Some 50 percent of company directors believe conflicts of interest are “prevalent” in boardrooms in Ireland, according to a survey of Institute of Directors in Ireland (IoD) members published today.
The survey of 2,600 members, which attracted 431 respondents, the highest ever response rate to an IoD study, also found that 86 percent say there has been an increased focus on business ethics in the boardroom over the past decade.
Respondents to Tone from the Top – Boardroom Ethics in Ireland were offered several choices when asked why there was increased attention to ethics among company directors.
Some 90 percent indicated that fear of reputational damage was a reason, while 81 percent referred to recent controversies and increased public scrutiny. The third most commonly selected answer, at 77 percent, was increased awareness of responsibilities.
There has been a number of changes to the regulatory environment in recent years, including the Companies Act 2014 which came into force in June 2015, and in effect codifies many directors’ responsibilities including conflicts of interest.
The vast majority of respondents (86 percent) to the IoD survey said they “definitely know” or “know to a large degree” what is expected from their board in terms of ethical behaviour. And 88 percent indicated they would know what to do if they were asked to breach ethical standards.
Eight out of ten respondents said their board has an ethics policy, 79 percent have a Company Values Statement and 74 percent have a conflict of interest policy.
Some 97 percent said they were aware of what constitutes a conflict of interest but less than half (47 percent) said their boards monitor ethics through evaluation or internal audit.
IoD chief executive Maura Quinn said:
"For the first time, this survey has provided a bird’s-eye view of ethical standards among directors and senior management.
“The findings of this comprehensive study show the vast majority of Irish businesses have adopted protocols to ensure ethical practice at boardroom level.
“Directors are far more aware of their responsibilities than they once were but there is still some way to go regarding the declaration and monitoring of conflicts of interest.
“These findings are set against a backdrop of much greater public scrutiny of how companies are run, so directors must ensure that monitoring ethical behaviour and conflicts of interest are embedded in their boardroom processes.
“Directors must recognise their responsibility to show leadership and set the ethical standards which then permeate through their company.”
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The online survey was conducted among executive and non-executive directors in mid-February. Some 68 percent of respondents sit on boards. This figure includes CEOs and Managing Directors.
When participants were asked to classify their organisations, the main responses were: Private Sector (32%), Multinational (15%), Semi-State (12%), PLCs (9%), Not-for-Profit (12%) and SME (8%).