UN anti-corruption campaign raises the bar for risk management practices
Anti-corruption risk management has been stepped up due to a United Nations Principles for Responsible Investment (UNPRI) initiative.
Three quarters of companies targeted for their poor track record in public disclosure of anti-corruption risk management and high levels of corruption risk, improved their practices over the course of the campaign.
The Australian Custodians of Superannuation Investors (ACSI) were among the 21 UNPRI signatories involved, which collectively manage over $1.7 trillion in assets.
ACSI chief executive Ann Byrne said that ACSI, representing long-term investors, had a responsibility to address the impact of bribery and corruption on returns, market volatility and company performance.
The signatories engaged with 21 companies across 14 countries in March 2010 to encourage appropriate anti-corruption controls in line with international reporting frameworks such as the International Corporate Governance Network's Statement and Guidance on Anti-Corruption Practices, and the UN's reporting guidelines on anti-corruption.
Improvements in companies' disclosure on how they managed bribery and corruption risks were tracked via Transparency in Reporting on Anti-Corruption (TRAC) methodology.
It found that by early 2013, 16 companies improved their performance against the 50 indicators, with 10 companies improving their score four-fold and the leading company improving its score six-fold.
Improving transparency allows investors to better manage their exposure to financial, operational and reputational risks, according to UNPRI.
"Companies involved in allegations of corruption and bribery are often characterised by poor corporate governance processes, the failure of internal processes to protect the integrity of stakeholders, and an inability to successfully implement and monitor company codes of conduct," Byrne said.
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