Collective Action: A new approach to combat corruption

In parts 1 and 2 of this series, we introduced the concept of Collective Action and why companies should have a vested interest in using it to fight corruption.

This week, we’re going to start taking a look at different approaches to Collective Action. How can these different approaches make a difference to how companies operate in corrupt environments? And can they impact the corrupt environments themselves — to make them less corrupt?

In a paper commissioned by the G20 in 2013, the Basel Institute of Governance and IBLF Global came up with a very simple classification of Collective Action initiatives. (If you want to go into more detail, you can find this, and more, on the pages of the B20 Collective Action Hub which the Basel Institute is hosting.)

The different forms of Collective Action correspond primarily to the level of enforceability of the participants’ commitments.

Voluntary declarations are the entry level position — Collective Action 101. These declarations are often accompanied by joint activities such as awareness-raising and training. Yes, it’s true that they have “no teeth”, but they are often an important means of increasing trust among market players. Without them, moving up to the next level of the pyramid would be impossible.

Standard setting initiatives aim to harmonize anti-corruption standards amongst participants and commit them to a clearly defined behavioural code. Codes of conduct in a particular industry, such as healthcare, extractive industries or financial services are typical of this approach.

The top level of Collective Action comes with integrity pacts, which are often monitored by an external third party. These are the hardest to organise, and for that reason are few and far between. But when done successfully, for example, in the context of government procurement, they can be extremely effective at creating a level playing field, enhancing fairness and transparency in public tenders, and generally having a significant impact on how business is conducted and government operates.

Let’s say right up front: no size fits all. Just as corruption is a global phenomenon which takes on local characteristics, so too any action to combat it – whether collective or individual — will need to address the specific root causes at the local level. Which method of Collective Action is chosen will depend on local market conditions, such as levels of state capture and corruption, structures of markets, the legal framework and rule of law, and, dare we say it ?, the levels of remuneration of public officials. Collective Action initiatives will also vary in terms of their geographic reach (local/national, regional, or international), thematic scope (sectoral or cross-sectoral) and timeframe (project-specific or long-term).

The boundaries between the three categories in the pyramid are often blurred. Experience shows that a Collective Action initiative may over time evolve from a declaration to a code of conduct, and beyond that, to an integrity pact.

The classification of a Collective Action initiative in one category or another is not always clear-cut — just because a particular initiative calls itself an “Integrity Pact” does not mean that it is one — it might just be a declaration or an over-ambitious statement of intent.

At the same time, there are plenty of examples of codes of conduct which bind their participants through such strong reputational constraints that they are no less effective in practice than a full integrity pact with third party verification.

In the next instalments we’ll be looking in more detail into each of the three types of Collective Action, and highlighting some case studies which illustrate how companies have successfully begun to have impact in changing the business landscape in some of the most challenging markets in the world.

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Brook Horowitz is CEO of IBLF Global and a member of the IBLF Global board. A graduate of Cambridge and Harvard Universities, he’s a contributor of opinion pieces on raising business standards to the Financial Times, International Herald Tribune, Moscow Times and others.