Guidance on whistleblowing for boards

September 22, 2020

With a wide-ranging whistleblower protection law set to impact companies all over Europe, we are being asked more frequently for guidance on whistleblowing for boards. What are the legal obligations? How active should board members be? What demands can the board place on the company management team when it comes to whistleblowing systems?  As a board member, it is your mandate to ensure solid governance. Whether your focus is risk mitigation, compliance, business ethics, transparency or anti-corruption, a whistleblowing system is an extremely valuable tool. So, read on for our top guidance on whistleblowing for boards.

“Implementing a whistleblowing solution should be a simple step for a responsible company to take, which nonetheless contributes to the greater good. Dire outcomes are so unnecessary when the means exist to help managers and board members be forewarned.” Gunilla Hadders, co-founder of WhistleB, quote from the WhistleB handbook 2020

1. Remember that whistleblower protection will soon be a compliance matter

By the end of 2021, all organisations in Europe with 50 employees or more will need to comply with their national version of the EU Whistleblower Protection Directive. We will not go into the detailed legal requirements in this article, if you are interested you are welcome to visit our EU Whistleblower Protection resource centre. But we would like to highlight these three things that boards need to be aware of:

  • Affected companies are legally obliged to implement a secure reporting channel and that keeps the identity of any whistleblower confidential. 
  • The system needs to comply with the EU GDPR.
  • Affected companies need to appoint competent personnel to manage the service and establish specific processes, including response times and feedback to the whistleblower.

As a board member you should ensure that your management team already has this new law on its radar screen.

2. Consider whether a member of the board should be on the whistleblowing team

The whistleblowing team receives, processes and follows up reports received through the system. In companies that already have whistleblowing system in place, the team typically provides the board with information about the aggregated results from the system and about very serious matters. However, our work with customers indicates that there is a growing presence of board representatives on the whistleblowing team. Given the board’s responsibility for governing risk, compliance, transparency and fairness, we believe this is positive. As members of the team that has a concrete role for monitoring the whistleblowing system, boards are able to access information that would not normally reach the boardroom.

3. Ask your whistleblowing team to report regularly on key whistleblowing metrics

Monitoring the reports received through the whistleblowing system will provide you as a board member with business-critical information, and enable an important health-check of your company. To that end, if no board members are active in the whistleblowing team, you should ask the team to report regularly on:

  • The number of reports received through the system
  • Whether they are substantiated or not
  • The types of issues most frequently reported
  • The status of investigations, in progress and completed
  • Consequences of investigations

Reports could be part of quarterly feed-back to the board, as an example.

4. Seek to gain valuable insight that underpins governance 

We see a clear trend of board members being active in the analysis of whistleblowing reports. For board members, the whistleblowing system should give valuable ongoing insight to important questions such as:

  • What does the number of cases indicate?
  • Are employees largely complying with the company’s code of conduct?
  • Has the company done enough to define and communicate its policy about frequently reported issues?
  • Do reports indicate that any one department, unit or country within the company presents a high risk?
  • Do the reports indicate a weakness in part of the internal control system? How can this be addressed?

Such insight can direct board and management attention to where it is needed in terms of measures to strengthen business ethics.

5. Review the whistleblowing escalation procedure

No potential matters for investigation should ever slip through the cracks of the organisation. In this, board members can ensure that reports are received and managed for the best of the company. We recommend the following escalation procedure to our customers:

  • If someone in the whistleblowing team is accused, this person should be immediately excluded from the investigation.
  • If your CEO is accused – report to your Chair of the Board.
  • If your Chairperson is accused – report to the other members of the board or the owner, as appropriate.

6. Look at digital systems for the best insights on whistleblowing for boards

“A digital whistleblowing system significantly reduces information security risks. Importantly, risks are minimised when data exists in the digital whistleblowing solution throughout the entire case management process and does not sit in any one person’s in-box or computer.” Quote from the WhistleB handbook 2020.

By far the most efficient and secure way for boards to get the insights needed to monitor the organisation is through a digital whistleblowing system. A digital system provides greater transparency. Everything can be logged; every report made, every action in the case, who accesses and handles the investigation… nothing can be hidden or removed. This builds great trust in the system and cannot be offered by non-digital channels.

While personal data is secure, digital whistleblowing systems can offer up-to-date statistics that allow analysis, for example of trends, types of misconduct, gaps, regions of increased risk, and so on. 

Finally, digital whistleblowing systems can offer boards some peace of mind regarding legal compliance. There is a significant risk of non-compliance given today’s stricter legal landscape. Since interpretation of complex laws and regulations can be embedded and configured into best practices within digital whistleblowing solutions, they can help to minimise compliance risks and prevent information disclosure.

So where do you go from here?

“Ensure customer satisfaction and minimise business risks by showing and communicating that you take business ethics seriously – that you encourage individuals to blow the whistle on suspected misconduct without any risk of retaliation.” Karin Henriksson, co-founder of WhistleB, quote from the WhistleB handbook 2020.

Hopefully our guidance on whistleblowing for boards has already given you some concrete ideas. Make sure that whistleblowing is a regular point on your board agenda, and in particular, stress to management teams the urgency that the upcoming European law presents. 

Contact:

Gunilla Hadders, co-author and Senior Advisor at WhistleB, Whistleblowing Centre
+46  70 214 88 73, gunilla.hadders@whistleb.com

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