The Rise of Whistleblowing in an Increasingly Ethical World
There has been a steady rise in whistleblowing systems being put into place around the world over the past few years.
This is happening because businesses and organisations recognise they need do more to prevent or reduce corruption, fraud and human rights abuses as these are given greater prominence within society.
It is part of a trend toward more ethical sourcing, with even the UN secretary-general of the United Nations, António Guterres, stating that ‘our world is facing a pandemic of human rights abuses’ as a result of COVID-19.[1]
There are over 16,000 searches a year for ‘ethical sourcing’ in the UK alone[2].
This is particularly true in the food industry, where a number of food production scandals – for instance the Horsemeat scandal of the last decade – brought wrongdoing in the food supply chain into sharp focus.
Add to this an increased awareness of Modern Slavery occurring within supply chains through forced labour – with one UK government statistic estimating 13% of all potential forced labour victims coming from the food sector[3] – and we can easily see why both consumers and businesses are concerned.
The simple fact is having a whistleblowing service and anti-bribery and anti-food crime clauses in place within supply chain contracts should be one of the most basic elements of any commercial dealings.
What types of crime can whistleblowing potentially prevent or reduce?
Here is a list of food crime as defined by the NCFU and refined following the 2013 Horsemeat Scandal in Europe report.
Theft – dishonestly obtaining food, drink or feed products to profit from their use or sale
Illegal processing – slaughtering or preparing meat and related products in unapproved premises or using unauthorised techniques
Waste diversion – illegally diverting food, drink or feed meant for disposal, back into the supply chain
Adulteration – including a foreign substance which is not on the product’s label to lower costs or fake a higher quality
Substitution – replacing a food or ingredient with another substance that is similar but inferior
Misrepresentation – marketing or labelling a product to wrongly portray its quality, safety, origin or freshness
Document fraud – making, using or possessing false documents with the intent to sell or market a fraudulent or substandard product
These run alongside the more recognisable wrongdoing in the workplace:
Bribery – where an employee or associated person accepting or issuing a bribe in order to gain a business advantage for either themselves or their organisation
Bullying and Harassment – behaviour that makes someone feel intimidated or offended
Discrimination – the unjust or prejudicial treatment of different categories of people, especially on the grounds of race, age, sex, or disability
Modern slavery – the recruitment, movement, harbouring or receiving of children, women or men through the use of force, coercion, abuse of vulnerability, deception or other means for the purpose of exploitation
Health and Safety – the disregard for risk assessment and the sensible management of risks to protect your workers and your business.
Robust whistleblowing reporting system
Regulators have always highlighted the importance of having robust due diligence procedures[4].
“If bribery does occur, it is a defence for a commercial organisation to be able to demonstrate that it had in place adequate procedures designed to prevent it.”
Hilary Ross, Head of Food and Retail at law firm DWF[5]
But often this is not enough, especially when many food manufacturers are still lagging far behind regulatory best practice.
That’s why regulation is increasingly demanding food industry businesses become proactive in their preventative actions, which brings us to whistleblowing systems.
Whistleblowing Systems | An Opportunity
But it would be wrong to see the introduction of whistleblowing services and ethical hotlines as ‘just another tick box exercise’.
There are real benefits to adopting a whistleblowing management system:
Helps prevent or reduces fraud – on average, organisations with a whistleblowing hotline as one of their internal controls see a 49% reduction in the total number of frauds and a 33% reduction in the duration of a fraud[6].
Helps prevent or avoid financial penalties – significant penalties can be imposed by the courts for food safety offences right up to and including a possible fine for each offence, and a possible prison sentence of up to six months.
It is even worse for more serious offences with the maximum fine is £20,000. And if the offence is dealt with by the Crown Court, there could be an unlimited fine and up to two years’ imprisonment.
Helps prevent or contain any reputational damage – having advanced knowledge of any wrongdoing before it is exposed proactively helps senior management handle any public relations fallout, and being able to prove that procedures were followed and due diligence took place can help mitigate the worst effects of wrongdoing.
Helps prevent or minimise the stress from wrongdoing incidents – take into consideration the stress and effect on the mental well-being of both management and employees from any exposure of wrongdoing.
Provides real insight into the business for senior management – whistleblowing can actually be used as a gauge of ‘business well-being’. It gives senior leaders within the organisation tangible data on potential issues that can then be handled
Morale – it is no coincidence that the Corruption Perceptions Index, that scores countries on the level of corruption in the public sector, matches almost perfectly with the analysis of whistleblowing systems around the world by UN.[4]
Confidentiality, anonymity, and protection after a whistleblower has blown the whistle acts as a positive force versus wrongdoing.
Regulators know protections for whistleblowers have an essential part of in combatting wrongdoing, and that is why external whistleblowing services – where anonymity can be maintained by compartmentalisation – are ideal.
A happier workforce is a workforce that trusts they are being looked after.
EU Whistleblowing Directive | A Brief Summary
Taking a lead in this world-wide crackdown on corruption and wrongdoing is the EU, with the EU Whistleblowing Directive that came into force in December of 2021.
In essence, the directive required member states of the EU to enact minimum levels of national legislation for the protection of whistleblowers within their country.
With only a few exceptions, these new whistleblowing rules and regulations apply to all businesses and organisations with more that 250 employees or volunteers.
And going even further, the directive will also be implemented for businesses and organisations with more than 50 employees by the end of 2023.
This even applies to many organisations outside the EU – including the UK – that have offices, supply lines or sell within the European Union economic market. Businesses within these countries still need to provide like-for-like whistleblowing facilities if they wish to continue their activities on a ‘level playing-field’ basis.
So, it is no exaggeration to say that the spotlight being shone onto whistleblowing and the protection of whistleblowers by this legislation is fundamentally changing how organisations handle wrongdoing in the workplace.