What measures
are listed companies
taking in the fight
against corruption?
A comparative analysis of Asia-Pacific, North-American
and European strategies for the prevention of
corruption between 2010 and 2012 Table of contents
1.
Key findings
2.
Measurement of business performance in terms of
prevention of corruption
3
• Method for mesuring CSR performance
The assessed universe
11
–
Performance of companies by country
12
–
Performance of companies by sector
13
–
Comparative analysis of performances per managerial axis
16
–
–
Vigeo ra ng 17
17
♦
Best world scores
18
♦
Best scores for France
18
Comparative analysis of the implementation process
22
♦
Best world scores
23
♦
Best scores for France
24
♦
Informing simply to educate, train,
or to make accountable?
25
Control mechanisms, what does this mean?
26
♦
4.
10
–
• Analysis of strategies and behaviours to
prevent corruption
– The comprehensiveness of commitments
3.
10
Comparative analysis of the results
Best practices
28
30
• Leadership
30
• Implementation
30
• Results
30
Conclusion
32
February 2013 2 Key Findings
COMPANIES STRENGTHEN THEIR
situations which would potentially
their subsidiaries or their business
PREVENTION OF CORRUPTION
accuracy is found in 42% of Euro-
North America: 35% of companies
COMMUNICATION
ON
THE
87% of European companies (81%
in 2010) and 99% of North American companies (97% in 2010) make
their
commitments
visible.
This
rate is also significant in the Asia-
Pacific region (66%). Display by
publicly traded companies of their
will to prevent corruption thus
appears as a general trend.
Companies clearly see that it is
now potentially costly for them not
amount to corruption. This level of
pean companies (versus 33% in
2010). This progress of European
companies hides wide disparities in
behaviour between firms in the
continent (on the level of precision
of their commitment to prevent
different
versus 42/100 for French, Spanish
and
Finnish
companies,
55/100 for Dutch companies).
and
covers in reality, seems to partici-
compared to the other two regions:
reputation. In the United States in
particular,
the
display
of
this
commitment in a code of conduct
is a measure of legal security.
Indeed, this commitment is therefore considered as an element of
compliance
influence
and
the
can
favourably
harshness
of
a
penalty towards the company in
case of a conviction for corruption.
THE
COMMITMENT
AMERICAN
MOST
EXPLICIT,
COMPANIES
OF
COMPANIES
NORTH
IS
THE
EUROPEAN
PROGRESS,
AND
COMPANIES IN THE ASIA-PACIFIC
REGION REMAIN BEHING
55% of North American companies
list in precise and detailed terms
the types and situations of corruption that they prohibit, or those
Vigeo ra ng dedicated
structures
countries
of
region.
the
Asia-Pacific
WEAK LINK IN ANTI-CORRUPTION
companies
Companies
pate in the prevention of risks to
of
appears in 11% of companies in the
obtain an average score of 26/100,
Irish
to take a stand against corruption.
This display, regardless of what it
tion
AWARENESS RAISING AND TRAIN-
and
of
versus 29% in 2010. The designa-
corruption,
Austrian
types
units. The same dynamic occurs in
in
the
Asia-Pacific
region show scores which are down
11% of companies in the Asia-
Pacific region displayed specific
and complete commitments. Most
of these communicating companies
are global companies operating
worldwide.
COMPANIES
TEND
TO
DECEN-
TRALISE FUNCTIONS TO PREVENT
CORRUPTION
Even four years ago, the majority of
European
companies
and
North
showed
American
ING OF EMPLOYEES REMAIN THE
PROGRAMMES
IN
REGIONS ANALYSED
Awareness
training
THE
raising
in
THREE
and
staff
the
prevention
of
of
employees
to
corruption are limited. The awareness-raising
prevent corruption occurs in 38% of
North American companies against
27% in Europe and 17% in the Asia-
Pacific region. However, specific
training,
going
awareness-raising
beyond
of
simple
employees,
has developed in Europe in recent
years. 32% of European companies
are using it; they are 21% and 15%
in
North
countries
region.
America
of
the
and
in
the
Asia-Pacific
centralised
management of commitment at the
headquarters level, without provid-
ing information on the distribution
of responsibility in their subsidiaries. This situation is changing. 43%
of European companies, versus 31%
in our previous study, have desig-
nated officials responsible for the
prevention
of
corruption
February 2013 within
3 INCREASED
P RESSURE
FROM
are much less visible and less
are (in ascending order): construc-
ALERT
where 5.3% of the companies under
ticals and biotechnology, manufac-
BUSINESS STAKEHOLDERS DISCIPLINES
DEVICES
CONTROL
AND
The regulatory framework for the
prevention
of
corruption
has
increased in recent years (increase
in the number of investigations for
violations of the FCPA in the United
States, entry into force of the
British law, the "UK Bribery Act"),
resulting in a growing interest from
institutional investors on the issue
of corruption.
Large pension funds are now more
frequently
using
shareholder
engagement towards companies to
question
their
efforts
in
this
regard. These factors have led
companies
to
strengthen
subject to judicial control in Asia,
review
have
been
These
limited
targeted
by
allegations or legal proceedings.
numbers
do
not
capture the extent of corruption in
the Asia-Pacific region, highlighted
59% of North American companies,
against 42% in Europe and 15% in
the Asia-Pacific region, communicate on the establishment of a
whistleblowing,
ensuring
the
confidentiality of the exchanged
information.
THE NUMBER OF ALLEGATIONS
AND CONVICTIONS ARE UP
North American companies, even
ing of strategies against corruption
explains the patterns of behaviour
fall.
The
may be, participates in the reshapand of governance rules.
INFORMATION
ON
THE
EFFEC-
TIVENESS OF REPORTING MECHA-
NISMS, CONFIDENTIAL OR OTHERWISE,
REMAINS
INDIGENT:
TABOO OR UNWILLINGNESS?
provide the most details about the
incidents of corruption (proven or
not) reported by employees via the
whistleblowing
systems.
during the past three years. The
phenomenon
European
is
also
rising
companies:
for
16%
(compared to 13% in 2010) have
been the subject of a claim or
recent conviction. Corruption cases
Vigeo ra ng ters structure, in fact, the defensive
form
of
corporate
action
with
respect to this risk, but not enough
to account for the causes of the
most advanced performance. The
managerial variable and the rules
of governance on which it relies,
play a crucial role in the ability of
firms to cope with the phenomenon
of corruption. this degree of transparency. 4% of
companies in North America and in
the Asia-Pacific region report the
nature and consequences of alerts
collected.
THE FREQUENCY OF CORRUPTION
IS CORRELATED TO THE SECTOR
OF ACTIVITY
variable in exposure to the risk of
tion or conviction for corruption
of corruption. These two parame-
17% of European companies display
corruption, are the more contro-
the subject of at least one allega-
of firms vis-à-vis the phenomenon
This
In 2010, we demonstrated that
versial. A fifth of them have been
the rigor of national law only partly
practice is a minority; however,
though they have the most relevant
commitments for the prevention of
manufacturers.
Belonging to a certain sector and
last
number, nature and treatment of
U.S. dates back to 1863. In fact,
services, followed by automobile
revelation of such cases, as slow it
scandal
France, the whistleblowing system
whereas the first similar law in the
and services, oil equipment and
WHAT ALWAYS COUNTS
Olympus
European companies are those that
has been in place since 2005,
turers of health care equipment
by spectacular cases such as the
their
monitoring and alert systems. In
tion and public works, pharmaceu-
sector affiliation was a significant
corruption.
existence
In
of
particular,
voluntary
the
sector
initiatives can positively shape the
commitments and business prac-
tices on this matter, but these
initiatives do not guard against the
occurrence of controversy. Among
the 32 sectors assessed by Vigeo,
the five most controversial areas
February 2013 4 THE 30
COMPANIES DISPLAYING THE MOST ADVANCED
MANAGERIAL PERFORMANCE AGAINST CORRUPTION AT
GLOBAL LEVEL
C o m p an y
XSTRATA PLC
Ran k
1
C o u n tr y
United Kingdom
Red Eléctrica Corporación
Anglo American
2
3
Spain
United Kingdom
Svenska Cellulosa B
5
Sweden
CA Technologies
6
Vattenfall AB
Atlantia
6
7
United States of
America
Lonmin
L'Oreal
Nexen Inc.
Enel
Indra Sistemas
Endesa
A2A SpA
Norsk Hydro
Danone
Heineken Hldg N.V.
Heineken N.V.
Goldcorp Inc.
4
5
6
6
8
8
8
8
9
9
9
10
Outokumpu Oyj
10
Kellogg Co.
10
Vigeo ra ng United Kingdom
France
Canada
Italy
Sweden
Italy
Sec to r
Mining & Metals
Electric & Gas Utilities
Mining & Metals
Mining & Metals
Luxury Goods & Cosmetics
Forest Products & Paper
Energy North America
Electric & Gas Utilities
Software & IT Services North
America
Electric & Gas Utilities
Transport & Logistics
Spain
Spain
Software & IT Services
Electric & Gas Utilities
France
The Netherlands
Food
Beverage
Italy
Norway
The Netherlands
Canada
Finland
United States of
America
February 2013 Sc o r e / 100
87
85
82
80
77
77
75
75
75
75
74
73
73
Electric & Gas Utilities
Mining & Metals
73
73
Beverage
Mining & Metals North America
72
71
Food North America
71
Mining & Metals
72
72
71
5 THE 30
COMPANIES DISPLAYING THE MOST ADVANCED MANAGERIAL PERFORMANCE
AGAINST CORRUPTION AT GLOBAL LEVEL
C o m pan y
Ran k
C o u n tr y
Sec to r
Sc o r e / 1 00
Rio Tinto
Barrick Gold Corp.
11
12
United Kingdom
Canada
Mining & Metals
Mining & Metals North America
70
69
SKF
12
Sweden
69
Australia & New Zealand
Banking Group Ltd.
Mechanical Components &
Equipment
13
Australia
Banks Asia Pacific
68
Siemens AG
13
Germany
68
Aegon
13
Salesforce.com Inc.
13
The Netherlands
United States of
Electric Components &
Equipment
Mondi PLC
Snam
The 30 companies with the best
performance at global level have
certain common characteristics. In
fact, most of these businesses are
globalised operating on a worldwide basis and do not have, strictly
speaking, a dominant market. The
choice of the country of their headquarters is related to their history
and their places of operation. These 30 companies also display other
common points; they stand out in
Vigeo ra ng 12
12
United Kingdom
Italy
America
Forest Products & Paper
Electric & Gas Utilities
Insurance
Software & IT Services North
America
particular by displaying relevant
commitments in other areas of social responsibility, such as respect
for human rights, the responsible
management of human resources
and the reduction of environmental
impacts, demonstrating the global
nature of their sustainable development strategy. Finally, it should
be noted that almost a third of these companies belong to the extractive industry sector, where expo-
February 2013 69
69
68
68
sure to the risk of corruption is
high. These convincing sector performances demonstrate that stakeholder pressure on the practices of
extractive industries in the fight
against corruption can bear fruit
and lead to the establishment of
efficient management strategies.
6 THE 30 EUROPEAN
COMPANIES DISPLAYING THE MOST
ADVANCED MANAGERIAL PERFORMANCE AGAINST CORRUPTION
C o m pan y
Ran k
C o u n tr y
Sec to r
Sc o r e / 1 00
XSTRATA PLC
1
United Kingdom
Mining & Metals
87
Red Eléctrica Corporación
2
Spain
Electric & Gas Utilities
85
Anglo American
3
United Kingdom
Mining & Metals
82
Lonmin
4
United Kingdom
Mining & Metals
80
L'Oreal
5
France
Luxury Goods & Cosmetics
77
Svenska Cellulosa B
5
Sweden
Forest Products & Paper
77
Enel
6
Italy
Electric & Gas Utilities
75
Vattenfall AB
6
Sweden
Electric & Gas Utilities
75
Atlantia
7
Italy
Transport & Logistics
74
Indra Sistemas
8
Spain
Software & IT Services
73
Endesa
8
Spain
Electric & Gas Utilities
73
A2A SpA
8
Italy
Electric & Gas Utilities
73
Norsk Hydro
8
Norway
Mining & Metals
73
Danone
9
France
Food
72
Heineken Hldg N.V.
9
The Netherlands
Beverage
72
Heineken N.V.
9
The Netherlands
Beverage
72
Outokumpu Oyj
10
Finland
Mining & Metals
71
Rio Tinto
11
United Kingdom
Mining & Metals
70
Mondi PLC
12
United Kingdom
Forest Products & Paper
69
Snam
12
Italy
Electric & Gas Utilities
69
SKF
12
Sweden
Mechanical Components &
Equipment
69
Siemens AG
13
Germany
Electric Components &
Equipment
68
Aegon
13
The Netherlands
Insurance
68
Allianz SE
14
Germany
Insurance
67
Enagas
14
Spain
Electric & Gas Utilities
67
Atos
14
France
Software & IT Services
67
Vigeo ra ng February 2013 7 THE 30 EUROPEAN
COMPANIES DISPLAYING THE MOST ADVANCED MANAGERIAL PERFORMANCE
AGAINST CORRUPTION
C o m pan y
Ran k
C o u n tr y
Sec to r
Sc o r e / 100
WPP
14
United Kingdom
Broadcasting & Advertising
67
Munich Re
15
Germany
Insurance
66
Gamesa
15
Spain
Iberdrola Renovables S.A.
15
Spain
Electric & Gas Utilities
66
GDF SUEZ
15
France
Electric & Gas Utilities
66
CRH plc
15
Ireland
Building Materials
66
ENI
15
Italy
Energy
66
LUNDIN PETROLEUM
15
Sweden
Energy
66
The European ranking of the best
performances reveals the very good
place that UK businesses hold, with
six companies in the top 30. Three
German companies are also
included in this ranking. It is also
interesting to note that more than
one third of the companies included in this ranking have activities
Vigeo ra ng Electric Components &
Equipment
where the extraction of raw
materials plays a central role – such
as the mining and metals, and
forest products and paper sectors,
and the oil, gas and electricity
industries. In these sectors,
stakeholder pressure is intense and
continuous, thus favouring the
February 2013 66
emergence of advanced behaviours
in the prevention of corruption.
8 FRENCH
COMPANIES DISPLAYING THE MOST ADVANCED
MANAGERIAL PERFORMANCE AGAINST CORRUPTION
C o m pan y
Ran k
Sec to r
Sc o r e / 100
L'Oreal
1
Luxury Goods & Cosmetics
77
Danone
2
Food
72
Atos
3
Software & IT Services
67
GDF SUEZ
4
Electric & Gas Utilities
66
Axa
5
Insurance
65
Suez Environnement
5
Waste & Water Utilities
65
CGG Veritas
6
Oil Equipment & Services
63
FONC.DES REGIONS
7
Financial Services - Real Estate
62
Sodexo S.A.
7
Hotel, Leisure Goods & Services
62
French companies that perform
best have in common not having
been the subject of any allegations
during their evaluation period. In
addition, all companies the majority of companies in this ranking
show evidence of convincing
performances across all environ-
Vigeo ra ng mental and social issues on which
they were evaluated, attesting to
the establishment of a comprehensive strategy for sustainable
development.
February 2013 9 Measurement of business
performance in terms of
the prevention of
corruption
1. Method for measuring CSR performance
Vigeo defines corporate social
responsibility as a managerial commitment to take into account the
rights, interests and expectations of
its stakeholders, and to report from
the perspective of risk management
and continuous improvement of
performance. We argue, in effect, that
the objectives and principles defining
corporate social responsibility are
strategic risk factors for the durability
of business performance and in this
sense; they affect reputation, cohesion, efficiency and security on the
markets.
In this spirit, we consider that the
more a managerial system integrates the observation of the
principles and objectives that
define corporate responsibility, the
more the risks in question will be
controlled and converted into a
sustainable lever of performance
for the organisation.
VIGEO'S EVALUATION FRAMEWORK
The framework against which Vigeo
evaluates business performance
consists of two elements:
• a repository of social responsibil-
ity objectives, including all of the
principles and rules set out by
international public institutions
in the form of conventions,
recommendations or guiding
Vigeo ra ng principles, either directly to the
attention of businesses, or
through States
• Managerial referential which is
structured by PDCA (Plan, Do,
Check, Adjust)
ANALYSIS OF THE MANAGERIAL
DIMENSION
Company commitments are
measured using a formal inquiry on
the relevance of policies, the
efficiency and effectiveness of their
implementation, and their results
Relevance is measured from the
visibility of targets, the completeness of their contents, and the
adequacy of their ownership within
the company.
(Leadership, Implementation,
Results) receives a score corresponding to the consolidation of
opinions on the various angles of
analysis that compose it
Then, the equally-weighted scores of
these three axes are consolidated
into a value (0 to 100) indicating the
level of organisational commitment
in favour of social responsibility
criteria. This approach enables the
evaluation of the performance of
individual companies and as such
makes it possible to compare and
rank ("benchmark") by country,
sector, managerial axis (Leadership /
Implementation / Results), and
elementary angle of analysis.
The efficiency of implementation is
evaluated through the suitability
and tangibility of the resources
allocated, but also through the
extent of their scope of application.
The efficacy of results is analysed
through stakeholder assessment of
the company's managerial commitments, and through the evolution
of sector indicators.
HOW TO READ THE REVIEW ?
By using questioning adapted to
sector issues, each of the three
managerial axes analysed
February 2013 10 On each of these aspects, the
assessment allows the identification
of innovative practices, controversies
and, in general, the terms and the
level of interest shown by the
companies under review to the
objectives and principles of social
responsibility that are binding (and,
as such, they constitute risk factors).
THE
The criterion of social responsibility
covered by this study is the principle
of the prevention of corruption.
Corruption is studied in its broadest
sense: bribes, gifts and invitations,
fraud, embezzlement, and money
laundering are covered by Vigeo's
definition of corruption. Conflicts of
interest are also taken into account
as they may cast doubt on the quality
of decisions taken by the company
and on personal integrity.
ASSESSED UNIVERSE
3%
3%
United States
3%
Japan
3%
27%
3%
4%
United
Kingdom
France
Australia
Germany
4%
Switzerland
4%
Canada
Sweden
7%
Spain
15%
13%
Hong Kong
Italy
Distribution of companies by country
The universe analysed is comprised
of 1,268 companies evaluated by
Vigeo between April 2010 and
October 2012 and have their
headquarters in one of the countries of the three regions represented in this study. The North
American region accounts for 30%
of the sample, with 47% for Europe
and 23% for the Asia-Pacific region.
The latter region therefore makes
its debut in this comparative study;
the countries of companies that
comprise it are in ascending order:
Japan, Australia, Hong Kong,
Singapore, China and New Zealand.
Vigeo ra ng The table above shows the distribution of companies by country
grouping a number of firms greater
than or equal to 3% of the total
number of companies evaluated.
Companies in the United States,
Japan, United Kingdom, and France
represent 62% of all companies
assessed.
This disparity, in terms of distribution by sector and by country, must
be taken into account in reading
the following classifications.
Companies observed are divided
into 32 sectors, with variable
distribution. The largest sector is
composed of 57 companies (Banks
Europe); the smallest (Tobacco Asia
-Pacific) is composed of one
company.
February 2013 11 PERFORMANCE
OF COMPANIES BY COUNTRY
On a scale where 100 is the highest
level of commitment for the
prevention of corruption, the
average level observed in all
countries is 43/100 (versus 47/100
in 2010). The average level in
Europe is 45/100 (as in 2010) and
48/100 in North America (versus
51/100 in 2010). For companies in
the Asia Pacific region, the average
score is 33/100.
The averages attributed by country
range from 25/100 (Hong Kong) to
51/100 (Netherlands and Canada).
As in 2010, the Netherlands and
Canada continue to lead as the
most advanced countries in terms
of prevention of corruption.
However, differences can be
observed between sub-groups of
countries. The superior performance of the leading duo reflects
both relatively structured target
commitments against corruption
and a low proportion of allegations
on the subject. The sub-group of
Hong Kong and Japan obtains the
lowest average score with 25 out of
100 and 30 out of 100 for the two
countries. This performance is
associated with low formalisation
of commitments and a limited
allocation of resources. The United
States, Japan and Britain, countries
heavily represented in the universe
under review, reach respectively
the 6th, 21st and 11th position.
The performance of Great Britain
remains stable despite the adoption in April 2010 of a new national
anti-corruption law (UK Bribery
Act), which strictly punishes acts of
bribery and corruption. This new
legislation, considered more severe
than the laws of the United States
(FCPA), has introduced a new
offense for legal persons: failure to
prevent corruption. Thus, the
inaction of companies in terms of
1
Netherlands
Canada
Italy
Sweden
Germany
United States
Portugal
Norway
Australia
Spain
United…
France
Finland
Switzerland
Belgium
Greece
Denmark
Singapore
Austria
Ireland
Japan
Hong Kong
prevention of corruption becomes
an offense in the case of an act of
or attempted bribery by a person
associated with the company
(employees, consultants, affiliates,
etc.). Beyond the direct implications
for UK businesses, the new law
applies the principle of extraterritoriality and is therefore
intended to apply to any company,
British or not, which conducts
business in Britain. Ultimately, it
will be the British jurisprudence
which will determine the severity of
the law.
51
51
48
48
48
48
47
46
46
46
45
44
43
43
39
39
36
35
35
34
30
25
1
relevance of their strategies or the
rigor of processes dedicated to the
prevention of corruption.
The average scores for all countries
remain weak. In addition, the
performance differences observed
between countries do not permit
the inference that the location of
the headquarters of companies is
sufficient enough to determine the
Listed in this table are countries with more than 9 companies under review (more than 1% of the total number of firms).
Vigeo ra ng February 2013 12 PERFORMANCE
OF COMPANIES BY SECTOR
Forest Products & Paper
Technology ‐ Hardware
Tobacco
Energy (Oil & Gas)
Defense and Aerospace
Insurance
Medical Components & Equipment
Software & IT Services
Building Materials
Mining & Metals
Publishing
Business Support Services
Mechanical Components & Equipment
Electric Components & Equipment
Oil Equipment & Services
Luxury Goods & Cosmetics
Telecommunications
Broadcast & Advertising
Financial Services ‐ General
Waste & Water Utilities
Hotel, Leisure Goods & Services
Banks
Food
Transport & Logistics
Home Construction
Electric and Gas Utilities
Industrial Goods and Services
Beverage
Pharmaceuticals and Biotechnology
Heavy Construction
Automobiles
Financial Services ‐ Real Estate
51
51
50
49
48
47
47
46
46
46
46
45
45
45
45
45
43
43
43
43
42
42
42
42
42
41
40
39
36
34
31
31
Commitment levels observed ranged from 31/100 (Financial - Real Estate Services and the Automobile sector) to
51/100 (Forest Products and Paper, Technology-Hardware), with a standard deviation of 5, showing for the
sectors of activity a relatively low dispersion of companies’ levels of commitment towards the prevention of
corruption.
SECTORS ACTIVE IN THE PREVENTION OF CORRUPTION
Among the five most active sectors
in the fight against corruption,
three sectors are the subject of
recurring allegations and convictions for corruption: the areas of
Defence, Energy and Tobacco.
Defence and Tobacco companies
Vigeo ra ng demonstrate in conjunction a
greater commitment against
corruption with an allocation of
resources and facilities greater
than other sectors. In contrast,
companies in the Energy and Forest
Products and Paper sectors display
less convincing commitments
towards the prevention of corrup-
February 2013 tion, and integration of risk control
devices for corruption in their
operations is less advanced.
13 THE SECTORS WITH LITTLE COMMITMENT
Among the five sectors that are
least committed to the prevention
of corruption, the Automotive,
Pharmaceutical and Biotechnology,
and Construction sectors are subject to public allegations or convictions for corruption. Companies in
these sectors show a moderate
degree of commitment towards the
prevention of the types of corruption that they may face. In contrast,
the financial and real estate ser-
vices sector , without necessarily
being the subject of public allegations or convictions for corruption,
has a low degree of commitment to
the prevention of corruption and
poor communication regarding the
implementation of control mechanisms for corruption risks in the
operations of companies in this
sector. This lack of transparency on
the implementation of internal
control mechanisms also applies to
companies in the beverage industry, which have on average a rela-
tively low level of commitment towards the prevention of corruption,
and are not particularly prone to
allegations or convictions for corruption.
THE MOST CONTROVERSIAL SECTORS
The frequency of corruption
correlates with the sector of activity
Sh ar e o f c o m pag n ies
Sec to r s
s u bjec t to alleg atio n s
Heavy Consctruction
41%
Pharmaceuticals & Biotechnology
36%
Health Care Equipment & Services
31%
Oil Equipment & Services
29%
Automobiles
25%
Controversial sectors have companies whose commitments in the
fight against corruption do not
necessarily lack formalisation.
Ensuring high visibility of the
principles and objectives for the
prevention of corruption and
publicly displaying the existence of
dedicated structures is not enough
to protect themselves against
allegations and implications in this
matter. With the exception of car
manufacturers and pharmaceutical
companies, who sell part of their
production to the final consumer,
the majority of the most controversial sectors in the world are
"Business to Business" companies:
Pharmaceutical and Biotechnology,
Health Care Equipment and Ser-
vices, and Oil Equipment and
Services. In the area of health,
excessive invitations and gifts
made to practitioners to promote
their products are regularly considered corruption practices by the
authorities and therefore punished.
Potential conflicts of interests
between pharmaceutical companies
and the authorities granting
authorisations for placing products
on the market are increasingly
scrutinised by stakeholders under
pressure from civil society. In the
Oil Equipment and Services sector,
the amount of contracts and
frequent interactions with foreign
officials make companies more
vulnerable.
Compared to our previous study,
only one change is observed in the
top 5 most controversial European
sectors: the Construction sector
makes a particularly visible entrance while the Tobacco industry
leaves the Top 5. With more than
one out of two firms having been
recently alleged or convicted , the
European Construction sector is the
most controversial of all the
sectors analysed by Vigeo. The
types of corruption identified are
quite varied: embezzlements, fraud
and gifts have been identified, but
bribes appear as the preferred
method in the industry.
Sec to r - Eu r o pe
S h ar e o f c o m pag n ies
s u bjec t to alleg atio n s
Heavy Consctruction
56%
Automobiles
53%
Pharmaceuticals & Biotechnology
48%
Aerospace
38%
Energy
33%
Vigeo ra ng February 2013 14 In the North American Region,
changes since the last survey are
more numerous. Only the Oil
Equipment & Services and Health
Care Equipment & Services sector
remain in the top 5 of the most
controversial sectors. The Mining &
Metals, Defence & Aerospace, and
Insurance sectors were replaced by
the Pharmaceutical & Biotechnology, Industrial Goods & Services and
Forest Products & Papers sectors.
These areas are exposed to different types of corruption. Thus, in
the Pharmaceutical & Biotechnology
sector, it is the relations between
companies and licensing authorities who authorise the placement
of products on the market that can
be marred by conflicts of interest
or even bribery. In the area of
Industrial Goods & Services, the
participation of these companies in
public contracts also contributes to
increase their exposure.
After reading this first analysis of
the top 5 of the most controversial
sectors in the Asia-Pacific region,
two major elements stand out.
Firstly, the areas in this region are
significantly less exposed to
allegations and convictions than
sectors from other regions. Indeed,
the most controversial sector,
Broadcasting and Advertising,
displays an exposure rate of 25%.
The fact that a quarter of the
companies in this sector have been
the subject of allegations may
seem high, but when compared
with the results observed for
controversial areas of Europe and
North America, the underexposure
of companies in this region appears clearly. This gap between the
three regions could be explained
by the entry into force of anticorruption laws in different countries. Thus, the Sentencing Reform
(Revised Federal Sentencing
Guidelines) came into force in the
United States in 2004, and the
British law (UK Bribery Act) in 2010.
Both texts allow companies that
can demonstrate the effectiveness
of their ethics compliance programme to benefit from reduced
sanctions by judges. In contrast,
Japan has been strongly criticised
by OECD in January 2012 for the
low level of implementation of its
anti-corruption legislation. The
OECD further recommends that
Japan strengthen this legislation,
particularly with regard to foreign
bribery, money laundering and the
protection of whistleblowers.
Sec to r - A s ia Pac ific
Sec to r - No r th A m er ic a
Pharmaceuticals & Biotechnology
50%
Health Care Equipment & Services
48%
Oil Equipment & Services
43%
Industrial Goods & Services
36%
Forest Products & Paper
33%
Sh ar e o f c o m pag n ies
s u bjec t to alleg atio n s
Broadcasting & Advertising
25%
Home Construction
25%
Hotel, Leisure Goods & Services
25%
Publishing
25%
Beverage
20%
Vigeo ra ng Sh ar e o f c o m pag n ies
s u bjec t to alleg atio n s
February 2013 Finally, none of the most controversial sectors in the Asia-Pacific
region appear in the top 5 of the
other two regions. More surprisingly, these areas are considered
by stakeholders as being less
prone to corruption than other
sectors such as those found in the
top 5 in Europe and North America.
15 COMPARATIVE
ANALYSIS OF PERFORMANCE PER MANAGERIAL AXIS
Analysis by managerial axis of business practices towards the prevention of corruption enables a comparison of
the adequacy of commitments shown ("Leadership") with operational efficiency ("Implementation") and allegations
or convictions of corruption, which companies under review have been the subject of either through the press or
through the justice system ("Results").
The average score for European
companies of the panel in terms of
"Leadership" is 47/100 (versus
42/100 in 2010), 57/100 for North
American companies (versus
54/100 in 2010), and 28/100 for
companies in the Asia-Pacific
region. The increased level of
performance in "Leadership" since
the last study attests to the
increasing integration of formalised
anti-corruption policies in
companies.
The observation of the resources
allocated ("Implementation")
confirms the low level of
mobilisation of devices and
measures of information and
control, which are supposed to
prevent and identify all forms of
corruption. In fact, only European
companies show significant
progress on these elements, their
average score increases by six
points to 36/100 and is close to
the average performance level of
U.S. companies, up one point to
39/100. These scores remain low
with regard to Vigeo's evaluation
grid. However, they remain well
above the average score for
companies in the Asia-Pacific
region (18/100), which attests to
an insufficient level of transparency
on managerial systems in place.
These scores are produced taking
into account the materiality of the
organisational, human and
financial resources allocated to the
100
Asia‐Pacific
90
Europe
80
North America
70
57
60
47
50
36
40
30
39
43 42
38
28
18
20
10
0
Leadership
Implementation
mapping and categorisation of
risks, awareness raising and
training, employee accountability
especially those most at risk, and
the formalisation of behaviours to
adopt to deal with various risk
situations. Our inquiry focuses on
the nature and scope of the
distribution of control mechanisms.
The managerial axis "Results"
provides information on the
effectiveness of alert mechanisms,
stakeholders' views on the
company’s ability to prevent
corruption, and in cases of
allegation, arbitration or sanction,
on their reactivity. Companies in
the Asia-Pacific region displayed
Results
the best performances on this
managerial axis with a score of
43/100, followed closely by
European companies (42/100). The
North American firms bring up the
rear with an average score of
38/100. Although more common in
North America than in Europe and
the Asia-Pacific region, penalties
and settlements to which
companies are exposed provide
more information about the more
pronounced vigour of legal
mechanisms of control than on an
increased propensity of U.S.
companies to bribe.
Due to methodological changes made by Vigeo on the managerial axis "Results", the performance of European and North American can
2
not be compared with the performance observed in 2010 on this same managerial axis
Ibid
3
Vigeo ra ng February 2013 16 2. Analysis of strategies and behaviours to prevent
corruption
COMPARATIVE
ANALYSIS OF THE RELEVANCE OF COMMITMENTS
Three elements are involved in the measurement model developed by Vigeo to assess the relevance of a policy
for the prevention of corruption: the visibility of commitments, their content and the ownership of such a commitment within the company. Business performance differs by:
• The nature of the supports expressing their own commitments (diluted statements in an annual report, codes
of conduct and ethical charters, or signing and communicating actions for progress under the UN Global
Compact),
• The content of commitments (completeness and accuracy of the identification of different forms of corruption),
• The range of duties and responsibilities of persons or structures responsible for the prevention of corruption
Ownership
within the business, the degree of inclusion of stakeholders in the design and approval of the strategy pursued
by the company, and the degree of involvement of the company in external initiatives, multipartite, in the
prevention of corruption.
North America
42,0
Europe
41,8
Asia‐Pacific
22,0
Content
North America
56,1
Europe
Asia‐Pacific
43,0
23,9
Visibility
North America
67,8
Europe
57,8
Asia‐Pacific
Vigeo ra ng 36,5
February 2013 17 BEST WORLD SCORES
C o m pan y
Ran k
C o u n tr y
S ec to r
Sc o r e / 100
Lonmin
1
United Kingdom
Mining & Metals
100
Norsk Hydro
1
Norway
Mining & Metals
100
XSTRATA PLC
2
United Kingdom
Mining & Metals
93
Anglo American
2
United Kingdom
Mining & Metals
93
2
Australia
Banks Asia Pacific
93
2
Germany
Insurance
93
Mining & Metals North America
93
Financial Services - General
North America
93
Australia & New Zealand
Banking Group Ltd.
Allianz SE
Alcoa Inc.
2
NYSE Euronext
2
United States of
America
United States of
America
Toronto-Dominion Bank
2
Canada
Banks North America
93
Great-West Lifeco Inc.
2
Canada
Insurance North America
93
UBS R
2
Switzerland
Banks
93
Societe Generale
2
France
Banks
93
Euler
2
France
Insurance
93
Deutsche Bank
2
Germany
Banks
93
Red Eléctrica Corporación
3
Spain
Electric & Gas Utilities
90
L'Oreal
3
France
Luxury Goods & Cosmetics
90
Rio Tinto
3
United Kingdom
Mining & Metals
90
Siemens AG
3
Germany
ENI
3
Italy
Energy
90
Suez Environnement
3
France
Waste & Water Utilities
90
Total
3
France
Energy
90
Thales
3
France
Aerospace
90
Thomson Reuters
4
United Kingdom
Publishing North America
86
HSBC Holdings
4
United Kingdom
Banks
86
Electric Components &
Equipment
90
BEST SCORES FOR FRANCE
C o m pan y
Ran k
S ec to r
S c o r e / 100
Societe Generale
1
Banks
93
Euler
2
Insurance
93
L'Oreal
2
Luxury Goods & Cosmetics
90
Suez Environnement
2
Waste & Water Utilities
90
Total
2
Energy
90
Thales
2
Aerospace
90
GDF SUEZ
3
Electric & Gas Utilities
83
Alstom
3
Accor
3
Vigeo ra ng Electric Components &
Equipment
Hotel, Leisure Goods & Services
February 2013 83
83
18 THE VISIBILITY OF COMMITMENTS
This angle of analysis measures the
level of display of commitments in
favour of the prevention of corruption. Several scenarios can be observed:
• No communication on the issue
of corruption;
• A non-formalised commitment:
the aversion of the company for
corruption is expressed on a
somewhat visible support, particularly employees (a few lines in
an annual report or on the website of the company);
• A formal commitment: the aver-
tion is highly visible, its commitment is formalised in a dedicated
policy (Code of Conduct, Code of
Ethics, Anti-Corruption Policy);
• A formalised commitment which
includes targets for progress in
the prevention of corruption.
sion of the company for corrup-
85,2%
65,2%
39,3%
34,2%
22,1%
12,6%
4,4%
No formalised engagement
Formalised, documented
engagement without specific
objectives
Europe
North America
Asia‐Pacific
Europe
North America
Asia‐Pacific
Europe
Asia‐Pacific
Europe
No observable engagement
North America
2,3%
0,8%
North America
11,7%
9,2%
Asia‐Pacific
13,0%
Formalised, documented
engagement with precise
objectives
Companies strengthen their communication on the prevention of corruption
The share of firms that express no
commitment towards the prevention of corruption is decreasing in
Europe (minus 6 percentage points
to 13%) and North America (minus
2.2 percentage points to 0.8%). The
share of companies in the AsiaPacific region not having made
such commitments is higher:
34.2%.
A similar trend is observed on the
proportion of commitments that
have been identified in the public
documents of the company (annual
report, reference document, report
on sustainable development,
website). Thus, 9.2% of European
companies (versus 14% in 2010)
Vigeo ra ng and 2.3% of North American
companies (against 7% in 2010)
evoke the prevention of corruption
as a principle of organisation, but
without devoting formalised and
visible documents visible by all
employees.
Codes of conduct and ethical
charters are two types of document
most commonly used by companies in the three regions to
formalise their commitments
because they are aimed directly at
employees. 85.2% of North
American companies (versus 91% in
2010), 65.2% of European companies (versus 66% in 2010) and
39.3% of companies in the Asia-
February 2013 Pacific region register their
commitments in documents of this
type.
Finally, the share of European
companies that have set specific
targets for the prevention of
corruption is increasing: they now
represent 12.6% of European
companies (against 9% in 2010). In
the North American region, this
share is relatively stable at 11.7%
(12% in 2010). In the Asia-Pacific
region, 4.4% of companies show an
action plan on the subject.
19 OF
• No communication on the issue
This angle of analysis measures the
comprehensiveness
of
commitments to the prevention of
corruption. Several scenarios can
be observed:
• Vague references, along with
THE COMPREHENSIVENESS
COMMITMENTS
of corruption
mentions of fraud, conflict of
interest, and money laundering
• Convincing
commitments
referring explicitly to different
forms and types of corruption
• Extensive commitments, based
on external recommendations
(NGOs, regulatory bodies or
international organisations)
55,4%
50,3%
44,4%
36,5%
35,2%
33,9%
13,7%
12,5%
9,7%
6,8%
Vague references to various
forms of corruption
Europe
North America
Asia‐Pacific
Europe
North America
Asia‐Pacific
Europe
North America
Asia‐Pacific
Europe
North America
No communication on
corruption
Asia‐Pacific
1,0%
0,8%
Convincing commitments with Extensive commitments based
explicit references to forms of on external recommendations
corruption
The discourse of North American companies is the most explicit, European companies’ progress, and businesses
in the Asia-Pacific region are beginning to talk about the prevention of corruption
62.8% of North American companies under review accurately
describe their involvement in
individual forms of corruption
(bribery and corruption, conflict of
interest, extortion, fraud, money
laundering, etc.) that they may face
in their sector. This figure has been
increasing since 2010, when they
were 59.4% to publish a commitment regarded as convincing.
12.5% of North American companies (against 6% in 2010) go
beyond, explicitly referring to
opposable texts or external
recommendations.
In Europe, 44.4% of companies
assessed are committed only in
general terms ("the company
rejects corruption in all its forms")
Vigeo ra ng or do not clearly describe all forms
of corruption which they may be
exposed. These were 47% in 2010.
European companies that publish
precise and explicit commitments
represent 42% of businesses in the
region. However, there is a significant improvement since 2010,
when they accounted for 33.4% of
businesses in the region. Finally,
6.8% of European companies under
review explicitly refer to opposable
texts or external recommendations
on the prevention of corruption.
against corruption, but only in a
partial or general manner. They are
merely 10.7% to publish a commitment regarded as convincing,
which includes a precise description of the different forms of
corruption with which its employees may be confronted.
In the Asia Pacific region, a third of
companies under review (33.9%) do
not communicate any commitment
against corruption. More than half
of the companies under review in
this area (55.4%) commit publicly
February 2013 20 THE OWNERSHIP
MENTS
OF
COMMIT-
This angle of analysis allows the
assessment of the existence and
effectiveness of hierarchical
responsibilities dedicated to the
managerial pursuit of an anticorruption policy. Several scenarios
can be observed:
• No communication on the issue
of corruption.
• The company does not communicate clearly on the entities
responsible for its commitment
against corruption internally.
• The company's commitment is
supported by a designated and
authorised executive function.
• The company's commitment is
supported by a designated and
authorised executive function. In
addition, operational or local
managers have been appointed.
• The company has established a
designated and authorised
executive function, operational or
local managers have been
appointed, and collaboration with
a third party active in the prevention of corruption is also in place.
A convincing ownership of commitment implies that responsibility
for preventing corruption risks are
formally defined at the highest
level of organisations and local
coordinators are in charge of the
objectives within business units or
subsidiaries of companies.
62,8%
48,3%
40,3%
39,9%
38,1%
34,9%
16,9%
11,1%
5,1%
1,8%
0,5%
North
America
Europe
Asia‐Pacific
No communication
North
America
Europe
Asia‐Pacific
A designated executive function
North
America
Europe
Asia‐Pacific
A designated and authorised
executive function
North
America
0,3%
Europe
Asia‐Pacific
A designated and authorised
executive function with a third party
active in the prevention of
corruption
Companies tend to decentralise functions to prevent corruption
The share of firms that do not
communicate on the ownership of
commitments is in decline in
Europe (16.9% versus 23% in 2010)
and North America (1.8% versus 4%
in 2010). In the Asia-Pacific region,
companies that do not communicate on a designated leadership
function represent 40.3% of
companies in the region.
ties do not permit the direct
guidance of the actions of operational structures. These were 63.9%
of companies in this case in North
America in 2010. With regard to
other regions, such practices were
observed in 39.9% (versus 31% in
2010) of European companies
under review, and 48.3% of AsiaPacific companies.
For 62.8% of North American
companies under review, the
ownership of commitments is
limited to the designation of a
person or a function at the uppermanagement level that guarantees
the commitments made by the
company, but whose responsibili-
Companies in Europe and North
America s having appointed one or
more persons responsible for the
supervision of principles set out in
an anti-corruption policy in the
various operational structures of
the company are increasingly more
numerous. Thus, 38.1% of Europe-
Vigeo ra ng February 2013 an companies (versus 31% in 2010)
and 34.9% (versus 29% in 2010) of
North American companies have
such an ownership level. The rate is
11.1% in the Asia-Pacific region.
Finally, 5.1% of European companies (5% in 2010) and 0.5% of North
American companies (versus 3% in
2010) go beyond this operational
designation and engage with third
parties to strengthen their internal
commitments and their proactive
approach in preventing corruption.
In the Asia-Pacific region, the share
of companies concerned is 0.3%.
21 COMPARATIVE
ANALYSIS OF THE IMPLEMENTATION PROCESS
The assessment of anti-corruption
strategies requires the analysis of
the coherence of measures and
devices dedicated to their implementation.
The analysis of the coherence of
the measures implemented consists of assessing the tangibility
and adequacy of processes and
resources (human, financial...)
implemented by organisations to
prevent corruption. Coherent
procedures involve:
purchase or sales services,
allowing them to adopt an
honest behaviour in all circumstances.
• Control mechanisms:
− Measur es
for em ployees
making it possible to report
violations.
− The guarantee of confidentiali-
ty of this information and
protection of whistleblowers
against any discrimination.
• Sensitisation of staff:
Control mechanisms
Sensitisation of staff
Scope of implementation
North America
20,20
27,81
31,05
17,42
North America
41,81
Europe
Vigeo ra ng of awareness and
control systems established
should apply throughout the
company, but also cover
partners, sales agents, suppliers, and contractors.
40,91
Europe
Asia‐Pacific
− Measures
50,18
Europe
Asia‐Pacific
• A wide scope of application:
of the internal control systems
(especially accounting and data
recording).
bers of staff holding exposed
positions, particularly in the
Asia‐Pacific
nies of their activities in certain
areas or countries charted as
particularly vulnerable to
corruption and the implementation of specific measures.
− The conduct of regular audits
− Specific training for the mem-
North America
− The identification by compa-
34,74
17,62
February 2013 22 BEST WORLD SCORES
C o m pan y
Ran k
C o u n tr y
S ec to r
S c o r e / 100
XSTRATA PLC
1
United Kingdom
Mining & Metals
90
Red Eléctrica Corporación
2
Spain
Electric & Gas Utilities
88
Kellogg Co.
2
British American Tobacco
2
United States of
America
United Kingdom
Food North America
88
Tobacco
88
Forest Products & Paper
88
Svenska Cellulosa B
2
Sweden
Mondi PLC
2
United Kingdom
Vodafone Group
2
United Kingdom
Telecommunications
88
Baxter International Inc.
2
United States of
America
Health Care Equipment &
Services North America
88
Lonmin
3
United Kingdom
Mining & Metals
86
Alcoa Inc.
3
United States of
America
Mining & Metals North America
86
Toronto-Dominion Bank
4
Canada
Banks North America
79
Aegon
4
The Netherlands
Insurance
79
Atlantia
4
Italy
Transport & Logistics
79
Goldcorp Inc.
4
Canada
Mining & Metals North America
79
UNITED COMPANY RUSAL
4
Russia
Mining & Metals Asia Pacific
79
UBS R
5
Switzerland
Banks
77
Societe Generale
5
France
Banks
77
Salesforce.com Inc.
5
United States of
America
Software & IT Services North
America
77
Philips Electronics
5
The Netherlands
Technology-Hardware
77
Allergan Inc.
5
United States of
America
Alstom
5
France
Weyerhaeuser Co.
5
United States of
America
Pharmaceuticals &
Biotechnology North America
Electric Components &
Equipment
Forest Products & Paper North
America
Nexen Inc.
5
Canada
Energy North America
77
BP
5
United Kingdom
Energy
77
Sodexo S.A.
5
France
Hotel, Leisure Goods & Services
77
QinetiQ Group PLC
5
United Kingdom
Aerospace
77
Hess Corp.
5
Energy North America
77
Medtronic Inc.
5
Health Care Equipment &
Services North America
77
Capita Group PLC
5
United Kingdom
Business Support Services
77
Hospira Inc.
5
United States of
America
Novartis
5
Switzerland
FRESENIUS
5
Germany
Fresenius Medical Care
5
Germany
Pharmaceuticals &
Biotechnology North America
Pharmaceuticals &
Biotechnology
Health Care Equipment &
Services
Health Care Equipment &
Services
Mobistar
5
Belgium
Vigeo ra ng United States of
America
United States of
America
February 2013 88
Telecommunications
77
77
77
77
77
77
77
77
23 BEST SCORES FOR FRANCE
C o m pan y
Ran k
S ec to r
Sc o r e / 100
Societe Generale
1
Banks
77
Alstom
1
Sodexo S.A.
1
Hotel, Leisure Goods & Services
77
GDF SUEZ
2
Electric & Gas Utilities
76
Axa
2
Insurance
76
Veolia Environnement
2
Waste & Water Utilities
76
Lafarge
2
Building Materials
76
BNP Paribas
3
Banks
70
ADP
4
Transport & Logistics
69
Total
5
Energy
67
Vigeo ra ng Electric Components &
Equipment
February 2013 77
24 INFORMING SIMPLY TO EDUCATE, TRAIN, OR TO MAKE ACCOUNTABLE?
The analysis of corporate
communication
regarding
employee involvement in the
prevention of corruption reflects
several practices:
• No action appears to be in place
• The means used are limited to
informing employees on the
company's commitment against
corruption (dissemination of a
code of conduct for example)
• Employees most at risk of
corruption (sellers, buyers, etc.)
follow specific training tailored to
their profession on the
prevention of corruption
• Employees most at risk of
corruption (sellers, buyers, etc.)
follow specific training tailored to
their profession on the
prevention of corruption. More
resources are put in place to
empower them personally in the
fight against corruption (e.g.,
managers must report annually
on their progress in the fight
against corruption).
Although progress has been
observed in Europe, a significant
proportion of companies on both
sides of the Atlantic do not share
any resource for informing on the
subject of corruption, or do not
report on any such measure. Thus,
38.3% of North American
companies (versus 35% in 2010),
and 38.9% of European companies
(versus 47% in 2010) fall into this
category. In the Asia-Pacific region,
they represent 65.4% of the
companies.
37.8% of North American
companies (versus 40% in 2010)
and 26.8% of European companies
(27% in 2010) only deploy
awareness raising campaigns
among employees. It can be the
distribution of the Code of Conduct
(or other anti-corruption
document) to all employees,
sometimes in the local language, or
Vigeo ra ng 65,4%
38,3%
38,9%
37,8%
32,3%
26,8%
21,4%
16,8%
North
America
Europe
Asia
Pacific
No actions in place
North
America
Europe
Asia
Pacific
Limited means of information
15,4%
North
America
Europe
Asia
Pacific
2,6%
2,0%
2,3%
North
America
Europe
Asia
Pacific
Means are allocated to
Significant means allocated for
training of employees at risk at‐risk employees to training
of corruption
and empowerment against
corruption
Awareness raising and training of employees remain the weak link in anticorruption programmes in the three regions analysed
offering awareness programmes of
the code of conduct (or other
document
anti-corruption
document) by computer.
Progress has been observed in
Europe and North America in terms
of offers of anti-corruption
training. Thus, 21.4% of North
American companies (versus 16% in
2010) and 32.3% of European
companies (versus 24% in 2010)
have allocated resources to training
their employees most at risk of
corruption. With a share of 15.4%,
companies in the Asia-Pacific
region are almost as likely to have
implemented training programmes
as to have implemented awareness
programmes, considered to be less
efficient.
Pacific region and 2.6% of North
American companies (versus 8% in
2010) go beyond training for their
employees, and ask some
employees, including managers, to
report annually on the integrity of
their department or their
employees.
Finally, only 2% of European
companies (versus 3% in 2010),
2.3% of companies in the Asia-
February 2013 25 CONTROL MECHANISMS, WHAT DOES THIS MEAN?
INCREASED PRESSURE FROM
BUSINESS STAKEHOLDERS DISCIPLINES CONTROL AND ALERT
DEVICES
The prevention of corruption solely
by awareness raising or employee
training is not sufficient to effectively prevent corruption in the
private sector; the establishment of
control mechanisms by the company appears to be a critical part of a
corporate agenda towards the
prevention of corruption.
The share of firms that do not
report on the implementation of
control mechanisms to prevent
corruption in their operations fell
sharply in Europe and North
America. They are 21.2% in Europe
(versus 32% in 2010), 4.4% in North
America (versus 9% in 2010) and
55.4% in the Asia-Pacific region.
These developments in Europe and
North America appear to be due to
the implementation of internal
control procedures, such as
compliance
audits,
nonconfidential reporting procedures,
or procedures for accepting gifts
and invitations. In fact, 35.2% of
North American companies (versus
29% in 2010), 33.1% of European
Vigeo ra ng 59,4%
55,4%
42,2%
35,2%
33,1%
27,2%
21,2%
Absence of control
mechanisms
Internal control mechanisms
companies (versus 31% in 2010)
provide evidence of the implementation of these types of control
systems. The observed rate was
27.2% in the Asia-Pacific region.
The share of North American
companies that attest to the
existence of internal control
procedures, including a whistleblowing or ethical alert system, is
unchanged from the last survey:
59.4% (60% in 2010). In the United
States, the entry into force of the
Sarbanes-Oxley Act in 2002 gave
protection of the reporter in listed
companies. Although the prevention of accounting fraud is at the
heart of the provisions of the law,
many companies have extended
the scope of their whistleblowing
system so that employees can also
report any act of corruption or
behaviour contrary to their principles of conduct. In Europe, an
increasing share of the companies
concerned is observed; it now
represents 42.2% of companies in
the region (versus 35% in 2010).
Given the multinational nature of
the activities of the majority of
companies evaluated in this study,
practices for the prevention of
corruption tend to become harmonised. This is all the more tangible
now that new legislation, such as
the new British law on anti-
February 2013 Amérique du Nord
Asie‐Pacifique
Europe
Amérique du Nord
Asie‐Pacifique
Europe
Amérique du Nord
Asie‐Pacifique
Europe
1,0%
3,6%
2,0%
Asie‐Pacifique
4,4%
Europe
15,4%
Amérique du Nord
The prevention of corruption solely
by awareness raising or employee
training is not sufficient to effectively prevent corruption in the
private sector, the establishment of
control mechanisms by the company is necessary. Several practices
can be observed in evaluated
companies:
• Lack of communication on
control mechanisms
• Internal control mechanisms are
in place (internal audits, nonconfidential reporting system ,
formalised procedure for gifts
and invitations)
• Internal control mechanisms are
in place, complemented by a
whistleblowing
system
(confidential reporting system ,
by mail or hotline)
• Internal and external control
devices are in place, complemented by a whistleblowing
system
Internal control mechanisms Internal and external control
complemented by
mechanisms complemented by
whistleblowing system
whistleblowing system
corruption, shall apply the principle
of extra-territoriality. In the AsiaPacific region, only 15.4% of
companies report the establishment of an alert mechanism in
addition to their internal controls.
The use of outside organisations to
perform specialised inspections
(audits, evaluation of control
measures, evaluation of anticorruption programmes, etc.) on
their operations, in addition to
their internal controls and whistleblowing schemes, remains a
minority. Only 3.6% of European
companies (against 2% in 2010), 2%
of companies in the Asia-Pacific
region, and 1% of North American
companies (as in 2010) report
publicly in this regard.
26 MEASURES, YES, BUT WHERE ARE
THEY DEPLOYED?
The efficiency of resources allocated assumes their diffusion on the
overall scope of activity. Companies must ensure the implementation of their programmes in their
relationships with their affiliates,
partners, sales agents, suppliers,
contractors, and other parties with
which they have business relationships. It is essential for companies
to take the necessary precautions
in the choice of agents whose role
will be to represent the company. It
is also the responsibility of companies to distribute their programmes
to the whole group and to verify
that the behaviour of subsidiaries
and business partners is consistent
with the principles of integrity they
display. Several perimeters of
implementation can be observed:
• Lack of control devices
• Control devices cover a portion
of the company's operations
• Control devices cover all business
operations
• Control devices cover all business
operations and measures apply
to commercial intermediaries
• Control devices cover all business
operations and measures apply
to commercial intermediaries and
partners
The scope of application of control
mechanisms is gradually spreading.
61.7% of North American companies show that the deployment of
these measures covers the entire
enterprise (versus 54.1% in 2010);
the share of relevant European
firms is also increasing: 49.7%
(versus 41.3 % in 2010). The
deployment of control mechanisms
beyond the natural frontiers of the
company (sales agents, partners,
suppliers, etc.) is stable in North
America: 31.8% of companies in the
region attest to this (versus 32% in
2010), and is increasing in Europe:
25.9% (versus 20.4% in 2010).
Companies in the Asia-Pacific
region show downgrading performances: 57.7% of them did not put
in place control mechanisms or did
so in a limited perimeter, 32.6%
demonstrated that measures are
implemented throughout the
company, and 9.8% report that the
implementation of such measures
goes beyond the traditional
boundaries of the enterprise.
61,7%
57,7%
49,7%
32,6%
24,4%
24,2%
No controls
Vigeo ra ng Controls cover all business
operations
Controls cover all business
operations and commercial
intermediaries
February 2013 7,6%
8,5%
Europe
4,4%
Asia‐Pacific
Asia‐Pacific
Europe
North A merica
Asia‐Pacific
Europe
North A merica
Asia‐Pacific
5,4%
Europe
North A merica
6,5%
North A merica
17,4%
Controls cover all business
operations, commercial
intermediaries, and partners
27 COMPARATIVE
ANALYSIS OF THE RESULTS
The questioning of the effectiveness of the results involves the
collection and processing of information from the stakeholders of
the company (including the media).
Controversies identified are taken
into account depending on the seriousness of the allegations, but
also in terms of the responsiveness
of the company and the degree of
transparency to face the facts in
question.
Other factors are taken into account, such as the implementation
by companies of a system to track
cases and suspicions, and of their
handling. These indicators should
be published, enabling business
stakeholders to observe the developments in corporate transparency
on this subject.
Allegations of corruption
On the evaluation period, each
company is subject to targeted
research from a database of international press with over 350 reference publications, and covering the
implication or the identification of
confirmed cases of
against the company.
corruption
The number of allegations and
convictions are up
16% of European companies (versus
13% in 2010) and 19.3% of North
American companies (versus 15% in
2010) have been the subject of
allegations or convictions for corruption. The most common cases
of corruption concern bribes or
payments to public officials.
7.8% of European companies
(versus 7% in 2010) and 11.7% of
North American companies (versus
7% in 2010) have been the subject
of recent convictions or recurring
legal proceedings.
In the United States, the total financial penalties (civil and criminal)
imposed on companies within the
framework of the application of the
FCPA anti-corruption law has increased from 2.7 million in 2002 to
reach a record level 1.8 billion in
2010, and then a high level of 509
million in 2011. In 2011, the aver-
age amount of fines paid by companies in the United States is 33.8
million, proving the importance for
companies to implement robust and
efficient compliance programmes.
Responsiveness of companies facing convictions
When a company is subject to an
allegation or conviction for corruption, the company can react in different ways:
• The company does not report
transparently on the allegations
to which it is subject.
• The
company communicates
transparently on the allegations
to which it is subject.
• The
company communicates
transparently on the allegations
to which it is subject, and cooperates with the parties or authorities concerned.
• The
company communicates
transparently on the allegations
to which it is subject, and has
94,6%
80,7%
11,7%
7,8%
7,6%
8,2%
North
America
Europe
84,0%
5,0%
0,3%
North
America
Europe
Asia‐Pacific
Recent conviction or recurring
allegations
4
Asia‐Pacific
North
America
Previous convictions or recent
allegations
Europe
Asia‐Pacific
No allegations
Shearman & Sterling LLP, Recent Trends and Patterns in the Enforcement of the Foreign Corrupt Practices Act, January 2012
Vigeo ra ng February 2013 28 Vigeo ra ng 28,6%
14,3%
8,3%
No communication on
allegations
Asia‐Pacific
2,2%
Europe
North America
Asia‐Pacific
Europe
North America
Asia‐Pacific
Europe
North America
Asia‐Pacific
Europe
North America
1,4%
Communication on allegations Communication on allegations Communication on allegations
and implementation of
and cooperates with
exhaustive corrective
concerned parties and/or
measures.
authorities OR puts in place
corrective measures.
• The company does not disclose
• The
• The
• The company has put in place an
any information on the number
or nature of corruption incidents
reported internally, or the
company has not put in place an
internal reporting system.
number and nature of
corruption incidents reported
internally are identified and
published.
95,6%
number and nature of
corruption incidents reported
internally are identified and
published, and the company is
transparent on the way in which
it has handled these reports.
internal reporting system and
confirms that no suspect cases
were reported during the period
under review.
94,3%
77,5%
11,4%
The company provides no
information on number or
nature of corruption incidents
reported internally
The number and nature of
corruption incidents reported
internally are identified and
published
Amérique du Nord
Europe
0,0%
Asie‐Pacifique
5,1%
1,7%
1,7%
Asie‐Pacifique
6,0%
1,0%
Europe
Asie‐Pacifique
2,3%
Amérique du Nord
3,4%
Europe
23% of European companies
compared to 6% of companies in
the Asia Pacific region and 4% of
North American companies are
transparent about the different
cases of suspected corruption
which have been raised internally.
Of the 23% of European companies
demonstrating transparency, 73.5%
of them make public the number
and nature of reports identified
during the year, the remaining
26.5% provide additional information on the way they have
handled these cases. Of the 6% of
companies in the Asia -Pacific
region demonstrating transparency, 71% make public the number
and nature of reports identified
during the year, the remaining 29%
provide additional information on
how they have managed these
cases. Of the 4% of North American
companies demonstrating transparency, 76.5% of them make
29,0%
21,4%
Amérique du Nord
Information on the effectiveness of
reporting mechanisms, confidential
or otherwise, remains indigent:
taboo or unwillingness?
30,6%
Asie‐Pacifique
A system for preventing corruption
is tangible only if accompanied by
a monitoring system of incidents
reported through the company's
whistleblowing systems. Several
cases can be observed among
companies:
37,6%
35,7%
31,2%
Europe
Transparency on results related to
whistleblowing and the reporting of
suspect cases
59,7%
Amérique du Nord
In Europe, the majority of companies (68.8%) are transparent about
the existence of allegations,
lawsuits or sanctions related to
corruption. Of these, a minority
(45%) attest to the implementation
of corrective measures to prevent
the occurrence of future corruption. Companies in the Asia-Pacific
region are relatively transparent
(64.3%) on the existence of allegations of corruption, and the vast
majority (67%) of these companies
have deployed corrective measures.
In the United States, however,
59.7% of companies do not disclose information about their
position vis-à-vis allegations,
prosecution or sanctions for
corruption to which they are
exposed. Among the 40.3% of
companies that communicate, most
(79%) attest to the implementation
of corrective actions.
The number and nature of
The company has put in a place
corruption indicidents reported an internal reporting system and
internally are identified and
reports no suspect cases
published in a transparent
manner
public the number and nature of
reports identified during the year,
the remaining 23.5% provide
additional information on how they
have handled these cases.
February 2013 29 Best prac ces
This section lists the managerial commitments considered by Vigeo as the
most advanced in terms of prevention and the fight against corruption. The
most innovative practices were identified in relation to the different
managerial axes under review of our methodology.
LEADERSHIP
The Norwegian Norsk Hydro has
formalised its commitments to
prevent corruption in its "Integrity
Programme ", where the company
explicitly defines active and passive
bribery, gifts and invitations, fraud,
conflicts of interest, laundering
money, embezzlement, illegal
financing of political parties. The
company also makes reference to
the OECD Anti-Bribery Convention,
the Business Principles for Countering Bribery of Transparency
International, and the Partnership
Against Corruption of the World
Economic Forum. In addition, the
organisations Transparency
International, Amnesty International, and TRACE ("Transparent Agent
and Contracting Entities") are
involved in the implementation of
the integrity programme of Norsk
Hydro.
The French aerospace and defence
group Thales has also formalised
its commitment against corruption
in its Code of Ethics, where it refers
to all types of corruption, and to
the United Nations and OECD
Conventions against corruption, as
well as several European directives
against corruption. The ownership
and implementation of this commitment are provided in-house by
a decentralised network of Ethics
leaders. In addition, Thales has
participated in the creation of an
Ethics and Anti-Corruption cell
within the European Aeronautical,
Space and Defence Industry
Association and is a founding
member of the International Forum
on Business Ethical Conduct for the
Aerospace, Space and Defence
(ASD) industry.
Vigeo ra ng The three companies operating in
the Tobacco industry have formalised their commitment against
corruption. This is also the case for
96% of companies in the areas of
health care equipment and services
and defence and aerospace, and
94% of companies in the oil
equipment and services sector.
IMPLEMENTATION
Alstom has developed an awareness-raising programme for all
employees in the prevention of
corruption, as well as specific
training programmes, particularly
on conflicts of interest and gifts,
intended for employees whose
positions are particularly exposed
to such risks. In addition, Alstom's
internal control procedures to
prevent corrupt practices have
been certified by an independent
body. The procedures implemented
throughout the company include
particularly control systems which
also apply to commercial intermediaries.
Part of the internal control and
corruption prevention systems of
Fresenius Medical Care are subject
to external audits, and apply to
trading partners of the group.
nies to involve employees in the
prevention of corruption.
92% of aerospace and defence
companies, 88% of tobacco companies and 75% of businesses operating in the management of water
and waste have implemented
internal control procedures that
involve confidential reporting
systems available to employees.
RESULTS
Siemens has been repeatedly
convicted of bribery, and is still
under investigation in several
countries. The company has
particularly been banned from
participation in tenders for projects
funded by the World Bank for two
years. Siemens communicates
transparently on all these allegations and convictions. In addition,
it has established a Corporate
Disciplinary Committee charged
with investigating cases of malpractice among management
teams, and with making recommendations.
47% of the Construction Materials
sector and 46% of mining companies conduct specific training on
the prevention of corruption aimed
at employees who are most exposed to the risks in their function.
These are the highest sector ratios,
which show that there is significant
room for improvement for compa-
February 2013 30 An amnesty programme is in place
for employees who cooperate with
the investigations. Siemens has
launched a collaboration with
Transparency International to
implement corrective measures to
prevent corruption, particularly in
the response processes to public
tenders. Finally, in 2009, Siemens
signed an agreement with the
World Bank, in which the company
is committed to invest 100 million
USD over 15 years to support the
fight against corruption. Siemens is
also committed to promote the
fight against corruption within its
industry.
38% of companies publish not only
the number and type of alerts
about corruption they have identified through their internal control
system, but also communicate the
tangible elements about the
handling of reported incidents
(assistance internal investigations,
disciplinary actions, etc.). Of these,
we may cite Danone, Alcatel
Lucent, Charter International,
Endesa, Enel, GlaxoSmithKline,
Heineken, Iberdrola, Volkswagen,
Sandvik, L'Oréal, Seb, Novozymes,
and Svenska Cellulosa.
Among the companies that have
been subject to allegations or
convictions for corruption during
the past three years, 59% communicate transparently on the facts
alleged against them. These
include 100% in the oil equipment
and services sector, 83% in the
defence and aerospace sector, and
70% in the automotive, electrical
and gas sectors.
Only 32% of companies subject to
allegations or convictions for
corruption communicate on
corrective practices implemented in
response to these allegations, or
on their cooperation with the
authorities or concerned parties. In
particular, none of the nine companies in the construction industry
who are subject to allegations
communicates such relevant
measures. These are 15% in the
pharmaceutical sector, 27% in the
banking sector, and 40% in the
sectors of energy, health care
equipment and services, and
electric and gas.
Vigeo ra ng February 2013 31 Conclusion The communication of companies
on their commitment towards the
fight against corruption has
become a widespread practice in
Europe and the United States. In
the Asia-Pacific region, these
commitments are becoming visible.
Beyond this, the international
nature of the operations of the
majority of companies evaluated
makes it difficult to identify a link
between corporate commitments
and the location of their headquarters.
In contrast, measures allocated for
the prevention of corruption
remain influenced by national
statutory contexts. This is particularly true in the United States, who
has for years had the most stringent legislation against corruption.
The year 2010 may have marked a
turning point in international
leadership in the fight against
corruption with the adoption by the
UK of a new law (Bribery Act), which
goes beyond the legal force in the
United States, (Foreign Corrupt
Practices Act of 1977). In addition
Vigeo ra ng to the heavy and dissuasive
sanctions provided, the British law
includes new effects such as legal
extraterritoriality, which now allows
acts committed outside the United
Kingdom or by foreign companies
having a connection with the
United Kingdom to fall within the
scope of the law. This could have a
significant impact on the
procedures and internal control
systems of British and European
companies, and, more generally,
any company having trade links
with the United Kingdom. This
study shows, however, that today
there is still significant room for
improvement and that the exposure of listed international companies to allegations and convictions
is still strong.
convictions. Most companies in the
Asia-Pacific region also being
multinationals, the weakness of
local anti-corruption legislation
alone cannot explain this difference. The findings of this study
therefore reinforce our postulate
according to which managerial
willingness is still the best lever for
change towards a culture of anticorruption.
This also shows that companies in
the Asia-Pacific region have
relatively different behaviours than
their counterparts in Europe and
North America. They are less likely
to communicate on this issue, and
at the same time, they have rarely
been the subject of allegations or
February 2013 32 THIS
STUDY
WAS WRITTEN BY:
MERIEM SABER
FANNY TORA
JEAN-PHILIPPE ROUCHON
Research Manager
Sustainability Analyst Sustainability Analyst [email protected]
T +33 (0)1 55 82 32 78
UNDER
THE SUPERVISION OF:
FOUAD BENSEDDIK
Director of Methodology
and Institutional Relationships
[email protected]
T +33 (0)1 55 82 32 73
www.vigeo.com
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