TRANSPARENCY IN CORPORATE REPORTING 2016 2 IF TRANSPARENCY

TRANSPARENCY IN CORPORATE REPORTING [2016] & 2 IF TRANSPARENCY INTERNATIONAL NEDERLAND 14 JUNE 2016, TI DENMARK Anne Scheltema Beduin (executive director TI-NL)

TRAC REPORT TI-NL [2016] • 4 students Rotterdam School of Management • 20 large listed multinational companies • 9 medium listed multinational companies • Checked public reports on efforts of fighting against corruption and encourage increased transparency: o Reporting on Anti-Corruption Programme (ACP) o Organizational Transparency (OT) o Country-by-Country Reporting (CBC)

MAIN FINDINGS I #1 COMPANIES LARGE: SME: 14 COMPANIES SCORE LESS THAN 5 OUT OF 10 OVERALL

MAIN FINDINGS II THE 2 BEST SCORING COMPANIES 5 LEAST PERFORMING COMPANIES

KONINKLIJKE KPN • Interesting fact – KPN scored just a little over average in TRAC Telecom report 2015: • Half a year later: 100% ACP, 75% OT, 53% CBC – what happened?

WERELDHAVE (193 EMPLOYEES) • • • SME in owning and operating shopping centres Very high score for an SME (65% ACP, 75% OT and 60% CBC) Example website Wereldhave: “Integrity and compliance There were no major integrity issues in 2015. In the Netherlands, a conflict of interest of a counterparty’s employee was not immediately recognised. Well before contracts were signed, the issue was settled at a higher management level. Two employees at Wereldhave were reprimanded. In France, an attempt was made by a third party to falsify Wereldhave invoices for the French offices portfolio. A tenant informed Wereldhave of the false invoices he received. Wereldhave immediately warned all tenants and the new owners. We asked the bank to take appropriate action against the swindler with the bank account details from the false invoices. ”

SCORE LARGE COMPANIES Please note: score is not final yet!

SCORE SMALL COMPANIES Please note: score is not final yet!

LARGE COMPANIES VS. SME’S LARGE COMPANIES SME’s AVERAGE SCORE: 5. 1 AVERAGE SCORE: 4. 3 ACP: 80% OT: 61% ACP: 40% OT: 65% CBC: 11% CBC: 24%

HIGH PERFORMANCE AREAS • • • Compliance with laws commitment Employees can raise concerns Whistleblower policy LOW PERFORMANCE AREAS • • Code of conduct applies to agents Prohibition of facilitation payments Regular monitoring anti-corruption programme CBC: Community contributions

COMPARISON OTHER PREVIOUS TRAC REPORTS Note: we included nine SMEs in our assessment – this influences the comparison

RECOMMENDATIONS TO MULTINATIONAL COMPANIES ü Companies should make their anti-corruption programmes publicly available, instead of only internally. Additionally, when requiring employees to comply with anti-corruption policies, also explicitly cover senior management ü Explicitly require compliance to the Code of Conduct from suppliers, agents and other third parties ü Instead of only disclosing the full list of subsidiaries, affiliates, joint ventures and other entities to Chamber of Commerce, also publicly disclose it on the company website ü Instead of clustering countries into regions, companies should publish financial information for each specific country of operation

RECOMMENDATIONS TO OTHERS ü Emphasize the necessity to commit with anti-corruption policies and make them publicly available ü Require all companies to disclose all fully or non-fully consolidated subsidiaries and their related information ü Establish a legal framework to encourage companies to disclose country -by-country financial information ü Private and institutional investors should request publication of ACP, OT and CBC ü ACP, OT and CBC should be an essential part of risk ratings and corporate responsibility indices ü Civil society organizations can promote transparency by getting more involved in monitoring multinational businesses based in their respective countries ü Civil society organizations should focus on raising awareness on the importance of transparency in corporate reporting with government bodies

INSTITUTIONAL INTEGRITY FORUM (2 IF) OF TI NEDERLAND

INSTITUTIONAL INTEGRITY FORUM • Started in 2014 • Slow but steady growth • 2 meetings a year, subjects: • 2014: Sports, sponsoring and corruption • 2014: Compliance Certification Dow Jones Sustainability Index, ISOnorms and third party due dilligence • 2015: Leading a compliance program for a multinational with DPA and under an FCPA monitor • 2015: Private-sector initiatives against Corruption • 2016: New Dutch Corporate Governance Code, Ethical leadership and Gifts & Entertainment • Special monthly 2 IF newsflash • Free access for up to 2 employees from 2 IF members to TI-NL meetings

FEEDBACK FROM THE FORUM • Try to involve SME’s / supply chain companies in the Forum • Make the TI name as well known as possible (levelling the playing field) • Many questions about practical issues: i. iii. iv. v. How to deal with facilitation payments? How about corruption risks in the diamond sector? Do you have a chapter in country X and could give me their details? What improvements would you make to our Anti-Corruption Policy? How can we improve our TRAC score? • What are general corruption trends? i. iii. iv. v. vi. More awareness (press / public / government / politics / SDGs) Less tolerance (public / politics / OECD) More enforcement (public prosecutor / FIOD / DNB / AFM / politics) More complexity (more legislation / more information / more leaks) Public-private partnerships (companies) Legislation (politics / EU)

THE FUTURE OF 2 IF • Professionalize 2 IF: hire a business & corruption expert • More members! • Specific meetings for subgroups: – by size – by sector – by subject • Special reports on specific subjects – i. e. water sector, banks • Elaborate forms of collaboration – writing reports together – SME awareness projects • (Free) training to companies • Corporate Anti-Corruption Benchmark?

THANK YOU FOR YOUR ATTENTION! Any questions?

Anne Scheltema Beduin asb@transparency. nl www. transparency. nl © 2016 Transparency International Nederland.