- Australians are placing a higher value on ethics than ever - the report found that importance placed on ethics in society has risen to an all-time high of 84, driven in large part by Millennials (and Gen X).
- Rising cost of living pressures and impacts of inflation top the list of ethical challenges facing Australia. Cybersecurity breaches and privacy protection ranks second (37%) and the increasing use of AI ranked third (31%)
- Acting on climate change also ranks in the top five ethical challenges facing the country.
- The corporate and financial services sectors (banking, finance and insurance) ranked in the bottom three sectors in terms of perceived ethical behaviour – though there was some improvement on last year.
- Perhaps unsurprisingly, most respondents consider that senior roles within organisations have the most impact on influencing ethics within an organisation – consistent with last year.
Overview
The Governance Institute's eighth annual Ethics Index tracks changes in public attitudes to the importance of ethics generally, and also changes in public perceptions around the extent to which certain groups can be trusted to behave ethically.
The findings are based on a survey of 1000 people conducted during June-July 2023. Our key takeaways are below.
More ethical than last year (but further away from living up to expectations)
- Overall, the 2023 Index found that public perceptions of the ethics of Australian society has recovered from last year's dip, with the overall Ethics Index Score now at 45 (up from 42 in 2022, in line with the score in 2021).
- The report attributes this in chief to the increase in trust/ethical perceptions of the public service – the ethics score for the public service returned to a score of 46, in line with 2021 (up from 38 in 2022).
- Despite the lift in the overall ethics score, the survey highlights a widening gap between public expectations of how ethical something should be and how ethical the public think it actually is – the ethics expectation deficit. The expectation deficit sits at -39 this year (up from -37 last year and -28 in 2021). Commenting on this Governance Institute of Australia CEO Megan Motto said it
'indicates that there’s still plenty of work to do by organisations and individuals, both in the public and private spheres to ensure good, ethical conduct and a positive culture remain top of the agenda.’
- According to the report, the widening gap is being driven chiefly by Millennials – Millennials were found to be placing more importance on ethical behaviour than previously (expectations increased 15 points on 2022).
Top five ethical challenges
Respondents nominated the following issues as the top five greatest ethical challenges facing Australia in the next 12 months.
- The standout concern is the rising cost of living and impacts of inflation (eg housing, healthcare) which was nominated by 54%.of respondents.
- Cybersecurity breaches and privacy protection ranks second (37%).
- Increasing use of AI ranked third (31%).
- Major reform and overhaul of the aged care sector (23%) which ranked as the top concern in 2022's Ethics Index
- Ensuring climate change and environmental issues continue to receive attention and action (21%), which ranked third in the list of top concerns in 2022 Ethics Index
Other key challenges
The following were nominated as the next most pressing ethical issues facing the country:
- Executive remuneration (21%). The report suggests that this is linked to the overall high level of concern over cost-of-living pressures.
- Referendum on the Voice to Parliament (20%)
Communication about data breaches is considered to be an 'urgent ethical obligation'
The survey found that the majority of survey respondents (73%) consider companies have an urgent ethical obligation to notify customers of all data breaches (ie not just serious data breaches).
Responsible use of AI
- The survey found that the majority of survey respondents (71%) consider companies have an urgent ethical obligation to ensure that their technologies are not being used by others to mislead or deceive.
- 60% of respondents considered that users of generative AI (eg ChatGPT) have an urgent ethical obligation to acknowledge that their material has been created using generative AI.
Acting on climate is considered to be an urgent ethical imperative for the public and private sectors
- When asked to nominate who has an ethical obligation to tackle climate change the majority respondents indicated that the Federal government, multi-nationals, international bodies (eg the UN), State governments, Australian businesses and local councils have an urgent ethical obligation to act. The Federal government was thought to bear the greatest responsibility of all groups with 67% of respondents indicating it has an 'urgent ethical obligation' to act.
- Interestingly, (especially in light of the high level of concern around cost of living pressures) the report also found that the public considers that that organisations have an ethical obligation to act on climate change even if this results job losses, fewer jobs or a reduction of profits.
- Though most respondents (78%) consider individuals to have an obligation to act on the issue, less than half of this group (43%) consider it to be an 'urgent ethical obligation'.
[Note: A separate survey of public attitudes to climate change released by the Australia Institue found that concern about the impacts of climate change is high (71% of respondents reported being concerned about climate change). The survey also highlights there is acceptance of a link between climate change and cost of living pressures and moreover, that climate change is exacerbating cost of living pressures – for example 75% of survey respondents reported being concerned about climate-related disruptions to supply chains making it harder to buy necessities. In terms of government action on the issue, the survey found (among other things) strong support for the introduction of new taxes on fossil fuel producers - 74% of those surveyed would support 'a polluter-pays tax', 66% of those surveyed would support a windfall profits tax on the oil and gas industry and 59% of those surveyed would support a levy on fossil fuel exports to fund climate adaptation.]
Large corporations and the financial sector still have work to do…
The corporate and financial services sectors (banking, finance and insurance) ranked in the bottom three sectors in terms of perceived ethical behaviour. Only the media sector is perceived as less ethical.
Having said this, there was some improvement on last year -
- At an organisational level, public companies are seen to more ethical than in 2022, increasing from 21 to 24. They are still seen as more ethical than Australian unlisted and private companies (13, down from 14 in 2022) and foreign companies operating in Australia (-6 up from -9).
- Company Secretary (consistent with last year) is perceived to be the most ethical occupation within the corporate sector with a net score of 26.
- Directors of foreign companies operating in Australia, Senior executives and Chairs of companies ranked as the three (perceived) least ethical occupations within the sector.
- Turning to perceptions ethical behaviour within the finance sector, Accountant is perceived to be the most ethical occupation with a net score of 35, while funds managers and mortgage brokers are perceived to be the least ethical with a score of 11 respectively.
- At organisational level, industry superannuation funds were perceived as the most ethical organisations with a score of 35, while payday lenders ranked as the least ethical with a net score of -30.
The public considers leaders have the greatest ability to set the tone from the top
- Perhaps unsurprisingly, most respondents consider that senior roles within organisations have the most impact on influencing ethics within an organisation – consistent with last year.
- CEOs were ranked top in terms of having the greatest influence with a net score of 69 (up from 64 in 2022), followed closely by the board of directors (66 up from 62), and senior management (at 64), and people holding Chair roles (59). This is potentially concerning given the negative public perceptions of Senior executives and Chairs in particular (flagged above).
- Interestingly, given the discourse around 'licence to operate' and the potential (financial and other) risks associated with falling foul of public expectations, survey respondents ranked customers and the general public in the bottom five groups in terms of the level of influence they are perceived to have over company ethics, together with 'the general workforce' and suppliers.
- Consistent with last year, activists are perceived to have the least influence over companies' ethical behaviour.
Top five ethical issues in business
- Corruption remains the top issue facing corporate Australia, followed by company tax avoidance, misleading and deceptive advertising, discrimination and bullying in the workplace.
- Environmental responsibility ranks ninth on the list.
- Treatment of suppliers ranked as the lowest priority.
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