Guarding the moral compass

Like most Chief Ethics Officers, Jennifer Drost admits that it wasn’t a job that was on her radar screen while studying at university. “I didn’t set out to become a Chief Ethics and Compliance Officer,” says Drost, who holds that role as well as Senior Counsel, Canada, at insurance firm Travelers Canada.

She was handed the Chief Ethics title in 2014, following the creation of a similar role at the firm’s U.S. parent company. She worked her way into the position through the legal and compliance department, breaking ground to take on what is increasingly becoming an emerging key role in organizations—the executive who oversees ethics and integrity. She says the appointments signaled a conscious effort by the company to emphasize its culture and values. “We started putting the emphasis on doing the right things,” she says, including focusing on “honesty, integrity and accountability.”

Words like values, culture and honesty roll off the tongues of those in charge of ethics and integrity with the same passion as a litigator in a closing argument.

Take Ula Ubani, Chief Ethics and Conduct Officer at Bank of Montreal Financial Group. She has had a front-row seat on issues of culture and integrity in organizations since being appointed Chief Ethics Officer in 2014; in 2018, her role was expanded to include Conduct Officer.

The MBA-educated Ubani, however, is not a lawyer. Rather, she arrived at her destination through investor relations, and then as Director, Corporate Responsibility and Sustainability, and Director, Environmental, Social and Governance, where she was exposed to a wide range of emerging issues facing corporate Canada.

“The role that I have now and the way that it is set up here was born out of conversations thinking about and looking at emerging trends and really trying to be more innovative,” she explains. It is a position continually evolving, and culture and values are central. “When I started in this role, I found out if you go in and talk about ethics, most people tune out, not because they are unethical, but because they feel they are ethical. When you talk about culture, values and behaviour, it’s a different conversation.”

Scott Driscoll also stresses the importance of value and culture when keeping a company on the straight and narrow. Driscoll was appointed the first Chief Ethics Officer at Export Development Canada (EDC) in 2015. He is responsible for the agency’s compliance and ethics program, noting that EDC operates much like a financial institution and abides by many of the rules and regulations governing banks.

“We are doing business pretty well around the globe. We need to make sure our employees know what the expectations are and how to help guide them in different cultural norms and environments. We need to make sure we are doing business in the right manner,” he says.

Things like culture, values, integrity and honesty are quickly becoming table stakes for corporations in an economy where consumers are increasingly suspicious of business and public institutions, notes Richard Powers, a professor of governance at the Rotman School of Management and a former corporate counsel. “There’s a renewed interest in culture from the Board of Directors right on down.”

That is spurring the rise of an executive role within corporations to tackle ethical and moral issues. Julianna Fox, who was appointed Chief Ethics and Compliance Officer at global building consulting giant WSP in 2018 after serving as the company’s Global Director of Compliance and Ethics, says “I think it’s a trend. In the U.S., there is a significant presence of this function throughout many industries. I find in Canada we are not quite there yet. I think the function is still growing.”

One need only look at the headlines to see what is driving the trend. Almost daily, companies are being called on the carpet for bad behaviour, from record fines paid by Wells Fargo for cheating their customers to organizations and institutions getting called out in the #MeToo movement over inappropriate conduct by executives.

It’s taking a toll on consumer confidence in the corporate world. According to the 2018 Edelman Trust Barometer, Canadians’ trust in their business and government continues to decline. Only 49 per cent of the general Canadian population trust business and 46 per cent trust government, indicative of a general decline globally. In 2018, trust slipped across seven of nine Canadian business sectors, with the exception of telecommunications and energy.

Moreover, Canadians are increasingly turning to authority figures for truth, but on that front CEOs and Boards of Directors bring up the rear as credible spokespeople. Academics, technical experts and employees are seen as more credible. A further 68 per cent of the populace believe CEOs are driven more by greed than a desire to make a positive change in the world, while 51 per cent say companies that only think about themselves and profit are bound to fail.

Such a climate is driving the opportunity for change and opening the doors for ethics, conduct or integrity officers to step in and help mold the corporate consciousness.

In fact, the topic of in-house counsel as integrity officer will be discussed at the CCCA’s National Conference in April, notes Eric Wai, Director, Client Relationships, at LexisNexis Canada Inc., one of the sponsors. The topic grew out of conversations at last year’s conference about the role lawyers play in guiding a company’s moral compass.

This year’s plenary speaker on the topic will be Silicon Valley lawyer Amyn Thawer (featured in above photo), a Canadian who is the first Head of Global Compliance and Integrity at LinkedIn Corp. In an interview, he notes that “culture is now becoming a key competitive differentiator in the market place.” When he joined in 2014, LinkedIn employed 3,500; today, it is at 14,000. He says one of his chief roles is to “operationalize the company’s culture and values.”

“Integrity matters,” he says, citing a range of corporate scandals that has led to much regulation in the U.S., such as the creation of the Sarbanes-Oxley Act and a host of other reforms. The role of the integrity officer, he explains, “is not only to meet the regulatory requirements, but to really impact the brand.”

Moreover, he says, “we are in a war for talent. Employees have a lot more bargaining power than they used to” and culture matters in recruiting wars.

In addition, employees are exercising their power in ways not seen before. Take Google, for instance. Employees there staged a walkout to protest the company’s handling of sexual harassment allegations against top executives.

However, it’s not just employees who are becoming more vocal. Thawer notes that “we’re in a whole new internet age, where social media gives people a platform. You can have small but vocal pockets of stakeholders—be they employees, activists, critics or citizens—who all have a voice or say that can get attention.”

That’s where a Chief Ethics or Integrity Officer can step in with their moral compass and help the company navigate stormy ethical waters.

When speaking to those who hold such roles, a few things become evident about this emerging position. First, the responsibilities are broad and a typical day can touch on a wide range of issues, often linked back to some type of compliance issue.

“Most of what I do relates to managing the ethics and compliance programs,” notes WSP’s Fox. Driscoll adds that there is a “policing” element to the role and “firefighting comes up on a daily basis.”

There is also the opportunity to be creative with solutions and push the envelope into the developing sphere of social responsibility and ethics when it comes to creating things like codes of conduct, policies and best practices. For example, Drost started an ethical and cultural training program two years ago that is gaining traction across the company: “We want employees to realize that even though something may be legal, it may not be ethical,” she explains.

She notes that her job extends well beyond a traditional legal job of writing memos and opinions. “You need to understand all aspects of the business,” she says, adding that “it’s much more interesting and a lot more variety” than in a typical in-house counsel role.

As for the skills necessary in such a role, they vary widely but those interviewed identified nine traits that help them in their job. They include:

• understanding the shifting regulatory landscape;
• capable of influencing different audiences;
• comfortable with change management;
• ability to collaborate;
• good business judgment;
• experience developing policies;
• speaking and thinking on your feet; and
• problem solving.

“You have to be able to get to the heart of behavioural issues,” says Ubani. “You need to be able to cut through the noise and figure out what is really important and relevant to your organization. You need to be analytical and an influencer. It’s a form of change management every day.”

Driscoll adds that his job is “very dynamic. It’s not for those who need a very structured day.”

Finally, when it comes to whom the Chief Ethics or Integrity Officer answers to, it is often a hybrid- or dual-reporting structure.

In many instances, the job falls under the watch of the Chief Legal Officer, but not always. There is also often some direct reporting link to the Board, either through a risk or audit committee, or a responsibility to report on conduct or ethical lapses directly to the Board in some type of regular report.

Rotman’s Powers says “it makes sense” that the legal department is involved in oversight of the Chief Ethics Officer, but there is also some risk of conflict in the event the Chief Legal Officer and Chief Ethics Officer don’t see eye to eye. Ways around that include having the Chief Ethics Officer report to a Chief Risk Officer, the CEO or directly to the Board.

And what about the difference between a Chief Ethics Officer versus a Chief Integrity Officer? That’s mostly semantics. WSP’s Fox says, “I don’t think there’s a difference. To my mind, it’s the same function.” And Powers adds, “It comes down to the flavour of the day.”

On one hand, ethical seems to conjure up a parallel notion of unethical, whereas integrity speaks more broadly to positive conduct. The Canadian Oxford Dictionary defines integrity as “moral uprightness; honesty,” while ethics is defined as “moral correctness.” Either way you cut it, there is a form of moral imperative at play.

LinkedIn’s Thawer, however, believes the integrity role will prevail over the long term. “I think if you look out three to five years, there’s going to be even more emphasis on the integrity piece.”

This article was initially featured in the Spring 2019 issue of CCCA Magazine