A LEVEL PLAYING FIELD FOR FAIR COMPETITION

If corruption were an industry, it would be the world’s third largest, corresponding
to 5 percent of global GDP or USD 3 trillion. Corruption adds another 10 percent on the cost of doing business internationally and is estimated to be even higher in developing countries. It is the greatest obstacle to economic and social development around the world.

Corruption is not only a problem of pour countries. With the global business community and extensive supply chains across different markets, corruption
impacts even the most transparent economies, with scandals surfacing in the top five least corrupt countries in the world, costing shareholders and the society at large billions of dollars.

Corruption gives a direct as well as a long-term delayed impact. It generated a direct cost on the balance sheet, and hinders the development of civil society when e.g. resources for public housing, hospitals and schools are siphoned off by cleptocrats and corrupt officials or when bribes are paid to evade environmental
regulations. As the last item on the list of sustainability issue areas, it has perhaps the greatest impact and can make the biggest change with regards to the GC ambition to achieve a sustainable and inclusive global economy.

In 2004, the Global Compact established the tenth principle against corruption, stating that “Businesses should work against corruption in all its forms, including extortion and bribery”. The principle sends a clear message to the global business community about the need to proactively manage the risk of corruption, and ensure that anti-corruption is recognized as integral part of sustainability.

In recent years, a growing number of companies are also sending out a clear message, and are developing zero tolerance policies for bribery and corruption. The However, fighting corruption alone represents a host of reputational, legal and financial challenges.


WORKING TOGETHER

Collective Action methods encompass project-specific, sector-wide and longterm
initiatives. The concept is closely related to Integrity Pacts, which are intended to guarantee transparency in the order-awarding process and to rule out bribery in the awarding of public-sector contracts. Some collective Action initiatives work to establish sector-wide codes of conduct, developed by companies from the same sector.

Collective Action provides a reason to get together and allows companies to
talk about corruption without being singled out, and describes various methods
of combating corruption, with the ultimate goal to create a “level playing field”,
setting up the conditions for fair competition within a corrupt environment and
thus promoting innovation.

Clearly in contrast to other issue areas such as environment or women’s rights,
companies operating alone are very exposed and challenged in their anticorruption
efforts. By the same token, there is a sense of resistance even to join working group because of the risk of being tarnished by association with the corruption issue.

The first collective action initiative was developed in Egypt in 2010. It aimed to produce policies and procedures for SMEs, support integrity in transactions
between business and government, and draw up a local anti-corruption declaration.
Other initiatives have since followed in South Africa, Nigeria, Brazil and India. These collective action programmes have helped encourage best practice and protect corporate reputations. Companies with international ambitions can prove they are sustainable, and increase their chances of joining global supply chains.

Perhaps most importantly, collective action initiatives can influence local public policy and regulatory development. In India, following the National Consultation on Anti-Corruption in 2012, local participants developed a white paper on consultation proceedings with recommendations that fed into the Public Procurement Bill (2012).