Update Spring 2013

Welcome to the Spring issue of Update.

We are delighted to announce that 2012 was a record year for GoodCorporation and are confident of building on that success in 2013. Our responsible business assessments and associated services are continuing to grow, but above all we are seeing interest in and demand for our Anti Bribery and Corruption (ABC) programmes.

We have an increasing number of listed clients, including 17 in the FTSE100 and six in the CAC40. To date, we have completed over 400 assessments in 50 countries, ensuring that our understanding of responsible and ethical business practices is truly global.

We explore that in this issue by taking a look at bribery risks in China; the first in a planned series of articles that will examine some of the real issues companies face in the more ethically challenging parts of the world

If anything strikes a chord, we’d be delighted to hear from youome of the current thinking and best practice in ethical business management and compliance.

Michael Littlechild

Corruption in China - the challenges and the tools to tackle it

Under the leadership of President Xi Jinping, corruption has become a hot political topic in China. His rousing speeches, vowing to tackle the problem of corrupt officials at both a high and low level, have pushed corruption higher up the corporate agenda. Prior to assuming power, he was known for his zero-tolerance towards corrupt officials. Now President, many feel sure he will deliver more results than his predecessors, others are conscious that implementation takes time and are watching the reaction of different government entities closely.

Rhetoric aside, corruption remains a key consideration for all foreign companies doing business in China, with cultural differences playing a vital role in understanding and tackling the problem.

Click here to read the article in full.

GoodCorporation's Business Ethics Debate Series

Over 100 leading organisations have attended our Business Ethics Debate series over the past 12 months, including Arcelor Mittal, Astra Zeneca, BAE Systems, BP, Diageo, Exxon Mobil, Shell, Vodafone and Total.

Each event is attended by up to 30 business leaders, industry experts, politicians and academics who join us to debate challenging aspects of business ethics. Recent topics have included Anti-Corruption Due Diligence, Ethical Challenges in the Defence Sector, The Bribery Act 12 Months On and The Rise of Business Ethics.

Hosted at venues such as the House of Lords or the Club France-Amérique in Paris, our debates provide a forum where industry leaders and opinion formers can share best practice as well as highlighting the key ethical issues their industry faces. The Chatham House Rule is always applied to enable a frank and honest exchange of views.

Although attendance is by invitation only, summaries of our debates are posted on our website and often reproduced here in Update.

Andrew Hayward, Head of Compliance at Balfour Beatty described them as “Definitely one of the most valuable events I go to”. David Halford, Head of Ethical Sourcing at BBC Worldwide said, “GoodCorporation’s Business Ethics Debates bring together a diverse range of experts for a tightly-facilitated discussion on some important topics.”

Click to read the summary of our debate on Anti-Corruption Due Diligence

Ethics in the Food Chain

Ethical business conduct, has once again played a central role in some of the news stories that have dominated the headlines in the first quarter of 2013, most notably ‘Burgergate’.

Prior to the discovery of horsemeat in frozen burgers and other processed beef products, the majority of testing was on fresh meat products following  the outbreak of BSE.  To date, retail supply chain monitoring has tended to focus on child labour and factory conditions, with the emphasis most firmly on the manufacture of clothes and electrical goods rather than the processing of meat.

Instead, supermarkets and food producers have concentrated their efforts on promoting an idea of wholesomeness and taste, while failing to check what they were actually selling. Consequently when Irish food inspectors found horsemeat in frozen beef burgers, many of the supermarkets concerned were caught on the hop, initially  hoping it was an isolated incident that would quickly go away. It didn’t.

To date, mislabeled food products have so far been discovered in the UK, the Republic of Ireland, France, Norway, Austria, Switzerland, Sweden, Spain, Italy the Czech Republic and Germany. Suspicious products have also been withdrawn in the Netherlands as tests are carried out.

Meanwhile answers to the question ‘why?’ are still being sought. Some have blamed the excessive complexity of the food industry’s supply chain, with the meat for many products moving through several countries before ending up as lasagne on supermarket shelves.

Others have blamed consumer demand for cheap meat. This is unacceptable; retailers cannot blame their customers for not buying a more expensive product when a cheap one goes wrong. Many have put it down to simple fraud for financial gain; horsemeat being cheaper than other meats in some European countries.

The real issue, however, is a lack of responsibility and proper controls.  In the UK, manufacturers and retailers have been happy to delegate their responsibility for food safety and hygiene to the Food Standards Agency. But the agency’s checks do not take account of authenticity. The FSA’s brief is to identify ‘those risks that can make people ill or worse’, such as arsenic or listeria. So despite checking 80,000 food samples in 2012, they were not testing meat DNA.

Until now, the meat processing chain has been below the radar, but now the industry needs to work hard to catch up. What industries must acknowledge, is that arguing for less regulation and fewer rules means that companies need to take more responsibility for what they make and sell, not less. This means thorough due diligence checks on the supply chain, regular monitoring and an in-depth knowledge of everyone you do business with.  Many companies are stepping up their due diligence in order to comply with the UK Bribery Act, but as we can see from the horsemeat saga a lot of reputational damage can be avoided if you know exactly what it is you’re selling.