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EY’s 2024 Integrity Report: Higher integrity & AI risks in the spotlight

EY’s Global Integrity Report for 2024 uncovers the potential risks of AI and ethical challenges in business highlighting the need for a strong compliance and speak-up culture. It is imperative for all stakeholders to champion integrity, as one in five organizations face significant fraud incidents.

We are excited to share EY’s 2024 Global Integrity Report, drawing on insights from 5,000+ professionals in 53 countries. According to Frédéric Guilmin, EY Luxembourg Forensic & Integrity Services Leader, “The new report reveals that while standards of corporate integrity in companies around the world appear to be improving, significant internal and external pressures on employee behaviors remain strong.“

As per the Report, in the EMEIA region, 56% of respondents noticed an improvement in integrity standards over the past two years, largely due to clear leadership direction, increased regulatory pressure, and stronger customer demand. Despite this trend, 46% of the respondents recognize the difficulty in upholding integrity standards during challenging market conditions. Alarmingly, over one quarter of respondents globally are prepared to compromise ethics for career progression.

A key discovery is that one in five financial organizations in Europe has encountered a major integrity incident in the past two years, with financial crime and money laundering being the most common issues. Respondents point to a failure of internal controls (31%) and involvement of external parties (26%) as the root cause. However, following the incident, 40% of the respondents reported no change in the organization’s prevention and detection procedures highlighting a gap in addressing the root causes effectively.

A crucial observation relates to establishing a secure “speak-up” culture for employees. The number of organizations without a whistleblowing hotline has been reduced by half. Yet, more than half of respondents (55%) report feeling discouraged from using it. Moreover, 17% of whistleblowers reported experiencing retaliation.

“The importance of a cultivating a genuine speak-up culture, where employees feel secure, and which highlights the impact of regulatory changes, such as the whistleblowing law in Luxembourg, is necessary,” says Frédéric. The survey reveals a significant communication gap. Half of senior management report frequently hearing leadership emphasize ethical conduct, but this drops to a third among junior employees. “Maintaining high integrity standards is crucial for trust in companies. There’s a tendency for senior management to discuss ethical standards exclusively with management, which can have negative impacts, particularly on how junior employees act.”

For the first time, we examined cross-sector organizational perspectives on AI integration into compliance functions, with 66% recognizing the need to update compliance programs. Furthermore, 47% of the respondents acknowledge the need to develop processes and policies for AI-related risks, such as privacy or fraud.

Finally, we observe a shift in ESG dialogue from aspirational values to a more actionable approach. Discussions now center on challenges and risks, especially with evolving regulations, such as the EU’s CSRD and newly adopted Corporate Sustainability Due Diligence Directive (CS3D). Forty percent (40%) of financial organizations are not confident in their ESG transparency and public communication, with 34% setting and publishing clear and measurable goals to improve reporting quality.

Click here to download the full report

Summary

EY’s Global Integrity Report for 2024 uncovers the potential risks of AI and ethical challenges in business highlighting the need for a strong compliance and speak-up culture. It is imperative for all stakeholders to champion integrity, as one in five organizations face significant fraud incidents.

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