Investors x embrace ethics

More than half of the world’s largest sovereign wealth funds, and around a third of the largest US state pension funds, have a disclosed code of ethics for their staff.

According to the Public Fund Investment Policies 2015 annual review produced by the Ohio State University Moritz College of Law, a code of ethics helps to ensure that investments are made in accordance with the fund’s investment policies and regulations.

Singapore’s Government Investment Corporation, for example, states “we expect the highest standards of honesty from everyone in GIC, both in our work and in our personal lives. This includes abiding by the laws of the countries we invest in, and observing our code of ethics in letter and in spirit.”

While most funds disclose only the existence of an internal code of ethics, a few funds disclose the entire code of ethics. The report highlights Mubadala’s report as “exemplary”, with its code of ethics covering a wide variety of ethical issues including “preventing improper payments in cash or kind”, “preventing money laundering”, and “protecting intellectual property and confidential information”.

But the ethical aspirations of a company are only as good as the behaviours of its employees.

The Mubadala code of conduct requires a personal commitment by each employee to make the company’s aspirations of being an ethical and compliant company a reality.

“Our Code of Conduct clearly states our aspiration to remain an ethical and compliant company. However, words are not enough. It requires the personal commitment of each of us to make it a reality. By working for or with the Mubadala Group, you are agreeing to uphold this commitment. Each one of us is required to acknowledge annually that we have read, understand and will comply with the requirements contained in our Code of Conduct. Those who fail to follow our Code put themselves, their colleagues and the entire Mubadala Group at risk. This annual acknowledgment will be made in writing or electronically. New employees will be provided a copy of the Code of Conduct and will complete their acknowledgment during the orientation training.”

The Korea Investment Corporation also has a very strict adherence to a code of ethics and periodically

It has adopted ethics and transparency as basic principles of its operation promotes ethical awareness and transparent management. All employees are required to sign a pledge to comply with the code of ethics and code of conduct upon joining KIC. In addition assessment of employees’ compliance with the code of ethics are conducted at regular intervals, and counselling on related issues is provided on an on-going basis.

Further an ethics training is offered periodically to employees to provide them with guidelines for sound decision-making and ethical judgment, and an ethics hotline has been set up which can be used to report inappropriate or unethical conduct by employees

Separately the CFA Institute has developed a code of ethics for pension fund trustees which outlines 10 fundamental ethical principles.