Can certification help with due diligence on third parties? Roundtable on 19 November in Zurich

Does your company do business in emerging markets? Wouldn’t it be helpful if you could really rely on the certification of a local business partner in those markets? If you know you can trust the certifier and the certification process, due diligence will be quicker and easier.

How can you get involved?

The Basel Institute's International Centre for Collective Action is launching an innovative project to explore certification and its role in anti-corruption due diligence. If you’re interested in being involved on a non-committal, free and informal basis, do join our roundtable discussion on the afternoon of 19 November, 2019 in Zurich, Switzerland. 

It's aimed at compliance officers and anyone else dealing with the collection or evaluation of third-party due diligence information in developing/emerging markets, and will take place in English. To register your interest and receive full details, please submit your name and email address on this form. (We won’t use this information for anything else.)

The issue

Companies of all sizes face similar anti-corruption compliance obligations when it comes to hiring third-party intermediaries or other business partners to work on their behalf in emerging markets. Due diligence is one of those obligations, addressing business, legal and reputation risks related to bribery.

Collecting reliable information in some markets to support due diligence can be a costly and time-consuming challenge. This is especially the case for SMEs, which lack the resources available to larger companies.

Can certification of compliance programmes help?

Being able to rely on a third party’s documentation, including a compliance programme that sets out its anti-corruption values and stance, demands a high level of trust and knowledge of local standards. Not many companies can claim to have this knowledge in every market where they operate. This particularly challenging in a country where the risks are high.

What if a local company has undergone a rigorous compliance certification process carried out by a local organisation that is highly reputable, independent and with a track record of acting with integrity? This should help to relieve the burden of collecting and verifying the information needed for due diligence. Which is probably the same information as other companies in the market require.

When is a certification process good enough to rely on?

Certification initiatives that are organised as anti-corruption Collective Action typically establish common anti-corruption policies and standards that all members must implement into their compliance management programmes.

They then usually require that members obtain external assurance that they have implemented these standards. This could be by a team of experts that are part of the Collective Action, independent consultants, civil society or others.

It’s clear that not every certification process can be relied upon, but there are strong examples of excellent practices that merit closer inspection. Some of these could be sufficient to reduce the need for duplicative checks by your company when it comes to conducting due diligence.

Help us to find out more – so that all companies can benefit

The International Centre for Collective Action (ICCA) is launching a new project that aims to: Identify excellent locally based certification Collective Action initiatives in emerging markets. Work with those initiatives to improve reliance on local company certifications by those seeking to hire or partner with certified companies.Work with locally based Collective Action initiatives that are seeking to improve their certification processes to attract investors looking for partners in the local market.

The project your inputs would support

With these aims in mind, the first phase is focusing on: 

  • Consultations with companies on their challenges in conducting due diligence on business partners in emerging markets.
  • Under what circumstances/conditions companies would be willing to rely on local certification Collective Action initiatives in emerging markets as part of their due diligence processes.

The second phase will involve building on our desk reviews of such initiatives and convening those that look most likely to offer the best chances for companies to actively rely on their certification standards. 

Examples of certification initiatives

There are many examples of certification initiatives in emerging markets. These include the Ukrainian Network on Integrity and Compliance and the Convention on Business Integrity’s Corporate Governance Rating System in Nigeria, among others.

What's coming up?

The project also foresees the opportunity of launching a pilot certification initiative in an emerging market. The pilot would build on the needs-based analysis of companies and best practices identified from Collective Action initiatives operating in emerging markets. 

KBA Integrity Fund

This project is supported by the KBA-NotaSys Integrity Fund. The fund, an initiative of KBA-NotaSys AG, supports research and non-profit projects that aim to promote business integrity and compliance in the economy.

Photo by Cytonn Photography from Pexels.