Our Ten Principles

What does it mean?

Complicity means being implicated in a human rights abuse that another company, government, individual or other group is causing. The risk of complicity in a human rights abuse may be particularly high in areas with weak governance and/or where human rights abuse is widespread. However, the risk of complicity exists in every sector and every country.

The requirement to respect human rights, pursuant to Global Compact Principle 1 and the UN Guiding Principles on Business and Human Rights, includes avoiding complicity, which is another way, beyond their own direct business activities, that businesses risk interfering with the enjoyment of human rights. The risk of an allegation of complicity is reduced (though not eliminated) if a company has a systematic management approach to human rights, including due diligence processes that cover the entity’s business relationships. Such processes should identify and prevent or mitigate the human rights risks with which the company may be involved through links to its products, operations or services.

Complicity is generally made up of two elements:

• An act or omission (failure to act) by a company, or individual representing a company, that “helps” (facilitates, legitimises, assists, encourages, etc.) another, in some way, to carry out a human rights abuse; and
• The knowledge by the company that its act or omission could provide such help

The commentary to Principle 17 of the UN Guiding Principles on Business and Human Rights notes that “most national jurisdictions prohibit complicity in the commission of a crime, and a number allow for criminal liability of business” as well as allowing civil actions based on a company’s contribution to a harm. In the international context, the same commentary notes that “the weight of international criminal law jurisprudence indicates that the relevant standard for aiding and abetting is knowingly providing practical assistance or encouragement that has a substantial effect on the commission of a crime.”

However, allegations of complicity are not confined to situations in which a company could be held legally liable for its involvement in the human rights abuse committed by another. The media, civil society organisations, trade unions and others may allege complicity in a far broader range of circumstances, such as where a business may appear to benefit from another actor’s abuse of human rights, and may lobby the company to play an advocacy role. The better view is that the presence of a company in an area and payment of taxes where egregious and systematic human rights abuses are occurring, without more, is not enough to make the organisation complicit in those abuses. However, some societal actors take a different view and may lobby business to play an advocacy role in such circumstances.

Accusations of complicity can arise in a number of contexts:

• Direct complicity — when a company provides goods or services that it knows will be used to carry out the abuse
• Beneficial complicity — when a company benefits from human rights abuses even if it did not positively assist or cause them
• Silent complicity — when the company is silent or inactive in the face of systematic or continuous human rights abuse. (This is the most controversial type of complicity and is least likely to result in legal liability)

Why should companies care?

The business rationale for taking action to avoid complicity is the same as for Principle 1. In other words, not only is it the right thing to do — there is also a growing business case. Several factors combine to place human rights higher on business’ list of priorities.

Human rights issues have become increasingly important as the nature and scope of business has changed. Different actors have different roles to play, and it is important for business to be aware of the contemporary factors that have made human rights an organisational issue.

• Globalisation: The growth in private investment has witnessed companies expanding operations to countries previously untouched by global markets. In some instances, these countries have poor human rights records and/or the capacity of the state to address these issues is limited. In these cases the role of business in respecting and supporting human rights is particularly important
• Growth of civil society: In some instances, the capacity of the state to address human rights issues has diminished. As a result, a steady alienation of people has occurred towards the public institutions that were established to serve them. Non-governmental organisations of all types and sizes have grown to fill the void, progressively influencing both public policy and the market agenda. They include new human rights, labour and corporate accountability organisations
• Transparency and accountability: The need for transparency in business practice has been highlighted both by globalisation, the growth of civil society interests and some recent problems in the corporate sector. Advances in information technologies and global communications mean that companies can ill afford to conceal poor or questionable practices
• Crime: Where an international crime is involved, complicity may arise where a company assisted in the perpetration of the crime, the assistance had a substantial effect on the perpetration of the crime and the company knew that its acts would assist the perpetration of the crime even if it did not intend for the crime to be committed
• State-owned enterprises: State-owned enterprises should be aware that because they are part of the state, they may have direct responsibilities under international human rights law

What can companies do?

An effective human rights policy and conducting appropriate human rights due diligence will help companies address (though will not eliminate) the risk of being implicated in human rights violations, by knowing and showing that they took every reasonable step to avoid involvement.

More information on Principle 2 is available here.

What does it mean?

Freedom of association implies respect for the right of all employers and all workers to freely and voluntarily establish and join groups for the promotion and defence of their occupational interests. Both workers and employers have the right to set up, join and run their own organisations without interference from the State or any other entity. All, including employers, have the right to freedom of expression and opinion, including on the topic of unions — provided that the exercise of this right does not infringe a worker’s right to freedom of association. As a voluntary initiative, the UN Global Compact does not and cannot require that employers adopt or express any particular opinion. To be able to make a free decision, workers need a climate free of violence, pressure, fear and threats.

“Association” includes activities of rule formation, administration and the election of representatives. The freedom to associate involves employers, unions and other workers representatives freely discussing issues at work in order to reach agreements that are jointly acceptable. These freedoms also allow for industrial action to be taken by workers and organisations in defence of their economic and social interests.

Collective bargaining is a voluntary process or activity through which employers and workers discuss and negotiate their relations, in particular terms and conditions of work and the regulation of relations between employers, workers and their organisations. Participants in collective bargaining include employers themselves or their organisations, and trade unions or, in their absence, representatives freely designated by the workers. An important part of the effective recognition of the right to collective bargaining is the “principle of good faith”. This is important for the maintenance of the harmonious development of labour relations. This principle implies that the social partners work together and make every effort to reach an agreement through genuine and constructive negotiations, and that both parties avoid unjustified delays in negotiations. The principle of good faith does not imply a pre-defined level of bargaining or require compulsory bargaining on the part of employers or workers and their organisations.

Why should companies care?

Businesses face many uncertainties in this rapidly changing global market. Establishing genuine dialogue with freely chosen workers’ representatives enables both workers and employers to understand each other’s problems better and find ways to resolve them. Freedom of association and the exercise of collective bargaining provide opportunities for constructive rather than confrontational dialogue. This harnesses energy to focus on solutions that result in benefits to the enterprise, its stakeholders, and society at large and is often more flexible and effective than state regulation. It can thus help in anticipating potential problems and advance peaceful mechanisms for dealing with them. A number of studies indicate that the dynamic resulting from freedom of association can set in motion a “decent work” cycle that increases productivity, incomes and profits for all concerned. Moreover, the guarantee of representation through a “voice at work” facilitates local responses to a globalised economy, and serves as a basis for sustainable growth and secure investment returns. The results help bridge the widening representational gap in global work arrangements, and facilitate the input of those people, regions and economic sectors — especially women and informal sector workers — who otherwise may be excluded from participating in processes that build decent work environments.

What can companies do?

In the workplace:

• Respect the right of all workers to form and join a trade union of their choice without fear of intimidation or reprisal, in accordance with national law;
• Put in place non-discriminatory policies and procedures with respect to trade union organisation, union membership and activity in such areas as applications for employment and decisions on advancement, dismissal or transfer;
• Provide workers’ representatives with appropriate facilities to assist in the development of effective collective agreement; and·
• Do not interfere with the activities of worker representatives while they carry out their functions in ways that are not disruptive to regular company operations. Practices such as allowing the collection of union dues on company premises, posting of trade union notices, distribution of union documents, and provision of office space, have proven to help build good relations between management and workers, provided that they are not used as a way for the company to exercise indirect control

At the bargaining table:

• Recognise representative organisations for the purpose of collective bargaining;
• Use collective bargaining as a constructive forum for addressing working conditions and terms of employment and relations between employers and workers, or their respective organisations;
• Address any problem-solving or other needs of interest to workers and management, including restructuring and training, redundancy procedures, safety and health issues, grievance and dispute settlement procedures, disciplinary rules, and family and community welfare;
• Provide information needed for meaningful bargaining; and
• Balance dealings with the most representative trade union to ensure the viability of smaller organisations to continue to represent their members

In the community of operation:

• Take into account the role and function of the representative national employers’ organisations; and
• Take steps to improve the climate in labour-management relations, especially in those countries without an adequate institutional and legal framework for recognising trade unions and for collective bargaining

More information on Principle 3 is available here.

What does it mean?

Forced or compulsory labour is any work or service that is exacted from any person under the menace of any penalty, and for which that person has not offered himself or herself voluntarily. Providing wages or other compensation to a worker does not necessarily indicate that the labour is not forced or compulsory. By right, labour should be freely given and employees should be free to leave in accordance with established rules.

Why should companies care?

Forced labour not only constitutes a violation of fundamental human rights, it also deprives societies of the opportunity to develop skills and human resources, and to educate children for the labour markets of tomorrow. The debilitating consequences of forced labour are not only felt by individuals, in particular children, but also by society and the economy at large. By holding back the proper development of human resources, forced labour lowers the level of productivity and results in less secure investments and slower economic growth. The loss of income due to disruption of regular jobs or income-generating activities reduces the lifetime earnings of potential breadwinners and is thus likely to lead to the loss of food, shelter, and health care of whole families.

While companies operating legally do not normally employ such practices, forced labour can become associated with enterprises through their business links with others, including contractors and suppliers. As a result, all employers should be aware of the forms and causes of forced labour, as well as how it might occur in different industries.

Both state and private agents have been implicated in the use of forced labour. State-imposed labour includes compulsory participation in public works, and the imposition of forced labour for ideological or political purposes. Forced labour exploitation by private agents can take the forms of slavery, bonded labour or debt-bondage, and other types of coercion. Situations of forced labour are generally characterised by a lack of consent to work (the route into forced labour) and the menace of a penalty (the means of keeping someone in forced labour).

Employers need to be aware that forced labour can take a number of forms:

• Slavery (i.e. by birth/descent into “slave” or bonded status)
• Bonded labour or debt bondage, a practice still used in some countries where both adults and children are obliged to work in slave-like conditions to repay debts of their own or their parents or relatives
• Child labour in particularly abusive conditions where the child has no choice about whether to work
• Physical abduction or kidnapping
• Sale of a person into the ownership of another
• Physical confinement in the work location (in prison or in private detention)
• The work or service of prisoners if they are hired to or placed at the disposal of private individuals, companies or associations involuntarily and without supervision of public authorities
• Labour for development purposes required by the authorities, for instance to assist in construction, agriculture, and other public works
• Work required to punish opinion or expression of views ideologically opposed to the established political, social or economic system
• Exploitative practices such as forced overtime
• The lodging of deposits (financial or personal documents) for employment
• Physical or psychological (including sexual) violence as a means of keeping someone in forced labour (direct or as a threat against worker, family, or close associates)
• Full or partial restrictions on freedom of movement
• Withholding and non-payment of wages (linked to manipulated debt payments, exploitation, and other forms of extortion)
• Deprivation of food, shelter or other necessities
• Deception or false promises about terms and types of work
• Induced indebtedness (by falsification of accounts, charging inflated prices, reduced value of goods or services produced, excessive interest charges etc.)
• Threats to denounce workers in an irregular situation to the authorities

What can companies do?

Organisations need to determine whether forced labour is a problem within their business sector and for their operations. It is important to mention that, although high profile cases are typically reported as occurring in developing countries, forced labour is also present in developed countries and should be viewed as a global issue. Understanding the causes of forced labour is the first step towards taking action against forced labour. Where forced labour is identified, the concerned individuals should be removed from work and facilities and services should be provided to enable them to make adequate alternatives. In general, a comprehensive set of interventions, including both workplace and community actions, is needed to help ensure the eradication of forced labour practices.

More information on Principle 4 is available here.

What does it mean?

The term “child labour” should not be confused with “youth employment” or “student work.” Child labour is a form of exploitation that is a violation of a human right and it is recognised and defined by international instruments. It is the declared policy of the international community and of almost all governments to abolish child labour. While the term “child” covers all girls and boys under 18 years of age, not all under-18s must be removed from work: the basic rules under international standards distinguish what constitutes acceptable or unacceptable work for children at different ages and stages of their development.

ILO conventions (Minimum Age Convention No. 138 and the Worst Forms of Child Labour Convention No. 182) provide the framework for national law to prescribe a minimum age for admission to employment or work that must not be less than the age for completing compulsory schooling, and in any case not less than 15 years. Lower ages are permitted for transitional periods — in countries where economic and educational facilities are less well-developed the minimum age for “regular work” generally is 14 years, and 12 years for “light work”. The minimum age for “hazardous work” is higher, at 18 years for all countries.

Minimum Age for Admission to Employment or Work

ILO Convention No. 182 requires Governments to give priority to eliminating the worst forms of child labour undertaken by all children under the age of 18 years.

They are defined as:

• All forms of slavery — including the trafficking of children, debt bondage, forced and compulsory labour, and the use of children in armed conflict; the use, procuring or offering of a child for prostitution, for the production of pornography or for pornographic purposes;
• The use, procuring or offering of a child for illicit activities, in particular the production and trafficking of drugs; and
• Work which is likely to harm the health, safety or morals of the child as a consequence of its nature or the circumstances under which it is carried out

Convention 182 is explicitly complementary to Convention 138 and must not be used to justify other forms of child labour.

Why should companies care?

Association with child labour will likely damage a company’s reputation. This is especially true in the case of transnational companies who have extensive supply and service chains, where the economic exploitation of children, even by a business partner, can damage a brand image and have strong repercussions on profit and stock value.

Child labour is damaging to a child’s physical, social, mental, psychological and spiritual development because it is work performed at too early an age. Child labour deprives children of their childhood and their dignity. They are deprived of an education and may be separated from their families. Children who do not complete their primary education are likely to remain illiterate and never acquire the skills needed to get a job and contribute to the development of a modern economy. Consequently, child labour results in under-skilled, unqualified workers and jeopardises future improvements of skills in the workforce.

Children have the same human rights as adults. But by virtue of their age and the fact that they are still growing and gaining knowledge and experience, they have some distinct rights as children. These rights include protection from economic exploitation and work that may be dangerous to their health, safety or morals and that may hinder their development or impede their access to education. The complexity of the issue of child labour means that companies need to address the issue sensitively, and must not take action which may force working children into more exploitative forms of work. Nevertheless, as Principle 5 states, the goal of all companies should be the abolition of child labour within their sphere of influence.

What can companies do?

Developing awareness and understanding of the causes and consequences of child labour is the first step that a company can take toward action against child labour. This means identifying the issues and determining whether or not child labour is a problem within the business. Companies sourcing in specific industry sectors with geographically distant supply chains need to be particularly vigilant. However, child labour also exists less visibly in developed, industrialised countries where it occurs, for example, in some immigrant communities.

Discovering if child labour is being used can be difficult, for example in the case where documents or records are absent, and companies may consider using local non-governmental organisations, development organisations or UN agencies to assist in this process.

If an occurrence of child labour is identified, the children need to be removed from the workplace and provided with viable alternatives. These measures often include enrolling the children in schools and offering income-generating alternatives for the parents or above-working age members of the family. Companies need to be aware that, without support, children may be forced into worse circumstances such as prostitution, and that, in some instances where children are the sole providers of income, their immediate removal from work may exacerbate rather than relieve the hardship.

More information on Principle 5 is available here.

What does it mean?

Discrimination in employment and occupation means treating people differently or less favourably because of characteristics that are not related to their merit or the inherent requirements of the job. In national law, these characteristics commonly include: race, colour, sex, religion, political opinion, national extraction, social origin, age, disability, HIV/AIDS status, trade union membership, and sexual orientation. However, Principle 6 allows companies to consider additional grounds where discrimination in employment and occupation may occur.

Discrimination can arise in a variety of work-related activities. These include access to employment, to particular occupations, promotions and to training and vocational guidance. Moreover, it can occur with respect to the terms and conditions of the employment, such as:

• Recruitment
• Remuneration
• Hours of work and rest/paid holidays
• Maternity protection
• Security of tenure
• Job assignments
• Performance assessment and advancement
• Training and opportunities
• Job prospects
• Social security
• Occupational safety and health

In many countries, additional issues for discrimination in the workplace, such as age, HIV status and sexual orientation, are growing in importance. It is also important to realise that discrimination at work arises in a range of settings, and can be a problem in workplaces ranging from rural agricultural businesses to high technology city-based businesses.

Non-discrimination in employment means simply that employees are selected on the basis of their ability to do the job and that there is no distinction, exclusion or preference made on other grounds. Employees who experience discrimination at work are denied opportunities and have their basic human rights infringed. This affects the individual concerned and negatively influences the greater contribution that they might make to society.

Discrimination can take many forms, both in terms of gaining access to employment and in the treatment of employees once they are in work. It may be direct, such as when laws, rules or practices explicitly cite a reason such as sex or race to deny equal opportunity. Most commonly, however, discrimination is indirect and arises where rules or practices have the appearance of neutrality but in fact lead to exclusions. This indirect discrimination often exists informally in attitudes and practices, which if unchallenged can perpetuate in organisations. Discrimination may also have cultural roots that demand more specific approaches.

Why should companies care?

From a business point of view discrimination does not make sense. It leads to social tensions that are potentially disruptive to the business environment within the company and in society. A company that uses discriminatory practices in employment and occupation denies itself access to talents from a wider pool of workers, and thus skills and competencies. The hurt and resentment generated by discrimination will affect the performance of individuals and teams in the company.

Increasingly, graduates and new employees alike assess companies on the basis of their social and ethical policies at work. Discriminatory practices result in missed opportunities for development of skills and infrastructure to strengthen competitiveness in the national and global economy. Finally, discrimination isolates an employer from the wider community and can damage a company’s reputation, potentially affecting profits and stock value.

On the positive side, diversity and inclusion in the workplace can produce positive outcomes for business, for individuals and societies. For business, it can improve
productivity, be a source of innovation, facilitate better risk management, enhance customer and business partner satisfaction, and open the door to or help maintain business opportunities.

What can companies do?

First and foremost, companies need to respect all relevant local and national laws. Any company introducing measures to promote equality needs to be aware of the diversities of language, culture and family circumstance that may exist in the workforce. Managers and supervisory staff, in particular, should seek to develop an understanding of the different types of discrimination and how it can affect the workforce. For example, women constitute a growing proportion of the world’s workforce, but consistently earn less than their male counterparts. Employees with disabilities may have particular needs that should be met, where reasonable, in order to ensure that they have the same opportunities (e.g. for training and advancement) as their peers.

More information on Principle 6 is available here.

What does it mean?

Introducing the precautionary approach, Principle 15 of the 1992 Rio Declaration states that “where there are threats of serious or irreversible damage, lack of full scientific certainty shall not be used as a reason for postponing cost-effective measures to prevent environmental degradation”.

Precaution involves the systematic application of risk assessment, risk management and risk communication. When there is reasonable suspicion of harm, decision-makers need to apply precaution and consider the degree of uncertainty that appears from scientific evaluation.

Deciding on the “acceptable” level of risk involves not only scientific-technological evaluation and economic cost-benefit analysis, but also political considerations such as acceptability to the public. From a public policy view, precaution is applied as long as scientific information is incomplete or inconclusive and the associated risk is still considered too high to be imposed on society. The level of risk considered typically relates to standards of environment, health and safety.

Why should companies care?

The key to a precautionary approach, from a business perspective, is the idea of prevention rather than remediation. In other words, it is more cost-effective to take early action to ensure that environmental damage does not occur.

Companies should consider the following:

• While it is true that preventing environmental damage may entail additional implementation costs, environmental remediation often costs much more, for instance in the form of treatment costs, or in terms of company reputation
• Investing in production methods that are not sustainable (i.e. methods that deplete resources and degrade the environment) has a lower, long-term return than investing in sustainable operations. In turn, improving environmental performance means less financial risk, an important consideration for insurers
• Research and development related to more environmentally friendly products can have significant long-term benefits

What can companies do?

Companies can support a precautionary approach by communicating potential risks for the consumer and providing complete information on risks to the consumer and the public. Supporting the precautionary approach includes obtaining prior approval before certain products, deemed to be potentially hazardous, are placed on the market.

Steps that a company could take in the application of this approach include the following:

• Develop a code of conduct or practice for its operations and products that confirms commitment to care for health and the environment
• Develop a company guideline on the consistent application of the approach throughout the company
• Create a managerial committee or steering group that oversees the company application of precaution, in particular risk management in sensitive issue areas
• Establish two-way communication with stakeholders, in a pro-active, early stage and transparent manner, to ensure effective communication of information about uncertainties and potential risk and to deal with related enquiries and complaints. Use mechanisms such as multi-stakeholder meetings, workshop discussions, focus groups, public polls combined with use of website and printed media
• Support scientific research, including independent and public research, on related issues, and work with national and international institutions concerned
• Join industry-wide collaborative efforts to share knowledge and deal with the issue of precaution, particularly in regard to production processes and products around which high level of uncertainty, potential harm and sensitivity exist

More information on Principle 7 is available here.

What does it mean?

In Chapter 30 of Agenda 21, the 1992 Rio Earth Summit spelled out the role of business and industry in the sustainable development agenda as: “Business and industry should increase self-regulation, guided by appropriate codes, charters and initiatives integrated into all elements of business planning and decision-making, and fostering openness and dialogue with employees and the public.”

The Rio Declaration says that business has the responsibility to ensure that activities within their own operations do not cause harm to the environment. Society expects business to be a good actor in the community. Business gains its legitimacy through meeting the needs of society, and increasingly society is expressing a clear need for more environmentally sustainable practices.

Why should companies care?

Cleaner and more efficient processes mean increased resource productivity, which translates to needing fewer raw material inputs and lower costs. More environmentally responsible companies are also benefiting from tax incentives or permit programmes because they are more advanced than their peers. Additionally, employees and consumers are increasingly interested in doing business with responsible companies.

The challenge for companies is developing an environmentally responsible strategy that keeps them ahead of the pack, helping them maintain an advantageous position in the marketplace. Companies must truly innovate in terms of how they manage their relationship with the environment.

What can companies do?

Steps that a company could take to promote environmental responsibility would be the following:

• Define company vision, policies and strategies to include sustainable development — economic prosperity, environmental quality and social equity
• Develop sustainability targets and indicators (economic, environmental, social)
• Establish a sustainable production and consumption programme with clear performance objectives to take the organisation beyond compliance in the long-term
• Work with product designers and suppliers to improve environmental performance and extend responsibility throughout the value chain
• Adopt voluntary charters, codes of conduct and practice internally as well as through sectoral and international initiatives to reach responsible environmental performance
• Measure, track and communicate progress on incorporating sustainability principles into business practices, including reporting against global operating standards. Assess results and apply strategies for continued improvement
• Ensure transparency and unbiased dialogue with stakeholders

In doing the above, the existence of appropriate management systems is crucial in helping the company meet the organisational challenge.

Key mechanisms or tools for a company to use include:

• Assessment or audit tools (such as environmental impact assessment, environmental risk assessment, technology assessment, life cycle assessment)
• Management tools (such as environmental management systems and eco-design)
• Communication and reporting tools (such as corporate environmental foot-printing and sustainability reporting)

More information on Principle 8 is available here.

What does it mean?

Environmentally sound technologies, as defined in Agenda 21 of the Rio Declaration, should protect the environment, are less polluting, use all resources in a more sustainable manner, recycle more of their wastes and products and handle residual wastes in a more acceptable manner than the technologies for which they were substitutes. They include a variety of cleaner production processes and pollution prevention technologies as well as end-of-pipe and monitoring technologies. Moreover, they include know-how, procedures, goods and services and equipment as well as organisational and managerial procedures. Where production processes that do not use resources efficiently generate residues and discharge wastes, environmentally sound technologies can be applied to reduce day-to-day operating inefficiencies, emissions of environmental contaminants, worker exposure to hazardous materials and risks of environmental disasters.

Why should companies care?

The key benefits of environmentally friendly technologies include:

• Implementing environmentally friendly technologies helps a company reduce the use of raw materials leading to increased efficiency
• Technology innovation creates new business opportunities and helps increase the overall competitiveness of the company
• Technologies that use materials more efficiently and cleanly can be applied to most companies with long-term economic and environmental benefits

What can companies do?

At the basic factory site or unit level, improving technology may be achieved by:

• changing the process or manufacturing technique
• changing input materials
• making changes to the product design or components
• reusing materials on site

Strategic level approaches to improving technology include:

• Establishing a corporate or individual company policy on the use of environmentally sound technologies
• Making information available to stakeholders that illustrates the environmental performance and benefits of using such technologies
• Refocusing research and development towards ‘design for sustainability’
• Use of life cycle assessment (LCA) in the development of new technologies and products
• Employing Environmental Technology Assessments (EnTA)
• Examining investment criteria and the sourcing policy for suppliers and contractors to ensure that tenders stipulate minimum environmental criteria
• Co-operating with industry partners to ensure that ‘best available technology’ is available to other organisations

More information on Principle 9 is available here.

What does it mean?

The 10^th principle against corruption was adopted in 2004 and commits UN Global Compact participants not only to avoid bribery, extortion and other forms of corruption, but also to proactively develop policies and concrete programmes to address corruption internally and within their supply chains. Companies are also challenged to work collectively and join civil society, the UN and Governments to realise a more transparent global economy.

With the entry into force of the UN Convention Against Corruption (UNCAC) in 2005, an important global tool to fight corruption was introduced. The UNCAC is the underlying legal instrument for the 10th Principle. Corruption can take many forms that vary in degree from the minor use of influence to institutionalised bribery. Transparency International’s definition of corruption is “the abuse of entrusted power for private gain”. This can mean not only financial gain but also non-financial advantages.

The OECD Guidelines for Multinational Enterprises define extortion in the following way: “The solicitation of bribes is the act of asking or enticing another to commit bribery. It becomes extortion when this demand is accompanied by threats that endanger the personal integrity or the life of the private actors involved.”

Transparency International’s Business Principles for Countering Bribery define bribery in the following way: “Bribery: An offer or receipt of any gift, loan, fee, reward or other advantage to or from any person as an inducement to do something which is dishonest, illegal or a breach of trust, in the conduct of the enterprise’s business.”

Why should companies care?

There are many reasons why the elimination of corruption has become a priority within the business community. Confidence and trust in business among investors, customers, employees and the public have been eroded by recent waves of business ethics scandals around the globe. Companies are learning the hard way that they can be held responsible for not paying enough attention to the actions of their employees, associated companies, business partners and agents.

The rapid development of rules of corporate governance around the world is also prompting companies to focus on anti-corruption measures as part of their mechanisms to express corporate sustainability and to protect their reputations and the interests of their stakeholders. Their anti-corruption systems are increasingly being extended to a range of ethics and integrity issues, and a growing number of investment managers are looking to these systems as evidence that the companies undertake good and well-managed business practice.

Businesses face high ethical and business risks and potential costs when they fail to effectively combat corruption in all its forms. All companies, large and small, are vulnerable to corruption, and the potential for damage is considerable. Business can face:

• Legal risks: not only are most forms of corruption illegal where they occur but it is also increasingly becoming illegal in a company’s home country to engage in corrupt practices in another country
• Reputational risks: companies whose policies and practices fail to meet high ethical standards, or that take a relaxed attitude toward compliance with laws, are exposed to serious reputational risks. Often it is enough to be accused of malpractice for a company’s reputation to be damaged even if a court subsequently determines the contrary
• Financial costs: there is clear evidence that many countries lose close to US$1 trillion due to fraud, corruption and shady business transactions and in certain cases, corruption can cost a country up to 17% of its GDP, according to the UN Development Programme in 2014. This undermines business performance and diverts public resources from legitimate sustainable development
• Erosion of internal trust and confidence as unethical behaviour damages staff loyalty to the company as well as the overall ethical culture of the company

What can companies do?

The UN Global Compact suggests that participants consider the following three elements when fighting corruption and implementing the 10th principle:

• Internal: As a first and basic step, introduce anti-corruption policies and programmes within their organisations and their business operations
• External: Report on the work against corruption in the annual Communication on Progress; and share experiences and best practices through the submission of examples and case stories
• Collective Action: Join forces with industry peers and with other stakeholders to scale up anti-corruption efforts, level the playing field and create fair competition for all. Companies can join the Global Compact Network Australia’s Bribery Prevention Network to  assist with delivering and accessing resources on anti-corruption collective action

More information on Principle 10 is available here.