A three-year project by 21 corporate members of the United Nations Principles for Responsible Investment (UN PRI) to persuade 21 companies in Europe, the US and Asia to improve disclosure has brought about ‘significantly’ increased transparency at three quarters of the targeted companies, the organization says.
The group of 21 signatories to the UN PRI, led by F&C Asset Management and Hermes Equity Ownership Services (HEOS), started an ‘engagement’ with 21 companies in 14 countries in March 2010 that were known for poor public disclosure of anti-corruption risk management and high levels of corruption risk, says the UN PRI in a press release.
The signatories, with a combined $1.7 tn in assets under management, sought to encourage the targets to adopt reporting in line with international frameworks and better disclose how they manage corruption and bribery risks. The companies’ improvement was rated using the Transparency in Reporting on Anti-Corruption methodology developed by anti-corruption organization Transparency International.
‘The results from the engagement have been encouraging,’ the UN PRI says in its press release. ‘By early 2013, 16 companies had improved their performance against the indicators, with 10 companies improving their score four-fold, and the leading company improving its score six-fold.’
The UN PRI doesn’t reveal the names of the targeted companies but says they are from Mexico, Russia, Germany, the US, the UK, Japan, Korea, China, Brazil and elsewhere. They operate in the sectors of materials, telecommunications services, capital goods, aerospace & defense, construction, media, utilities and food markets.
A group of 12 investors, in collaboration with the UN PRI, now plans to launch another such engagement, this time targeting as many as 50 companies in a wider range of countries and sectors, the organization says.
‘We have seen in recent high-profile cases, even if corruption is not prosecuted, the huge reputational and financial damage it can cause to the companies engaging in it,’ says Tim Goodman, associate director at HEOS. ‘More than that, it siphons value to the corrupt, inhibits fair competition and impedes economic development to the detriment not only of shareholders’ portfolios but also of companies’ other stakeholders and wider society.’
