Only one in seven German companies meets all EU Whistleblowing Directive requirements

Whistleblowing Report 2021: Only one in seven German companies meets all EU Whistleblowing Directive requirements

The EU Whistleblowing Directive has been met with a great reception from European compliance professionals, yet only one in seven companies in Germany fulfils all the requirements of the new regulation set to come into force on 17 December 2021. This is the key finding of the Whistleblowing Report 2021 presented at the European Compliance & Ethics Conference today. The international study, carried out by the University of Applied Sciences Graubünden in cooperation with EQS Group, surveyed 1,239 companies in Germany, France, Great Britain and Switzerland.

"The Directive comes into force in a few months time but many companies are still not sufficiently prepared. Companies should now use the remaining time to introduce an efficient reporting system that strengthens their processes and culture," explained Professor Dr Christian Hauser from the University of Applied Sciences Graubünden, who as project manager led the drafting and compilation of the report.

More than one third of companies affected by wrongdoing

Currently 73.9 per cent of companies in Germany with more than 249 employees operate a whistleblowing system for the purpose of preventing and uncovering malpractice. In doing so, they meet one of the main requirements of the EU Whistleblowing Directive. Only 43.7 per cent of small and medium-sized companies (20 to 249 employees) currently fulfil this requirement - although most of these companies (those with 50 employees or more) will only be subject to the directive in two years' time. Smaller companies with 20 to 49 employees are unaffected.

The study also reveals that 37.1 per cent of companies in Germany were affected by illegal and unethical behaviour in 2020 which demonstrates the importance of a functioning reporting system. This is higher than in the UK (35.8 %), France (32.8 %) and Switzerland (32.5 %). A good quarter of the affected German companies estimated the financial damage caused by malpractice at more than 100,000 Euros. However, it was pleasing to note that almost 40 per cent of the German companies surveyed were able to uncover more than 80 per cent of the total financial damage with the help of their whistleblowing system.

Corona-related redundancies increase likelihood of wrongdoing

The report also examines the impact of the Corona pandemic on whistleblowing. Last year European companies with a whistleblowing system received on average 34 tip-offs, a significant decrease from 2018 (52). This result suggests that the pandemic led to disruptions in processes and structures for whistleblowing systems, something that other studies have also concluded. However, companies which reduced staffing levels due to the corona outbreak or those where a large share of the workforce worked from home (> 66%) recorded more reports than other companies. These companies were also more likely to be affected by abuses.

Abusing the system an exception

The study once again refutes the frequently voiced reservation that whistleblowing systems may be subject to abuse. In Germany only one in ten reports featured untruthful or defamatory content. This figure was also the same for companies that allow anonymous reports.

"For this reason companies should offer anonymous reporting or they run the risk that important tip-offs relating to legal violations either never arrive or arrive too late," explains Marcus Sultzer, Member of the Management Board at EQS Group. In Germany, 73.2 per cent of whistleblowing systems allow anonymous reporting. In Switzerland (57.1 %), Great Britain (55.3 %) and France (48.8 %), the figures are significantly lower.

You can download the full study here: Whistleblowing Report

Contact

Ulrike Dittmar

Marketing EQS Group

ulrike.dittmar@eqs.com
+49 (0)89 444430-173