Collective Action is not a new concept but it is gaining growing attention from businesses, NGOs and policymakers as a tool to fight corruption. These three constituents were well attended at ‘Collective Action: Going Further Together to Counter Corruption’ Conference1 in Basel in June 2014. Over 100 representatives from business, government, academic and civil society joined for this event which heralded increasing interest and activity in this area.
Many businesses are already taking steps to fight corruption through two mechanisms: (i) the implementation of effective internal controls and a rigorous compliance program; and (ii) the external publication of these compliance and corporate responsibility efforts. Collective Action offers an opportunity for businesses to go one step further to demonstrate their compliant conduct and commitment to fighting corruption.
Businesses recognise that there are certain corruption issues which cannot be tackled alone, such as demands for facilitation payments which are endemic in the shipping industry. Collective Action provides opportunities for businesses to use the power of the group to make a real difference, and to engage with competitors and the public sector to develop new initiatives to tackle these systemic corruption issues.
Businesses are encouraged by the World Bank to take part in Collective Action and funding is available for new initiatives. Further, governments are responding to businesses’ need for support, funding and expertise. Modern technology and social media have also widened the scope of Collective Action, allowing organisations to develop innovative ideas for anti-corruption Collective Action initiatives, as demonstrated below. All of these factors contribute to reasons why now is a good time to get involved in Collective Action.
What is collective action?
According to the World Bank Institute’s guide, Collective Action is ‘a collaborative and sustained process of cooperation amongst stakeholders.’ Relevant stakeholders may include businesses, governments and non-governmental organisations. Fighting corruption collectively with all stakeholders increases the impact and credibility of individual action. Common forms of anti-corruption Collective Action include anticorruption declarations; integrity pacts; principle-based initiatives; and certifying business coalitions. It can be achieved either through one-off projects or alternatively through longterm initiatives.
“A collaborative and sustained process of cooperation amongst stakeholders. It increases the impact and credibility of individual action, brings vulnerable individual players into an alliance of likeminded organisations and levels the playing field between competitors. Collective Action can complement or temporarily substitute for and strengthen weak local laws and anticorruption practices.’ The World Bank Institute’s Fighting Corruption through Collective Action, A guide for business2”
Anti-corruption declarations are principle-based documents that bind signatories to not engaging in corruption during a particular project. This method of Collective Action helps to initiate open discussions on corruption and thus enables the signatories to the declaration to set mutual behaviour expectations and create a signed statement that can be published and shared with subcontractors. It is this demonstrable public commitment which then leads to enforcement of the declaration through stakeholder awareness and public pressure. For example, direct contractors at AVA GmbH in Frankfurt signed an anti-corruption declaration which formed the basis to conduct discussions on compliance topics.3
Integrity pacts take the form of a formal, written contract to establish mutual rights and obligations between customers and bidders and are usually introduced at the pre-tender stage. Integrity pacts were initially introduced by Transparency International and its various national chapters in the 1990s as a tool to promote project integrity. The contract includes sanctions that will be applied in the case of infringement of contract and in most cases also provides for external monitoring from an independent body. The integrity pact governing all contracts involved in the construction of Berlin’s new international airport, which was a €2.4 billion project, is considered a best practice example.4
Principle-based initiatives are similar to anti-corruption declarations but take the form of longer-term solutions in which broad integrity principles bind the signatories of a business coalition to not engaging in corruption in their daily business. They are often used to promote appropriate ethical conduct within specific countries or industry sectors. Such principle-based initiatives can take the form of ethical leadership forums which, for example, aim to lobby the government to implement more effective anti-corruption legislation. The precise format of the principle-based initiative will depend on the stakeholders involved, but each will share at its core a series of common principles or business charter. The World Economic Forum Partnering Against Corruption Initiative5 (PACI) is a global anti-corruption initiative for the private sector. PACI principles were first issued in 2004 and have set a globally recognised benchmark to track and encourage compliance efforts by companies.
Certifying business coalitions
Certification is a more substantial long-term initiative which a number of high-risk sectors are utilising as a mechanism to strengthen anticorruption principles. Certification builds upon principle-based initiatives and requires that commitment to shared ethical principles must be verified through the external audit of companies’ internal procedures. These compliance-related prerequisites for membership, coupled with the adoption of membership requirements, set a high bar for companies to meet. However, those companies that are verified will be at a competitive advantage to others in their sector through sending the strongest possible signal to the public that they have taken effective and rigorous steps to tackle corrupt conduct. For example, Pacto Etico Commercial6 (PEC) is a leading private sector initiative in South America which has developed mechanisms of evaluation and certification of ethical conduct in businesses. The PEC seal is becoming a branding tool in Paraguay.
In addition to the above examples, there are a number of creative anticorruption Collective Action initiatives at global and local levels:
B20 Collective Action Hub
The International Centre for Collective Action (ICCA) has developed the B20 Collective Action Hub7 which serves as a central repository of best practices in Collective Action worldwide and 5 http://www.weforum.org/issues/partnering-againstcorruption- initiative 6 http://www.pactoetico.com.py/index.php 7 http://www.collective-action.com/about_us/b20 as a reference to groups that desire to employ Collective Action strategies in the fight against corruption.
GACI is a recent joint initiative developed by the International Road Transport Union and the UN Global Compact to collect data on the existence of cases of corruption, bribery and extortion in the transport and logistics industry along major international trade routes in Eurasia, Africa, and Latin America. An e-questionnaire8 completed by road transport companies and truck drivers will help to identify the areas of business and administrative activities, as well as geographic location, that are most susceptible to extortion and bribery. This data will be analysed by experts and compiled into a report with specific recommendations on anti-corruption activities in the area of international road transport. The report will be shared with the governments of the countries involved and leading global international groups such as G8, G20 and the World Economic Forum.
The Portuguese project GestãoTransparente.Org9 is a multisector corporate initiative which provides practical guidance to the management of corruption risks in a business context. For example, it has created an interactive simulator to support the management of corruption risks.
In order for the Collective Action to be successful, it is important to ask the following key questions at an early stage:
- Is Collective Action the best way to address the problem?
- Which type of Collective Action is appropriate?
- Which factors are needed to sustain the Collective Action?
Collective Action is often best to address certain corruption issues which are systemic and deep-rooted, as opposed to unilateral action.
Choosing which method of Collective Action will depend on the particular project or jurisdiction in question. Anticorruption declarations and integrity pacts, for example, may be more suited to large projects whereas longer-term initiatives have external imperatives such as improving a legal system.
It is advisable to begin by identifying the relevant stakeholders and creating a list of potential partners, e.g. other companies, NGOs, governments. Collective Action can be more successful if convened by a neutral facilitator who can bring together relevant stakeholders and provide a neutral platform. Possible facilitators include business chambers, NGOs or academic advisors.
It is also important to consider the scope of the exercise that is proposed to be undertaken. Milestones for short-term deliverables and long-term goals can be helpful in sustaining the initiative. Another factor to consider is funding. Since 9 December 2009, Siemens AG has made available funds totalling USD100 million to non-profit organisations worldwide that promote business integrity and fight corruption. This initiative is part of the World Bank- Siemens AG comprehensive settlement that was agreed on 2 July 2009.
What are the benefits of Collective Action?
Collective Action has benefits for a range of stakeholders. For all concerned, Collective Action contributes to enhanced public reputation and credibility. In the case of bidding companies in a tender process, Collective Action carries with it increased prospects of fair selection as a supplier and an enhanced access to emerging markets and high-risk jurisdictions. Customers in turn benefit through increased competition in the tendering process, and Collective Action helps to guarantee that the most efficient and not the most connected bidder succeeds.
Businesses can demonstrate to law enforcement and regulatory authorities their serious commitment to improving not only their internal anti-corruption program but also making a difference in the wider business environment, which is cited among the adequate procedures under the UK Bribery Act. Collective Action is specifically encouraged by the World Bank in their Integrity Compliance Guidelines.10
Collective Action is a viable method to engage Small and Medium-sized enterprises (SMEs) in concerted compliance efforts. Although any compliance program must be proportionate to the risk posed by a company, SMEs often lack the financial and human resources to implement the necessary systems to prevent corruption. Collective Action enables SMEs to participate in a joint effort to tackle the issue of corruption through shared ideals and will allow them to leverage influence more effectively in an effort to promote ethical conduct.
The benefits of Collective Action can be seen at an international level. It helps to ensure the consistent and fair enforcement of regulations, and means that national legislation and international conventions are supplemented and bolstered by engaged industry stakeholders. Although care must be taken to balance national and international concerns, if approached correctly Collective Action can fill lacunae in legislation or replace or augment inadequate local law in emerging markets and high-risk jurisdictions.
Why should you get involved?
Over the past year, there has been a significant uplift in regulatory activity coupled with increased cooperation between international regulators in the area of bribery and corruption. Collective Action is a means for businesses to demonstrate proactive compliance efforts to mitigate risk to the business and to publicly commit to ethical practices and a zero-tolerance attitude to corruption.
In order to succeed, however, Collective Action requires expertise, commitment, patience and in some cases, a skilled facilitator to mediate between the interests of the relevant stakeholders. Central to its success going forward will be increased publicity of the success of the significant projects already underway, coupled with renewed engagement from other interested stakeholders at a national and international level.
Given the growing attention on anticorruption Collective Action from various stakeholders, now is the time to think about what you can do to effect a change in the wider business environment through Collective Action.