Update Spring 2013

Welcome to the Spring issue of Update.

We are delighted to announce that 2012 was a record year for GoodCorporation and are confident of building on that success in 2013. Our responsible business assessments and associated services are continuing to grow, but above all we are seeing interest in and demand for our Anti Bribery and Corruption (ABC) programmes.

We have an increasing number of listed clients, including 17 in the FTSE100 and six in the CAC40. To date, we have completed over 400 assessments in 50 countries, ensuring that our understanding of responsible and ethical business practices is truly global.

We explore that in this issue by taking a look at bribery risks in China; the first in a planned series of articles that will examine some of the real issues companies face in the more ethically challenging parts of the world

If anything strikes a chord, we’d be delighted to hear from youome of the current thinking and best practice in ethical business management and compliance.

Michael Littlechild

Corruption in China - the challenges and the tools to tackle it

Under the leadership of President Xi Jinping, corruption has become a hot political topic in China. His rousing speeches, vowing to tackle the problem of corrupt officials at both a high and low level, have pushed corruption higher up the corporate agenda. Prior to assuming power, he was known for his zero-tolerance towards corrupt officials. Now President, many feel sure he will deliver more results than his predecessors, others are conscious that implementation takes time and are watching the reaction of different government entities closely.

Rhetoric aside, corruption remains a key consideration for all foreign companies doing business in China, with cultural differences playing a vital role in understanding and tackling the problem.

Click here to read the article in full.

GoodCorporation's Business Ethics Debate Series

Over 100 leading organisations have attended our Business Ethics Debate series over the past 12 months, including Arcelor Mittal, Astra Zeneca, BAE Systems, BP, Diageo, Exxon Mobil, Shell, Vodafone and Total.

Each event is attended by up to 30 business leaders, industry experts, politicians and academics who join us to debate challenging aspects of business ethics. Recent topics have included Anti-Corruption Due Diligence, Ethical Challenges in the Defence Sector, The Bribery Act 12 Months On and The Rise of Business Ethics.

Hosted at venues such as the House of Lords or the Club France-Amérique in Paris, our debates provide a forum where industry leaders and opinion formers can share best practice as well as highlighting the key ethical issues their industry faces. The Chatham House Rule is always applied to enable a frank and honest exchange of views.

Although attendance is by invitation only, summaries of our debates are posted on our website and often reproduced here in Update.

Andrew Hayward, Head of Compliance at Balfour Beatty described them as “Definitely one of the most valuable events I go to”. David Halford, Head of Ethical Sourcing at BBC Worldwide said, “GoodCorporation’s Business Ethics Debates bring together a diverse range of experts for a tightly-facilitated discussion on some important topics.”

Click to read the summary of our debate on Anti-Corruption Due Diligence

Ethics in the Food Chain

Ethical business conduct, has once again played a central role in some of the news stories that have dominated the headlines in the first quarter of 2013, most notably ‘Burgergate’.

Prior to the discovery of horsemeat in frozen burgers and other processed beef products, the majority of testing was on fresh meat products following  the outbreak of BSE.  To date, retail supply chain monitoring has tended to focus on child labour and factory conditions, with the emphasis most firmly on the manufacture of clothes and electrical goods rather than the processing of meat.

Instead, supermarkets and food producers have concentrated their efforts on promoting an idea of wholesomeness and taste, while failing to check what they were actually selling. Consequently when Irish food inspectors found horsemeat in frozen beef burgers, many of the supermarkets concerned were caught on the hop, initially  hoping it was an isolated incident that would quickly go away. It didn’t.

To date, mislabeled food products have so far been discovered in the UK, the Republic of Ireland, France, Norway, Austria, Switzerland, Sweden, Spain, Italy the Czech Republic and Germany. Suspicious products have also been withdrawn in the Netherlands as tests are carried out.

Meanwhile answers to the question ‘why?’ are still being sought. Some have blamed the excessive complexity of the food industry’s supply chain, with the meat for many products moving through several countries before ending up as lasagne on supermarket shelves.

Others have blamed consumer demand for cheap meat. This is unacceptable; retailers cannot blame their customers for not buying a more expensive product when a cheap one goes wrong. Many have put it down to simple fraud for financial gain; horsemeat being cheaper than other meats in some European countries.

The real issue, however, is a lack of responsibility and proper controls.  In the UK, manufacturers and retailers have been happy to delegate their responsibility for food safety and hygiene to the Food Standards Agency. But the agency’s checks do not take account of authenticity. The FSA’s brief is to identify ‘those risks that can make people ill or worse’, such as arsenic or listeria. So despite checking 80,000 food samples in 2012, they were not testing meat DNA.

Until now, the meat processing chain has been below the radar, but now the industry needs to work hard to catch up. What industries must acknowledge, is that arguing for less regulation and fewer rules means that companies need to take more responsibility for what they make and sell, not less. This means thorough due diligence checks on the supply chain, regular monitoring and an in-depth knowledge of everyone you do business with.  Many companies are stepping up their due diligence in order to comply with the UK Bribery Act, but as we can see from the horsemeat saga a lot of reputational damage can be avoided if you know exactly what it is you’re selling.

In Brief...

GoodCorporation works with Ford Retail to ensure high standards of corporate behaviour

Ford Retail, a new GoodCorporation client, has set up a work stream at board level to ensure high standards of corporate behaviour are maintained throughout the business, covering staff, customers, suppliers, the community, the environment, management and other key stakeholders. In order to assess where they are, GoodCorporation has conducted a high level review against the key headings of the GoodCorporation Standard. The results will help focus initiatives over the next couple of years with a view to achieving the GoodCorporation Standard.

GoodCorporation work quoted in House of Lords Baroness Parminter praised the work of GoodCorporation in a recent debate at the House of Lords as part of the All Party Group on Ethical and Sustainable Fashion.

Arguing that not enough is being done to improve labour standards in the supply chain, Baroness Parminter highlighted the failure of supply chain audits to detect the real problems, relying too heavily on bribable inspectors.

Highlighting the work of GoodCorporation client BBC Worldwide, Baroness Parminter praised its refusal to rely on third party certification and its policy of making unnanounced checks on suppliers.

GoodCorporation was commended for bringing the debate to the fore and pushing managers to take greater responsibility for standards.

GoodCorporation strengthens Ethics Course for Imperial

GoodCorporation has updated the modules on the Ethics and Professional Standards Course that it developed for Imperial College Business School in 2011.

Part of Imperial’s MSc in Finance and its MSc in Risk Management and Engineering, the revised modules cover Libor, Insider Trading and SRI funds. Designed to give students a thorough understanding of ethical practices in the financial sector, the online courses offer practical guidance that will apply to students’ work post graduation.

Corporates against Corruption

When Transparency International published its Corruption Perceptions Index at the end of 2012, it revealed that two thirds of the countries and territories it ranked had scores that would indicate serious corruption problems in their public sector.

What concerned Transparency the most, was how little countries had done to reduce corruption given the recent global focus on bribery.

This appears to be in direct contrast to the efforts of the business community. Since the Bribery Bill made its first appearance in the Queen’s speech in 2009, corruption and how to stoop it has risen up the corporate agenda.

From the work that we do and the Business Ethics Debates we have held on the subject, GoodCorporation has a detailed perspective on the full scope of work that businesses are undertaking to tackle corruption and the challenges this presents.

Our article in the February edition of Ethical Performance looks at Corporates against Corruption: the development of effective ethics-driven anti-corruption compliance departments; high-level anti-corruption reviews; risk assessments and the implementation of a successful ABC process.

We acknowledge the difficulties businesses face in combating corruption, particularly within large global organisations, calling on governments to do more than simply legislate and prosecute to help businesses in their fight.

Click here to read the article

GoodCorporation helps global EPCM company review code of conduct

GoodCorporation has also been working with a global Engineering, Procurement, Construction and Management Group, to review its revised Code of Conduct with particular emphasis on the areas covering anti-bribery and corruption (and with specific reference to the UK Bribery Act).

GoodCorporation provided a short report outlining a number of recommendations and provided a benchmark table assessing the code versus that in other leading businesses.

News and Views

For the latest GoodCorporation views on ethics and responsible practice you can read our thoughts on the goodblog. We are also on twitter.