Unveiling Ethical Transparency: Insights from Ethics in Electronics’s 2024 Survey

As the electronics industry faces growing scrutiny over ethics and sustainability, Ethics in Electronics's (EiE) 2024 survey reveals significant gaps in transparency among electronics companies. In this interview, EiE's project leader, Niek Poortman, discusses the survey’s key findings and what companies must do to meet evolving ESG standards.

Elektor: Before we dive into the details of EiE’s 2024 survey, can you tell us a bit about Ethics in Electronics as an organization?

Poortman: Ethics in Electronics was founded in 1994, as part of Lenthe Foundation, years before the electronic industry started to care about ethics and/or sustainability. Ethics in Electronics was raising awareness by triggering columns and articles in Elektor, a magazine and platform for European engineers. Nowadays Lenthe supports communication managers of middle sized companies with research, content and awards. Our ambition is to inspire and assist them in making transparent (internal and external) corporate ethical communication.

Elektor: What were the main objectives you had in mind when you created EiE’s 2024 survey? What were you hoping to uncover?

Poortman: When we designed the 2024 survey for Ethics in Electronics, our primary objective was to gain a clearer understanding of how companies in the electronics industry communicate their commitment to ethics and sustainability. With the upcoming regulatory requirements around ESG reporting, particularly for large enterprises with over 500 employees and, soon, for SMEs in 2025, we wanted to assess how prepared companies were for these shifts.

The goal was to uncover the extent to which these companies are transparent about key aspects, such as their ethical commitments, sustainability practices, employee relations, revenue, and whether they publish reports like annual or sustainability reports. We also aimed to see how well these companies align with emerging trends and stakeholder expectations, such as the integration of Sustainable Development Goals (SDGs).

By benchmarking 100 exhibitors at Messe München 2024, we hoped to highlight the industry's strengths and weaknesses in this area, offering companies an opportunity to identify gaps in their own communications and improve their transparency. Ultimately, our goal was to provide insights that would help companies not only meet legal obligations but also enhance their market positioning, credibility, and attractiveness to employees, clients, and stakeholders.
 
Elektor: How did you go about selecting the companies that participated in the 2024 survey? Was there a particular criterion or segment of the electronics industry you were focusing on?

Poortman: For the 2024 survey, we specifically targeted exhibitors from Electronica 2024 at Messe München. Our focus was on European SMEs (small and medium-sized enterprises) within the electronics sector. The companies we included were randomly selected within this criterion.

The decision to focus on SMEs in Europe was quite intentional. We wanted to assess how well mid-sized companies—often the backbone of the industry—are preparing for the upcoming regulatory changes related to ESG and sustainability reporting. While larger corporations may already have established reporting mechanisms, we were particularly interested in SMEs because they may face more significant challenges in adapting to these new requirements. By concentrating on European companies, we also acknowledged the stricter compliance landscape across the EU, which often sets the standard for global sustainability efforts.

Our goal was to see how these SMEs, who play a critical role in driving innovation within the electronics industry, are positioning themselves in terms of ethical and sustainable practices and how they are communicating these efforts both publicly and within their stakeholder networks.
  Elektor: Your survey revealed that only 16% of companies explicitly reference the UN’s Sustainable Development Goals (SDGs) on their websites. Why do you think there is such a low alignment with these global sustainability standards?

Poortman: The low percentage of companies explicitly referencing the SDGs likely reflects a few key factors. First, while the SDGs are widely recognized as global sustainability standards, many companies—especially SMEs—may struggle with how to integrate these broader goals into their specific business models and operations. For smaller businesses, aligning with SDGs might seem like an additional layer of complexity, particularly if they lack the resources or expertise to connect these global objectives with their day-to-day activities.

Second, many companies may be engaging in sustainable practices without explicitly framing them in the context of the SDGs. They may be addressing issues like reducing carbon footprints, improving labor practices, or enhancing transparency but don’t necessarily use the language of the SDGs in their communication. This could be due to a lack of awareness or simply a disconnect between their actions and how they market their sustainability efforts.

Lastly, SMEs might feel that aligning with such global standards is more relevant for larger corporations with a greater global reach. However, with the growing emphasis on transparency and compliance, especially in Europe, there’s a clear opportunity for companies of all sizes to improve their communication and showcase how their efforts contribute to broader societal goals, like the SDGs. As compliance regulations tighten, we expect more businesses to recognize the importance of aligning their strategies with international standards like the SDGs.

Elektor: One of the key findings was that only 14% of companies make their annual reports publicly available. What are the potential risks for companies that are not transparent about their financial health?

Poortman: Companies that fail to make their annual reports publicly available risk losing trust with key stakeholders like investors, clients, and employees, who increasingly prioritize transparency and accountability. In a competitive market, non-transparency can damage a company’s reputation and limit opportunities for growth. Additionally, with tightening ESG regulations, especially in Europe, companies that aren't proactive in sharing financial and sustainability information may face compliance challenges, making them less attractive to both partners and talent.

Elektor: You found that 62% of companies do not disclose their number of employees. Why might this be a problem? Do you think this lack of transparency negatively affects a company’s perception among potential employees and other stakeholders?

Poortman: The lack of employee information can raise concerns about transparency and trust, especially for potential employees and stakeholders looking for insight into a company's workforce. For job seekers, knowing the size of a company can influence their decision to apply, as it often reflects resources, opportunities for growth, and company culture. For stakeholders, especially those focused on ESG factors, workforce data is key to evaluating a company's social impact and employee relations. Not disclosing this information could make a company seem secretive or less accountable, potentially harming its reputation and attractiveness in a competitive market.

Elektor: You conducted a similar survey in 2022, and the 2024 results show little improvement in transparency. Why do you think electronics companies are struggling to make progress in this area, despite increasing regulatory and stakeholder pressure?

Poortman: Despite growing regulatory and stakeholder pressure, many electronics companies are likely struggling with transparency due to the complexity of aligning internal processes with new reporting standards. Implementing transparent ESG and financial reporting requires significant time, resources, and expertise, especially for SMEs, which often lack the infrastructure of larger corporations. Additionally, there may be hesitation or uncertainty about how best to present this information publicly without compromising competitive advantage. As regulatory frameworks evolve, many companies might still be in the process of adapting, which explains the slow progress despite external pressures.
  Elektor: Ethical leadership endorsement was low, with only 14% of companies featuring a CEO quote on ethics and sustainability. How important do you think visible leadership support is in building stakeholder trust?

Poortman: Visible leadership support, such as a CEO endorsing ethics and sustainability, plays a crucial role in building stakeholder trust. When leaders openly champion ethical values, it signals to employees, investors, and clients that these priorities are integral to the company's mission. It fosters credibility, demonstrating a top-down commitment to sustainability that goes beyond compliance. Without this visible endorsement, stakeholders may question whether ethical initiatives are superficial or lack true backing, potentially undermining the company's reputation and its ability to engage meaningfully with audiences who prioritize ethical business practices.

Elektor: What role can the Ethics in Electronics organization play in helping electronics companies bridge the communication gap, particularly with services like the Ethical Profile?

Poortman: Ethics in Electronics plays a crucial role in helping electronics companies close the communication gap on ethics and sustainability, particularly through services like the Ethical Profile. This service offers companies a structured, editorial approach to sharing their ethical commitments and sustainability efforts. With increasing regulatory demands such as ESG reporting and SDG alignment, companies often struggle to present a clear, comprehensive picture of their initiatives. The Ethical Profile not only highlights a company's actions but also ensures that these efforts are communicated effectively across key platforms—whether through the company’s website, social media, corporate reports, or inclusion in the 2025 Ethical Guide. This increases visibility and credibility among stakeholders, from customers to investors, who are increasingly prioritizing ethics and sustainability in their decision-making.

Moreover, the Ethical Profile helps companies build trust by guiding them to adopt best practices in transparency and corporate responsibility. Ethics in Electronics provides insights based on industry benchmarking, helping businesses identify gaps in their communication and improve how they convey their values. By publicly showcasing their ethical practices, companies can differentiate themselves in the market, attract potential employees, and solidify their reputation as leaders in responsible innovation. This service offers not only compliance with regulations but also a competitive advantage by positioning companies as trustworthy and future-focused.

Elektor: Looking to the future, what do you think will be the biggest challenge for electronics companies in terms of ethics and sustainability communication?

Poortman: Looking to the future, the biggest challenge for electronics companies in terms of ethics and sustainability communication will likely be maintaining transparency while keeping up with increasingly complex regulatory requirements and stakeholder expectations. As ESG reporting becomes more standardized and detailed, companies will need to find ways to align their internal processes with these frameworks, while also ensuring that their communication is clear, credible, and authentic. Striking a balance between regulatory compliance and meaningful, engaging communication that resonates with customers, investors, and employees will be key.

Additionally, as the public becomes more informed and discerning about ethical practices, companies will face the challenge of avoiding "greenwashing"—making superficial claims about sustainability without substantive backing. Electronics companies will need to provide concrete evidence of their initiatives and demonstrate measurable impacts, all while competing for attention in a market increasingly saturated with sustainability messaging. Ensuring that their communication remains genuine and data-driven, while also aligning with global sustainability goals, will be critical for building long-term trust and maintaining competitive advantage.

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Elektor and eeNews Europe are trusted media partners of Ethics in Electronics that are interested in driving ethical innovation in electronics. Ethics in Electronics was founded in 1994. Producer Lenthe Foundation started that year raising awareness with popular columns and articles in Elektor.