Transparency in Corporate Reporting
This post is a short summary of Transparency International’s report, Transparency in Corporate Reporting: Assessing the World’s Largest Companies (2014). The report is an evaluation of the “world’s 124 largest publicly listed companies” in terms of transparency.
“The report assesses the disclosure practices of companies with respect to their anti-corruption programmes, company holdings and the disclosure of key financial information on a country-by-country basis”. The last related report was published in 2012 with only 102 companies being evaluated.
Legal and ethical obligations are part of the global companies’ programmes aside from their main business activities. The rationale behind those obligations is for them to conduct their business with integrity and honesty. The implementation and monitoring of these companies’ anti-corruption policies and other ethical programmes can help prevent or curb corruption within their organizations. Corruption is not only detrimental to their business in general, but also to the consumers and society at large.
In addition, the report mentions that corporate reporting regulation is one of the best and ideal ways to prevent corruption. Denmark, France and South Africa are the first countries that introduced such reporting in recent years, according to the report. In fact, just very recently, the movement to promote greater transparency among companies is the campaign to publish the names of owners of companies and any relevant information that could help curb anonymous, paper and shell companies.
Methodology
The report (can be shortened as TRAC – stands for Transparency in Corporate Reporting) employs a methodology that is being used to assess the current transparency status of a particular company under study. Corporate reporting by global companies under study is measured through three criteria by Transparency International, namely:
Anti-corruption programmes (ATC)
Organizational transparency (OT)
Country-by-country reporting (CBC)
When employing the method, Transparency International only researches whether an anti-corruption exists (available online) or not in a company. Transparency International did not “investigate the veracity or completeness of the published information and did not make any judgement about the integrity of the information…” (p.13) they found. The data collected were then shared to companies and they were given opportunity to review and comment before finalizing the research results.
Scaling the research results
0-10 where 0 means least transparent and 10 means very transparent. That index is based on the average of results in all three categories (ACP, OT, CBC) mentioned.
Highlights of the Report
1 Company -> Vodafone is the only company that scores about 50% in all three categories
101 Companies -> This is the total number of companies, out of the 124 being researched, that score less than 5 out of 10
Best performing companies -> 7 of the top 10 companies are European
Worst performing companies -> 8 of the bottom 10 companies are Asian
90 Companies -> They failed to reveal any information regarding their tax payments in other countries
0 (none or no) Chinese Companies -> No Chinese company that reveal any financial data in countries where they operate
11 (out of 13) UK companies -> Companies that now ban facilitation payments. Surprisingly, 68 companies do not prohibit it.
28 US companies do not disclose their political donations
The giants: Amazon, Apple, Google & IBM -> They did not publish the list of countries where their subsidiaries are operating
Findings
3.8 over 10 is the average score for overall index result
70% is the average score for anti-corruption programmes.
97% of the evaluated companies publicly claimed that they are committed to comply all laws including anti-corruption laws.
Recommendations
Just like in all surveys and research done by Transparency International, the report also provides recommendations to all global companies and all stakeholders to take concrete actions. For example:
To global companies to prohibit facilitation payments since they are “part of a cycle of bribery that corrodes public and business standards and they contribute to a climate that is conducive to larger-scale public sector bribery and state theft” (p.10).
Please, find out more details of Transparency in Corporate Reporting report by clicking the link below:
Or, download directly from this site, below.