The UK Bribery Act: Law as a tool for Sustainability

December 5, 2011 EcoVadis

As a CSR analyst, I’ve seen a number of Code of Ethics and anti-corruption policies in the last year that outline the UK Bribery Act to employees. In many ways this can be seen as the first step in a company’s due diligence procedures required by the legislation. It’s also a demonstration that it’s working. Or perhaps this is a little pre-emptive. But much has been written about the ambitiousness of the UK Bribery Act, and this has been rightly earned. The act is the most comprehensive in the world and has been heralded as a major step to combating corruption & bribery across the board, by, amongst others, Transparency International UK.

It’s an example of law being used as a way of compelling companies (and notably their supply chains) to embed CSR & sustainable procurement practice in key issue areas. And there’s a need for it. Environmental initiatives by companies & their supply chains have torpedoed, partly due to the dominant climate change discourse of the last few years, and partly as they are often linked to cost reduction & efficiency. Pressing issues in the labor standards and business ethics arenas do not always derive the same kind of direct benefits – of course cutting out corruption completely will create a level playing field for business and will make it more efficient & fair – but aside from the ideological argument, corruption & bribery are not always the first port of call for CSR and sustainable procurement professionals. This act goes some way of dissolving this problem.

Regulation is clearly the “stick” in CSR dialogue, but it is a necessary one. When fighting against “business as usual” and apathy towards anti-corruption, there is a need to use legal means to strengthen reform. A recent study by Ernst & Young suggests perceptions around bribery remain depressing. There’s still the assertion by many that bribes are a natural way of doing business – especially in “some parts of the world”. The study summarizes: “To help their company survive or grow, more than a third of all respondents are prepared to offer cash payments, gifts or entertainment to win business” and further reveals that the corruption perception of respondents of mature markets is 20%, while emerging markets is 38%. This means professionals “perceive” more bribery & corruption in emerging markets. What does this do to day-to-day business practice?

So to the UK Bribery Act for a solution! The act has expanded the possibility of liability for corrupt acts; it has extra-territorial reach both for UK companies operating abroad and for overseas companies with a presence in the UK; it also extends the crime of bribery to cover all private sector transactions and creates a new liability offense of failing to prevent bribery if the company has not implemented adequate due diligence measures to prevent this.

The act has of course been feared somewhat due to these extensions and widening of the threats to companies. But through these threats, creates compliance. And due diligence procedures. Without the act, would as many UK or UK affiliated companies act on corruption & bribery in the way they have done in the last year? The CSR pessimist might say no, the CSR enthusiast yes; on this occasion I may have to say I’m a CSR pessimist and the law can serve a useful & necessary CSR tool and it’s power should not be overlooked.

This article was written by Maria Mursell, a CSR Analyst at EcoVadis. You can follow her on twitter @mariaGmursell

Photo from flickr creative commons, by The Uprooted Photographer

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