UK - Friends Ivory & Sime is urging pension funds to use their shareholding muscle to encourage firms to tighten up their bribery and corruption policies.
A new study by Friends Ivory & Sime found that 60% of firms believe corruption and bribery are a material source of risk to their business. However, FIS is concerned that firms are not doing enough to minimise the risk.
FIS head of governance and SRI Karina Litvack said: “Our belief is that companies that have inadequate management procedures to deal with the risks posed by bribery and corruption, face being blacklisted and face a limited range of potential partners.”
Litvack identified the World Bank, export credit agencies worldwide – especially those in the US - and companies with advanced ethical policies, such as BP and Shell, as organisations that might blacklist companies with lax policies.
She also highlighted the reputational risk posed by growing legislation worldwide to combat bribery and corruption, which has led to a higher chance of company employees being fined, prosecuted or going to jail.
Litvack added: “A company culture which tolerates bribes will lead to choices being made which are not based on value for money or business efficiency. It will encourage decisions to be made on self interest and it corrodes the entire chain of decision making in a company.”
FIS is currently in negotiation with the government as well as non-government organisations to create workshops for companies to help them meet these growing standards of compliance.
Litvack called on the collaborative help of other shareholders in giving this issue the attention it deserved. The socially responsible investment team at FIS surveyed 82 large UK and European companies to gauge their stance on bribery and corruption.
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