You will be redirected back to your article in seconds
Skip to main content

Report Reveals Most Common Corruption Risks in Global Supply Chains

Under developed nations are often rife with corruption, and supply chains are suffering as a result.

In a new briefing published by responsible supply chain platform Sedex Global, in partnership with anti corruption NGO, Transparency International UK and training and consulting NGO Verite, highlights the impact of corruption risks on global supply chains.

According to the brief, corruption linked to improper granting of permits and licenses or bribing officials to bypass environmental safeguards can lead to damaging environmental impacts.

Corruption cal also lead to labor abuses and health and safety risks for workers. Sedex said corruption contributed to the vulnerabilities that led to the Rana Plaza building collapse that killed more than 1,000 workers in April 2013.

“Media reports on the Rana Plaza tragedy highlighted how permission for high-rise buildings can be obtained through bribes. Sohel Rana, the owner of the building, had not received the proper building consent, obtaining a permit for only a five-story building from the local municipality. The building was, however, illegally extended by a further three stories – an act ignored by the authorities due to Rana’s political connections,” the brief noted.

Analysis also suggested the government consistently failed to enforce workplace health and safety standards for access, crowding, lighting, ventilation, working hours, bathroom breaks and minimum wage, according to Sedex.

“Corruption in the recruitment supply chain exacerbates the risks faced by migrant workers, and is a risk that brands and buyers must pay attention to as part of their supply chain compliance. Verité is pleased to help highlight this issue,” Verite CEO Dan Viederman said.

The most common business ethics issues uncovered after analyzing 49,293 sites and conducting 20,000 audits between July 1, 2012 and July 1, 2014, were: site fails to comply with local/national laws on business ethics; lack of, or inadequate, policy concerning bribery, corruption or unethical business practices; site has no transparent system in place for confidentially reporting and dealing with unethical business practices.

Related Stories

In order to scale up good practices, Sedex outlined opportunities for businesses to take heed of.

First, companies should improve verification efforts to better assess corruption in and across business operations. At the time of the report, just 11.9% of sites on the Sedex platform had conducted business ethics assessments in the last two years.

“While businesses are not expected to audit 100% of their suppliers, more business ethics assessments would provide a more effective program for preventing and detecting corruption across the supply chain,” the report noted.

Businesses also need to put better systems in place to help more suppliers deter, detect and remediate corruption. Suppliers could benefit from their customers sharing experiences on policies and procedures as they integrate anti-corruption measures into daily operations.

Better communication across the supply chain could also be key to increasing awareness of ethical requirements, Sedex said. Site are not always aware of ethics standards or requirements in place, and the report’s data reveals that only 8.7% of the sites with an ethics policy in place extended those requirements to their suppliers. Improving communication and training could help suppliers understand what is expected of them.

Peter van Veen, director of Transparency International UK’s Business Integrity Programme, said, “Companies should conduct their operations legally, ethically and consistently with their values. Many businesses are part of or have supply chains where there is a risk of corruption. To manage these risks, companies need to have robust anti-corruption systems.”