ICQ Log - Ethics Committee
- Ethics and Compliance – Putting them Together 


Last Updated:  10 August 2022 

The Role of Compliance in Setting an Ethical Culture: 

According to Financier Worldwide magazine (as quoted on the US law firm J D Supra, 13 May 2022) “The complexity of political, regulatory and supervisory pressures on companies means they cannot afford to neglect their compliance function.” Good compliance behaviour and standards are at the heart of company culture, with the Compliance function being the link across a whole organisation to ensure that all share the same ethical approach and values. The values are usually set out in the Code of Conduct but it’s how those values are interpreted in every part of the organisation that demonstrates the company’s real commitment to the Code’s values.

Codes of Conduct Need to be Very Clear: 

Codes on their own have been shown to be not enough; they have to be promoted, explained and applied in every area of the company’s activities and at every level. It could be argued that the Compliance function is the guardian of the company’s Values, hence the link between Ethics and Compliance, but it must be always remembered that ethics should be everywhere in the company, not just in the Compliance function. Each department, division, activity centre within a company has to oversee its own attitudes and behaviours and be accountable for them. That said, Compliance departments are in a pivotal role for influencing Attitudes and Values, even though things can go wrong ethically at many points within the organisation.  

Dealing with Behaviours and Attitudes:

Ethics and Compliance actually go together because they both deal with behaviours and attitudes, underpinned by values, albeit with maybe some slight differences of emphasis. They both deal with risk-taking and making judgements or assessments. And they both fundamentally deal with right and wrong, good and bad. And they both exist to try and ensure that people do the right thing, though the nuance is always in “What exactly is the right thing to do, and according to whom?” 

Laws and regulations can cover many aspects of an issue. Indeed, laws and regulations often are developed because of bad outcomes from bad behaviours which in turn may be influenced by inappropriate attitudes. They are intended as ways to make sure that we don’t do the bad things, and so we have specific rules and regulations – hence we have the need to ensure that we comply with the regulations to guard against bad things/bad outcomes happening.

And to do that we have seen the evolvement of the Compliance function in many organisations as an independent organisational activity to ensure or promote a sense of compliance. As a rule, people working in Compliance aren’t reviewing or assessing issues for ethical compliance though they will overlap with Ethics in assessing Risk. But laws, regulations and rules can’t cover every nuanced aspect of running or working in a business, because business is made up of a whole lot of separate functions with different skillsets, different goals, different characteristics and with people who look at issues differently.

Consider All Aspects, Not Just a Pre-Set View:  

The big issue for anyone (at all levels in an organisation, not just the notion of there being only a tone from the top) who has to make a choice or a decision is to have all the facts and points of view that can be reasonably gathered – and that includes contrary points of view or indeed, contrary data, with all the points being clearly argued and not just brush some of them aside. But then, human beings, being emotional creatures, have all sorts of pulls on them, other aspects that influence them. As Michaela Ahlberg, the former Telia Chief Compliance Officer said in an interview with the Wall Street Journal (22 January 2020), “Some executives are blinded by forces that are more powerful and stronger than any force that (a regulator or Compliance officer) can counteract. It is fear of not being part of the group, fear of not delivering the results that they have promised, fear of losing their jobs for being somebody who doesn’t agree with everybody else, fear of not making the numbers.” Just to explain, Telia AB, a major telephone and mobile operator in Sweden and Finland, was hit with a $1.4 billion fine under the US FCPA for bad practices in its entry to a new market and its Chairman admitted that it had acted “in an unethical and wrongful way and we are prepared to take full responsibility”. This was presented as a major compliance failure but note the linking of compliance and ethics.

Compliance’s Influence in Promoting Standards: 

While Compliance may be a separate function, its role and practices may be the model for all the other functions – all based on the attitude of being wellbehaved and being compliant with agreed standards, and noting that the problems of non-compliance that emerge, occur in the first place in those other functional areas, and only come to light after they have occurred. Many of those problems may be attributable to what could be assessed as being under ethical failures and didn’t the Nyberg Report on the great financial crisis identify them as intolerance of other points of view, intolerance of contrarian thoughts and views, following the herd, among other things. Ethics never goes away, it’s always around though maybe we should talk about using words like judgement, analysis, risk assessment, reputation, values, attitudes and behaviours. Attitudes, values and behaviours are at the heart of ethical analysis and bearing in mind that there are many renowned ethics theories, they each have to justify themselves. That is not to say that we should be exclusively beholden to any one Ethics theory, but realising that we each have different ways of looking at things, then surely, we should insist on viewpoints being validated through discussion and negotiation – especially when a choice has to be made about what to do. Writing on 13th May 2022 about the importance of clear Business values for a successful company, Linda Luty of Navex (a leading supplier of regulatory compliance and ethics software), says that “... ethics and compliance truly lays the groundwork for long-term success” and for creating the right sense of corporate culture. In this regard, it clearly sees that the combination of ethics and compliance ought to be at the core of company culture, and that this involves constant review and training in company values, offering a way of addressing business risk.  

People are at the Heart of Compliance and Ethics: 

Why am I putting such an emphasis on Attitudes, Behaviours and Values? Compliance and Ethics are fundamentally concerned with what people do and how they are influenced in what to do. It all focuses on People, whoever they may be – boards, C-suites, executives, line managers, supervisors, big teams, small teams, suppliers, external parties. People are the thread to all of these when making choices and decisions. As Anna Romberg, Exec Vice-President at Swedish Med-tech company Getinge AB says “The purpose of the ethics and compliance work is to steer behaviours and enable the right decisions at all levels in the organization. There is no self-interest in preparing policies and training if these are not tailored towards behaviours and decision-making. The foundation of an ethics and compliance program is people, and people make mistakes.” (FCPA blog, 5 May 2021).

Lawyer Photo

AUTHOR: Ed McDonald 

FCI, MA in Ethics and Corporate Responsibility, Member of Compliance Institute Ethics Committee. 

ICQ Summer Edition 2022

This article was taken from Compliance Institute's ICQ Summer Edition 2022