Businesses conduct under increased scrutiny due to pandemic
With public scrutiny having mounted on businesses and governments during the pandemic, more than eight-in-ten companies expect investigations into their operations over the coming year. Probes from watchdogs are expected to focus in the key areas of business conduct, sustainability, and the procurement of government contracts.
Societal inequality exposed by Covid-19 are creating an unforgiving marketplace, with companies under scrutiny from governments and the public and little room to avoid disputes and investigations into business practices and behaviour. For example, in August 2020, the UK Government had already come under fire for its spending on private consulting contractors, after it emerged the industry had received contracts worth £56 million to help with the national response to the coronavirus. While that figure – and the criticism attached to it – has continued to snowball since, new controversies surrounding those initial awards are still coming to light, one year later.
At the same time, spiking public consciousness about the unfolding climate disaster – and the role of common practices in the corporate world which have exacerbated it – has heightened scrutiny on sustainability practices in all industries. With pressure building, the bellwether that is investment sentiment suggests many corporations are going to experience financial difficulties due to public scrutiny – and 80% of investment managers now believe businesses without supply chain sustainability risk falls in their share price.
As suspicion of corporate and government practice continues to ferment, a new study from FTI Consulting has found that a large majority of businesses now expect to be publicly investigated over the coming 12 months. The survey of more than 2,800 executives from large public and private companies across G-20 nations found that 83% of those organisations were either are being or expected to be probed in that period.
According to FTI, the three leading investigation worries were: business conduct and the treatment of customers; sustainability and ESG practices; and the relationship with public bodies and government contracts. One-third of respondents cited each of these areas as a top concern.
In response to these fears, businesses are looking to proactively shield themselves from future scrutiny. The report found 41% of companies believed they were under “extreme” pressure to integrate technology, 37% were pushed to strengthen reputations, 34% felt an expectation to improve sustainability practices, and 29% were looking at improving corporate culture in the next 12 months.
Caroline Das-Monfrais, a Senior Managing Director and Global Resilience Lead at FTI Consulting, said, “Covid-19 has exposed and exacerbated economic and social fault lines – employee wellbeing, talent shortages, treatment of customers, financial crime and cybersecurity all have risen up the corporate agenda, and businesses are responding to protect value and build resilience as they look towards future growth.”
By addressing these concerns, the firms not only position themselves to avoid investigations, however. They may also be better able to handle a number of emergent crises resulting from the coronavirus outbreak.
For example, growing cybersecurity threats could be addressed by better integrating technology – as 78% of companies surveyed suffered a cyber-attack in the past 12 months. Meanwhile, by boosting their treatment of customers and reputations, the 13% of companies who experienced class actions and mass consumer claims in the last year may improve their ability to attract and retain consumers. And the 30% of companies now complaining of a shortage in talent and skills, or the 68% who see increasing mental health issues in their workforce, may attract and retain a more productive staff if they improve their corporate culture.
