On 21 May 2020, the International Corporate Governance Network published updated Guidance on Anti-Corruption Practices (the Guidance). The Guidance calls on investors to use their voice to take a stand on anti-corruption. It seeks to help them make better informed decisions regarding anti-corruption practices of the companies in which they invest.
Investors are encouraged to challenge companies on their commitment to tackling corruption, acknowledging that “corruption corrodes corporate culture and undermines the quality of management”.
The Guidance identifies the following areas for investors to consider when raising the subject of anti-corruption with companies:
- policy: encouraging companies to have clear policies on anti-corruption, which are endorsed at executive level and communicated effectively throughout the company;
- procedures and enforcement: comprehensive procedures to ensure effective implementation of policies;
- transparency: clear communication of policies and procedures to investors, including the nature of board oversight;
- reporting, auditing and benchmarking: benchmarking of company capability relative to established standards and peers; and
- voluntary initiatives: support of international conventions combating corruption and supporting collaborative efforts to promote a corruption-free business environment.
As well as identifying these areas, the Guidance contains recommended questions for investors to ask of companies in relation to each topic.
The investor-focused nature of this Guidance is welcomed as it seeks to create an additional incentive for companies to act ethically, even in cases where they may not face legislative or regulatory sanctions for not doing so. If investors commit to the recommendations outlined in the Guidance, companies will soon be unable to ignore or minimise the importance of strong internal anti-corruption procedures.