A 2021 edition of the Anti-bribery and Corruption Benchmarking report was released by Kroll, a global consulting firm. The report sheds light on the developments and main trends in the financial crime segment. Head of Compliance, Risk, and Diligence for APAC and Managing Director at Kroll, David Liu, explained the report’s primary findings in the areas of environmental, social and governance or ESG.
In the past few years, ESG criteria have been widely included in boardroom agendas. There is an increase of scrutiny for ESG metrics among the growing recognition of the fact that businesses have different societal responsibilities towards the communities where they operate in.
Anti-bribery and corruption programs have been part of corporate risk analysis. This clearly plays a significant role in ESG. This is because every ESG compliance aspect can be seriously affected by bribery and corruption attempts. The recent report surveyed hundreds of senior-level compliance and risk professionals worldwide to get an insight into how businesses around the Asia Pacific are dealing with the “G” in their ESG programs.
Asia Pacific stock exchanges have required their listed firms to include ESG metrics in their yearly reports for many years now. In June 2016, Singapore Exchange introduced sustainability reporting on a “comply or explain” basis. Subsequently, the Clearing Limited and Hong Kong Exchanges made ESG reporting to be mandatory.
The Anti-bribery and Corruption Benchmarking Report revealed that 57% of investors around the region had included ESG issues in their investment analysis. These include corporate governance issues such as anti-bribery and corruption policies.
The earlier ESG initiatives of the region are reflected in the adoption and support for various ABC programs. A report from Consultancy Asia showed that 86% of Asia Pacific respondents agree that ABC-related programs are important for good governance and transparency. By far, this is the largest percentage among the other regions. This number might be related to the perceived corruption and complexities within the region.
According to the Corruption Perception Index of Transparency, the Asia Pacific region had an average score of 45/100 compared to Western Europe, which had a score of 66. This figure reflects many circumstances in the region, such as high-fliers like Singapore, New Zealand, Hongkong, Australia, Thailand, Indonesia, and the Philippines.
Aside from discussing bribery and corruption, the need for ESG compliance is the result of other crucial regional factors. Some examples of these are employee rights and business resilience which are also considered to be strong catalysts within the Asia Pacific region.
Although the region has played an important role in achieving ESG requirements, the process is not an easy feat. According to the reposts, despite the support for the ABC programs and the understanding of its importance in ESG, many professionals still struggle to implement these. 64% of Asia Pacific respondents from the survey say that ESG challenges have outweighed its benefits in terms of the compliance function.
However, these challenges might soon be lessened, given that there are more ESG regulations. With this in mind, ABC programs will still have a crucial role in ESG compliance, especially for a culturally and economically diverse region such as the Asia Pacific.