Whistleblowing Channels: An Opportunity To Transform Corporate Culture
August 03, 2022
The EU Directive 2019/1937 on whistleblowing requires private companies with 50 or more workers, and many public bodies, to have safe and effective channels for whistleblowers to report a possible breach of EU law.
Whistleblower protection is an important cornerstone of the Directive, and thus a fundamental feature of this legislation is that the implemented reporting provisions protect both the anonymity and confidentiality of the users.
In Spain, the draft bill regulating the protection of people reporting on breaches of regulatory and anti-corruption legislation was approved by the Government on 4 March 2022. Under this new law individuals and organisations can expect tough sanctions if they retaliate against a whistleblower, the most stringent of which is a penalty of up to one million euros for employers.
The regulation recognises the important role that whistleblowers play in the prevention and detection of breaches, fraud and corruption. Whistleblowing procedures are a force for good that enables companies to investigate and take action against inappropriate behaviour or wrongdoing. A programme that helps to identify problems in the early stages is likely better positioned to address those problems before they become a major obstacle or threat to the business.
However, without effective protections in place, whistleblowers would be deterred from flagging when something is wrong in their organisation.
A good litmus test to discover whether a company has an effective reporting programme, and therefore the corresponding built-in culture to deal with concerns aired, is to check whether all reports are investigated thoroughly. Companies should not choose which ones to address or take seriously, for example, based on employee seniority, employee position or the jurisdiction. Similarly, whistleblower anonymity should not influence the determination with which an organisation deals with a report on irregularities.
If a companys programme helps to identify problems in the early stages, it is likely to be better placed to address potential problems before they become a major obstacle or threat to the business. Similarly, anonymity should not influence the determination with which an organisation deals with the resolution of a report on irregularities.
One of the most critical aspects of a company’s role is to assure employees that reports will be taken seriously and that they will not face retaliation for participating in the whistleblowing process. A best practice approach shows respect for the confidentiality of employees who make a disclosure, and outlines and upholds consequences for those employees who fall short of any regulatory and anti-corruption guidelines.
Mishandled whistleblowing reports can be devastating for an organisation. If business leaders are in any doubt about the importance of an effective reporting programme that is integrated into the corporate culture, they need only look to recent scandals. The worst cases highlight instances in which senior management took steps to suppress, conceal or diminish the accusations of a whistleblower. The end result has been significant financial and reputational damage for those organisations.
The good news is that companies are getting the message. According to the 2022 Association of Certified Fraud Examiners Report to the Nations, a detailed study of organisational fraud worldwide, 70% of the companies surveyed had established reporting channels, compared to just 54% in 2012.
Creating a favourable environment for reporting
The main advantage of this new piece of legislation is, of course, that it helps businesses build a culture where complaints and misconduct are managed in a secure and confidential manner. With the necessary underpinning of organisation core values, communication and trust, it is about creating a favourable environment for reporting all breaches, which in turn helps to prevent misconduct and detect infringements.
Studies by international bodies such as Forética have shown that safe and reliable reporting channels are an essential resource for the prevention of fraud and its possible impacts on society. Employees are often the first to be aware of threats or damage to the public interest that arise in areas of business and, in flagging them, perform an important social function.
Good reporting processes not only encourage good business practices — they act as a significant lever of change at a corporate level, both locally and internationally. In instances of health and safety breaches, environmental disasters, or the violation of corporate codes of ethics, they may also save lives and benefit wider society.