An investor engagement programme has improved anti-corruption transparency in 16 global companies, according to a coalition of shareholders.
The group of 21 signatories of the United Nations' Principles of Responsible Investment (UNPRI), representing $1.7trn (£1.1trn) in assets, said its three-year engagement programme has resulted in better disclosure of anti-corruption strategies, policies and management by a number of international firms with high levels of corruption risk exposure.
Led by F&C Asset Management and Hermes Equity Ownership Services (EOS), investors began a programme of engagement with 21 companies across 14 countries in March 2010 in order to establish whether the businesses had "appropriate" controls to limit corruption risk.
This included encouraging firms to adhere to international reporting frameworks, including the International Corporate Governance Network's Statement and Guidance on Anti-Corruption Practices and the UN's Global Compact's Reporting Guidance on the 10th Principle Against Corruption.
According to analysis, carried out using Transparency International's Transparency in Reporting on Anti-Corruption (TRAC) methodology, 16 of the 21 companies targeted have improved performance against key indicators relating to strategy, policy and management of corruption issues.
The best performing company improved its score six-fold, while ten companies quadrupled their initial rating.
Hermes EOS associate director Tim Goodman said: "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. 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 of companies' other stakeholders and wider society."
Australian Council for Superannuation Investors chief executive Ann Byrne added: "As long-term investors we have a responsibility to address the impact that bribery and corruption has on investment returns, market volatility and uncertainty in company performance.
"Companies involved in allegations of corruption and bribery are often characterised by poor corporate governance processes, the failure of internal processes to protect the integrity of stakeholders and an inability to successfully implement and monitor company codes of conduct."
A group of 12 investors has launched a second phase of engagement, which will target up to 50 companies across a wider range of sectors and countries to improve understanding of abilities to manage and reduce corruption-related risk.
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