Originally published in NAVEX Global's Top 10 Risk & Compliance Trends for 2021 eBook. You can download the full eBook here.
In 2021, whistleblowers will come into their own in ways previously unseen. While the United States has had whistleblower protections for two decades, Europe and the Asia-Pacific region are setting new standards in requirements for whistleblower solutions and whistleblower protection. In 2021, we expect to see an explosion of whistleblower requirements in organizations, responding to a massive change in regulation, as well as a shift in the perception of whistleblowers.
In Europe: From Sceptic to Protector
Europe is in the midst of a regulatory leap forward for whistleblower protection. The EU Directive on Whistleblower Protection is a significant new piece of legislation that will shake up the European business landscape starting in 2021. The new laws will elevate the status of whistleblowers, as well as the role organizations play in bringing unethical behavior and criminal activities to light. It will also drive professionalization and standardization for whistleblowing systems and the management of whistleblower reports.
The Directive sets minimum requirements that can affect organizations significantly. For instance, the Directive requires organizations with 50 or more employees, or with an annual turnover or total assets of more than €10 million (about $11.1 million USD), to have a secure and confidential internal reporting channel. Additionally, whistleblowers must be protected against retaliation; the burden of proof lies on the organization that retaliation has not occurred. These requirements will inevitably shine the spotlight on whistleblower systems in the coming year.t
The E.U. Whistleblower Law will elevate the status of the whistleblower, increase the role organizations play in bringing unethical behavior to light, and drive standardization and professionalism.
In addition to compliance with the new laws, organizations will (or should) ensure their internal reporting systems are professionally run, to encourage internal reporting. Consequently, in 2021, we expect to see an expansion of the compliance function and related services in Europe, benefitting the profession as a whole.
In the upcoming year, the Directive will lead to acultural shift on the continent for whistleblowers. Look for the rise of the “whistleblower hero!” Protections granted by the new law, clear data protection requirements, and the respect for professionals appointed to handle cases properly will create newfound respect for whistleblowers and improve their status.
In the U.S.: Elevated Whistleblower Status
In 2020, the U.S. Securities and Exchange Commission (SEC) published amendments to the rules governing its whistleblower program to provide greater clarity and transparency in the award determination process. Despite COVID, the SEC hit record highs in 2020 for the number of claims processed, the amount awarded, and the number of awards made to whistleblowers. Expect even higher record numbers for all of these metrics in 2021.
In the Asia-Pacific Region: Increasing Regulation
Until very recently, Asia-Pacific was thought of as a hostile environment for whistleblowers. That’s increasingly untrue. In 2020, Japan, Australia, and other countries implemented penalties for companies that do not have compliant whistleblower programs. Japan passed amendments to its Whistleblower Protection Act such that companies that fail (or fail to try) to establish a reporting system are subject to administrative action by the Consumer Affairs Agency. In Australia, the failure of an in-scope company to have a compliance whistleblowing policy can attract fines of over $125,000 AUD.
Protecting the identity of whistleblowers and maintaining confidential investigations ratcheted up in 2020 in Asia-Pacific. Amendments to a key anti-corruption law in Korea increased penalties for improperly revealing a whistleblower’s identity. In Japan, employees that disclose the identity of a whistleblower without a justifiable reason may be fined. And in Australia, new laws enhance the protection of whistleblowers during and following the reporting process.
A bill in New Zealand is working its way through the parliamentary process, replacing the Protected Disclosures Act of 2000. It clarifies the definition of “serious wrongdoing,” enables people to report directly to an appropriate authority at any time, and strengthens protections for disclosers. Like New Zealand, other countries are likely to either update or implement new whistleblower protections throughout Asia-Pacific in 2021.
Global Trends in 2021
Confidentiality is the hallmark of many new laws.
Failure to keep a whistleblower’s identity confidential may have financial, reputational, and even criminal penalties. We expect this trend to continue, with stronger protections for whistleblowers and fines for organizations and individuals that fail to protect their identities. We’ve even seen potential prison terms for disclosure of whistleblowers’ identities. The availability of stiffer penalties under the law is expected to escalate in 2021.
More countries are adopting a sympathetic and positive attitude toward anonymous reporting. Global data from NAVEX Global’s 2020 Risk & Compliance Hotline Benchmark Report shows that 59% of reporters choose to remain anonymous. We expect more countries, explicitly or implicitly, to endorse anonymous reporting and to remove the legal barriers that have previously existed, to encourage internal rather than external reporting.
Laws in Asia-Pacific and Europe will continue to expand the definition of whistleblowers. Once, it was only current employees; but the Directive in Europe, the amendments to the whistleblower laws in Australia, and the new Japanese law all extend protections and reporting capacity to others, including former and retired employees and directors. We expect the legal definition of who can be a whistleblower to continue expanding significantly in 2021.
Lastly, we expect laws will continue to allow larger fines and penalties against companies that engage in retaliation or fail to implement a compliant whistleblowing system.
In 2002, Time magazine named the Enron whistleblowers their persons of the year, earning them a cover story. In 2021, brave whistleblowers will be more revered globally, as laws and public policy strongly support their courage.
Steps for an Organization to Take
- Review and update your investigations protocol and strengthen the language relating to whistleblower confidentiality.
- Include a section about confidential and anonymous reporting in your onboarding and annual Code of Conduct refresher training to highlight their importance to employees.
- Review the security features in the technology system that manages your whistleblower7 complaints, cases, and the evidence you discover.
- Give specialist training to those who will be involved in investigations to reinforce the significance of confidentiality.