31. January 2016

What is the business case for anti-corruption Collective Action?

This summer will mark two years since the ICCA Conference, Collective Action: Going Further Together to Counter Corruption

Despite increasing attention being given to Collective Action, the appearance of promising new initiatives from around the globe, and its continued presence as a topic on the international anti-corruption conference circuit, strengthening and evidencing the business case are key to ensure greater take-up and buy-in.

The ICCA remains deeply engaged with this discussion. As a preview to upcoming announcements on the topic (watch this space!), this blog piece returns to one of the key messages that emerged from the 2014 event, a topic which in the months since remains no less relevant today: what is the business case for anti-corruption Collective Action?

As Collective Action continues to gain attention from companies, NGOs and policymakers as a tool to counter bribery and extortion, one question that consistently arises from those deciding whether to engage in it remains: What is the business case for participating in Collective Action initiatives? The conference brought this issue to the fore again.

Many of the corruption risks that companies face in a particular market are often common among competitors but also across industry sectors. By taking steps beyond solely improving their own internal compliance programs, Collective Action provides opportunities for leveraging the power of the group to effect real change, and to engage with the public and private sectors to kick-start new initiatives to tackle systemic corruption and related issues. ‘Going it alone’ has often been a hurdle for firms to overcome when persuading boards and business managers as to why they should take a proactive approach to tackling bribery: Engaging in Collective Action affords companies the benefits of a group approach, decreasing concerns of being out of sync with other players in the market.

Everyone concedes that reducing corruption provides more stable, transparent, and in the end, more profitable business environments for companies and other stakeholders in which to operate; this in itself should galvanise companies to think creatively about how to enhance their anti-corruption approaches. But if internal drivers are lacking, responding to external pressures is going to continue to be an imperative for companies large and small. The growing demands of customers, and civil society, the frustrations of disillusioned citizens are all cogent reasons to engage in Collective Action because it can deliver concrete evidence of a firm’s commitment to acting with integrity and play a part in improving the overall development prospects of a country.

Finally, the regulatory environment continues to evolve to ensure that companies and individuals paying bribes will be prosecuted, and companies will be fined, damaging to reputations and to their share price. Engaging in Collective Action demonstrates to law enforcement and regulatory authorities a company’s serious commitment to improving not only their internal anti-corruption programs but also making a difference in the wider business environment. This is cited as well among the adequate procedures for compliance with the UK Bribery Act.

Arguing for business involvement in Collective Action through highlighting the tightening regulatory arena, responsibilities of good corporate citizenship within broader economic and social settings, and Collective Action’s contribution to establishing a more level playing field and cleaner business environment presents strong incentives for company participation.

One area for future consideration is the greater need for researchers and proponents of Collective Action to better speak the language of business. Through the development of metrics to improve the collection and analysis of measurable data, the benefits accruing to companies involved in Collective Action can be more tangible and convincing for other stakeholders to also take part.

Collective Action team at the Basel Institute on Governance