The directive in question is the EU Whistleblower Directive. It is important not only in what it does specifically, but also for the implications it has regarding companies’ commitment to ethical behavior overall.
In a nutshell, the proposed law does the following:
1. Establishes public reporting channels where workers can report violations of EU law.
2. Protects all workers from retaliation when they make reports in good faith.
3. Requires certain companies to implement internal, confidential reporting channels and all necessary policies and procedures to support them, according to directive requirements. Companies required to implement such channels include:
Companies with 50 or more employees;
Companies with turnover or total assets exceeding € 10 million; and
All financial service firms and firms vulnerable to money laundering and terrorist financing, regardless of their size or turnover.
The proposed directive is significant enough in what it specifically requires. However, its implications go much deeper. Simply put, if your company has not yet focused on how to promote a culture of trust, integrity and ethics, you should do so now.
This is because a reporting hotline is just one small part of an effective ethics and compliance program. In order to build an ethical culture, a company needs all of the following:
commitment and ownership from the board and senior management
a person or group responsible for running the program
periodic risk assessments
standards, policies and procedures
communications and training
reporting mechanisms and methods for following up on reports
methods to ensure continuous improvement
Once the proposed directive takes effect, we can expect an increase in reports of wrongdoing. As workers will be protected from retaliation, they should be more willing to come forward when they witness wrongdoing.
Is your company ready?