Conflicts can arise between:
- different stakeholder groups
- different stakeholder groups, where one is ‘a client’
- my interests and those of stakeholders
- my personal behaviour and the values I expect of organisations.
Personal Financial Interests
I have personal financial interests in insurances, pension funds and in securities.
I would ensure that I divested myself of investments above £15,000 in any organisation for which I undertook paid or unpaid work.
Conflicts between stakeholder groups
There are often conflicts of interest between different stakeholder groups. The principal practical and moral task of mainstream business management involving a variety of stakeholders’ interests is to find a workable balance between them. This is just as true of my advice to an organisation. The guiding principle here should be impartiality. However impartiality is not (and possibly cannot be) completely defined without producing perverse effects, such as trying to balance the interests of a major investor against those of a displaced farmer in the South. In such cases the characteristic of my work would be to prioritise the interests of the most vulnerable, or least powerful, group.
Conflicts between stakeholder groups where one is a client
What may appear as a conflict between the interests of a client and those of a stakeholder group is actually a conflict between two stakeholder groups. The ‘client’ is always a representative of a stakeholder group; for a company this may be the shareholders, or quite possibly, a management group.
Conflicts between my interests and those of stakeholders
My own personal interests may conflict with those of a stakeholder group (including a client). This may arise either because of a difference in moral values or because of a financial interest on my part. One value which I do not intend to compromise is that of transparency. There may be differences in other values, such as whether I approve of the specific core activities of an organisation with which I might work. Where I do not approve of the core activities in themselves, such as the arms industry, I will not work with them. But there are other cases in which I may not wish to participate in the activities, but do not seek to impose my values upon them. I would accept work from such organisations.
Conflicts of interest are normally interpreted as cases where one of the following is true: there is an additional financial advantage to be gained from a dual relationship with a client, where one or both parts involve financial gain, and which is possible because one part of the relationship may be concealed and prejudices the other. For example, undertaking undisclosed consulting work together with audit work for the same client in a short period, or providing advice to a company in which an undisclosed investment is held undertaking work for competing organisations or conflicting stakeholder groups over the same issue, where one client (or both of them) is unaware of the other. For example, working for a company and its direct competitor.
These conflicts should be avoided. However some work which I undertake appears inherently to involve a rather similar conflict of interest: for example, an assignment to develop a consensus amongst stakeholders over a contentious issue. However I believe that since the main task here involves confronting stakeholder differences, any prejudice I may have will be quickly exposed and discounted.
Conflicts of interest within audit assignments are covered by the AA1000 standard from AccountAbility to which I adhere for such work. Here the prime remedy is the disclosure of such interests, which I believe this statement satisfies. However some claim that it is possible, and indeed necessary, to be independent and objective in the analysis or review of material in an audit and also that no advice can be given to the audit client. I believe that neither claim is valid.
Firstly, it is not possible to be independent of a client if there is a financial relationship. There is always a financial relationship with a client. Similarly, it is not possible to be objective if that means being uninfluenced by personal interests. Much more helpful is to declare what interests, both organisational and personal, are active.
Secondly, audit work necessarily involves feedback to stakeholder groups. Just as a financial auditor would be failing in their duty if they did not disclose financial performance problems, so a social auditor should disclose findings of poor social performance to all stakeholders, which would include disclosure to organisational management. This approach enables corrective action to be taken.
A conflict of interest may also arise where an audit project combines issuing advice over some aspect of implementation (or actually undertaking the implementation) together with auditing the implementation or its results. This should not be done; if it is done, this fact must be disclosed in the audit.
Conflicts between my behaviour and the values I expect
There may also be conflicts between the values which I profess (and which I may expect of organisations) and my actual behaviour. For example, I may advocate fairly traded products, but not always buy them in my local supermarket. Of these and other inconsistencies, I am, from time to time, guilty.