The Governance Institute's latest Ethics Index has highlighted that the financial services sector still has work to do to rebuild public trust. 

Key takeouts

  • The Governance Institute's latest Ethics Index has identified that the financial services sector and the corporate sector more broadly have work to do to improve perceptions of their behaviour. For example:
    • the financial services sector was rated the least ethical of all sectors
    • financial services and social media organisations dominated the list of the most unethical organisations overall
    • CEOs, Chairs, Managing Directors, senior executives and directors of foreign companies operating in Australia and mortgage brokers were ranked among the top ten least ethical occupations.
  • Climate risk: 90% of Australians believe Australia has an ethical obligation to act on climate change. Of this group, 45% believe Australia has an urgent ethical obligation to take climate action. Similarly, 90% of respondents believe Australia has an ethical obligation to transition to renewable energy.

Some interesting findings

The Governance Institute's fifth 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 1-13 October 2020.

People believe Australian society is overall more ethical than they did last year?

Overall, perceptions of how ethical Australian society improved as compared with 2019 with the Governance Institute's overall metric for measuring this improving by 15 points from 37 in 2019 to 52 in 2020.

The ethical expectation deficit which the Governance Institute explains as 'the difference between the level of ethical behaviour we want to see and the actual level of ethical behaviour' also improved from -45 in 2019 to -29 in 2020 (the lowest it has been in the five years of the survey).

Commenting on this shift, Governance Institute CEO Megan Motto suggested that it could be attributed to the hardships of the past year - 'It seems that a year of hardship, in which co-operation, trust and transparency have become paramount, has changed our perceptions around how we function as a society' she said.

Climate action is ranked among the top ethical challenges facing Australia

  • Top five greatest short term ethical challenges: Respondents nominated the following issues as the top five greatest ethical challenges facing Australia in the next 12 months: 1) balancing personal freedoms with COVID control (44%); 2) reducing our reliance on global supply chains (33%); 3) aged care reform (32%); 4) climate change action (28%); and 5) balancing fire hazard reduction with conservation (27%). Bushfire management via fuel reduction was also included among the top five challenges facing the country 'in future'.
  • Top five greatest 'future' ethical challenges: The top five most difficult ethical challenges facing Australia were nominated as: 1) euthanasia (40%); 2) immigration (40%); indigenous affairs (35%); 4) the 'business practices of foreign companies operating in Australia' (32%) and 5) foreign investment in Australia (31%).
  • Climate risk: 91% of respondents believe Australia has an ethical obligation to act on climate change. Of this group, 45% believe Australia has an urgent ethical obligation to take climate action. Similarly, 90% of respondents believe Australia has an ethical obligation to transition to renewable energy.

The financial services and corporate sectors have work to do...

Financial services/corporate occupations were nominated as the least ethical occupations overall

  • The ten least ethical occupations were: 1) mortgage brokers; 2) lawyers; 3) CEOs/Managing Directors; 4) Chair of companies; 5) senior executives; 6) local politicians; 7) state politicians; 8) real estate agents; 9) federal politicians; and 10) directors of foreign companies operating in Australia.
  • Company secretary remains the occupation with highest ethical score in the corporate sector.
  • Directors of foreign companies continue to have the lowest ethical score (-4%).

The financial services sector was rated the least ethical of all sectors

  • The financial sector has the lowest ethical score of all sectors (18). The report comments that this is nevertheless an improvement on 2019 when the score was -11.
  • Within the sector, all occupations and almost all organisations have seen an improvement on 2019.
  • Industry superannuation funds are perceived to be the most ethical of all organisations in the sector. Pay day lenders are perceived to be the least ethical.
  • Overall, financial services and social media organisations dominated the list of the most unethical organisations overall: The top ten least ethical organisations were nominated as: 1) 'Other insurance companies'; 2) investment banks; 3) retail banks; 4) life insurance companies; 5) foreign companies operating in Australia; 6) Instagram; 7) Twitter; 8) Facebook; 9) Tik Tok and 10) pay day lenders.

Commenting on these findings, the Governance Institute suggests its an indication that business needs to prioritise ethics. Ms Motto said,

'Ethics matter, in business and in society. Our survey shows that the perception of the finance industry in Australia is still recovering from the banking royal commission and other scandals, and the media is suffering the same crisis of legitimacy here as overseas. These perceptions have consequences, and our leaders need to get to work addressing them'.

Attitudes to COVID-19 measures

  • Support for COVID-19 restrictions: Most respondents expressed support for government COVID-19 restrictions. including lockdowns, the closure of international and state borders and mandatory mask wearing. In contrast, most respondents vie a 'herd immunity approach' which they see as unethcialIn contrast, there is significant resistance to a herd-immunity.
  • Support for COVID-19 some workplace safety measures: Similarly, there was strong support for some workplace COVID-19 safety measures. For example, 60% of respondents supported employers requiring employees to wear mask in the office. However, other measures such as monitoring employees working from home using surveillance technology was not generally supported (30%)