Emerging market businesses that lack formal compliance processes suffer twice: first from inefficiency and then from losing out on beneficial partnerships. While companies in emerging markets are becoming formal businesses in increasing numbers, there is still a sizable gap between getting a license and paying taxes (the minimum definition of “formal”) and following the internal rules and processes necessary to attract partners and investors.
Emerging market companies need an intermediary step; a way to understand and apply the basic principles and practices of global compliance standards before going whole hog with ISO 37001. Enter CIPE’s new business integrity guide.
This new guidebook condenses decades of lessons learned from dozens of overseas programs to explain the “what” and “how” of ethical business practices. Strengthening Ethical Conduct & Business Integrity: A Guide for Companies in Emerging Markets is a succinct publication filled with real-world examples and practical recommendations for business leaders on compliance and business integrity, including codes of conduct.
As discussed in a recent podcast, this Guide will support CIPE efforts in over 20 countries to improve the anti-corruption compliance program of local companies. In the past decade, CIPE’s work in countries ranging from Thailand to Kenya and Ukraine has focused on giving smaller companies in emerging markets sufficient knowledge and resources to comply with global anti-corruption norms and position themselves as reliable partners for multinational enterprises.
Previous to the new Guide, CIPE had relied upon Anti-Corruption Compliance: A Guide for Mid-Sized Companies in Emerging Markets and the Business of Integrity blog. These resources helped form the foundation of a comprehensive training curriculum that CIPE has developed and used to educate businesses around the world. This curriculum has been used in countries such as Moldova, Armenia, and Nigeria and is a starting point for more extensive country-specific work with local partners. CIPE also has an interactive, online anti-corruption training course.
What is Business Integrity?
Business integrity and compliance are often new concepts to companies in emerging markets. Many languages lack direct equivalents for “integrity” and “compliance,” and instead use terms that mean “honesty” or “following the law.” While these substitutes capture part of the idea, integrity and compliance go even further.
Applied to individuals, integrity is defined as “strict adherence to a moral code, reflected in transparent honesty and complete harmony in what one thinks, says, and does.” For organizations, this means setting up an organizational code of conduct and ensuring that standards are consistently applied and upheld.
Integrity also means the “state of a system where it is performing its intended functions without being degraded or impaired by changes or disruptions.” Since fraud, bribery, and other forms of corruption are disruptive and hurt business efficiency, business integrity means implementing rules and processes that strengthen operations, reduce costs, and make it harder for bad actors to get away with harmful and dishonest behavior.
In The Guide
While there is a growing collection of free anticorruption resources available from international organizations, companies introducing business integrity programs still face many practical challenges. CIPE’s new integrity Guide is designed to address these challenges by sharing common challenges that many companies, particularly small- and medium-sized enterprises (SMEs), face when developing or upgrading their business integrity programs.
The Guide’s eight sections correspond to the steps required to create an anti-corruption integrity and compliance program. As the Guide progresses, 28 questions highlighting common implementation challenges are raised and addressed. Specific examples draw on publicized cases of corruption and CIPE’s own experience helping emerging market SMEs and other companies build and implement their own compliance programs.
In addition, the Guide aims to help companies in emerging markets in three main ways:
1. Make company leaders confident that behaving ethically will not put their companies at a disadvantage compared to competitors that continue unethical, “business as usual” practices.
2. Equip individuals who champion business integrity within their companies with better guidance on how to implement a business integrity program.
3. Offer practical suggestions to interested business leaders who are still at an early or exploratory phase in their approach to business integrity. This Guide outlines principles that can be approached in different ways, allowing business leaders to take into consideration the unique set of risks and challenges that their company faces.
Never Too Late
While the Guide has been developed, the global economic fallout from the COVID-19 pandemic has devastated the operations of SMEs around the world. Faced with decreased resources to run their businesses, some company leaders may wonder if there are still benefits to be gained from committing to anti-corruption compliance and ethical behavior.
Yet the value of building and reinforcing a culture of integrity and compliance remains compelling. Many private sector actors have observed that ethical businesses can respond more quickly and efficiently in a crisis due to previously established risk frameworks, trusted and loyal employees, and clearer guidance on ethical behavior.
In addition, while COVID-19 has hit the global economy hard, most cross-border trade is expected to rebound. At the same time, anti-corruption laws such as the U.S. Foreign Corrupt Practices Act (FCPA) and the UK Bribery Act are maintaining pressure on multinational companies to demand higher standards from local partners.
Practicing business integrity requires companies to develop a culture of integrity that goes deeper than merely following rules, laws, and regulations. “Paper compliance,” or superficial box-checking without real internal change, tends to breed cynicism and mistrust among employees and other stakeholders. Compliance author Joseph Murphy warns,“You should only proceed with a compliance and ethics program if you are serious about doing the right thing. A sham program is worse than none at all.”
With the launch of this new Guide, CIPE reiterates its commitment to promoting ethical business practices around the world. Building and reinforcing a culture of integrity and compliance within companies contributes to development, improves livelihoods, and strengthens civil society. It is also the right thing to do.