June 20 2016, the Principles for Responsible Investment (PRI) and United Nations Global Compact have launched an evidence-based guide for investors and companies on anti-bribery and corruption engagement dialogue.
The guidance presents findings from a PRI coordinated engagement that took place between 2013 and 2015, which involved 34 investors with US$2.7 trillion of assets under management working together to engage 32 multinationals on their anti-bribery and corruption policies and systems. The guide provides practical advice for investors and companies.
The target companies were benchmarked by Transparency International, and improvements in score by individual companies are charted across 17 indicators. The questions asked range from:
“Does the company prohibit retaliation for reporting the violation of a policy?” to “Does the company report regularly on the operation of its whistleblowing policy? (i.e. number of complaints, times whistleblowing hotlines are used, dismissals etc.)?”
Advice on how investors can approach engagement with companies, and how companies can stay ahead of the curve on anti-bribery and corruption is supplemented by feedback from investors and companies gleaned from post-engagement interviews.
Corruption losses are detrimental to investors, companies, governments and society. What’s more, strong anti-corruption policies and their implementation can act as an indicator for good management practice across the board, making the ESG issue particularly useful to investors, and one which can even work towards increasing their confidence in an investment .
A SIGNAL TO INVESTORS
Currently most companies still view their anti-bribery and corruption system as a tool for managing financial or operational risk in the wake of an incident.23 However for investors such measures point towards a company’s integrity, the strength of their management systems and, more widely, the companies’ potential for long-term value creation.
Corporate integrity is difficult to quantify but companies can consider the following actions to increase trust and enhance dialogue with investors.
■■ Cultural change from within: establish and review performance-related integrity targets that can help improve ethical behaviour.
■■ Allocation of responsibility and stakeholders: work with the board and undertake an ongoing review of internal structures; maintain clear lines of management accountability throughout the organisation as well as an open and continuous engagement with key stakeholders
■■ Benchmarking against best practice: determine progress against best practice using available tools such as the Transparency International’s corporate anticorruption benchmark
■■ Reporting: increase disclosure and demonstrate the link between company performance and integrity. Best practice would cover the “basic” and “desired” reporting elements outlined in reporting guidance on the UN Global Compact 10th Principle. The International Corporate Governance Network (ICGN) has also developed guidelines on this area.
Read the two-page summary of the guide Engaging on anti-bribery and corruption – a quick-reference guide
Read the full guide Engaging on anti-bribery and corruption – a guide for investors and companies