Bates Wells convenes the Impact Counsels’ Forum, a space for senior counsel working within impact investors, B Corps, and other purpose-driven businesses. The forum discusses the ‘impact angles’ on legal and practical issues faced by in-house legal teams. Recently, the forum explored the benefits an effective whistleblowing framework and how that can support an open culture in which staff feel safe to speak up. Together with Sybille Raphael, Legal Director at UK whistleblowing charity Protect, we share our perspectives on the key takeaways from the discussion.
An effective whistleblowing framework brings valuable insights for the business
When a problematic incident, practice or behaviour is left to develop into a complaint, regulatory breach and/or public scandal, there can be substantial human costs, including for those who blow the whistle. For the organisations involved, there can be deep reputational and financial losses, as well as wider economic and social impacts in the most high-profile cases. Protect’s research report, The Cost of Whistleblowing, estimated the financial impact on central government of 3 recent scandals (the Post Office, Carillion and Lucy Letby scandals) at over £400 million due to whistleblowing failures. Arguably, for purpose-driven businesses, which hold themselves to high standards of accountability and sustainability, there is greater stakeholder scrutiny and exposure to reputational loss when something goes wrong.
An effective whistleblowing framework is a crucial tool for business risk management and supporting regulatory compliance, but it can be much more. If the appropriate ecosystem of measures is in place within the organisation, to help support the people involved and understand and put into action the feedback and insights that whistleblower complains can provide, then the framework can unlock valuable input for the business. Viewed in this light, complaints can guide the business on what issues are most pressing for its stakeholders and what to monitor and measure. They can inform stakeholder engagement, marketing, impact strategy and more.
As part of this, the information gleaned from whistleblower complaints can provide insight into the shifting social norms of the world within which the business is operating. 10 years ago, Protect mainly heard about whistleblower complaints on issues such as financial misconduct and patient safety. More recently, aspects of ‘toxic’ or dysfunctional organisational culture have become common subjects for complaints, as well as an increase in environmental whistleblowers and reports on ethical concerns. In particular, younger generations are less likely to tolerate unethical working practices and more likely to raise concerns. The complaints a business receives can help it to identify, track and respond to the shifting priorities of staff, customers and other stakeholders.
Making the business case for an effective whistleblowing framework
Some organisations may be concerned that creating a clear and transparent process for whistleblowing could invite high numbers of frivolous or vexatious complaints. However, the organisation is not going to substantiate unfounded complaints, and even unsubstantiated complaints can still guide the business as to whether its communications are informing stakeholders sufficiently and how its messaging is landing. This may include helping to spot greenwashing risks, if the business appears to be doing something that is misaligned with its impact credentials and stated values. In addition, the business’ whistleblowing framework may be of interest to investors, particularly in the impact space. An effective framework not only helps to demonstrate an investee’s approach to identifying risks, but also its approach to governance and its commitment to its social and environmental goals.
Even in industries where whistleblowing frameworks are typically more mature, such as financial services, there’s always something to learn from the data provided by the complaints received, and addressing gaps in the whistleblowing framework constitutes an important future-proofing process. Also, regulation is always evolving. For example, recent amendments to the Equality Act 2010 created a new, proactive duty upon employers to prevent sexual harassment in the workplace, which came into effect last year. The current Employment Rights Bill proposes developing this duty further and making complaints of sexual harassment a specific category of protected disclosure. This underlines the importance of an effective whistleblowing framework in this area.
While it can be difficult to know where to start when assessing the effectiveness of the business’ whistleblowing framework, there are tools available to help. For example, Protect provides a Whistleblowing Benchmarking service for employers that is designed to act as a thorough gap analysis, providing guidance on what best practice looks like and allowing organisations to compare themselves against others in their sector. For B Corps, B Lab’s new certification standards include requirements around regular stakeholder engagement to discuss material topics, and ask whether the business has a publicly accessible grievance procedure allowing stakeholders to safely raise grievances and seek resolutions.
Content of the whistleblowing framework
A whistleblowing framework is central to an organisation’s accountability and transparency; it can build trust, which supports a more productive relationship with the staff and wider stakeholders. An effective framework will go beyond compliance, empowering the business’ people to be its eyes and ears. The whistleblowing policy document should encourage people to raise issues when needed and state what the organisation wants people to blow the whistle about – what kinds of practices or behaviours the organisation needs to hear about. However, the policy will only be effectively implemented if integrated across the organisation; this includes the business’ governance, communications and operations. If that framework is in place, a complaint is not a discrete event but the start of a process. This process should include support for the individuals raising the issue; a ‘report and support’ approach is key.
For example, is the whistleblowing framework clear on:
- what the organisation will do with the whistleblower’s complaint?
- how whistleblowers (and other staff) will know that something is done about complaints?
- who at board level is responsible for, and champions, the organisation’s whistleblowing process?
While the law currently only protects employees, workers and certain other specified groups, organisations should consider extending their whistleblowing frameworks. For example, interns, volunteers or contractors may see and hear things that others do not. In addition, recent case law indicates that the courts may, in certain contexts, be taking a broader approach to whistleblower protection. It can also be beneficial to provide proper channels for reporting issues within the supply chain, where some suppliers may not have a whistleblowing function or it may not be safe for individuals to complain. In fact, some organisations have an online whistleblower reporting policy that is open to anyone.
Organisations should talk about the changes they are making to tackle the issues raised. This can encourage an open environment where individuals feel safe to speak up and trust that they are taken seriously. However, a careful balance is needed in communications, between being transparent about issues raised and protecting the confidentiality of the individuals involved. People need to feel that they can come forward anonymously, and the rights of potential perpetrators of reported behaviours/incidents must also be respected.
What might this look like in action?
The overriding theme of good practice is transparency, meaning that the organisation is taking action and this is visible. Once an individual raises an issue, a meaningful process should be triggered that helps people feel that they are not alone and will be taken seriously. This should include the business providing a response to the complainant (findings and actions taken), while being mindful of the rights of the person or people whose behaviour is the subject of the complaint (e.g. confidentiality).
The organisation may consider wider internal communications when an issue arises, although without disclosing identifiable details of the matter and people involved. In the press, cases of significant detriment to whistleblowers are often highlighted, but positive stories are rarely reported. Communicating positive outcomes/improvement measures prompted by complaints can encourage staff members to trust the business’ framework for speaking up. For example, organisations can talk broadly about the measures they are taking to prevent sexual harassment and protect complainants ‘in response to issues raised within the organisation’. This might include letting people know that the business is improving lighting at facilities, implementing procedures to help staff get home safely late at night, or setting up a complaints line.
The effectiveness of a whistleblowing framework should be regularly evaluated, but there’s no one indicator of success. There is no ‘good’ number of reports to indicate that the framework is working. Even receiving no reports could be ambivalent, possibly meaning that no one feels safe to raise an issue, or that all issues are resolved at the informal level by line managers before needing to be reported. The organisation will need to assess data across the ecosystem and from different stakeholders to understand the impact of its whistleblowing framework. For example, if customers are raising issues that could have been observed by staff, perhaps the whistleblowing framework is not facilitating the necessary speak-up culture inside the organisation.
As part of Bates Wells’ work with purpose-driven organisations, we provide advice in relation to whistleblowing that goes beyond compliance, supporting the values and social impact goals of the business. If you’d like more information, please get in touch.
The material in this article is provided for guidance and general information only and is not intended to constitute legal or other professional advice upon which you should rely. In particular, the information should not be used as a substitute for a full and proper consultation with a suitably qualified professional. Please do contact the Bates Wells team if you require further information.