliance (what the law prevents); opportunistic compliance (what the law allows); and avoidance of litigation.
The 2022 report shows only a third (33%) of respondents say behaving with ethical standards is an important characteristic of integrity, while half (50%) cite compliance with laws, regulations and codes of conduct. And even when it comes to compliance, the report’s findings show more willingness among the most senior company ranks to act outside the rules.
“Integrity isn’t an easy topic,” says Jon Feig, EY Americas and EY US-Central Region Leader, Forensic & Integrity Services. “The integrity agenda rests on organizational intent and actual behavior. A wrong decision for the right reasons is still a wrong decision if it fails ethical values.”
Management should be under no illusion that creating a culture of integrity is a quick fix. Although organizations are investing more in communication and training programs, such efforts are not enough. While 60% of board members say that their organization has communicated about the importance of behaving with integrity frequently in the last 18 months, only 30% of employees remember it.
“Organizational culture is dynamic and takes far longer to change than rules and regulations,” says Maryam Hussain, Partner, Forensic & Integrity Services, Ernst & Young LLP, United Kingdom.
“Too often, fraud is focused on a bad apple, a lone unscrupulous anomaly,” Hussain says. “But bad actors rarely thrive in a business culture with high integrity values.”
As we emerge from the pandemic and begin the process of rebuilding the economy and recalibrating work processes in a digital operating environment, leaders have an opportunity to close these gaps. Insights from the EY Global Integrity Report 2022 reveal how companies can define and instill integrity into their culture; create the optimal environment for integrity to thrive; and innovate and transform the integrity agenda to minimize external threats and protect long-term value.
