On this International Anti-Corruption Day, I offer three points to explain why.
Firstly, effective anti-corruption compliance requires respecting the human rights of compliance teams.
Corruption is big business and the stakes are high. Sometimes, individuals who are tasked to refuse to accept corruption on behalf of their employers, are in fact also asked to put themselves at risk for the company. We have seen in more extreme cases how compliance professionals operating in places governed by authoritarian regimes, risk being jailed for refusing to sign corrupt deals and contracts. HREDD can therefore be helpful in making the call on where we can do business. Obviously, from a compliance perspective, it would be difficult to do business where sufficient compliance efforts are not possible. But from a human rights perspective, it is also difficult to do business where necessary anti-corruption measures put compliance professionals and their colleagues at risk.
But human rights of compliance teams are not only relevant in higher-risk situations. Many compliance professionals have, more often than they care to admit, faced reactions from colleagues – ranging from raised eyebrows and looks of disbelief, to outright reprisals or being locked out of important business meetings. These are sanctions against individuals who are actually working to safeguard the company, and who are often business enablers. A company with a compliance ambition therefore needs a culture that promotes and provides space for voicing different views and ideas. I have found that compliance professionals operating in cultures that are open, can be challenged by the business to find solutions that help the business move forward in a compliant way. But in cultures where it is difficult to have challenging conversations, it might be easier just to say “no” to a deal.
Secondly, HREDD provides protection and mitigation against corruption.
Here are two real-life examples of why that is.
The first is one I have seen play out across continents, including in the Nordic region: businesses embarking on land exploration facing objections from local communities and business interests. It is an increasingly relevant example in the wake of mining for green minerals and finding land for solar and wind-power.
In these situations, the business instinct is sometimes to take a transactional approach and make a quick deal with those in the community who make the most noise and seem to have the biggest ability to create obstacles for project development. The deal might be dressed as “compensation for impact” even though the real human rights impact is not yet known. The deal may include an obligation of the community to stop complaining. Sometimes, the ultimate beneficiaries of the deal are hidden, and the deal points themselves, kept secret. Several compliance red flags appear right there.
Depending on their set-up, such deals risk being legally questionable. But more often, they run the risk of increasing the human right impact and thereby, community conflict and ultimately, project operability. By starting out with proper HREDD, companies can make sure that community agreements address real impacts and compensate those actually impacted. This way, by applying HREDD together with compliance processes, compliance teams and their human rights colleagues can enable a conflict-free business project and avoid corruption, at lower cost.
Another example is related to forced labour among migrant workers across global supply chains. These workers are often brought into forced labour situations through illicit recruitment practices. They are frequently required to pay recruitment fees. These payments are systematically excessive and often just plain corrupt payments, for instance in the form of kickbacks from sourcing agents to human resource departments. A properly conducted HREDD together with KYC and other compliance procedures, would identify these transactions and abusive recruitment practices. It would enable the company to source workers with less risk of being linked to neither corruption, nor to forced labour.
And thirdly, arguably, the most important: how you treat people and conduct business is a matter of compliance. But it is also a matter of organisational culture and leadership.
If the culture and leadership demonstrate in words and deeds that the company acts ethically and treat people well, perhaps the number of people on compliance and sustainability teams can even be reduced? Instead, an ethical culture would truly be embedded in everyone’s jobs and felt responsibility. Here is the business case: according to research made at MIT that enquired into why people leave their jobs, by far the main reason for people leaving is toxic culture. The study mentions five attributes of toxic cultures. They are disrespectful, non-inclusive, unethical, cutthroat and abusive; the very definition of a non-compliant and rights-abusive culture.
Human rights and compliance then, are both business critical. Good people want to work in companies that don’t only limit the risks of doing wrong, but that proactively do good. By looking at our corporate behaviour as a whole, whether it starts as a compliance, human rights, climate or environmental issue, we can.
