Reporting Guidance on the 10th Principle against corruption 2 Launched in 2000, the United Nations Global Compact is a both a policy platform and a practical framework for companies that are committed to sustainability and responsible business practices. As a multi-stakeholder leadership initiative, it seeks to align business operations and strategies with ten universally accepted principles in the areas of human rights, labour, environment and anti-corruption and to catalyze actions in support of broader UN goals. With over 7,000 signatories in more than 135 countries, it is the world’s largest voluntary corporate responsibility initiative. www.unglobalcompact.org Transparency International is the global civil society organization leading the fight against corruption. Through more than 90 chapters worldwide and an international secretariat in Berlin, Germany, TI raises awareness of the damaging effects of corruption and works with partners in government, business and civil society to develop and implement effective measures to tackle it. www.transparency.org At the invitation of the UN Global Compact, Transparency International co-chaired the Taskforce that developed this Reporting Guidance and acted as its secretariat. Disclaimer The UN Global Compact and Transparency International make no representation concerning, and do not guarantee, the source, originality, accuracy, completeness or reliability of any statement, information, data, finding, interpreta- tion, advice or opinion contained within the publication. This publication is intended strictly as a learning document. Copyright The material in this publication is copyrighted. The UN Global Compact encourages the dissemination of the content for educational purposes. Content from this publication may be used freely without prior permission, provided that clear attribution is given to UN Global Compact and that content is not used for commercial purposes. © 2009, UN Global Compact Acknowledgements The UN Global Compact Office wishes to thank Transparency International and the members of the Taskforce that developed this Reporting Guidance. It also thanks the Global Compact Local Network focal points and companies that took part in the field-testing of this publication. Designer: Tannaz Fassihi 1 Contents Foreword by Huguette Labelle 2 Welcome Message from Georg Kell  3 About this Reporting Guidance  4 1. Objectives and Structure  6 2. Communication on Progress  7 Section 1: The Business Case for reporting on the 10th Principle 10 1. Increased internal integrity and transparency  10 2. Enhanced reputation  11 3. Common information basis  11 Section 2: Reporting Elements for the 10th Principle  12 1. Commitment and Policy  16 2. Implementation  22 3. Monitoring  30 Appendix A: Examples of what to report on  35 Appendix B: List of sources for reporting indicators  38 Appendix C: Additional Global Compact resources on anti-corruption  40 2 Foreword by Huguette Labelle Transparency is a first line defence against corruption. Through transparency, organizations can communicate to stakeholders and the public their values and polices and how they are being translated into action. Transparency sets a tone of openness, accessibility and account- ability, building confidence among stakeholders that they are treated in an equitable and responsible manner. Transparency of commitment to values and openness about policies and processes will not only enhance a company’s reputation but act as a substantial deterrent to those wishing to act corruptly. Public reporting is a formalization of transparency and an essential link in the accountability chain. Through public reporting a company provides information in a structured way on mat- ters important to stakeholders. Reporting enables companies to build public trust by meeting the growing expectations that companies adopt and implement robust anti-corruption mea- sures. However, research by Transparency International shows that many leading companies, whilst having high-level, strategic commitments to prevent corruption, still have a long way to go in reporting how they integrate these commitments into their policies and activities. It is likely that small and medium enterprises have even further to go. Therefore, Transparency International is delighted to have contributed to the development of the Global Compact’s Reporting Guidance on the 10th Principle. We believe the Reporting Guidance provides practical and comprehensive steps that will enable companies of all sizes to report progress on the 10th Principle, according to their particular circumstances and aims. The introduction by the Global Compact of the Reporting Guidance to its thousands of signa- tories marks a significant step for anti-corruption. The Guidance sets a new benchmark and Transparency International recommends it to all companies as well as signatories of the Global Compact as an essential tool for reporting on anti-corruption. We look forward to working with the Global Compact in further promoting the Guidance and to seeing the results over time reflected in improved reporting not only in Communications on Progress but in companies’ overall performance. Huguette Labelle Chair, Transparency International Member, UN Global Compact Board 3 Welcome Message from Georg Kell Corruption is a complex and intricate issue, with wide scope. Numerous tools and resources have been created to assist companies in the development and effective implementation of anti-corruption policies. Despite these efforts, many businesses still struggle with the integra- tion of anti-corruption measures into their day-to-day operations. Consequently, these struggles are also reflected in corporate reporting practices on anti-corruption. Even among Global Compact participants, the 10th Principle on Anti-Corruption is often identi- fied as the most difficult to implement. Many companies do not report yet on the 10th Prin- ciple in the mandatory annual Communication on Progress (COP). The fallout from the financial crisis and the subsequent global economic downturn has created an increasing demand for companies to report on non-financial matters. Much of this demand is driven by regulators, but also by consumers and civil society organizations. And most nota- bly, investors are increasingly considering environmental, social and governance issues, includ- ing the implementation of anti-corruption measures, material to their investment decisions. Beyond external factors, quality reporting on anti-corruption can effectively support the deeper integration of anti-corruption measures into business operations by establishing an external ac- countability mechanism and stimulating companies to improve their internal management sys- tems. Further, reporting can allow companies to share best practice and learn from each other. This Reporting Guidance on the 10th Principle was developed to assist companies in this often daunting task, and I hope it will serve as a practical resource in identifying reporting priorities on the path to performance improvement and enhanced accountability and transparency. Georg Kell Executive Director UN Global Compact 4 About this Reporting Guidance The integration of a clear anti-corruption commitment into the corporate citizenship agenda sends a strong signal that the private sector shares responsibility for countering corruption. Yet, this remains one of the most challenging topics for organizations to report on, not only because of its complex and hidden nature, but partly owing to the lack of a practical reporting guidance. The difficulty of reporting has been confirmed by Global Compact implementation surveys that have found that too few Global Compact business participants report comprehensively on anti- corruption policies and implementation mechanisms1. In this context, the Global Compact Working Group on the 10th Principle appointed the Task- force to create a Reporting Guidance on the 10th Principle as a tool to give practical guidance to small, medium and large companies as they report on their efforts. This Reporting Guidance was created over the course of 15 months (from September 2008 until November 2009) by the Taskforce which included non-governmental organizations, anti-corruption experts and business practitioners: Members of the Taskforce (in alphabetical order): n A  ccenture: Sven Biermann (co-chair), Chad A. Fentress, Kari K. Gregory n B  ASF: Eckart Sünner n G  lobal Compact Local Network Spain: Isabel Garro, Cristina Sanchez n S  anlam: Jacques Marnewicke n S  iemens: Daniel Kronen, Sabine Zindera n T  otal: Laure Armandon, Richard Lanaud n T  ransparency International: Jermyn Brooks, Birgit Forstnig-Errath (co-chair), Peter Wilkinson (co-chair) n UN Global Compact: Simon Gargonne, François Georges, Oliver Johner, Olajobi Makinwa, Mark Snyderman n U  N Office on Drugs and Crime: Maria Adomeit, Giovanni Gallo n W orld Economic Forum Partnering Against Corruption Initiative (PACI): Michael Pedersen Observers of the Taskforce (in alphabetical order): n F  &C Asset Management: George Dallas n G  lobal Reporting Initiative: Sean Gilbert, Mike Wallace Extensive consultation was conducted to ensure the usefulness and user-friendliness of the Reporting Guidance, such as: ■■ anonymous field testing over a period of three months by Global Compact participants (companies and Global Compact Local Networks); ■■ individual consultations with other Global Compact Local Networks (mainly from emerging markets) and the investment community. The Reporting Guidance thus represents a global, multi-stakeholder endeavour to extend the reporting of companies’ anti-corruption efforts in their Communications on Progress (COP). 1 See: Global Compact Annual Review 2007 and 2008 5 The Global Compact’s 10th Principle On 24 June 2004, the first Global Compact Leaders’ Summit announced that the Global Compact, the world’s largest corporate sustainability initiative, had adopted a 10th Principle against corruption: “Businesses should work against corruption in all its forms, including extortion and bribery.” The adoption of the 10th Principle sent a strong worldwide signal that the private sector and other non-state-actors share responsibil- ity for eliminating corruption and stand ready to play their part. The 10th Principle commits Global Compact participants not only to avoid bribery, extortion and other forms of corruption, but also to develop policies and concrete programmes to address it. Companies are challenged to join governments, UN agencies and civil society to realize a more transparent global economy. The 10th Principle was the response of the business community and other non-state actors to the adoption of the United Nations Convention against Corruption. The UN General Assembly adopted the Convention in October 2003, and it entered into force on 14 December 2005. As of September 2009, over 140 States had ratified the Convention. As the sole global, legally binding anti-corruption instrument, the Convention provides a unique opportunity to prevent and fight corruption in both public and private sectors. With this in mind, the 2004 Global Compact Leaders’ Summit designated the UN Convention against Corruption as the underlying legal instrument for the new 10th Principle. In fact, while the Convention is legally binding only for countries that have ratified it, its values and principles are applicable to the widest spectrum of society, in- cluding the business community. The principles enshrined in the Convention can serve as an inspirational tool for companies adopting or reviewing internal anti-corruption policies, strategies, and measures. Following adoption of the 10th Principle, the Global Compact established a multi- stakeholder working group to provide strategic input to the Global Compact’s work on anti-corruption and to define the needs of the business community in implementing the principle. The Working Group on the Implementation of the UN Global Compact’s 10th Principle also aims to contribute to greater coherence by supporting the alignment of existing initiatives and avoiding the duplication of efforts. The Working Group has established several task forces to develop various tools and resources to help businesses achieve the goals of the 10th Principle. This Guidance is the result of one such effort. 6 1. Objectives and Structure This Reporting Guidance provides a comprehensive set of Reporting Elements (Basic and Desired), which can help any organization by: ■■ identifying the components of a comprehensive anti-corruption programme; ■■ giving practical examples on how and what to report, including references to indicators from other initiatives; and ■■ providing a clear and easy-to-use format to structure and facilitate the reporting of anti-corruption activities in the annual Communication on Progress. The objective of this Reporting Guidance is to set out and promote the strong benefits of reporting on anti-corruption in the Communication on Progress by providing a structured and comprehensive guidance document that encourages thorough and consistent reporting of anti-corruption efforts by signatories. The Global Compact invites you to use the Reporting Guidance in developing your COP and to describe activities and outcomes in an aligned manner and thereby share your experiences and endeavours. While the Reporting Elements require descriptive reporting, some propose that you addition- ally provide quantitative reporting (e.g., number of employees trained); however, the key as- pect is to illustrate practical actions (i.e., activities undertaken, outcomes achieved or expected) that you have taken to implement the 10th Principle. Consequently, the Reporting Guidance focuses mainly on descriptive Reporting Elements, such as a description of responsibility assigned to oversee and implement your anti-corruption programme. The Reporting Guidance contains two principal sections: ■■ Business Case for reporting on the 10th Principle: This section explains and underscores the benefits of reporting on the implementation of the 10th Principle. (pages 10-11) ■■ Reporting Elements for the 10th Principle: This section sets out a list of Basic and Desired Reporting Elements for the 10th Principle. Each Reporting Element is supplemented with practical guidance on the importance of the Element, how to implement it and examples of what to report on. (pages 12-33) Finally, the Appendices provide further practical guidance with a summary of examples for use in your reporting against relevant Reporting Elements, details of five initiatives offering report- ing indicators on anti-corruption (FTSE4Good, the Global Reporting Initiative, the International Corporate Governance Network, the Partnering Against Corruption Initiative and Transparency International) and a list of other Global Compact resources related to the 10th Principle. 7 2. Communication on Progress While the Global Compact is a voluntary initiative, it includes a mandatory disclosure frame- work for business participants. Companies committed to implementing the Global Compact principles are required to communicate on their implementation through an annual report, known as the Communication on Progress (COP). The COP can serve as a learning tool, but can also be seen as a basis for public dialogue and an effort towards greater accountability. COPs are published on the Global Compact website and many show good practices or inspirational examples of corporate implementation. The COP is based on concepts of public accountability, transparency and continuous perfor- mance improvement. COPs are important because they: ■■ enhance the credibility and value of an organization’s participation in the Global Compact; ■■ serve as a source of information for stakeholders on an organization’s environmental, social and governance activities and performance; ■■ facilitate learning and information sharing for Global Compact participants; ■■ contribute to the development of a useful collection of organizational practices; ■■ drive change in organizations; and ■■ protect the integrity and accountability of the Global Compact. Practical Guide to Communication on Progress The Global Compact has published a Practical Guide to Communication on Progress (second edition)2 which provides valuable information on the creation and sharing of a COP and showcases several practical examples from participants. The Practical Guide also defines key concepts related to the reporting process, such as reporting boundaries, sustainability context, material- ity, sphere of influence, as well as indicators from the Global Reporting Initiative.3 Reporting requirements of the Communication on Progress A revised Communication on Progress Policy took effect on July 1st 2009.4 New business partici- pants must report during the first year of participation on at least two of the four issue areas: human rights, labour, environment and anti-corruption. After five years of participation, participants must report on all four issue areas. Benefits of using the Reporting Guidance in preparing your Communication on Progress There are various benefits from reporting against the 10th Principle and your company is encouraged to start reporting early in your participation in the Global Compact. The benefits include: ■■ demonstrating the commitment of reporting companies to greater accountability and transparency; ■■ meeting the growing demand for reporting on non-financial matters from a wide range of stakeholders (ranging from regulators to civil society); ■■ strengthening internal anti-corruption systems through increased transparency; ■■ enhancing reputation; and ■■ stimulating multi-stakeholder dialogue related to anti-corruption. 8 Year-on-year reporting Organizations are required to provide COPs annually and focus on progress made year-on-year. When you first use this Reporting Guidance and its new structure of Basic and Desired Report- ing Elements you may already have reported in previous COPs on some of the topics covered in the Reporting Elements. However, to enable readers of COPs to assess your progress on anti- corruption measures, you are encouraged to report again information that you have previously reported or provide a link to where the information can be found on your website. For subsequent years, you need not repeat previous reporting but you should indicate in which year the information was provided in a COP and the link to where the information can be found. 2 http://www.unglobalcompact.org/AboutTheGC/publications.html#COMMUNICATION%20ON%20PROGRESS 3 For more information read Making the Connection - Using GRI's G3 Guidelines for the COP http://www.unglobalcompact.org/docs/communication_on_progress/4.3/Making_the_connection.pdf 4 http://www.unglobalcompact.org/COP/ 9 10 Section 1: The Business Case for reporting on the 10th Principle The integration of a clear anti-corruption commitment into the corporate responsibility agenda sends a strong signal that the private sector shares responsibility to address and counter corrup- tion. Yet, countering corruption remains a serious challenge for implementation, monitoring and reporting, owing to the complex and hidden nature of the issue, but also partly because of the lack of a practical reporting guidance. At the same time, public reporting on anti-corruption is not only an important way of demon- strating the sincerity of the corporate commitment to the Global Compact’s 10th Principle. It can also provide substantial benefits, such as strengthening internal anti-corruption systems through increased transparency, enhancing reputation and providing a common basis for mea- suring progress and learning from your peers. There are three major benefits from reporting on anti-corruption. The first two categories apply to individual organizations (independent of their size), whereas the third category outlines benefits also for the overall community. 1. Increased internal integrity and transparency Reporting on anti-corruption raises awareness among employees and provides a means of control and discipline for the management. Formalized and consistent reporting on anti-corruption activities, integrated into already estab- lished reporting processes (e.g., accounting), ensures reliable and measurable internal opera- tions. It shows to employees that the fight against corruption is taken very seriously (“What gets measured gets done”). This results in the following benefits: ■■ strengthening anti-corruption behaviour, including better risk management and compliance; ■■ encouraging and supporting employees in resisting corruption; ■■ providing management with a foundation for analysis of progress, planning and continuous improvement; and ■■ motivating employees to be proud of the organization’s integrity and reputation. 11 2. Enhanced reputation Reporting on anti-corruption positively influences your organization’s reputation in the marketplace and society. An organization’s reputation is a major success factor in today’s globalized world. It has a considerable impact on purchasing and contracting capabilities, marketing and recruitment competitiveness. Proactively reporting on anti-corruption efforts can positively influence public awareness and perception, resulting in the following concrete and indirect benefits for your organization: ■■ obtaining a competitive advantage as a preferred choice of ethically concerned customers, suppliers and other stakeholders; ■■ attracting highly skilled and motivated people; ■■ supporting and encouraging business partners and challenging competitors to resist corruption by setting standards of excellence; ■■ reducing your cost of financing by helping external financing institutions to assess risk premium through enhanced information; and ■■ increasing the credibility of voluntary initiatives such as the Global Compact by demonstrating commitment to their values and principles through reporting on progress. 3. Common information basis Reporting on anti-corruption establishes a common language to mea- sure, compare, discuss and improve anti-corruption activities and practices. Finally, reporting on anti-corruption activities based on a consistent reporting guidance enables different stakeholders to share information, raise awareness, learn from each other and im- prove practices. Stakeholders, as well as each individual organization, can benefit from this in multiple ways: ■■ sharing experience and procedures with other organizations; ■■ stimulating multi-stakeholder dialogues; ■■ increasing importance of disclosure on anti-corruption activities in overall sustainability agendas; and ■■ driving media coverage of good anti-corruption practices through provision of comparable progress reports. 12 Section 2: Reporting Elements for the 10th Principle This Reporting Guidance provides a comprehensive set of 22 Reporting Elements which can be reported against in a mainly descriptive manner. Recognizing that companies report on anti-corruption in different ways and to different extents, the Reporting Elements are organized in an easy-to-apply matrix: By reporting levels: ■■ Basic Reporting Elements: These 7 Elements are considered to be the basic level of reporting on an organization’s anti-corruption policies and procedures; ■■ Desired Reporting Elements: These additional 15 Elements give you the opportunity to report more extensively on your anti-corruption policies and procedures. By categories: ■■ Commitment and Policy: how your organization has committed to a zero-toleration of corruption; ■■ Implementation: how your organization’s commitment has been put into practice through detailed policies and systems; ■■ Monitoring: how your organization monitors progress and has a continuous process for improvement. Basic Desired Reporting Elements Reporting Elements Commitment B1-B2 D1-D5 and Policy Implementation B3-B6 D6-D11 Monitoring B7 D12-D15 Your organization is encouraged to develop its own anti-corruption practices and report against the Reporting Elements as the process of developing content for reporting will in itself assist your organization in reviewing and improving anti-corruption policies and programmes. 13 Required reporting against Basic Reporting Elements From 2011, all Global Compact participants will be required to report in their COP against Basic Reporting Elements, described below. If you use sustainability or corporate citizenship reports as the reference for your COP reporting, you will need to align or reference your report- ing in the reports to the Basic Reporting Elements. Additionally, you can choose to report on one or more of the 15 Desired Reporting Elements, depending on the extent of your reporting systems and progress made in implementing the 10th Principle against Corruption. In this way, as an increasing number of organizations report on their practices, other organizations can use these examples to improve their own anti- corruption programmes. For each Reporting Element, a description explains its importance, details how it is usually implemented, and presents examples, both qualitative and quantitative, of what to report on. The examples illustrate the types of information that can be reported on, and are neither an exhaustive list nor a list of minimum requirements. Appendix A provides a summary of the examples of what to report on for each of the 22 Reporting Elements. Finally, each Reporting Element includes an example of a reporting indicator from another ini- tiative, such as the Global Reporting Initiative. The examples show that the Reporting Elements are rooted in existing practice and reporting on the Elements will help when reporting against indicators of other initiatives. The Global Compact asks reporting companies to reference the Reporting Guidance when de- veloping a COP, e.g., in the index of a sustainability report. The next section provides an overview of the 22 Reporting Elements in the easy-to-apply matrix and is then followed by detailed guidance for each of the Elements, grouped by the three categories: ■■ Commitment and Policy ■■ Implementation ■■ Monitoring For each category, the Basic Reporting Elements are listed first, followed by the Desired Reporting Elements. 14 Matrix of Reporting Elements Commitment and Policy Basic Reporting Elements Desired Reporting Elements Publicly stated commitment to work against corruption in B1 D1 Publicly stated formal policy of zero-tolerance of corruption all its forms, including bribery and extortion Commitment to be in compliance with all relevant laws, Statement of support for international and regional legal B2 D2 including anti-corruption laws frameworks, such as the UN Convention against Corruption D3 Carrying out risk assessment of potential areas of corruption D4 Detailed policies for high-risk areas of corruption D5 Policy on anti-corruption regarding business partners Implementation Basic Reporting Elements Desired Reporting Elements Actions taken to encourage business partners to implement B3 Translation of the anti-corruption commitment into actions D6 anti-corruption commitments Management responsibility and accountability for implementa- B4 Support by the organization’s leadership for anti-corruption D7 tion of the anti-corruption commitment or policy Communication and training on the anti-corruption com- Human Resources procedures supporting the anti-corruption B5 D8 mitment for all employees commitment or policy Internal checks and balances to ensure consistency with Communications (whistleblowing) channels and follow-up B6 D9 the anti-corruption commitment mechanisms for reporting concerns or seeking advice Internal accounting and auditing procedures related to anti- D10 corruption D11 Participation in voluntary anti-corruption initiatives Monitoring Basic Reporting Elements Desired Reporting Elements B7 Monitoring and improvement processes D12 Leadership review of monitoring and improvement results D13 Dealing with incidents D14 Public legal cases regarding corruption Use of independent external assurance of anti-corruption D15 programmes 15 Commitment and Policy 16 1. Commitment and Policy B1 Publicly stated commitment to work against corruption in all its forms, including bribery and extortion Importance: What to report (Examples): The culture of integrity and compliance in ■■ Provide your organization’s statement an organization starts at the top. Commit- against corruption. ment means that the organization shows by ■■ Describe where the statement can be found its public communications and actions that it publicly (e.g., website, corporate citizenship will not tolerate corrupt behaviour by its em- report). ployees or business partners. A public state- ment enhances an organization’s reputation, Cross-reference to Reporting Elements reinforces the internal policies and systems within this Guidance: among employees and business partners and If a commitment is stated in a detailed policy, can help to deter corruption. please refer to Reporting Element D1. How to implement: Public commitment can be shown in various Example of reporting indicators from ways: public declaration by the organiza- other organizations: tion (e.g., by the CEO, Board or equivalent ■■ Organization: Partnering Against Corrup- body, owner or management) through such tion Initiative (PACI) channels as annual shareholder meetings ›› R  eporting indicator: No. 6: Does your and reports, interviews, management letters company publish its anti-corruption com- circulated to each employee, public meetings, mitment externally, i.e. on its website departmental meetings, supplier and other and/or in its annual report? business partner communications, state- ments on the internet and intranet, keynote speeches to and from heads of business units. The Definition of Corruption and the United Nations Global Compact Corruption is defined by Transparency International as “the abuse of entrusted power for pri- vate gain”. This convenient shorthand, encompassing myriad illegal and illicit acts, recognizes the breadth of the concept, but does not attempt to enumerate or precisely delimit. During the negotiations of the United Nations Convention against Corruption, UN Member States carefully considered the opportunity for the global anti-corruption treaty to provide a legal definition of corruption. Concluding that any attempt at a comprehensive definition inevitably would fail to address some relevant forms of corrupt behaviour, the international community reached global consensus on a large number of manifestations of corruption while leaving each State free to go beyond the minimum standards set forth in the Convention. The Convention calls for ratifying States to outlaw, at a minimum, bribery of public officials; embezzlement, trading in influence, abuse of function, and illicit enrichment by public officials; and bribery and em- bezzlement in the private sector, as well as money laundering and obstruction of justice. These corrupt actions are spelled out under the chapter of the Convention devoted to criminalization and law enforcement, denoting that corruption is a crime, which is a notion wider than bribery and extortion. In consonance with this approach, the 10th Principle of the United Nations Global Compact calls for companies to work against corruption in all its forms, including extor- tion and bribery. 17 B2 Commitment to be in compliance with all relevant laws, including anti-corruption laws Importance: ences, consulting local business associations, Compliance with all relevant laws, including chambers of commerce, and embassies, as relevant anti-corruption laws, is a legal obliga- well as by using professional advisors. tion and not an option for organizations. Non- compliance with laws places an organization What to report (Examples): at risk of reputational, administrative, civil ■■ Provide a public written statement that you and criminal consequences, including internal are committed to be in compliance with all costs, investigations, prosecutions, fines, loss relevant laws and indicate where this state- of contracts and possible blacklisting. ment is published. ■■ Describe your procedures and efforts with How to implement: regard to that statement. Your organization should have procedures in place to know and monitor relevant laws and Cross-reference to Reporting Elements regulations in the jurisdiction(s) where you within this Guidance: operate. For example, your organization or If you make reference to international legal your professional advisors should maintain frameworks, please refer to Reporting Ele- or have access to an up-to-date register of rel- ment D2. evant laws and the requirements and implica- tions of these laws should be communicated internally as appropriate. These procedures Example of reporting indicators from can be daunting and demanding, especially other organizations: for small and medium-size businesses, but ■■ Organization: FTSE4Good can be carried out practically through inter- ›› R  eporting indicator: Policy: Commits to nal research, attendance at industry confer- obeying all relevant laws D1 Publicly stated formal policy of zero-tolerance of corruption Importance: How to implement: A public commitment against corruption may The policy can include a statement that the be insufficient. A publicly stated policy is a organization does not tolerate corrupt behav- more powerful and precise expression of an iour, and confirmation that the organization organization’s zero-tolerance commitment as has established binding organizational guide- it allows no room for misinterpretation. An lines requiring all directors, managers and anti-corruption policy usually requires Board employees worldwide to behave ethically and and/or management approval, helps employ- in conformity with the law and the guide- ees and business partners to understand bet- lines. These guidelines are the cornerstone ter the detailed position of the organization of your organization’s work and the relation- and will provide the context for detailed rules ships of its directors and employees with and procedures and a way forward towards one another as well as with customers and continuous progress. partners. Such a policy should be available to all employees, business partners and other 18 stakeholders and be published either on your Cross-reference to Reporting Elements organization’s website or by other means within this Guidance: which are publicly accessible. Additional, If you are providing a general statement more detailed anti-corruption policies, proce- against corruption, please refer to Reporting dures and other measures will be necessary Element B1. to actually implement the anti-corruption programme. Example of reporting indicators from What to report (Examples): other organizations: ■■ Provide or describe the current policy. ■■ Organization: International Corporate ■■ Describe where the policy can be found Governance Network (ICGN) (e.g., website). ›› R  eporting indicator: Question No. 2: Does ■■ Describe the extent to which the policy the organization have a formal published covers all legal entities and locations over policy, approved by the Board, on man- which you have effective control. aging the risks posed to the business by bribery and corruption? D2 Statement of support for international and regional legal frameworks, such as the UN Convention against Corruption Importance: national jurisdictions in which you operate, International anti-corruption treaties inform encouraging governments to sign and ratify and shape national legislation. The UN international conventions, to ensure that the Convention against Corruption (UNCAC) is principles of the conventions are properly en- the only global convention against corrup- acted and properly enforced. A statement of tion and is the most comprehensive of all the support may best be carried out as a collabou- anti-corruption conventions preventing and rative effort by a business sector or initiative. fighting corruption both in the public and private sectors. Support by organizations for What to report (Examples): international legal frameworks is important ■■ Describe general statements of support for because this demonstrates: (a) organizations’ international and regional frameworks; readiness to promote common global stan- make specific mention of the treaty or dards irrespective of the status of domestic framework supported. regulation, (b) organizations’ alignment with ■■ Describe your organization’s initiatives, if the global anti-corruption movement across any, to mark the annual International Anti- industries and (c) promotion of level-playing Corruption Day (9 December). fields within specific industries. Cross-reference to Reporting Elements How to implement: within this Guidance: In addition to the activities described in B2, If you provide a statement that you are com- you should find out which international plying with all relevant laws, please refer to anti-corruption treaties have been ratified by Reporting Element B2. the jurisdiction(s) in which you operate. You can demonstrate support for international treaties by: (1) issuing a general statement of Example of reporting indicators from support for UNCAC or for a regional conven- other organizations: tion such as the OECD Convention; and (2) in No example. 19 D3 Carrying out risk assessment of potential areas of corruption Importance: What to report (Examples): Risk assessment is the foundation of an anti- ■■ Describe your current risk assessment corruption programme. To address the risks procedures (e.g., how often it is carried of corruption in its operations, an organiza- out, who is in charge, which parts of your tion must understand how its business model organization are covered, how results are and procedures may expose it to such risks. dealt with). ■■ Describe the business units and subsidiar- How to implement: ies for which a risk assessment has been Risk assessments for corruption can be simple undertaken. and high level or complex and detailed. It is often appropriate to start assessment at a Cross-reference to Reporting Elements high level and increase the focus and level of within this Guidance: analysis over time. A risk assessment looks at None. business activities, location of business activi- ties, industries, local business conditions and customs, identifies corruption risks inherent Example of reporting indicators from in those activities, and attempts to estimate other organizations: the likelihood of the occurrence of the risks ■■ Organization: Global Reporting Initiative and their impact on the organization. Finally (GRI) and most importantly, the assessment looks ›› R  eporting indicator: SO 2: Percentage and for ways and means to minimize the risks total number of business units analyzed for by providing appropriate counter measures. risks related to corruption Having identified the relevant areas of risk, the organization will define the need for and develop detailed policies that address the potential areas of corruption. D4 Detailed policies for high-risk areas of corruption Importance: in place. In the event of a violation of the Detailed policies are needed to give specific organization’s anti-corruption policy, evidence guidance to employees on how to act in order of supporting policies and procedures can help to be in compliance with your organization’s protect the organization’s reputation and can anti-corruption policy and how to counter also serve as a mitigating factor in the case of specific forms of corruption. The detailed poli- prosecution or sentencing. cies will provide the basis for implementation procedures and also for communication and How to implement: training. Such policies will help employees As described in D3, you should have carried and business partners in high-risk situations out a risk assessment to identify which de- such as those involving gifts and hospitality tailed policies are needed. In general, policies and conflicts of interest. Also, detailed policies will take into account the most prevalent are a statement to the outside world, including forms of corruption and also which business business partners, that the organization takes functions and processes have the highest the issues seriously and has adequate and vulnerability. In order to develop detailed effective anti-corruption policies and systems policies, organizations can draw upon 20 the UN Convention against Corruption and ■■ Describe where these policies can be found on various voluntary instruments5 that cover, and how they are made available to all em- among others, conflict of interest, money ployees and business partners concerned. laundering, embezzlement, gifts, hospitality and travel, donations, sponsorships, social Cross-reference to Reporting Elements and community investment, facilitation pay- within this Guidance: ments, political contributions, interactions None. with government officials and lobbying, and dealings with business partners, agents and other intermediaries, joint ventures use of the Example of reporting indicators from organization’s assets, mergers, acquisitions other organizations: and minority interest. ■■ Organization: Transparency International ›› R  eporting indicator: Indicator No. 29: Is What to report (Examples): there a written policy covering political ■■ List the areas of potential risk of corruption contributions whether made directly or which are covered by detailed anti-corrup- indirectly? tion policies. 5 Such as the International Chamber of Commerce Rules of Conduct, the World Economic Forum/Partnering Against Corruption Initiative and the Business Principles for Countering Bribery, and the Wolfsberg AML Principles. D5 Policy on anti-corruption regarding business partners Importance: corruption commitment extends to busi- Business partners include among others, ness partners as well as how anti-corrup- agents, consultants or other intermediaries, tion commitments from your business joint venture and consortia partners, suppli- partners extend to your organization. ers and customers. In certain circumstances, ■■ Describe your identified high-risk business the organization may be held legally liable partners by industry (e.g., public sector). for corruption by a business partner (for ex- ■■ Describe the coverage of your supply chain ample, an agent paying a bribe). Stakeholders related to the extension of the anti-corrup- may disapprove of an organization’s dealings tion policy (e.g., identified size or types of with a third party known to be involved in supplier, producers). corrupt activities though not related to its ■■ Specify detailed policies for business partners. immediate business activities. Conversely, an organization can be a positive force in sup- Cross-reference to Reporting Elements porting its suppliers in tackling corruption within this Guidance: and thereby creating a level playing field. For actions taken to encourage business part- ners to implement anti-corruption commit- How to implement: ments, please refer to Reporting Element D6. Your organization should have a policy in place extending its anti-corruption commit- ment to business partners. Such policy should Example of reporting indicators from be made available publicly and incorporated other organizations: into contracts with business partners. ■■ Organization: Transparency International ›› R  eporting indicator: Indicator No. 98: Is What to report (Examples): there a policy to require or encourage the ■■ Outline your definition of business partners implementation of a Programme equiva- (e.g., suppliers, agents, joint ventures). lent to its own in entities with which the ■■ Describe how your organization’s anti- company has significant business relation- ships? 21 Implementation 22 2. Implementation B3 Translation actions of the anti-corruption commitment into Importance: the organization’s policies and procedures as Making a formal commitment to zero tolera- well as the leadership’s commitment to zero tion of corruption is an important step for tolerance of corruption; (5) Consequences: an organization. However, without taking ensure that appropriate measures are taken in concrete actions directly supporting that com- the event that the anti-corruption programme mitment, an organization remains at risk of is violated; (6) Monitoring and continuous violating anti-corruption laws. improvement: carry out regular reviews of the anti-corruption programme including inter- How to implement: nal audits, provide resulting reports to senior Concrete actions to prevent, detect corruption management and the Board and take neces- and apply sanctions begin with identifying sary actions to improve the programme. corruption risks within an organization’s operations (e.g., type of transactions, opera- What to report (Examples): tional departments, countries, industries, ■■ Report on the existence of and the ele- customers/business partners). Based on such an ments in your anti-corruption programme. assessment, the organization can take steps to ■■ Describe the assignment of responsibility to implement its anti-corruption programme, by oversee and implement the anti-corruption doing the following: (1) detailed procedures: programme. develop detailed procedures that support your anti-corruption commitment and cover forms Cross-reference to Reporting Elements of corruption such as bribes, gifts, entertain- within this Guidance: ment and expenses, donations and sponsor- None. ships, political contributions, facilitation payments and conflicts of interest; (2) Respon- sibility: appoint a manager to devise, imple- Example of reporting indicators from ment, monitor and improve the programme other organizations: under the oversight of senior leadership; ■■ Organization: Transparency International (3) Business partners: communicate your ›› R  eporting indicator: Indicator No. 12: anti-corruption commitment to your business Does the Programme clearly and in reason- partners and require anti-corruption standards able detail, articulate values, policies and of them; (4) Awareness and education of procedures to be used to prevent bribery employees: provide communication and train- from occurring in all activities under the ing to ensure that your employees understand company’s effective control? B4 Support by the organization’s leadership for anti-corruption Importance: expectations of its employees; and the orga- Demonstration by the leadership (“tone at nization’s support for employees in carrying the top”) that it is committed to the policy of out the anti-corruption programme and in anti-corruption will make clear to employees: standing up to corrupt demands, even in the seriousness that the organization attaches cases where business might be lost. to countering corruption; the organization’s 23 How to implement: ■■ Describe the form of expression (e.g., CEO Leadership means not only communicating declaration, corporate social responsibility a clear message but also acting with integrity report, speaking at employee events). and leading by example. It includes speaking at employee and external events and commu- Cross-reference to Reporting Elements nicating through internal and external chan- within this Guidance: nels. Communications can include internal None. memoranda circulated to each employee; a CEO declaration on the organization’s intra- net; keynote speeches from heads of business Example of reporting indicators from units during employee meetings. External other organizations: communications can include an integrity ■■ Organization: International Corporate message from the CEO in corporate literature Governance Network (ICGN) and for larger organizations, a statement in ›› R  eporting indicator: Question No. 22: Do the sustainability or equivalent report. senior management encourage a culture of transparency and integrity through their What to report (Examples): own behaviour? ■■ Describe the organization’s leadership message. B5 Communication and training on the anti-corruption commitment for all employees Importance: nior leadership to supervisory level staff with Communication to and training of all em- messages relevant to the targeted employee ployees on your organization’s commitment audience and training tailored to identified to zero tolerance of corruption is perhaps risks and needs. Communications should be the most important and continuous action made over extended periods of time, because that your organization can take aside from this is more effective than large amounts of making the anti-corruption commitment. information provided during a limited period. Effective communication helps to ensure that along with all other important messages What to report (Examples): for employees, the anti-corruption policy ■■ Describe internal communication of and how the employee should act remain the programme such as anti-corruption high on each person’s agenda. It will put campaigns, management communica- your organization in a better position to tions, departmental meetings, publications, require adherence, achieve compliance, take business conduct guidelines, internet or disciplinary actions for non-compliance, and intranet resources. ultimately see that your employees’ actions ■■ Provide monitoring measures such as live up to the organization’s values and results of surveys of employee attitudes, the anti-corruption commitment. Internal publications in local languages. communications will be seen externally and ■■ Describe the frequency of such communi- thereby add to the strength of the external cations (e.g., quarterly, annually). communication of the organization’s anti- ■■ Describe anti-corruption training initia- corruption commitment. tives. ■■ Explain whether the communications and/ How to implement: or the training have been translated into Communication and training should be made multiple languages and if so, describe the at all levels within the organization from se- principal languages. 24 Cross-reference to Reporting Elements within this Guidance: Example of reporting indicators from None. other organizations: ■■ Organization: Global Reporting Initiative ›› R  eporting indicator: SO 3: Percentage of employees trained in organization’s anti- corruption policies and procedures B6 Internal checks and balances to ensure consistency with the anti-corruption commitment Importance: cesses, audit plans, expense and invoicing Checks and balances are essential tools to guidelines, etc., aimed at detecting and/or prevent and detect corruption because they preventing corruption and how these sup- separate the power to make decisions from port your anti-corruption commitment. the power to verify the execution of such ■■ Describe how often you review these inter- decisions. This restricts the opportunity for nal checks and balances. corrupt employees to create false transactions and records and hide corrupt activities. Cross-reference to Reporting Elements within this Guidance: How to implement: Checks and balances form part of internal The extent to which checks and balances are controls covered in Reporting Element D10. implemented will depend on the size of your organization, the risks assessed for particular functions and processes and the available Example of reporting indicators from resources. An example of checks and balances other organizations: is the assignment of different individuals or ■■ Organization: Transparency International departments to be responsible for handling ›› R  eporting indicator: Indicator No. 201: contracts, placing orders, receiving goods, Do the internal controls to counter bribery processing invoices and making payments. comprise financial and organizational checks and balances over the organization’s What to report (Examples): accounting and record keeping practices ■■ Describe specific internal checks_and_ and other business processes related to the balances such as approval policies and pro- Programme? D6 Actions taken to encourage business partners to implement anti-corruption commitments Importance: of complex value chains of production, all The risk of corruption in the supply chain organizations face the risks of being associ- is high, especially in countries with a high ated with corrupt behaviour by business part- degree of corruption. Customers, mainly ners and thus having their supplies disrupted multinational organizations, have a key if their suppliers, as a result of conviction for role to play to encourage the engagement of corruption, have to close operations or end their supply chain (mostly SMEs with scarce up on blacklists. resources) in countering corruption. As part 25 How to implement: nization’s anti-corruption requirements in Before signing, amending or renewing a con- requiring conformance with codes; tract with a business partner, the following ■■ collective action. measures are recommended: ■■ classification of the corruption risk con- What to report (Examples): nected with the business partner (risk ■■ Outline your definition and scope of busi- classification); ness partners (e.g., suppliers, agents, joint ■■ review of the integrity and qualifications of ventures). the business partner (due diligence review); ■■ Describe specific communication measures ■■ approval of the results of the due diligence and actions, such as training taken to by the management; encourage your business partners to imple- ■■ continuous monitoring of the business ment anti-corruption programmes. relationship and careful watch for “danger ■■ Describe the process of monitoring the signs and red flags”. effectiveness of such communication mea- sures and actions. Actions could include: ■■ anti-corruption requirements in contracts Cross-reference to Reporting Elements with intermediaries; within this Guidance: ■■ inclusion of an integrity clause in procure- None. ment contractual arrangements with sup- pliers and sub-contractors; ■■ requiring written agreement and adher- Example of reporting indicators from ence of your suppliers to ethical standards other organizations: equivalent to those of your organization or ■■ Organization: Partnering Against Corrup- to specific suppliers’ codes; tion Initiative (PACI) ■■ third-party risk assessments; ›› R  eporting indicator: No. 5: Does your ■■ due diligence procedures in selection pro- company encourage or support business cess of select suppliers; partners, i.e. suppliers, agents, distributors, ■■ training of suppliers in anti-corruption service providers and customers, in devel- measures; oping and implementing anti-corruption ■■ audits at suppliers’ premises to check com- programmes? pliance with laws and codes and your orga- D7 Management responsibility and accountability for implementa- tion of the anti-corruption commitment or policy Importance: the anti-corruption programme. Appraisal Just as effective oversight and leadership by and remuneration procedures can be used management is essential to the anti-corrup- to support and encourage the performance tion programme so too is the assignment of of managers for their assigned responsibili- clear lines of responsibility and accountability ties. Tools may include training sessions, to management in all parts of the organiza- guidance or even control mechanisms such tion for effective implementation of the as unannounced inspections. How this can programme and avoidance of omissions or be done mainly depends on the size of the errors. organization, the nature of its business and on its legal and regional environment. It is How to implement: therefore up to the organization to find the Assignment of responsibilities should be best fitting solution within the organiza- accompanied by setting objectives and per- tion’s ways and means. formance standards for implementation of 26 What to report (Examples): ■■ Describe how responsibilities are assigned Example of reporting indicators from in your organizational structure. other organizations: ■■ Provide, if possible, specific reporting ■■ Organization: Transparency International indicators used in your organization to ›› R  eporting indicator: Indicator No. 77: Is support responsibility and accountability unambiguous responsibility and authority for implementation of the anti-corruption assigned to managers for carrying out the commitment or policy. Programme? Cross-reference to Reporting Elements within this Guidance: None. D8 Human Resources procedures supporting the anti-corruption commitment or policy Importance: such as: consultation with employees; man- Human Resources (“HR”) plays a central role datory compliance with the anti-corruption in the anti-corruption programme by provid- policies and procedures; orientation of ing policies and procedures that shape the recruits; appraisal, remuneration and motivation, understanding, skills and actions recognition procedures; and disciplinary of employees in implementing the anti- processes. corruption commitment. ■■ Report measures of activities and results, such as percentages of recruits that have How to implement: received anti-corruption orientation or The HR policies and procedures for employees numbers of employees dismissed for non- should include clearly stated anti-corruption compliance with organizational policies. requirements, rules and guidance. The policies and procedures will be developed in alignment Cross-reference to Reporting Elements with relevant laws and regulations by: assess- within this Guidance: ing and mitigating corruption risks; consulting None. with employees and employee representative bodies; analyzing results of surveys and re- search, and benchmarking with peer organi- Example of reporting indicators from zations. The policies and procedures will be other organizations: communicated formally with regular reviews ■■ Organization: Transparency International of their effectiveness and improvements. ›› R  eporting indicator: Indicator No. 150: Do the company’s human resources practices What to report (Examples): including those for recruitment, training, ■■ Describe how your organization imple- performance evaluation, remuneration, ments effective documented personnel recognition and promotion reflect the com- policies and processes that support the pany’s commitment to the Programme? anti-corruption commitment, including references to how these were developed, 27 D9 Communications (whistleblowing) channels and follow- up mechanisms for reporting concerns or seeking advice Importance: ■■ Specify a break-down of the types of inqui- Whistleblowing channels are an important ries, provided that this will not lead to a feature of most anti-corruption programmes breach of confidentiality or security for the as they can provide a confidential safety- reporting employees. valve for employees to make the organization aware of wrong doings or doubtful practices Cross-reference to Reporting Elements by or within the organization. Whistleblow- within this Guidance: ing channels can also be used as advice chan- Analysis of concerns expressed through nels to provide guidance on the anti-corrup- Whistleblowing channels and hotlines can tion programme in general or a specific issue be used to identify areas for improvement, or dilemma faced by an employee. which in turn will form part of the process of continuous improvement covered by Report- How to implement: ing Element B7. The channels must be confidential so that employees are secure in reporting corruption concerns without fear of personal repercus- Example of reporting indicators from sions. A decision to be made is whether greater other organizations: confidence will be provided to employees if ■■ Organization: FTSE4Good the whistleblowing channel is provided inter- ›› R  eporting indicator: Management: Pro- nally or managed by an independent provider. vides secure communication channels for employees to seek advice or voice concerns What to report (Examples): (e.g., hotlines, advicelines, whistleblowing ■■ Describe individual solutions already procedures for protection, internal report- implemented or envisaged. ing mechanisms) ■■ Provide statistics of the use of the whistle- blowing, advice or hot lines. D10 Internal accounting and auditing procedures related to anti-corruption Importance: ing, operating and monitoring the system of Strong internal controls are necessary to internal controls. The internal controls should preventing and detecting corruption. A corrup- provide “reasonable assurance” that payments tion incident in any form represents a breach and receipts are authorized by management, of the controls. Transparent disclosure of an owner, the Board or equivalent body. Auditing assessment of the effectiveness of internal con- of the control mechanisms provides assurance trols builds the confidence of stakeholders. that controls are functioning effectively. An example is an internal audit function with How to implement: a specific mandate to test anti-corruption Your organization’s Board or equivalent body controls and the implementation of related is ultimately responsible for the system of policies. An external audit mandate can add internal controls, although it is customary to further assurance to the process. delegate to management the task of establish- 28 What to report (Examples): ment and this will form part of the process of ■■ Describe the internal controls policies and continuous improvement covered by Report- processes (e.g., frequency, scope of organi- ing Element B7. zational coverage, degree of control auto- mation, international frameworks used). ■■ Report whether internal and external au- Example of reporting indicators from dits have taken place. other organizations: ■■ Report on the specific mandates given to ■■ Organization: International Corporate the audit function, internal and external Governance Network (ICGN) where applicable. ›› R  eporting indicator: Question No. 14: Is there regular internal audit or external Cross-reference to Reporting Elements assurance of the effectiveness of these within this Guidance: systems? Has the company ever sought Checks and balances are part of internal external audit of its policies and their ef- controls – refer to Reporting Element B6; in- fectiveness and if so, to what effect? ternal audits will identify areas for improve- D11 Participation in voluntary anti-corruption initiatives Importance: What to report (Examples): Participation in voluntary initiatives offers ■■ List voluntary initiatives or collabora- strong benefits. Your organization can learn tive actions in which your organization from peers and handle corruption risks more participates. Examples are sector initiatives, effectively. It also allows organizations to cre- chamber of commerce or trade association ate collective action and minimum standards, initiatives, inter-governmental and national thereby encouraging a level playing field. If working groups, international initiatives. you are a small or medium sized organiza- ■■ Specify the type of involvement (active/ tion, collaboration through associations or passive membership) as well as duration of sector initiatives can help in resisting extor- membership. tion and corruption demands. Participation in voluntary initiatives can help build soci- Cross-reference to Reporting Elements etal integrity. Organizations that undertake within this Guidance: participation in initiatives with the aim of None. contributing to society can benefit through helping strengthen societies and a business environment in which the risk of corruption Example of reporting indicators from is reduced. other organizations: ■■ Organization: International Corporate How to implement: Governance Network (ICGN) Identify existing initiatives through research, ›› R  eporting indicator: Question No. 26: discussions with stakeholders, peer organiza- Where appropriate, does the company tions and civil society. Consider initiating new participate actively in collaborative efforts initiatives where you identify a need and can with external parties, including other find suitable partners. businesses, governments and civil society groups or non-governmental organiza- tions to promote a corruption-free business environment? 29 Monitoring 30 3. Monitoring B7 Monitoring and improvement processes Importance: who is responsible for the process, how Monitoring and continuous improvement en- often it takes place, and how results are sure that strengths and weaknesses are identi- taken into account including review and fied and that the anti-corruption programme oversight by senior management and/or the is continuously improved to remain effective Board or appropriate Board committees. and up-to-date in addressing changing risks. ■■ Describe the procedures for internal and external communication of the monitoring How to implement: and improvement process and the results. Monitoring compliance and implementing improvements will largely be conducted by Cross-reference to Reporting Elements internal or external auditors, consultants within this Guidance: or service providers. In addition, employee If your senior management reviews reports suggestions, reports on use of whistleblowing from the monitoring process, please refer to channels and hotlines can provide informa- Reporting Element D12. tion useful to monitor and improve the programme. It is most effective if the results of assessments and other identified improve- Example of reporting indicators from ments form part of a continuing process and other organizations: are shared broadly across the organization. ■■ Organization: Partnering Against Corrup- It is also important that concrete remedial tion Initiative (PACI) actions are identified and reviewed by the ›› R  eporting indicator: No. 1: Does your com- leadership and that necessary changes are pany continuously evaluate its anti-corrup- implemented and communicated. tion programme group-wide? What to report (Examples): ■■ Describe the process in place to undertake monitoring and continuous improvement, D12 Leadership review of monitoring and improvement results Importance: How to implement: Monitoring and continuous improvement Responsibility for oversight of the anti-corrup- will keep your anti-corruption programme tion programme will depend upon the gover- up-to-date and relevant to the needs of the nance structure of the organization. It could organization. As such, the leadership of the be the Board or equivalent body, owner or a organization should oversee the results of committee such as an audit or ethics commit- reviews and ensure that changes are imple- tee. Reviews should be carried out regularly by mented. This will also show further the senior management and/or the audit com- commitment and involvement of the leader- mittee or ethics committee (reporting to the ship in ensuring the implementation of the Board) of the effectiveness of anti-corruption anti-corruption policy and the assignment of policies, including benchmarking against best adequate resources to support this. practice of peer organizations within the same 31 sector (or across sectors). Results of reviews Cross-reference to Reporting Elements with specific regular recommendations should within this Guidance: be made to the Board or ownership which None. should then ensure the recommended changes are implemented as judged appropriate. Example of reporting indicators from What to report (Examples): other organizations: ■■ Describe the oversight of the review process ■■ Organization: Partnering Against Corrup- (e.g., who has ultimate oversight, who con- tion Initiative (PACI) ducts the review, who reviews the results, ›› R  eporting indicator: No. 1: Does your frequency of reviews). corporate executive management review the ■■ Describe actions taken, including improve- evaluation of your company’s anti-corrup- ment results. tion programme? D13 Dealing with incidents Importance: What to report (Examples): No organization is immune to the threat of ■■ State that there is a process in place for deal- an incident of corruption. Such incidents ing with incidents including remedial steps. can present significant adverse consequences ■■ Describe the process. for an organization and preparations should ■■ State the nature and number of incidents be made so that such incidents are handled dealt with and number of disciplinary well, impacts are mitigated and that lessons actions. are learned and measures applied to improve the programme. Adverse consequences can Cross-reference to Reporting Elements include prosecution by authorities with risk within this Guidance: of fines and other costs; reputational dam- Lessons from dealing with incidents can form age and undermining of the anti-corruption part of the improvement process covered in programme. Reporting Element B7. How to implement: It is advisable to devise a process setting out Example of reporting indicators from the steps to be taken to deal with incidents, other organizations: such as: ■■ Organization: International Corporate ■■ Procedures, roles, rights, responsibilities for Governance Network (ICGN) investigations; ›› R  eporting indicator: Question No. 24: ■■ Investigation by a dedicated corporate Does the company have internal reporting team; processes to the board or appropriate board ■■ Documented investigation; committee on the number and types of ■■ Reporting of findings to the leadership; relevant incidents that have been detected ■■ Remedial steps or sanctions taken against and remedial actions taken? relevant employees; ■■ Appropriate disclosure to relevant authorities; ■■ Suspension of contracts or payments to any third parties involved; ■■ Internal and external communication. 32 D14 Public legal cases regarding corruption Importance: bodies, media communication, sustainability Regulatory frameworks may differ in the or corporate citizenship reports, announce- disclosure requirements for public legal cases ments to staff. (and related information publicly available about existence and details of cases). How- What to report (Examples): ever, irrespective of applicable disclosure ■■ List in a corporate publication (such as your requirements, if any, the management of an annual report or sustainability report or on organization may determine to report on your website) any current public investiga- public legal cases for a variety of reasons. tions, prosecutions or closed cases (take These can include a commitment to a policy care to avoid stating any information that of transparency or to a voluntary reporting may be misleading or compromising). code (such as the Global Reporting Initiative) or stakeholder expectations. Apart from meet- Cross-reference to Reporting Elements ing any regulatory requirements, voluntary within this Guidance: reporting of public legal cases is valuable as it None. can show that the organization acts transpar- ently and takes seriously any incidents or violations of its anti-corruption programme. Example of reporting indicators from other organizations: How to implement: ■■ Organization: Global Reporting Initiative Anti-corruption cases, whether pending ›› R  eporting indicator: SO 4: Report any or closed, can be made public within and concluded legal cases regarding corrupt outside the organization through appropriate practices brought against the reporting channels such as filings with stock exchange organization or its employees during the reporting period D15 Use of independent external assurance of anti-corruption programmes Importance: premium through enhanced information; While there is no agreed-upon standard or ■■ meeting pre-qualification requirements code for an effective anti-corruption pro- of public sector customers, export credit gramme at present, an independent review of agencies, inter-governmental lenders, and an organization’s programme can provide the national lenders; organization with valuable insight into the ■■ strengthening the anti-corruption pro- strengths and weaknesses of its programme. gramme (by forming part of a continuous Obtaining an independent external assur- improvement process); ance of the design, strength and quality of an ■■ mitigating factors in prosecution and/or organization’s anti-corruption compliance sentencing in cases where corruption has programme can offer a range of benefits occurred. including: How to implement: ■■ enhanced credibility with stakeholders; Independent external assurance comprises an ■■ reduced cost of financing by helping ex- external, third-party assessment of an organi- ternal financing institutions to assess risk zation’s anti-corruption measures. Indepen- 33 dent assurance comes in two forms: fectiveness of the programme. 1) assurance of the adequacy of the design ■■ Specify the scope of the engagement, e.g., (and implementation) of the programme company, subsidiary, business unit or func- considering the nature of its business and tion. the corruption risks that it is facing, and ■■ Describe if the outcomes of an external as- 2) testing the effectiveness of measures in surance are publicly available. If yes, please place. Assurance can be provided using specify. various frameworks e.g., AA 1000 Assurance Standard, ASEA 3000 or a framework that Cross-reference to Reporting Elements Transparency International and the Partner- within this Guidance: ing Against Corruption Initiative (PACI) are External independent assurance will identify currently developing with the accounting areas for improvement and this will form profession. Assurance engagements could part of the process of continuous improve- then be carried out by various parties such ment covered by Reporting Element B7. as assurance providers, lawyers, consultants, inspection agencies, NGOs and others. Example of reporting indicators from What to report (Examples): other organizations: ■■ State that an external assurance of your anti- ■■ Organization: Partnering Against Corrup- corruption programme has been carried out. tion Initiative (PACI) ■■ Specify the nature and the scope of such ›› R  eporting indicator: No. 6: Does your com- an external assurance, i.e., if assurance has pany externally publish the results of anti- been on the programme design and/or ef- corruption assurance provided by external counterparts? 34 35 Appendix A: Examples of what to report on This table provides a summary of practical examples for use in your reporting against relevant Reporting Elements. It must be stressed that this is neither an exhaustive list nor a list of minimum requirements, but rather a selection of examples to assist you in developing your own reporting. Basic Reporting Elements ID Reporting Elements Examples of what to report on Commitment and Policy: Publicly stated ■■ Provideyour organization’s statement against corruption. B1 commitment to work against corruption in ■■ Describewhere the statement can be found publicly (e.g., website, corporate all its forms, including bribery and extortion citizenship report). Commitment and Policy: Commitment ■■ Provide a public written statement that you are committed to be in compliance B2 to be in compliance with all relevant laws, with all relevant laws and indicate where this statement is published. including anti-corruption laws ■■ Describe your procedures and efforts with regard to that statement. ■■ Reporton the existence and the elements in your anti-corruption programme. Implementation: Translation of the anti- B3 ■■ Describethe assignment of responsibility to oversee and implement the corruption commitment into actions anti-corruption programme. ■■ Describethe organization’s leadership message. Implementation: Support by the organiza- B4 ■■ Describe the form of expression (e.g., CEO declaration, corporate social tion’s leadership for anti-corruption responsibility report, speaking at employee events). ■■ Describe internal communication of the programme such as anti-corruption campaigns, management communications, departmental meetings, publications, business conduct guidelines, internet or intranet resources. Implementation: Communication and ■■ Provide monitoring measures such as results of surveys of employee attitudes, B5 training on the anti-corruption commitment publications in local languages. for all employees ■■ Describe the frequency of such communications (e.g., quarterly, annually). ■■ Describe anti-corruption training initiatives. ■■ Explain whether the communications and/or the training resources have been translated into multiple languages and if so, describe the principal languages. ■■ Describespecific internal checks and balances such as approval policies and pro- Implementation: Internal checks and cesses, audit plans, expense and invoicing guidelines, etc., aimed at detecting and/ B6 balances to ensure consistency with the or preventing corruption and how these support your anti-corruption commitment. anti-corruption commitment ■■ Describe how often you review these internal checks and balances. ■■ Describe the process in place to undertake monitoring and continuous improve- ment, who is responsible for the process, how often it takes place and how results Monitoring: Monitoring and improvement are taken into account including review and oversight by senior management and/ B7 processes or the Board or appropriate Board committees. ■■ Describe the procedures for internal and external communication of the monitor- ing and improvement process and the results. 36 Desired Reporting Elements ID Reporting Elements Examples of what to report on ■■ Provide or describe the current policy. Commitment and Policy: Publicly stated ■■ Describe where the policy can be found (e.g., website). D1 formal policy of zero-tolerance of corruption ■■ Describe the extent to which the policy covers all legal entities and locations over which you have effective control. Commitment and Policy: Statement of ■■ Describe general statements of support for international and regional frameworks; support for international and regional legal making specific mention of the treaty or framework supported. D2 frameworks, such as the UN Convention ■■ Describe your organization’s initiatives, if any, to mark the annual International against Corruption Anti-Corruption Day (9 December). ■■ Describe your current risk assessment procedures (e.g., how often it is carried out, Commitment and Policy: Carrying out who is in charge, which parts of your organization are covered, how results are D3 risk assessment of potential areas of cor- dealt with). ruption ■■ Describe the business units and subsidiaries for which a risk assessment has been undertaken. ■■ Listthe areas of potential risk of corruption which are covered by detailed anti- Commitment and Policy: Detailed poli- corruption policies. D4 cies for high-risk areas of corruption ■■ Describe where these policies can be found and how they are made available to all employees and business partners concerned. ■■ Outline your definition of business partners (e.g., suppliers, agents, joint ventures). ■■ Describe how your organization’s anti-corruption commitment extends to business partners as well as how anti-corruption commitments from your business partners Commitment and Policy: Policy on anti- extend to your organization. D5 corruption regarding business partners ■■ Describe your identified high-risk business partners by industry (e.g., public sector). ■■ Describe the coverage of your supply chain related to the extension of the anti- corruption policy (identified sizes or types of suppliers, producers). ■■ Specify detailed policies for business partners. ■■ Outline your definition and scope of business partners (e.g., suppliers, agents, joint ventures). Implementation: Actions taken to encour- ■■ Describe specific communication measures and actions, such as training taken to D6 age business partners to implement anti- encourage your business partners to implement anti-corruption programmes. corruption commitments ■■ Describe the process of monitoring the effectiveness of such communication measures and actions. ■■ Describehow responsibilities are assigned in your organizational structure. Implementation: Management responsi- ■■ Provide, if possible, specific reporting indicators used in your organization to D7 bility and accountability for implementation support responsibility and accountability for implementation of the anti-corruption of the anti-corruption commitment or policy commitment or policy. ■■ Describe how your organization implements effective documented personnel policies and processes that support the anti-corruption commitment, including ref- erences to how these were developed (e.g., including consultation with employees, Implementation: Human Resources mandatory compliance with the anti-corruption policies and procedures, orienta- D8 procedures supporting the anti-corruption tion of recruits, appraisal, remuneration and recognition procedures and disciplin- commitment or policy ary processes). ■■ Report measures of activities and results, such as percentages of recruits that have received anti-corruption orientation or numbers of employees dismissed for non-compliance with organization policies. 37 ID Reporting Elements Examples of what to report on Implementation: Communications ■■ Describe individual solutions already implemented or envisaged. (whistleblowing) channels and follow-up ■■ Provide statistics of the use of the whistleblowing, advice or hot lines. D9 mechanisms for reporting concerns or ■■ Specify a break-down of the types of inquiries, provided this will not lead to a seeking advice breach of confidentiality or security for the reporting employees. ■■ Describe the internal controls policies and processes (e.g., frequency, scope of organizational coverage, degree of control automation, international frameworks Implementation: Internal accounting used). D10 and auditing procedures related to anti- ■■ Report whether internal and external audits have taken place. corruption ■■ Report on the specific mandates given to the audit function, internal and external where applicable. ■■ List voluntary initiatives or collabourative actions in which your organization partic- ipates. Examples are sector initiatives, chamber of commerce or trade association Monitoring: Participation in voluntary anti- D11 initiatives, inter-governmental and national working groups, international initiatives. corruption initiatives ■■ Specify the type of involvement (active/passive membership) as well as duration of membership. ■■ Describethe oversight of the review process (e.g., who has ultimate oversight, Monitoring: Leadership review of monitor- D12 who conducts the review, who reviews the results, frequency of reviews). ing and improvement results ■■ Describe actions taken, including improvement results. ■■ State that there is a process in place for dealing with incidents including remedial steps. D13 Monitoring: Dealing with incidents ■■ Describe the process. ■■ State the nature and number of incidents dealt with and number of disciplinary actions. ■■ List in a corporate publication (such as your annual report or sustainability Monitoring: Public legal cases regarding report or on your website) any current public investigations, prosecutions or D14 corruption closed cases (take care to avoid stating any information that may be misleading or compromising). ■■ State that an external assurance of your anti-corruption programme has been carried out. ■■ Specify the nature and the scope of such an external assurance, i.e. if assurance Monitoring: Use of independent external has been on the programme design and/or effectiveness of the programme. D15 assurance of anti-corruption programmes ■■ Specify the scope of the engagement, e.g., company, subsidiary, business unit or function. ■■ Describe if the outcomes of an external assurance are publicly available. If yes, please specify. 38 Appendix B: List of sources for reporting indicators Organization Document title FTSE4Good FTSE4Good Countering Bribery Criteria, 2005 Global Reporting Initiative Sustainability Reporting Guidelines, Version 3.0, 2006 International Corporate Governance Network (ICGN) ICGN Statement and Guidance on Anti-Corruption Practices, 2009 Business Principles for Countering Bribery, TI Self-Evaluation Tool, Transparency International June 2008 World Economic Forum Partnering Against Corruption PACI Self-Assessment Template, 2008 Initiative (PACI) 39 40 Appendix C: Additional Global Compact resources on anti-corruption The Global Compact offers further guidance, tools and publications related to anti-corruption, which can be consulted as complementary documents or used as inspirational examples.6 Brochures and short publications The publication Clean Business Is Good Business – The Business Case against corruption7 provides an overview of the scope and issues at stakes with respect to anti-corruption. It was prepared jointly by the Global Compact, the International Chamber of Commerce, Transparency Inter- national and the World Economic Forum. It is an introduction to Resisting Extortion and Solicita- tion in International Transactions (RESIST)8, a tool providing practical guidance for practitioners on how to respond to an inappropriate demand by a client, business partner or public authority. It provides examples of 21 business scenarios where extortion and solicitation can occur and the response options available to companies. Guidance documents on anti-corruption Business against corruption: A framework for action. Implementation of the 10th UN Global Compact Principle against corruption9 is a guide for companies seeking to implement the objectives of the tenth principle and to deal with corruption in every aspect of their operations. It was published jointly by the UN Global Compact, the Prince of Wales International Business Leaders Forum and Transparency International. The guide suggests steps to help companies fight corruption, internally, externally and through collective action. It provides links to a range of resources and international initiatives already in place. A complementary publication, Business against Corrup- tion – Case Stories and Examples10 provides a large number of inspirational examples, case stories and white papers on anti-corruption policies and mechanisms. The publication Fighting Corruption through Collective Action describes how companies can reach out to industry peers, suppliers and other stakeholders to initiate joint activities against corrup- tion, particularly in high-risk regions and sectors. It provides concise guidelines and practical examples through case summaries. Business Fighting Corruption: Experiences from Africa11 represents a collection of case studies show- casing how organizations and businesses in Africa are addressing the challenge of corruption. The publication aims to assist managers in fighting corruption and increasing transparency. 6 All relevant publications can be found at: http://www.unglobalcompact.org/Issues/transparency_anticorruption/Anti-Corruption_Guidance_Material.html 7 http://www.unglobalcompact.org/docs/news_events/8.1/clean_business_is_good_business.pdf 8 http://www.unglobalcompact.org/docs/issues_doc/Anti-Corruption/RESIST.pdf 9 http://www.unglobalcompact.org/docs/issues_doc/7.7/BACtextcoversmallFINAL.pdf 10 http://www.unglobalcompact.org/docs/issues_doc/7.7/BACbookFINAL.pdf 11 http://www.unglobalcompact.org/docs/news_events/8.1/bfc_web.pdf 41 Global Compact Office Postal address: UN Global Compact Office United Nations New York, NY 10017 USA The Global Compact Office is located at UN Headquarters in New York. For staff contact information, please visit the Global Compact website: http://www.unglobalcompact.org/ AboutTheGC/contact_us.html Transparency International International Secretariat Alt-Moabit 96 10559 Berlin Germany Phone + 49 30 3438 200 Fax + 49 30 3470 3912 www.transparency.org PHOTO CREDITS: cover © istockphoto Page 15 © istockphoto Page 21 © istockphoto Page 29 © istockphoto Page 34 © istockphoto Page 39 © Jenny Matthews / Panos Pictures The Ten Principles of the United Nations Global Compact Human rights Principle 1 Businesses should support and respect the protection of internationally proclaimed human rights; and Principle 2 make sure that they are not complicit in human rights abuses. Labour Principle 3 Businesses should uphold the freedom of association and the effective recognition of the right to collective bargaining; Principle 4 the elimination of all forms of forced and compulsory labour; Principle 5 the effective abolition of child labour; and Principle 6 the elimination of discrimination in respect of employment and occupation. Environment Principle 7 Businesses are asked to support a precautionary approach to environmental challenges; Principle 8 undertake initiatives to promote greater environmental responsibility; and Principle 9 encourage the development and diffusion of environmentally friendly technologies. Anti-corruption Principle 10 Businesses should work against corruption in all its forms, including extortion and bribery. Published by the UN Global Compact Office Contact: unglobalcompact@un.org December 2009