Protecting Your People, Clients and Reputation

Doing business responsibly, if properly embedded and integrated into an organisation, should simply become how business is done.

A code or moral compass should govern everything from recruitment to procurement, and arguably also the clients it’s prepared to work with.

But for most organisations, this level of integration is aspirational, and there’s a long journey ahead. For professional services firms, who have their own external codes and obligations, there’s an extra layer of complexity. They may come under increasing scrutiny in situations of conflict. Would a decision to work with a fossil fuel company negate an organisation’s stated commitment to the principles of sustainability and net zero?

Customers and clients are now more likely to associate an organisation’s reputation with who it works, or does not work, for.

Background

Companies have faced criticism in the media for maintaining a significant presence in Russia, despite having condemned the invasion of Ukraine.
The football World Cup in Qatar became a reputation risk for firms or celebrities condemning the host country’s human rights record but worked with them on the event.
A group of 150 prominent lawyers has claimed that professional firms are “ethically obliged” to advise their clients of the serious risks — legal and otherwise — of pursuing fossil fuel investments.
Activists have highlighted firms who say, for example, that it’s committed to improving the environmental sustainability of the legal sector but also says it is a market-leading oil and gas practice.
Weighed in the balance for law firms is upholding the rule of law and having a fundamental commitment to access to justice.

“The key to making all forms of governance work in any business is to make doing the right things the right way part of the culture of the business.”

Bruce Macmillan – General Counsel

What to look out for in 2023 and beyond

The Economic Crime and Corporate Transparency Bill is expected to come into force in 2023. It will ban the use of corporate directors (with an exemption when used in corporate groups) and require members and persons with significant control to verify their identity.
The Register of Overseas Entities came into force in the UK on 1 August 2022 through the new Economic Crime (Transparency and Enforcement) Act 2022. This Act requires overseas entities who want to buy, sell or transfer land or property in the UK to register with Companies House and disclose who their registrable beneficial owners are. The deadline for notification was 31 January 2023, and there is a concern that non-compliance will cause delays with dealing with property including sales, leases and land charges.
The Online Safety Bill is currently making its way through the House of Lords. The Bill has the high-level aim of making the internet a safer place and will make social media companies responsible for keeping children and young people safe. Businesses with an online presence may also be affected, with the legislation shaping the way business is conducted online.

Business risks

Integrity is key. If you espouse a set of organisational values, you’ll be held to those standards. If you’re then perceived to fail to live up to them, or are directly associated with organisations or individuals which contradict them, the consequences can be far-reaching.
You risk losing the trust of your key stakeholders, colleagues, clients and the wider community. Brands that fail to live by their own values can nowadays be exposed and held to account very publicly and speedily through social media. The ensuing reputational damage can be devastating.

Business response

Leadership. Being a responsible business means its values must be front and centre, with senior leadership setting the ethical tone.
Culture. Processes, pay, promotion, personal development plans, business plans, performance measurement should all be designed so that it is easier and more natural to do whatever you do in the business the right way than to do it the wrong way.
Structure and training. At Irwin Mitchell, for example, we have a Responsible Business Committee, an ethics sub-committee, and a programme of governance and compliance training.
Governance. We’re actively mitigating risks and creating a robust decision-making process through enhanced governance. Our General Counsel works in close collaboration with our Responsible Business colleagues, supporting our people to navigate a variety of increasingly complex ethical challenges.

Business benefits

Trust in your brand is more important than ever when most potential customers and clients will scan the internet for reputation clues.
Maintaining reputation will help retain existing customers, build loyalty and attract and retain the best talent.
Familiar brands with positive associations are the best placed to grow and build value.
Word of mouth from satisfied customers is the most cost-effective way to cut marketing costs and build a business.
A culture of integrity enables the best decisions for a business but with a wider societal and environmental perspective.

“Being successful in realising our aspiration to be a leading responsible business depends upon each one of our colleagues playing their part to uphold own values, each and every day.”

Kate Fergusson – Head of Responsible Business