In an era of evolving business ethics and compliance challenges, the International Compliance Association (ICA) and LRN have collaborated to present key insights from the 2025 Ethics & Compliance (E&C) Program Effectiveness Report. This recent webinar explored critical findings relevant to organizations in Japan, shedding light on how businesses can adapt to an increasingly complex regulatory and ethical landscape.

Meet the speakers

The discussion featured a distinguished panel of experts with diverse backgrounds in compliance and corporate governance: 

Ty Francis – Chief Advisory Officer, LRN - Ty leads LRN’s research on ethics and compliance program effectiveness globally. He is a former executive at the New York Stock Exchange, with deep expertise in organizational justice, ethical culture, and corporate governance. 

Shuhei Fujimura – Senior Ethics & Compliance Manager, Oxford University Press (OUP) - Shuhei oversees compliance across Northeast and Southeast Asia, including joint ventures and global operations, and is an expert in anti-bribery frameworks, supply chain risk management, and ethics culture-building. 

Olga Belosludova – Associate, Paul Hastings Law Firm (Tokyo Office) - A licensed lawyer in Japan, California, and New York, Olga specializes in corporate compliance and investigations, advising multinational corporations on third-party due diligence, internal investigations, and regulatory enforcement trends. 

The discussion was led by Pekka Dare, President of the International Compliance Association, who guided the expert panel through an in-depth conversation on compliance effectiveness in Japan and beyond. 

Key takeaways from the webinar 

The conversation revolved around six critical themes shaping the future of compliance:

1. Values-based compliance programs are more effective 

Compliance programs that focus on values and ethical culture significantly outperform those that rely on strict rules and policies alone. High-impact programs integrate ethical decision-making, organizational justice, and a culture of speaking up. The panelists shared the following views on the topic: 

• Ty Francis said that programs based on values—not just rules—are significantly more effective. Employees need to understand the ‘why’ behind compliance, not just the ‘what.’ 
• Shuhei Fujimura agreed adding that by embedding ethics into daily business decisions, it ensures that compliance is part of the organizational DNA, not just a box-ticking exercise. 
• Olga Belosludova added that many companies still treat compliance as a formality even though regulators now expect to see ethics and compliance embedded in decision-making. 

2. The benchmarking gap continues to widen  

The effectiveness gap between high-performing and average compliance programs is growing. Globally, high-impact programs:

• Ty Francis noted that in Japan, the gap is even more extreme—high-impact programs are 2.6 times more effective than medium-impact ones and companies that fail to modernize risk being left behind. 
• Shuhei Fujimura stressed that regularly reviewing compliance risks using real-world data will help Japanese organizations identify weak spots and improve efficiency. 

3. Middle management: The critical disconnect 

The report highlights a persistent gap between senior leadership and middle management when it comes to ethical decision-making. 79% of senior executives are reported to make decisions aligned with company values, while only 37% of middle managers are reported to do the same. This gap, though slightly smaller in Japan, still poses a challenge to embedding ethical values throughout an organization. 

• Ty Francis highlighted that organizations need to move from ‘tone from the top’ to ‘tone from the middle.’ Middle managers must be equipped to reinforce ethics daily. 
• Shuhei Fujimura suggested that companies use real-life case studies in compliance training to make ethical decision-making more relatable to employees at all levels. 
• Olga Belosludova emphasized that transparency is key. Leaders need to openly discuss compliance issues with employees, rather than keeping them confidential. 
  

4. The role of data in compliance monitoring 

Data analytics plays a crucial role in compliance program effectiveness. The report found that high-impact programs were 69% more likely to leverage misconduct trend analysis to proactively identify risks, compared to 27% of medium-impact programs in Japan. 

• Ty Francis highlighted that companies that use data-driven compliance programs outperform their peers and organizations that ignore data risk blind spots in their compliance efforts. 
• Shuhei Fujimura shared that OUP uses compliance hotline data to pinpoint areas needing further investigation, which helps us stay ahead of emerging risks. 
• Olga Belosludova suggested that companies not only collect compliance data but also communicate findings with employees to build trust and accountability. 

5. Third-party due diligence remains a weak spot  

One of the report’s more alarming insights is that only 15% of low-impact programs invest significant effort into third-party due diligence, compared to 51% of high-impact programs. In Japan, this gap is particularly pronounced, with many organizations still relying on paper-based, checklist-driven due diligence approaches. 

• Olga Belosludova pointed out that regulators now demand ongoing monitoring of third parties and that a one-time risk assessment is no longer sufficient. 
• Pekka Dare recommended that businesses ensure they are able to demonstrate a risk-based methodology for onboarding and monitoring third parties. 
• Shuhei Fujimura agreed, adding that due diligence is not just about checking a box. It should actively influence decision-making and contract negotiations.

6. Generational differences in ethical perceptions  

The research underscores a generational divide in ethical attitudes and rule adherence. 29% of Gen Z employees believe breaking rules is acceptable to get the job done, compared to only 12% of Baby Boomers. Additionally, Gen Z employees were twice as likely to admit to violating their company’s code of conduct than older employees. 

• Ty Francis noted that Gen Z employees need compliance training that resonates with them—short, digital, and scenario-based. 
• Olga Belosludova suggested companies tailor their compliance messaging for younger employees with emphasis on values and real-world decision-making. 
• Shuhei Fujimura added that ethical culture should be part of onboarding and daily business—not just an annual training session. 
  

Practical advice for Japanese organizations 

• Invest in robust data analytics: Organizations should develop real-time compliance monitoring systems to detect and mitigate risks effectively.
• Enhance middle management training: Senior leaders must communicate ethical expectations clearly and empower managers to make integrity-driven decisions. 
• Upgrade third-party risk management: Strengthen due diligence processes and ensure compliance considerations influence business decisions. 
• Foster a culture of transparency: Share compliance insights and ethical challenges across all levels of the company to build psychological safety and encourage employees to speak up. 
• Adapt compliance programs for younger employees: Modernize training methods to align with Gen Z’s learning preferences and workplace expectations.
  

Final thoughts: The future of compliance in Japan

As Japanese companies navigate the complexities of 2025, the insights from this webinar and the 2025 E&C Program Effectiveness Report serve as an invaluable guide. The report makes one thing clear: organizations that take a proactive, data-driven, and values-based approach to compliance will be the ones that succeed in today’s rapidly evolving regulatory landscape. The widening gap between high-impact and medium-impact programs demonstrates the importance of leveraging analytics, strengthening middle management engagement, and ensuring that compliance is embedded in business decision-making rather than existing as a box-ticking exercise. Third-party due diligence remains a growing challenge, and organizations must move beyond static, one-time risk assessments to continuous monitoring and evaluation of their supply chains and business partners. Furthermore, generational shifts in the workforce demand new approaches to compliance training, ensuring that younger employees receive engaging, scenario-based education that aligns with their learning preferences. Transparency, ethical leadership, and a strong culture of speaking up will be the pillars of truly effective compliance programs moving forward. Organizations that embrace these insights will not only mitigate risk but also build a sustainable and resilient ethical culture that drives long-term success.

For a more comprehensive look at the trends shaping the future of compliance, explore the full 2025 Ethics & Compliance Program Effectiveness Report and start implementing best practices today.