The idea of whistle blowing can sometimes be daunting to both senior executives and the workforce alike. Our human instinct is to fear whistleblowing because whistleblower reports usually mean trouble.
Wrong! The negative view of whistleblowing is deeply flawed and over the long term can leave an organisation with more problems than whatever whistleblowers might report.
Whistleblowing is an important part of business. The 2019 reforms to the Corporations Act dictate a whistleblower protection regime should not only encourage more people to come forward, but also support ASIC’s performance of its regulatory role. So much so that ASIC now considers it essential for a company to have effective internal systems and processes to handle disclosures in line with its whistleblower policy.
But what are the benefits of having a strong whistleblowing policy?
- It protects your company – A strong whistleblowing policy helps to identify potential risks and misconduct that otherwise would go unnoticed.
- It’s ethical – At a base level, companies have the responsibility to support and protect those working for them. Including those who come forward raising red flags.
- It facilitates trust and prevents wrongdoing – When employees who want to commit misconduct know that other employees will report them, those high-risk employees are less likely to try whatever wrongdoing they have in mind due to fear.
Having a strong whistleblowing policy encourages a culture of openness and accountability. It is a process that takes a bit of time and has many considerations but is well worth it in the end.
One of ASIC’s priorities for 2023 is to review whistleblower programs from a sample of regulated entities to see how practices are evolving to address the reforms. With a corporate governance lens, they will look at:
- how entities are handling whistleblower disclosures
- how entities use the information from disclosures to address issues or misconduct or change their operations
- the level of board and executive oversight of whistleblower programs.
With pre-testing, ASIC found that three of the most prevalent and concerning deficiencies were incomplete or inaccurate information, obsolete and out-of-date policies and policies without oversight arrangements.
ASIC wants to see entities treating their whistleblower programs as an important governance function which supports robust and timely escalation of important information and cultural warning signs to an organisation’s leadership.
Strong whistleblower systems, processes and procedures are – and always will be – a vital element of good corporate culture.
Lastly, a reminder that in accordance with the Corporations Act large proprietary companies are required to have whistleblower policies.
Please feel free to reach out to your ESV engagement partner if you have any questions or need assistance in developing a whistleblower policy for your organisation.