During engagement: creating a successful dialogue

Actions for successful dialogue: investors

Set clear objectives

Set clear objectives for your anti-bribery and corruption engagement, based on company research and your organisation’s engagement approach.

Select the right indicators

Select indicators that will reflect progress antibribery and corruption policy disclosure as well as systems implementation (and culture as far as is possible).

Evaluation methodology

Use clear evaluation methodology to help guide dialogue with the target companies and measure progress made against set objectives.

Collaborate with others

Work with other investors interested in engaging the same companies, to spread the workload. Then regularly exchange insights with them, such as different companies’ responses and practices.

Actions taken for successful dialogue: companies

Keep programmes up-to-date

Continuously assess anti-bribery and corruption programme elements to keep them updated and to ensure performance.

Maintain communication channels with your board

Make sure the board stays informed of issues investors would like to discuss, meeting agendas and agreed key objectives. This way, feedback from the engagement can directly feed into the company’s governance, strategy and performance. Companies should also encourage direct involvement of the board in the engagement dialogue with investors.

Engagement: the investor perspective

Investors in the PRI engagement group found that the results generated from benchmarking companies’ disclosure, as well as working in collaboration with other investors, was helpful in securing meetings and initiative the dialogue with selected companies. They allocated a minimum of 18-36 month for engagement, with meetings and/or calls ranging from once to several times per year.

The length and coverage of the engagement was dependent on the specific objective of the investor within the broader remit of the coalition. Some held long-term and continuous engagements with target companies in high-risk sectors and/or regions. These shifted between ESG topics including anti-bribery and corruption. Other investors had a clear end point in mind and would engage on specific anti-bribery and corruption issues and request other meetings only if the company’s situation had materially changed.

A holistic or targeted approach

A range of different types of dialogues took place over the course of the PRI engagement. Some investors chose to include wider ESG issues in their engagement dialogue, such as supply chains, executive pay and climate risk policies. For others the engagement focussed on anti-bribery and corruption issues only.

Investors felt that a wider approach met the engagement objective of gaining a holistic view and encouraging generic changes of operation, governance and risk management. A targeted, anti-bribery and corruption only approach was typically deployed when a material anti-bribery and corruption issue, such as a corruption scandal, needed addressing. One investor interviewed took a hybrid approach:

Three years is the typical length of engagement, but five companies we engage have long-term and continuous engagement, which shifts from [ESG and other] topic to topic.


Across the group involved in the PRI engagement, investors engaged companies on specific aspects of anti-bribery and corruption systems (i.e. disclosure on board level responsibility, a codified anti-bribery and corruption policy, code of conduct, company level risk assessments). The softer area of company-wide culture in handling anti-bribery and corruption issues was also addressed.

Investors usually employed the same engagement approach across regions and sectors, leading with the value proposition of a robust compliance system. At the same time, investors were aware that different diversity of cultural norms needed to be considered in different countries. Sometimes, more time needs to be spent building trust with companies, especially those that are not familiar with investors’ requests for disclosure on ESG issues, commonly seen in other markets.

Language was also a barrier to the engagement process at times, with investors requiring additional time to achieve a mutually-constructive tone.

The company did not immediately understand what was meant by company level risk assessment. Upon further discussion they understood and explained that they have different risk structures in place, but it is something they never thought would need disclosing.


Investors emphasised their commitment to constructive engagement: a critical investor perspective combined with a solid understanding of the companies’ chosen approach to implementing anti-bribery and corruption systems.

The elusive matter of company culture

Internal company culture is difficult to manage and measure for companies themselves, let alone for investors who are, essentially, outsiders. However, some proxy indicators were found to be useful to give investors a sense of what company culture was like.

  • The cost of not paying bribes: questions regarding this issue can provide insight into how far the company acknowledges and understands what is actually happening.
  • Specific disclosures regarding the whistleblowing process: this can be a good indication of how well an anti-bribery and corruption system has been implemented.
  • Employee turnover: either the departure of specific individuals, or a spike in turnover in conjunction with new leadership and a new anti-bribery and corruption programme, can read as evidence of organisational culture change.

Another telling question is to ask companies what the cost of not paying bribes is. That is, if it has slowed their speed to market. If large multi-nationals respond that this is not an issue as they have strong policies etc., then investors should be sceptical. Answering “yes” to this question can actually make investors more comfortable and can be an indicator that policies are being applied in an open and honest culture.

Standard Life Investments

Bridge the knowledge gap between strategy and operations

A company responding through a designated person responsible for the specific issue of anti-bribery and corruption was welcomed by investors. However, investors did experience knowledge gaps, such as those between the operational information held by management or regional heads and the strategic oversight which typically resided at board level. One investor adjusted their approach accordingly.

We typically engage on more than one ESG issue at the same time and at different levels of the company. This usually takes a multi-pronged approach, whereby our portfolio managers, governance team will meet with individuals at the board level and our responsible investment team will meet at the executive and operational level. We consider the consensus between the two to guide our view on the company.

Standard Life Investments

This was less of an issue if the designated company contact had good access to both the board and to senior management. Investors should still bear such potential knowledge gaps in mind when engaging on anti-bribery and corruption issues.

Taking your engagement to the next level

During dialogue with companies, investors involved in the coalition tested different strategies to receive more meaningful information on the effectiveness of corporate implementation practices. Based on these lessons learnt, further requests to consider would be:

  • Encourage further disclosure on internal controls, in particular the instances, breakdowns, and outcomes from the whistleblowing mechanism. This was an antibribery and corruption area that improved less than other areas. Such disclosure would be seen as a positive indicator of a strong anti-bribery and corruption culture. At large companies, zero instances could be seen as an indicator of a weak espeaking up f culture and/or poor whistleblowing systems implementation.
  • Ask the company whether they have ever lost any contracts because of corruption with gno h being a potential concern, especially if a company operated in a high risk sector and/or region

Bribery and corruption or ‘conduct cost’ is a very significant risk to business. Tone from the top is key and the best way to implement this is by assigning responsibility (at a senior level) and using linked remuneration and accountability. A correctly applied code of conduct can also be useful to drive practices, but everyone needs to be held accountable. It’s not just a top level issue

Standard Life Investments

  • Ask the company more questions about the effectiveness of the anti-bribery and corruption feedback processes to both management and employees.
  • Question if employees could be made accountable for the implementation of good practices by linking positive ESG performance (including on anti-bribery and corruption) to pay.

Trust is key when it comes to anti-corruption and often it is about reading between the lines.


Companies that failed to win contracts in circumstances where the competitor may have paid a bribe

During engagement: the company perspective

Board oversight

Involving the board is key to ensure proper oversight on developing and implementing an engagement strategy, as well as putting appropriate anti-bribery and corruption risk management systems in place.

Open lines of communication

Companies can offer an open line of communication between investors and a specific designated person who is part of the leadership team. Such a person needs to be well prepared to discuss anti-bribery and corruption matters of importance to investors – being usually the CEO, the Chief Compliance Officer or the Head of Investor Relations.

Other helpful tools

During engagements, companies should consider to:

  • present the corporate strategy and anti-bribery and corruption programmes in a way that speak to the needs of investors. Show that anti-bribery and corruption issues are understood in the context of financial (e.g. the impact of fines, the loss of business) and reputational risks;
  • develop an executive summary of the link between anti-bribery and corruption issues and financial performance
  • educate top and middle management on the investor exposure of anti-bribery and corruption concerns.

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    Engaging on anti-bribery and corruption

    June 2016