In the summer of 2023, Act XXV of 2023 – the Whistleblower Protection Act – entered into force. This law regulates complaints, public interest disclosures, and the reporting of misconduct. Today, whistleblowing systems have become a cornerstone of responsible corporate governance and ESG strategy – not only to ensure regulatory compliance but also to secure long-term business and reputational advantages.
EthiCom, developed by the ESG Solution experts of RSM Hungary, is a comprehensive digital whistleblowing solution that fully supports the management of misconduct reports – from ensuring legal compliance and safeguarding data protection and anonymity to strengthening corporate integrity and trust.
In this blog post, we outline why whistleblowing systems established under the Act are important and what concrete benefits they bring to companies in everyday practice.
What does the Whistleblower Protection Act prescribe?
The Act requires companies employing at least 50 persons – and certain regulated industries regardless of headcount – to operate a secure and anonymous whistleblowing channel. The aim is to provide employees, partners, or clients with the opportunity to report suspected misconduct, irregularities, or breaches of law – even anonymously.
We discussed the detailed provisions of the Act in a previous blog post.
Why is operating a whistleblowing system important?
1. Protection of internal and external stakeholders’ rights
The primary goal of the Act is to protect those who draw attention to irregularities. A properly functioning whistleblowing system allows stakeholders to raise concerns safely and without fear of retaliation.
2. Strengthening customer loyalty and brand value
Ethical business conduct enhances customer relationships. Transparent complaint handling and the open management of issues contribute to building and maintaining long-term business partnerships.
3. Ethical and healthy workplace culture
The mere existence of a whistleblowing system sends a clear message to employees: the company does not tolerate misconduct, it provides a constructive channel to address problems, and it ensures a safe form of expression. This increases employee engagement and workplace well-being.
4. Building trust
The transparent operation of whistleblowing channels builds significant trust capital both inside and outside the organization. Whether among colleagues, customers, or investors, trust is based on predictability and ethical behavior. A well-designed system makes these values visible.
5. ESG compliance, evaluation, and sustainability
Whistleblowing systems directly strengthen the “S” (Social) and “G” (Governance) pillars of the ESG framework. Social responsibility and responsible corporate governance are now not just advantages but clear expectations from investors and business partners.
6. Competitive advantage through a conscious compliance strategy
A well-thought-out whistleblowing framework that goes beyond minimum compliance is not only an expectation but a source of competitive advantage. Market players, partners, and suppliers appreciate transparent and responsible operations. This can be a differentiating factor in tenders, collaborations, or investment decisions.
7. Risk reduction and preventive action
The goal of the Act is not to punish mistakes but to detect them in time. A whistleblowing system allows problems to be addressed before they escalate into regulatory or public conflicts. This can result in significant risk and cost reduction for companies by avoiding regulatory fines, employment litigation, or reputational damage.
8. Internal development opportunities
Well-handled reports can provide valuable feedback on internal processes, shortcomings, or weaknesses. A good whistleblowing system is not just a reporting tool but also a driver of continuous improvement, helping to increase efficiency and shape organizational culture.
What type of whistleblowing system complies with the Act?
The Act requires more than a simple email address or mailbox for complaints. It mandates a technical and organizational solution that ensures:
- anonymity,
- traceability of reports,
- secure handling of documentation, and
- GDPR compliance.
An online solution ensures accessibility and supports independent, anonymous case management.
EthiCom – Whistleblowing System by RSM Hungary
EthiCom, developed by RSM Hungary ESG Solution, is a comprehensive digital whistleblowing solution designed specifically to meet the requirements of Act XXV of 2023. The system is secure, user-friendly, supports anonymous reporting, and strengthens corporate integrity – while seamlessly integrating into ESG strategies.
Learn more about the EthiCom system
Do you want to safeguard your company from legal, ethical, and reputational risks?
Discover how EthiCom supports compliance with the Whistleblower Protection Act and helps achieve ESG objectives.
