State-led, top-down approaches imposing regulation on the private sector alone tend to tackle corruption less effectively. Better outcomes can be achieved when they are combined with a bottom-up approach of governments collectively working with the private sector to develop anti-corruption laws, strategies, policies, incentives and sanctions.
The primary responsibility of companies in the area of business integrity is to ensure that their employees, agents and business partners understand and comply with applicable anti-corruption laws.29 To achieve this goal, companies put in place anti-corruption programmes. The business community, especially larger domestic and global companies, and industry associations can also help raise public awareness about the harm of corruption by supporting governmental and other anti-corruption initiatives and advancing good practice standards for their industry and in the supply chain. These activities typically occur in coalition or other associational contexts, but they can also be advanced by individual companies.
Ethical business practices can bring tangible advantages. Better systems and controls to prevent corruption provide for more certainty and control over operations. Perhaps more importantly, they also help to protect an enterprise’s reputation – often its most valuable asset – among employees, customers, business partners and the public at large.
A company’s reputation for integrity is hard-won and easily lost. While legal sanctions generally require the State to bring evidence to prove its case, reputations are judged by public opinion and can be won or lost in the span of a news cycle. Surveys of corporate officers have shown that they consider reputation to be an important, perhaps even, the primary motivation for corporate investments in anti-corruption programmes and other integrity measures.31 Companies may find it more difficult to win contracts, engage suppliers and attract talented employees if their brand is tainted by corruption. Large national and multinational enterprises make an enormous investment in their “brand”, and they depend on a good reputation to attract and retain employees, investors, business partners and customers.
Reputational risk is primarily associated with larger companies that have a national or international profile, but it can also be a significant factor for small businesses. Small- and medium-sized enterprises (SMEs) are also judged on integrity by their employees, customers and business partners. SMEs can suffer economic harm from a poor reputation, particularly vis-à-vis supply chain partners who may require that they only engage with other ethical suppliers.32 As large national and multinational companies work to strengthen integrity practices in their supply chains, local partners with a poor reputation or inadequate anti-corruption practices will increasingly be passed over.33
A significant way a company’s reputation can be impaired is through divestiture by government-controlled investment vehicles who may also make information public about a company’s compromised commitment to integrity.
Governments can publish information about corruption cases on their websites, including through press releases, that describe the resolution of enforcement actions, either through trial or non-trial resolutions, or through actual court filings. This practice adds a reputational aspect to the imposed legal sanctions by making a wide range of information, including the reasons for imposing a sanction about a case, publicly accessible. In some countries, the publication of a judgment can be an optional, complementary sanction for legal persons. Judges can be encouraged to promote transparency about concluded corruption cases to inform the public about corruption risks and to signal that society does not tolerate corruption.
Company financial reports that are filed with securities regulators are a common source of information about pending investigations, as are formal court filings that initiate or settle an enforcement action. Civil society reporting also relies on information that companies make available through corporate responsibility disclosures, such as environmental, social and governance reporting obligations, and other means. A number of the reports released by civil society organizations rank corporate compliance efforts in relation to their peer organizations, providing a reputational boost or decline for company.
States may also use the importance of reputation as an incentive for companies to act with integrity. Companies that have earned a good reputation make for better business partners, and this will often be reflected in a competitive preference in procurement and other business selection processes. States can reinforce this positive market signal through measures of their own that encourage and reward good practice. These positive signals may also provide an advantage with consumers and when recruiting trustworthy employees, particularly in difficult business environments.
Judgments about business integrity are also shaped by a company’s own public reporting on its anti- corruption activities through the UN Global Compact Communication on Progress35 and similar channels, as well as public recognition of its membership in, or support for, integrity initiatives. Similarly, positive recognition in a comparative survey conducted by civil society can enhance a company’s reputation for integrity.
Companies use anti-corruption programmes as a primary means to advance ethical business practices and are thus a focal point for incentives and sanctions analysis. They provide a framework for articulating the values, policies and procedures used by an enterprise to educate its employees, deliver management’s message of integrity, and prevent and detect corruption within the company’s business operations.
The essential elements of an effective anti-corruption programme are well-established and have been detailed in the UNODC publication An Anti-Corruption Ethics and Compliance Programme for Business: A Practical Guide (2013)37 and the OECD Good Practices Guidance on Internal Controls, Ethics and Compliance (2009, updated and expanded in 2021)38. These documents outline good practices that have become global standards or are gaining traction. Importantly, however, anti-corruption programmes should not be just a matter of “ticking all the boxes”. They should be risk-based, operational, documented, tested, appropriately resourced, supported by management and the entity’s governing body, and otherwise meet applicable legal standards.
While there are many different models of anti-corruption programmes, they share certain characteristics, including:
Public reporting is a central tool for communicating corporate engagement on a range of sustainability issues, including efforts to prevent and counter corruption. Public reporting on anti-corruption programmes is grounded on several assumptions – in particular, that transparency can improve internal practices, strengthen public credibility, and provide necessary information to investors and other stakeholders. Reporting allows for awareness-raising within an organization and an increased focus on leadership and resources. It can also allow for benchmarking and improvements to be made over time. While increasing transparency is positive on the whole, one study acknowledges that increased transparency can also expose businesses to greater risk, potentially impeding progress.42
One of the leading public reporting frameworks is the Communication on Progress (CoP) established by the UN Global Compact.43 The CoP44 is the primary mechanism for companies participating in the UN Global Compact to demonstrate progress in the areas of governance, human rights, labour, environment and anti-corruption against the Ten Principles and the Sustainable Development Goals (SDGs). The CoP is an annual questionnaire45 that companies complete to update on their efforts to embed the Ten Principles into their strategies and operations and support societal priorities. The questionnaire provides a standardized way to measure progress, facilitate recognition and transparency and compare corporate actions. The questions are designed to highlight gaps and challenges, showcase successful initiatives and inspire future action, while the complementary data platform allows participants to track progress over time. The image below shows what the CoP seeks to achieve.
As part of the CoP mechanism, the UN Global Compact also requires participating companies to report on internal anti-corruption policies and programmes, on the effectiveness of their implementation and on any involvement in collective action initiatives against corruption. To publicly report anti-corruption efforts is an opportunity for companies to demonstrate their level of accountability and commitment to strengthening business integrity.
Companies are increasingly pursuing responsible conduct and reporting on their actions for multiple reasons. Environmental, social and governance (ESG) information is guiding the decisions of mainstream investors, as well as those of consumers, local communities and civil society organizations that are expecting greater action, transparency, and accountability from business. Once a purely voluntary activity, there is a trend towards mandatory non-financial reporting, particularly given the increasingly complex risk environments in which businesses operate and the rapid rise of disclosure requirements. Today, some of the largest ESG framework providers are the Global Reporting Initiative (GRI) and the European Sustainability Reporting Standards, which require companies to report on a range of governance factors, including business ethics and corporate culture, anti-corruption and anti-bribery, the protection of whistle- blowers and activities related to political influence, including lobbying.46
