Challenging conditions put corporate integrity standards at risk in emerging markets

• EY Global Integrity Report shows growing pressures on ethical conduct in emerging markets
• 62% of respondents believe it is challenging for organizations to maintain integrity standards in tough economic conditions
• Worsening market conditions (36%) and declining financial performance (31%) top risks to ethical conduct in emerging markets 

Bangkok, 25 October 2022: Corporate integrity standards in emerging markets, including Thailand, are at risk from a series of new pressures on businesses, according to the 2022 EY Global Integrity Report - Emerging Markets Perspective: “Is your organization upholding its integrity standards?”

The report canvassed the views of more than 2,750 employees, managers, and board directors from 33 emerging markets, including Thailand, and found that the current geopolitical and economic environment - in the aftermath of the COVID-19 pandemic - poses a significant threat to ethical business conduct.

Sixty-two percent of respondents say that it is challenging for organizations to maintain standards of integrity in periods of rapid change or difficult market conditions, and nearly half (46%) say that the impact of the pandemic has made it harder to act with integrity. Specifically, the greatest risks seen to ethical conduct resulting from the pandemic are worsening market conditions (36%), declining financial performance (31%) and reductions in employee compensation (29%).

Wilaiporn Ittiwiroon, Forensic & Integrity Services Partner, EY Thailand said:

“Organizations are facing many challenges, which have heightened the risk of unethical behavior. Growing geopolitical tensions, supply chain disruption and recent inflationary pressures have hit businesses in emerging markets across the world, including Thailand, just as they seek to recover from a global pandemic.”

The findings also show that an increasing number of employees would be willing to compromise ethical standards for their own benefit. More than half of board members (52%) and nearly half of senior managers (47%) surveyed agree that there are managers within their organization who would sacrifice integrity for short-term financial gain.

“It’s important to recognize that it is people — not systems and processes — that commit fraud. Employees will be more likely to behave with integrity if they understand why and how the business does things, instead of simply following the rules. Especially given today’s economic challenges, leaders need to set a strong example of ethical conduct for employees to follow. If they do not, it is likely we will see a continued rise in the number of reported fraud incidents and interventions from regulators.”, Wilaiporn explained.

Despite the current pressures on ethical conduct, the survey demonstrates that progress is being made with 97% of respondents (99% for Thailand) now agreeing that corporate integrity is important to sustain their business and 47% (66% for Thailand) believing that corporate integrity standards have improved within their organizations over the past two years. The survey results for Thailand also show that 87% of respondents say that they can report wrongdoing at work without fear or negative consequences at work and 61% still express concerns about misconduct not being reported.

“Many businesses are now prioritizing and trying to build a foundation of integrity in their organization, with systematic training on regulations and systematic communications with their employees about the importance of integrity. In addition, creating a culture where ethical behavior is supported and rewarded can help reduce risk, improve employee morale, and build stakeholder confidence in a company’s ability to deliver both short- and long-term value.”, according to Wilaiporn.

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