Trust in NFP sector remains high as public loses faith in corporate companies
The ethical behaviour of the social sector was rated highly as community trust in corporations fell in the wake of banking scandals
Trust in the ethical behaviour of the not-for-profit and charity sector has rated high, as scandals in the banking sector eroded the public’s perception of corporate companies’ conduct.
The Governance Institute of Australia’s annual Ethics Index found the public lost its trust for major corporations further, following on from the revelations of the Hayne Royal Commission into the misconduct of banking and financial services.
Governance Institute’s Chief Executive, Steven Burrell, said: “The community’s faith in some of the country’s biggest corporations have been sorely tested, following a turbulent 12 months in Australia’s banking finance and insurance industry.
“The Index suggests numerous high profile scandals, and the alarming corporate breaches being revealed on a daily basis by the Royal Commission into Misconduct in the Banking, Superannuation and Financial Services Industry, are undermining confidence in the sector.”
Although trust fell for corporations, the social sector is considered highly ethical and has the smallest gap between the importance of ethical behaviour and their scores.
While ethical behaviour is considered important across all sectors, it is valued the most in the health and education groups. Government and public service sectors followed closely behind, as did charities and not-for-profit organisations.
Within the charity and not-for-profit sector, medical charities and social welfare charities continued to be held in high ethical regard. Indigenous charities were also highly rated.
This trust rose as bank perceptions fell. The Index is derived from Governance Institute Research, which measured Australia’s expectations and perceptions across sectors. While most sectors remained constant, the corporate and finance sectors saw significant falls.
“For the third year in a row, Banking, Finance and Insurance was the lowest category in the Index,” Burrell said. “It’s net score has dropped dramatically from last year with a score of -15. It has never before scored this badly – 55 per cent of respondents consider the sector unethical and only 28 per cent view it as ethical.”
Australian communities rated life insurance companies and retail banks as unethical, due to the review, while education and health were rated most ethical.
Medical charities and social welfare charities were held in high ethical regard, having rated above 70 per cent. While unions continued to be polarising, perceptions of ethical behaviour in professional sports clubs was slightly more positive.
“The message here is clear – those who are seen to be working selflessly for others are generally more trusted,” Burrell said.
“If corporations like the banks and other financial institutions continue to be exposed for pursuing profits to the detriment of their customers, we can expect confidence in them to drop even further.”