Monitoring the level of awareness of values

Now that we have understood the mechanisms companies use to internalize values, we will explore how these companies are moni- toring the level of awareness of corporate values. Below we provide examples of some of the more common practices and systems used among sustainability leaders.

Whereas the code of conduct is a reserved power of, and is en- dorsed by, the board of directors, implementation programs are the responsibility of the business units or divisions. A senior manag- er of each business unit is usually nominated to act as owner of the

Implementation of codes of conduct

Regular employee communication

Intranet with practical examples for training purposes

Dedicated help desks DJSI Leaders General sample

0% 10% 20% 30% 40% 50% 60% 70% 80% 90% 100%

36%

61%

39%

78%

63%

94%

84%

100%

GRAPH 2.4:Procedures for internalizing values and codes of conduct

Source:SAMResearch, 2003.

implementation program. In addition, all executives and managers must confirm their knowledge of the code of conduct and their com- mitment to promote it among employees. We also observed that some companies have created a corporate compliance committee or have nominated a compliance officer to oversee the necessary policies and systems in place to ensure compliance with the code of conduct in all divisions and business units. Senior managers or compliance com- mittees report regularly to the board of directors or board audit com- mittee and keep them informed of adherence to business principles across the organization. Moreover, most companies have put in prac- tice disciplinary actions to deal with breaches of the code of conduct.

It is also worth mentioning that 72% of companies link em- ployee and manager remuneration to compliance with the code of conduct as a way to ensure a complete awareness of business prin- ciples and values across the organization. Also, 67% of companies have integrated compliance with the code of conduct in their em- ployee performance appraisal system. The annual or bi-annual em- ployee surveys given to all employees are commonly used for mea- suring the level of awareness of business principles and values among this group. In addition, some of these companies have a per- formance indicator for measuring the progress of the awareness of business principles among employees.

A more reduced number of companies have gone a step further and are conducting a Business Conduct and Ethics audit in all busi- ness units and subsidiaries. The results are reported to the board audit committee, which in turn informs the board of directors. A summary of the above results follows:

• Seventeen companies have internal management systems and reporting structures to ensure adherence to the princi- ples and values endorsed in the code of conduct.

• Fourteen companies put in practice disciplinary actions in the case of a breach of the code of conduct’s norms.

• Thirteen companies link the code of conduct to employee and manager remuneration.

• Twelve companies conduct employee performance appraisal systems that integrate issues related to code of conduct com- pliance.

• Seven companies conduct internal Business Conduct and Ethics audits.

• Three companies track the progress of the level of awareness of business principles and values among employees.

Graph 2.5 makes a comparison between ^DJSIleading companies and the universe of companies analyzed by ^SAMof some of the code of conduct implementation procedures that we have explained.

As we can see, definition of responsibilities and reporting lines is the most common system for implementing the code of conduct, with 94% for DJSIleading companies and 61% for ordinary companies.

Comparing the results between these two groups of companies we can observe that DJSIleading companies are far more advanced than ordinary companies. In some particular cases, such as compliance linked to employee remuneration, the difference extends to more than 50%. The field of certification of compliance systems is the only one where results and differences are not too significant.

It is important to note that 30% of the analyzed companies responded not known.If we consider the previous graph (Graph 2.3), we see that 16% did not communicate or did not have a code of

Responsibilities, accountabilities and reporting lines are systemically defined in all divisions and group companies

Disciplinary actions in case of breach

Compliance linked to employee remuneration

Employee performance appraisal systems integrate compliance/codes of conduct

Compliance system is certified

Not known/

Not applicable DJSI Leaders

General sample 0% 10% 20% 30% 40% 50% 60% 70% 80% 90% 100%

30%

0%

6%

11%

34%

67%

20%

72%

39%

78%

61%

94%

GRAPH 2.5:Implementation procedures of codes of conduct

Source:SAMResearch, 2003.

conduct. Thus, we can infer that 14% of companies which have a code of conduct do not possess any system or procedure to imple- ment it. This creates further potential for improvement for the ma- jority of the companies.

In sum, these results reaffirm the main idea expressed at the be- ginning of this chapter: the sustainable enterprise not only has dec- larations or statements of the importance of embracing new values in accordance with sustainability, but also has systems and proce- dures that ensure that all members from the company live up to these values.

The remarkable endeavors of British Telecom (^BT) in promoting its code of conduct and checking its level of awareness across the company require a detailed explanation. ^BThas a written a State- ment of Business Practice (The Way we Work). The Statement re- flects the firm’s international operations and increasing expecta- tions in the areas of corporate governance and business practice standards. A copy of the Statement—which is available in eight lan- guages: English, German, French, Italian, Japanese, Korean, Span- ish and Chinese (Mandarin)—has been sent to every employee and is also available on the company’s intranet site. There is also a ques- tion and answer guide for managers to help them brief their teams.

These high-level principles are supported by a comprehensive com- munications program and online training. A confidential helpline and e-mail facility are also available to employees who have ques- tions regarding the application of these principles. Agents and con- tractors are required to apply these principles when representing

BT. The Head of Group Business Practice is responsible for dealing with all these policies. Other elements of the communications plan include: a video and a credit card-size ^CD-^ROM(explaining the State- ment) which went to all senior managers for use as a briefing tool, a desk calendar sent to all managers illustrating the firm’s 12 business principles, a training web site, a Maintaining Integritybooklet sent to all managers, 2,000 training videos distributed to targeted man- agers, and letters from senior managers to their teams reinforcing the compliance message. In addition, ^BT’^S Statement of Business Practice is reinforced by a number of company-wide policies: Equal Opportunities, Ethical Trading, Health and Safety, Environmental Policy, and Social Policy.

In 2001 a ^BTInternal Audit Department Report found that awareness of the Statement of Business Practice stood at 73% of all employees across the entire ^BTGroup and 71% of all ^BTemployees in the ^UK:

BT Group BT in the UK

Awareness March 2001 73% 71%

Target March 2001 70% 70%

Awareness Sept. 2000 — 68%

Target September 2000 — 65%

These improvements in awareness are the consequence of a comprehensive employee communications plan. In collaboration with the Institute of Business Ethics, BTalso established an in-house business practice excellence award. Individuals are nominated by colleagues for demonstrating excellent business practice behavior.

In 2001 a BTInternal Audit Department Report found that the pro- portion of managers aware of the specific ethical risks they face stood at 87% across the entire BTGroup and 89% of all BTemployees in the UK.

BT Group BT in the UK

Specifically awareMarch 2001 87% 89%

BTbelieves that this level of application arises from its strategy of embedding the Business Principles into its day-to-day activities. BT

has, for example, linked the Statement of Business Practice to Turn- bull compliance (a requirement of company financial reporting), not only at the BTGroup level but also at the operational unit level.

This means that risks are regularly reviewed throughout the busi- ness, rather than just at the corporate center. All senior managers are required to manage and minimize that risk (rather than leaving it to a specialist in compliance) and have recently briefed their teams on the importance of the Statement.

The Statement of Business Practice is a reserved power of the BT

Group Board and all BT’^SLines of Business (Ignite, Retail, Whole-

TABLE 2.5:Awareness of the Statement of Business Practice

TABLE 2.6:Proportion of managers aware of specific ethical risks

sale, Exact & Openworld) are mandated to comply with it. Imple- mentation programmes are the responsibility of each Line of Busi- ness, all of which have nominated their own senior manager to act as owner.