Legitimacy and Ethics

Building trust to remain relevant for society

Society lost confidence in our capacity to deliver on our purpose: to build trust and solve important problems. We continue to hear critical comments about our role and activities as a professional services firm. The public is questioning our ability to align business, society and the environment and doubts our social utility and high quality standards.

In order to safeguard our legitimacy as a firm, we need to win back trust. Listening to the views of a wide range of stakeholders, two elements are key in achieving this: (1) delivering the highest service quality; and (2) exemplifying the highest standards of ethical business conduct.

Delivering the highest service quality

The quality and impact of our work is a critical part of how we build trust with our clients, in each other and in society at large. We must uphold our reputation for professional competence because it is upon this that our stakeholders base their trust in us. 

However, regarding our main service line - audit - we are increasingly engaging in  discussions about its future, and how it needs to change to meet society’s evolving expectations. Given the important role that auditing plays in the modern economy, everyone that relies on audit work needs to have the same high level of confidence in its transparency, objectivity and effectiveness. 

In order to provide greater focus on the quality and public interest responsibilities of audit services, PwC member firms started to make significant investments in training and hiring people and developing supporting technology.

Aiming at following this example, PwC Luxembourg is currently investing in automation with the clear focus on improving quality (see ‘Assurance’ section for more detail).

Exemplifying the highest standards of ethical business conduct

The trust that our clients, communities and people place in us largely depends on our standards of ethical behaviour. As we go about our work, it is important to have a common framework that defines how we do business: our Code of Conduct. A key element of making our Code alive is to Speak Up. Getting our entire workforce to uncompromisingly support and demonstrate high standards of ethical conduct and allowing them to feel comfortable enough to  report ethical concerns lays the cornerstone of an ethical business culture. Speaking up restores trust and confidence in our people, but it is also crucial for our long-term success as a firm. Offering this freedom to speak demonstrates that we have the courage to do the right thing, it helps to prevent mistakes and misconduct, and it supports the delivery of high quality outcomes. 

To empower our people to speak up when dealing with situations that do not seem right, we have a dedicated Business Conduct and Ethics Committee. They take testimonials and/or complaints about business wrongdoings and personal conduct and follow up with the issues while ensuring confidential treatment and protection of whistleblowers from retaliation. This committee proved to be a well-utilised whistleblowing channel, with 10 cases brought up to them in FY 18/19. 

“My motivation for being an Ethics Counsellor is to make it easier for my peers to speak up. As I’m “one of them”, they feel more at ease to talk to me about topics that they would not dare to formally bring up to the Ethics Committee. These colleagues were not comfortable or afraid to file a complaint, or to directly discuss it in a formal context (with someone from HR or the Ethics Committee). Also, as I am very close to the teams on a day-to-day basis, I can offer my help easily when something does not seem right, for example, when someone seemed to have made a racist remark or when people seem to be bullying a team member.”

Lauriane Moniot, Ethics Counsellor and Manager in IFS

However, sometimes our people may not feel comfortable to formally bring up issues. In order to reduce psychological barriers to speak up, the Ethics Committee appointed 20 independent ‘Ethics Counsellors’: an extra set of attentive ears to whom we can talk informally when facing situations of ethics, behaviour or values questions. Their inherent proximity to our teams make them our people’s preferred contact when they feel the need to talk. Since the Ethics Counsellor’s appointment in spring 2019, we received three complaints through that channel.

“Sometimes people do not even realise that their behaviours are inappropriate,'' says our Ethics leader Thierry Blondeau. To remind them in a funny way, we display cartoons with real-life examples of ethical no go’s throughout our building on a quarterly basis.

We believe that fostering trust levels with our people forms the basis for restoring public trust.

This material references Disclosures 102-16 and 102-17.

Our Ethics Counsellors

Measuring our progress

In our ambition to deliver on our purpose, we need to rehabilitate trust from two main interest groups: the public and our employees.

As a baseline to measure our progress regarding the trust level of our workforce, we use an Ethics Index. It is built from 5 ethics-relevant questions from our yearly Global People Survey (GPS; see ‘Employee Journey’ for more information), and it covers topics like the demonstration of ethical conduct in our day-to-day work, the perceived freedom to speak up and the sense of responsibility for reporting improper conduct. This year, 61% of our people are satisfied with how ethical conduct is lived at PwC Luxembourg. Even though our staff’s perception about ethics remained quite stable over the past 3 years, and there is a high percentage of neutral opinions (25%), a satisfaction rate of below 70% suggests that this dimension needs to be further monitored.

To measure ourselves against the goal of regaining trust from the public, we conducted a survey in 2016 - with the help of an independent market research institute - that defines the level of trust that Luxembourgish society has in us. The survey results revealed that 46% of the public trusted us. As we would like to better understand this low result, we committed to running a regular follow-up survey. Initially we had foreseen to run the next survey this year. However, the elaboration and deployment of the action plan that we based on last year’s survey results was delayed due to changes in our leadership team. As we did not want to run another survey before implementing the actions derived from our first year’s findings, we decided not to do a new survey this year. We will work on an action plan with our leaders in the months to come and we expect to conduct a follow-up survey by mid next year.

This material references Disclosures 102-44, 102-46, 102-47, 103-1, 103-2 and 103-3.

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