Why India Inc. must focus on integrity for sustainable growth

When it comes to organizational integrity, corporate India is making strides in the right direction to ensure long-term success. 

In brief

• To foster a culture of trust and accountability, employees must be confident about their organizations’ compliance with integrity standards
• A sound whistleblowing function can guide policy improvements, ethical training programs
• Emphasis on non-financial reporting has spurred a rejigging of business models towards sustainability

In an era of interconnected businesses, organizations are increasingly adopting a global outlook to keep up with changing consumer expectations. India’s rapid economic expansion over the past few decades and the quick shift to digitization during the global pandemic, has placed it at a pivotal position on the world stage. However, with exponential growth comes the responsibility to ensure that the proliferation is in the right direction.

The Indian economy has displayed great tenacity and resilience in the face of uncertainties from  last few years. Given its relentless pace of growth, organizations have the chance to capitalize on the advantages if they can withstand the regulatory headwinds and the turbulence caused by geopolitical factors. Integrity is the cornerstone of maintaining sustainable growth. To build a robust foundation of ethics, India Inc. must inculcate good governance practices.

Building a culture of integrity involves supporting ethical decision-making and prioritizing ethical behavior over short-term financial gains. Corporate integrity must pass the litmus test of a highly complex and increasingly uncertain business landscape.

The Global Integrity Report – India edition documents country-specific findings from the larger survey and offers invaluable insights into the perception around ethics in the wake of macroeconomic and geopolitical upheavals and increased regulatory scrutiny. It also provides an overview of the integrity quotient in Indian companies amidst the significant operational challenges and regulatory complexities facing them in the current scenario. It takes stock of the compliance environment in the country and traces the evolution of organizational integrity vis-à-vis the upheavals of the past decade. The key insights identified will serve as a moral compass for companies to help them navigate this complex business landscape through the lens of integrity.

What is your organization’s integrity quotient?

Global Integrity Report 2022 witnessed corporate India adjusting to the new normal with a renewed sense of purpose and documented how the resulting confusion put a dent in companies’ integrity agendas. In this year’s Global Integrity Report surveys, India secured the top spot for trust in employee integrity, with 98% of respondents agreeing.

When it came to factors why they felt compliance with integrity standards had improved, respondents felt it was mainly due to stricter regulations or pressure from regulators and law enforcement agencies, followed by direction from the management or leadership. 

To foster a culture of trust and accountability, employees must be confident about their organizations’ compliance with integrity standards. Having confidence in their company’s commitment to ethics encourages employees to act responsibly, benefiting the organization’s reputation and public perception. For India Inc., interestingly, this confidence in organizations’ commitment to integrity is evident from the survey findings.

However, setting integrity standards is a continuous process and organizations must assess their priorities every few months. When asked what they considered being the most important areas for their organization’s ongoing integrity standards in the next two years, respondents prioritized the need for awareness, training, and communications (35%), followed by risk assessment activities (24%).

Is your organization rethinking its whistleblower protocols?

In ever-evolving corporate environments, robust whistleblowing mechanisms can set the tone just right for an organization’s integrity agenda. In our survey, 32% said people were now more concerned about reporting misconduct than they were two years ago. With tech-interference, whistleblowing helplines are much more secure and enable complainants to voice their concerns without the fear of retaliation. Almost half (46%) respondents agreed that current solutions for whistleblowing were more advanced and offered greater anonymity and flexibility to raise concerns.

By opening a channel of communication between the employees and decisionmakers, a sound whistleblowing function can build trust and accountability and its proactive use can guide policy improvements, ethical training programs for continuous enhancement of the ethics framework. Encouragingly, 77% of respondents strongly agreed that the employees in their organizations could report wrongdoing at work without fearing negative consequences for themselves. Meanwhile, 45% felt it had become easier for employees to report their concerns in the last two years, a significant drop from 62% in 2022. 41% said whistleblowers were now offered more protection from retaliation in their organization.

However, even with widespread awareness about the mechanism and no fear of retaliation for reporting instances of wrongdoing, only 50% admitted they had personally reported issues of misconduct in the last two years. This is concerning, considering 48% respondents shared that they had concerns about misconduct that they had not reported in the last two years.

Is your organization ready to integrate AI into its core?

Even 10 years after the launch of the Indian government’s ‘Make in India’ initiative, India Inc. continues to prioritize increasing innovation and creativity, with close to half (47%) respondents supporting the same, placing India way ahead of other countries. In fact, more than 20% of survey takers consider it to be the most important aspect. These survey findings are indicative of the leaps that technology adoption has made in digital India.

While there were a few teething troubles during the transition from traditional modes of working to digital in the wake of the pandemic, as evidenced in the findings of the last Global Integrity Report, 50% respondents shared their organizations were already actively using one or more AI-enabled tools and 25% were planning to explore and use it over the next two years.

Can your organization view integrity through the lens of ESG compliance?

Over the past two years, India Inc. has been consciously aspiring and displaying intent and preparedness to combat climate change and meet the Sustainable Development Goals of the United Nations in many of its regulatory schemes internally such as the introduction of the Business Responsibility and Sustainability Reporting (BRSR) by SEBI.  The emphasis placed on non-financial reporting has spurred a rejigging of business models towards taking a more sustainable approach. This is an encouraging development, since sustainability is key to long-term business success. Today, customers are expecting it, investors demand it, employees value it, and shareholders rely on it.