nvesco Advisers is paying the price for misleading clients and investors about how much of its assets were truly aligned with environmental, social, and governance principles. The Atlanta-based investment firm has agreed to pay a $17.5 million civil penalty to settle the Securities and Exchange Commission’s charges that it issued misleading statements on ESG.

According to the SEC’s order, from 2020 to 2022, Invesco told clients and stated in marketing materials that between 70 and 94 percent of its parent company’s assets under management were “ESG integrated.” However, in reality, these percentages included a substantial amount of assets that were held in passive ETFs that did not consider ESG factors in investment decisions. Furthermore, the SEC’s order found that Invesco lacked any written policy defining ESG integration.

“As stated in the order, Invesco saw commercial value in claiming that a high percentage of company-wide assets were ESG integrated. But saying it doesn’t make it so,” said Sanjay Wadhwa, Acting Director of the SEC’s Division of Enforcement, in a statement. “Companies should be straightforward with their clients and investors rather than seeking to capitalize on investing trends and buzzwords.”

The order charges Invesco with willfully violating the Investment Advisers Act of 1940. Without admitting or denying the order’s findings, Invesco agreed to cease and desist from violations of the charged provisions, be censured, and pay the aforementioned $17.5 million civil penalty.  

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Gartner predicts that by 2025, over 50% of major enterprises will use AI and machine learning to perform continuous regulatory compliance checks, up from less than 10% in 2021. This illustrates how dynamic the current GRC landscape is and how vigilant teams must be to prepare for further shifts. Fill out the form at right and hit “Submit” to get the report.

This report presents the key trends in GRC for 2024, highlighting the dual need to adapt to rapidly changing regulations while maintaining the highest standards of ethical conduct across industries.

The emphasis this year is on several pivotal areas: the impact of Artificial Intelligence (AI) on regulatory and ethical frameworks, increased demands for data privacy and protection, and the expanding scope of Environmental, Social, and Governance (ESG) criteria. Each of these areas presents distinct challenges and opportunities for GRC professionals, demanding new approaches to secure.

As organizations prepare to tackle these challenges, the report aims to equip GRC professionals with the knowledge and tools needed to navigate the complexities of the modern regulatory and operational environment. In this report, you’ll learn:

• AI in GRC: Its impacts, challenges, and the road ahead
• GRC in the new data privacy landscape
• The expanding reach of ESG and sustainability in GRC
• Data-driven compliance as the new foundation in GRC
• The close relationship between compliance and cybersecurity
• Ways to maintain compliance in remote workplace

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In a landmark decision, the SEC voted to implement new regulations requiring public companies to disclose climate change risks and their greenhouse gas emissions. This long-awaited ruling marks a significant shift in corporate reporting, potentially impacting thousands of companies and bringing the U.S. closer to alignment with global efforts on climate transparency.

The SEC’s final rule follows a two-year process that included a proposed rule in March 2022 and culminated in a vote split along party lines. The new regulations aim to address investor concerns about the financial implications of climate change on businesses.

“These final rules build on past requirements by mandating material climate risk disclosures by public companies and in public offerings,” said SEC Chair Gary Gensler in a statement. “The rules will provide investors with consistent, comparable, and decision-useful information, and issuers with clear reporting requirements. Further, they will provide specificity on what companies must disclose, which will produce more useful information than what investors see today. They will also require that climate risk disclosures be included in a company’s SEC filings, such as annual reports and registration statements rather than on company websites, which will help make them more reliable.”

The Final Rules in Detail

Specifically, the final rules will require a public company to disclose:

• Climate-related risks that have had or are reasonably likely to have a material impact on the registrant’s business strategy, results of operations, or financial condition;
• The actual and potential material impacts of any identified climate-related risks on the registrant’s strategy, business model, and outlook;
• If, as part of its strategy, a registrant has undertaken activities to mitigate or adapt to a material climate-related risk, a quantitative and qualitative description of material expenditures incurred and material impacts on financial estimates and assumptions that directly result from such mitigation or adaptation activities;
• Specified disclosures regarding a registrant’s activities, if any, to mitigate or adapt to a material climate-related risk including the use, if any, of transition plans, scenario analysis, or internal carbon prices;
• Any oversight by the board of directors of climate-related risks and any role by management in assessing and managing the registrant’s material climate-related risks;
• Any processes the registrant has for identifying, assessing, and managing material climate-related risks and, if the registrant is managing those risks, whether and how any such processes are integrated into the registrant’s overall risk management system or processes;
• Information about a registrant’s climate-related targets or goals, if any, that have materially affected or are reasonably likely to materially affect the registrant’s business, results of operations, or financial condition. Disclosures would include material expenditures and material impacts on financial estimates and assumptions as a direct result of the target or goal or actions taken to make progress toward meeting such target or goal;
• For large accelerated filers (LAFs) and accelerated filers (AFs) that are not otherwise exempted, information about material Scope 1 emissions and/or Scope 2 emissions;
• For those required to disclose Scope 1 and/or Scope 2 emissions, an assurance report at the limited assurance level, which, for an LAF, following an additional transition period, will be at the reasonable assurance level;
• The capitalized costs, expenditures expensed, charges, and losses incurred as a result of severe weather events and other natural conditions, such as hurricanes, tornadoes, flooding, drought, wildfires, extreme temperatures, and sea level rise, subject to applicable one percent and de minimis disclosure thresholds, disclosed in a note to the financial statements;
• The capitalized costs, expenditures expensed, and losses related to carbon offsets and renewable energy credits or certificates (RECs) if used as a material component of a registrant’s plans to achieve its disclosed climate-related targets or goals, disclosed in a note to the financial statements; and
• If the estimates and assumptions a registrant uses to produce the financial statements were materially impacted by risks and uncertainties associated with severe weather events and other natural conditions or any disclosed climate-related targets or transition plans, a qualitative description of how the development of such estimates and assumptions was impacted, disclosed in a note to the financial statements.

Climate-Change Disclosure Light?

While these rules mark a significant change in U.S. climate disclosure regulations, they are narrower compared to the SEC’s 2022 draft, with the Commission reducing stringency in several areas.

For example, the SEC removed the Scope 3 disclosures requirement which, if it were in effect, would have obligated specific companies to provide data about the emissions generated by their suppliers and customers.

While the proposed rule required disclosure of Scope 1 (direct emissions from company operations) and Scope 2 (emissions associated with the purchase of energy) in all cases, the final rule requires this disclosure only if the company deems these emissions to be “material.”

The moves angered some proponents of stricter climate-change proposals. “While we are pleased to see the SEC issue its long-awaited climate disclosure rule, we are disappointed the final rule falls far short of what consumers and investors deserve: full, transparent, reliable, and comparable disclosure of greenhouse gas emissions through direct, indirect, supply chain, and product use,” said Cathy Cowan Becker, responsible finance campaign director at environmental advocacy group, Green America. “It’s unfortunate that the SEC would bend to pressure from corporate interests to significantly weaken its proposed rule.”

Others applauded the change. “While the SEC appears to have moved away from some of the most troubling provisions in the original proposal, questions remain about several aspects of the final climate disclosure rule, said Business Roundtable CEO Joshua Bolten in a statement. “The rule contains multiple, highly complex provisions that have not been subject to notice and comment. Business Roundtable will continue to evaluate the rule to better assess its impact and scope.”

The final rules will become effective 60 days following publication of the adopting release in the Federal Register, and compliance dates for the rules will be phased in for all registrants, with the compliance date dependent on the registrant’s filer status.  

Jacob Horowitz is a contributing editor at Compliance Chief 360°

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The shareholder proposals specifically urge Exxon to diminish carbon emissions and broaden the range of emissions it monitors. “Investors face economy-wide risks from climate change,” Natasha Lamb, co-founder and chief investment officer at Arjuna Capital, said. “We have a fundamental right and duty to voice concern over climate risk, its impacts on the global economy, and shareholder value.”

According to Exxon, the proposals are “driven by an extreme agenda” and that the only reason why these activist organizations became shareholders was exclusively to campaign for change that is “calculated to diminish the company’s existing business.”

In its complaint, the energy giant said the Exxon shareholder proposals, “do not seek to improve [the company’s] economic performance or create shareholder value,” rather they are “trying to shrink the very company in which they are investing by constraining and micromanaging [its] ordinary business operation.”

Although Exxon has already demonstrated its efforts in reducing its greenhouse gas emissions, which includes those emissions that result directly from its business operations, the company has not implemented a plan to reduce emissions that result from the use of its products.

Exxon Sidesteps Traditional Proposal-Exclusion Procedure

When companies are faced with shareholder proposals that they would like to exclude from a proxy statement, they ordinarily file a “Rule 14a-8 no action request” with the SEC. A company can usually succeed in such a request if it can show that the proposal “relates to the company’s ordinary business operations.”

Although Exxon has asserted such a contention, the company did not do so with the SEC; instead, the oil giant sidestepped the agency and filed its lawsuit in a Texas federal court. The company addressed its decision to do so in its complaint: “The plain language of Rule 14a-8 supports excluding the 2024 Proposal, but current guidance by SEC staff about how to apply the rule can be at odds with the rule itself.”

In recent years, the SEC has raised the bar for companies seeking to challenge activist proposals by adopting a stricter standard. During this year, American Express and many other companies were denied in their requests to exclude certain shareholder proposals regarding environmental impacts, abortion, discrimination, and civil rights. Because of the SEC’s stringent view of “Rule 14a-8 no action requests,” Exxon opted for an unconventional approach in filing its lawsuit with the District Court in Northern Texas.

Although Exxon’s strategic sidestep may be unorthodox, it is not the first time that such a move has been used. Apache Corp. pushed the SEC to the side when it filed a similar lawsuit in the Southern District of Texas to strike activist shareholder proposals it saw as improper. The company prevailed in its lawsuit and set the stage for others to take the legal avenue.

From 2011 to 2014, three more companies followed suit and filed lawsuits in U.S. District Courts. All three companies prevailed in their lawsuits and were permitted to exclude certain shareholder proposals. However, in 2014, three more similar lawsuits were filed but were later dismissed for lack of jurisdiction.

Exxon hopes for a favorable ruling before March 19, anticipating two crucial deadlines in the upcoming spring. The company must submit its proxy statement by April 11, in preparation for its annual shareholder meeting scheduled for May 29.  

PHOTO BY HARRISON KEELEY, USED UNDER CREATIVE COMMONS LICENSE: CC BY 4.0

Jacob Horowitz is a contributing editor at Compliance Chief 360°

The post Exxon Takes Rare Move to Sue Shareholders Over Climate Change Proposals appeared first on Compliance Chief 360.

It specifically suggests that regulated financial firms establish a process for identifying, measuring, and controlling financial risks associated with climate change. These strategies should be reflected in the organization’s policies, procedures, and controls for the intention of providing boards and management with an understanding of how exactly to assess climate-related financial risks and their effects on their organizations. It also provides additional guidance on developing strategies for the effective management of climate-related risks and calls for the implementation of an internal control and risk management framework on climate change.

The new guidance is designed to support the efforts by New York financial firms to better manage their climate-related financial and operational risks, says the NYDFS. “To protect New Yorkers from financial harm, regulated institutions must anticipate and respond to new and emerging risks,” NYDFS Superintendent Adrienne Harris said in a NYDFS press release. “Today’s guidance provides these institutions with a balanced, data-driven approach to preserve safety and soundness and operational resiliency by addressing the risks posed by climate change.”

This newly adopted regulation addresses climate change components of risk management by banks—including corporate governance, internal control frameworks, risk management processes, and data collection and analysis—so that institutions will incorporate assessment of these risks into their existing risk frameworks.

“Regulated organizations should take a strategic approach to managing material climate- related financial and operational risks, considering both current and forward-looking risks and identifying actions required to manage those risks,” the guidance instructs. “Regulated organizations should consider questions such as: which business areas are or may in the future be exposed to these risks, what is the resiliency of the organization’s business models, what is the current or potential future materiality of the risks, and whether climate-related financial and operational risks require consideration across all business areas and processes, or only those areas or processes that are or may be particularly exposed.”

Climate-Related Internal Control Framework

The guidance also calls for the implementation of an internal control framework in order to “ensure sound, comprehensive, and effective identification, measurement, monitoring, and control of material climate-related financial risks.” The newly enacted regulation sets out “three lines of defense” in order to do so. The first line of defense advises that an organization consider climate-related financial risks when taking on new clients or reviewing a credit application. Such considerations include how climate-change risks may impacts its clients and their overall business environment. The second line of defense consists of a compliance system where an organization undertakes an assessment of climate-related financial risks. In this step, an organization should assess whether it is adhering to relevant climate-related rules and regulations. The third and final line of defense recommends that an organization conduct regular independent reviews and internal audits of its overall climate-related internal control framework.

The guidance also sets out a risk management framework that its regulated organizations are advised to implement. It recommends that this framework be designed for the purpose of identifying, measuring, and controlling climate-related financial risks. This includes the need to identify emerging and significant risks and how these risks may impact specific asset classes, sectors, and geographical locations as well as the need to establish, implement, and regularly review plans to mitigate exposure to climate-related financial risks.

Data Collection and Scenario Planning

The NYDFS guidance additionally suggests that its regulated organizations implement data aggregation processes that provide the ability to monitor significant climate-related financial risks. These processes should be designed for the purpose of producing information to the board in a timely manner in order for senior management to make well-informed and suitable decisions.

It also suggests that its organizations implement a “climate scenario analysis” into is internal risk assessment. By using a range of climate scenarios, organizations will be able to test the strength of their business models and strategies against climate-related financial risks. As a result of doing so, organizations will be better able to identify, anticipate, manage and measure such risks and adjust their strategies accordingly. Also, with such a tool, organizations will be able to identify and measure vulnerability to relevant climate-related financial risk factors, to estimate exposures and potential impacts, and to determine the overall significance of climate-related financial risks.  

Jacob Horowitz is a contributing editor at Compliance Chief 360°

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Tennessee’s lawsuit stems from what the state sees as conflicting statements BlackRock recently made on ESG’s influence over the firm’s business decision. As a result of joining ESG coalitions such as Net Zero Asset Managers Initiative and Climate Action 100+, BlackRock is required to implement carbon-reduction tactics into its investment strategies. Attorney General Jonathan Skrmetti, however, says that on other occasions BlackRock has ensured its customers that the only consideration driving its investment decision is return on investment.

“Some public statements show a company that focuses exclusively on return on investment, others show a company that gives special consideration to environmental factors,” Skrmetti said in a statement. “BlackRock has articulated two inconsistent positions: one focusing solely on money and the other focusing on environmental impact. Tennessee consumers deserve to know which of BlackRock’s statements are a true account of the company’s decision making.”

Tennessee also claims BlackRock misled investors in a statement regarding the impact that ESG has on the firm’s financial performance. The state claims that BlackRock informed its customers of financial benefits that ESG funds provide to its investors. The firm’s website, however, states that ESG considerations do not inevitably affect the firm’s financial standing, according to the Tennessee lawsuit.

BlackRock Disputes the AG’s Claim

BlackRock disputed Tennessee’s claims and stated that the firm has been completely transparent regarding its investment practices. “We reject the Attorney General’s claims and will vigorously contest any accusations that BlackRock violated Tennessee’s consumer protection laws,” a BlackRock spokesperson told FOX Business. “Contrary to the Attorney General’s claims, BlackRock fully and accurately discloses our investment practice.”

Companies and investors are increasingly considering ESG factors, such as climate change and workforce diversity, when making investment decisions, and regulators have pushed investment firms to do a better job of communicating ESG considerations in investment decisions and investment products. BlackRock has also received disapproval from those in some circles for its support of ESG investments.

Republican state attorneys general, like Skrmetti, have voiced criticism of ESG investing under the belief that it directly conflicts with a firm’s fiduciary duty to act exclusively in the best interest of their clients. Earlier this year, Skrmetti and twenty other Republican state attorneys notified asset managers, such as BlackRock, of their concern regarding what they see as an inherent conflict between ESG investing and the firm’s duty to its clients.

Other state AGs have also pushed back on firms such as BlackRock for their ESG strategies. The state treasury of Florida, for example, has divested $2 billion in assets from BlackRock.

When BlackRock signed onto Climate Action 100+, it published a letter stating that it would continue to “independently exercise its fiduciary duties” to clients, which extended to “proxy voting and engagement with issuers on investment stewardship topics, including climate change.”

Jacob Horowitz is contributing editor at Compliance Chief 360°

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The FCA’s measures include putting in place new sustainability disclosure requirements and an investment labels system, as well as an “anti-greenwashing” rule. The regulator says it conducted “detailed engagement with a range of stakeholders, including industry, other regulators, and consumer groups.” The move follows similar ESG regulations adopted by the EU in recent years.

The sustainability disclosure requirements are designed to provide clarity and standardization in how sustainability is measured and reported. Investment firms will be required to produce consumer-facing disclosures summarizing the product’s key sustainability characteristics. The FCA says this would “help consumers to understand those characteristics and compare similar products.” The consumer-facing disclosure will be required by firms for all products, including those which were not engaged in sustainability-related strategies.

A second measure will regulate labels ESG investment products use that will assist investors in understanding how their investments align with specific sustainability goals. There will also be an anti-greenwashing rule, which mandates that all authorized firms ensure their sustainability-related claims are fair, clear, and not misleading.

“Research has shown that investors weren’t confident that sustainability-related claims made about investments were genuine,” the FCA said in a statement. “This isn’t helped by a lack of consistency when firms use terms such as ‘green’, ‘ESG’ or ‘sustainable.'”

To tackle this issue, the FCA will introduce:

• An anti-greenwashing rule for all authorized firms to make sure sustainability-related claims are fair, clear and not misleading
• Product labels to help investors understand what their money is being used for, based on clear sustainability goals and criteria
• Naming and marketing requirements so products cannot be described as having a positive impact on sustainability when they don’t

“We’re putting in place a simple, easy to understand regime so investors can judge whether funds meet their investment needs. This is a crucial step for consumer protection as sustainable investment grows in popularity,” said Sacha Sadan, director of environmental, social, and governance at the FCA. “By improving trust in the sustainable investment market, the U.K will be able to maintain its position at the forefront of sustainable finance, and capture the benefits of being a leading international center of investment.”

Sustainability Labeling System

Investment firms will need to satisfy a set of requirements in order to use specific investment labels to help consumers navigate the investment product claims and differentiate between various sustainability objectives. The new system offers four different labels with specific requirements:

• Sustainability Focus: applicable to products investing mainly in assets that are sustainable for people and the planet. Firms will be tasked to set their own “robust, evidence-based” standards to ensure they align with the product’s sustainability objectives.
• Sustainability Improvers: applicable to funds investing in assets that may not be sustainable now, but aim to improve their sustainability for people and the planet over time, including in response to the firm’s stewardship influence. This category focuses on the assets’ potential to meet the standards over time, placing an even higher emphasis on firms’ asset selection processes.
• Sustainability Impact: applicable to funds investing in solutions to problems impacting people or the planet to achieve “real-world impact.” These products will need to have an explicit objective to achieve a positive and measurable contribution to sustainability outcomes.
• Sustainability Mixed Goals: applicable to funds investing across different sustainability objectives and strategies aligned with the other three categories. This means firms will also need to disclose details of the proportion of assets invested “in accordance with each relevant label.”

The anti-greenwashing rules will be the first to take effect starting in May of 2024, followed by the labelling system at the end of July 2024 and the naming and marketing rules, which will apply starting in December 2024.  

Joseph McCafferty is editor & publisher of Compliance Chief 360°.

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The legislation would require thousands of public and private businesses that operate in California and make more than $1 billion annually to report their direct and indirect emissions. It is estimated that it could impact more than 5,000 companies. The goal, say lawmakers, is to increase transparency and nudge companies to evaluate how they can cut their emissions.

The measure, the first of its kind in the nation, passed in a 48-20 Assembly vote last week before the Senate signed off on it in a 27-8 concurrence vote. It now heads to Gov. Gavin Newsom for a final decision. Speaking at a climate panel in New York City, the governor said “of course” he would sign it. Because many large companies have operations in California, some consider it a de facto national mandate, with wide-spread implications for many large companies.

Reporting on ‘Indirect’ Scope 3 Emissions

While many companies already disclose their Scope 1 and 2 emissions, which come directly from company operations and owned assets, under California’s proposed legislation, businesses would also be required to report their Scope 3 emissions—those produced indirectly up and down their supply chains, including by the end use of their products.

California’s disclosure law would be more stringent than the one being finalized by the Securities and Exchange Commission, which dropped the Scope 3 requirement after intense pressure from corporate representatives.

“We are out of time on addressing the climate crisis,” Democratic Assemblymember Chris Ward said in a statement. “This will absolutely help us take a leap forward to be able to hold ourselves accountable.”

The announcement comes one day after Calif. Governor Newsom and Attorney General Rob Bonta announced a landmark case against five energy companies—Exxon, Shell, Chevron, ConocoPhillips, and BP—which they accuse of misleading the public about the dangers of climate change. The suit—the most ambitious attempt by any American official to hold fossil fuel companies accountable for climate change—alleges that dishonest conduct has continued, as oil companies attempt to mislead the public about their greenhouse gas emissions.  

The post California to Adopt Most Stringent Carbon Disclosure Law in the Nation appeared first on Compliance Chief 360.

Since March 2020, Delta Air Lines said it will commit $1 billion over the next 10 years to become “the first carbon-neutral airline globally” on its “journey to mitigate all emissions from its global business going forward.” The airline said it is investing in “driving innovation, advancing clean air travel technologies, accelerating the reduction of carbon emissions and waste, and establishing new projects to mitigate the balance of emissions.” Over the last two years, Delta Air Lines says it has been transparent about how it is progressing on that journey.

But a proposed class-action complaint, filed May 30 in U.S. District Court for the Central District of California, accuses Delta Airlines of greenwashing. It alleges that “such representations are manifestly and provably false.” The central argument in the complaint is that “foundational issues with the voluntary carbon offset market…cannot make a company carbon neutral.”

Carbon Offsets ‘Misleading’

The voluntary carbon offset market is an initiative that aims to facilitate investment in green projects—such as renewable energy and prevention of deforestation. In exchange for their investment in these projects, companies receive “carbon offset” credits that that are supposed to verify the amount of carbon that was not released due to the company’s investments in the offset market.

However, the complaint argues that even the primary offset vendors offer offsets replete with:

• inaccurate accounting;
• non-additional effects on worldwide carbon levels due to the vendors crediting offsets for projects that would have occurred with or without offset market investment;
• non-immediate speculative emissions reductions that will at best occur over decades, despite crediting purchasers with the sum of those projected offsets; and
• impermanent projects subject to disease, natural disasters, and human intervention.

According to the complaint, such issues are specific to offsets purchased by and relied upon by Delta Air Lines, as well as many other companies, that have “grossly misstated the actual carbon reduction produced by their carbon offset portfolio.”

The complaint, filed on behalf of a California resident and other Delta Air Line customers, alleges that she and other customers “purchased Delta flights at a market premium” due to their belief that by flying Delta they engaged in “more ecologically conscious air travel.”

The lawsuit further called Delta Airlines’ carbon-neutral representations “false and misleading.” The complaint claims that customers would not have purchased Delta Airlines’ services or would have “paid substantially less for those services,” had they known Delta Airline’s carbon neutral representations were false.

The complaint alleges violations of California’s Consumers Legal Remedies Act, California’s False Advertising, Business and Professions Code; and “unlawful, unfair, and fraudulent trade practices” in violation of California’s Business and Professions Code.

As of press time, the judge had not yet approved a jury trial. 

Jaclyn Jaeger is a contributing editor at Compliance Chief 360° and a freelance business writer based in Manchester, New Hampshire.

The post Delta Air Lines Faces Class Action Suit Over Claims of Greenwashing appeared first on Compliance Chief 360.

In Transparency International’s report, “Exporting Corruption 2022,” 43 signatories to the OECD Anti-Bribery Convention were assessed, along with China, India, Hong Kong SAR, and Singapore. Together, the countries analyzed account for almost 85 percent of all global exports, with OECD member countries accounting for almost two-thirds.

The report is meant to complement the OECD Working Group on Bribery’s (WGB) monitoring of country implementation of the OECD Anti-Bribery Convention in successive phases.

According to Transparency International, just two of the 47 largest exporting countries in the world—the United States and Switzerland—are “active enforcers,” meaning they investigate, charge, and impose sanctions commensurate with their share of global exports (11.8 percent in combination). However, even the United States pursued “significantly fewer cases in 2021,” Transparency International said in a blog post.

“From the inception of our categories in 2009, the percentage of global exports coming from ‘active enforcers’ had remained above 20 percent— nearly twice this year’s percentage—until it began to drop in 2020,” Transparency International said.

Two former “active” enforcers—the United Kingdom and Israel—dropped this year into “moderate” enforcement. Seven other countries whose enforcement levels declined were Italy, Brazil, Spain, Sweden, Portugal, Denmark, and Lithuania.

Most of the 47 countries analyzed have limited or no enforcement at all, while representing 40 percent of global exports. These countries include China, the world’s top exporter, as well as Japan, South Korea, Hong Kong, Russia and more.

Only two countries—Latvia and Peru—stepped up their foreign bribery enforcement efforts. That now puts Latvia in the “moderate” enforcement category, while Peru has inched up into the “limited” enforcement category.

Inadequacies persist
Transparency International’s report further highlighted inadequacies in legal frameworks and enforcement systems. “Serious inadequacies persist in laws and justice systems in every country. In many, investigative bodies have inadequate resourcing and independence,” Transparency International said.

It continued, “Whistleblowers lack key protections. Few governments publish sufficient information on pending or concluded foreign bribery cases stymying accountability to citizens, partner countries and the people harmed.”

“Even in countries that do enforce, foreign bribery continues to be treated as a victimless crime,” said Gillian Dell, head of Conventions at Transparency International and co-author of the report. “This means states whose companies commit crimes abroad fill their treasuries with multimillion dollar penalties while victims are left to bear the cost.”

“It is time to recognize victims’ rights by developing transparent and accountable mechanisms to compensate those harmed, including foreign states, business competitors and whole populations suffering from foreign bribery,” Dell added. “This is essential to achieve justice and deter future violations.” 

Jaclyn Jaeger is a contributing editor at Compliance Chief 360° and a freelance business writer based in Manchester, New Hampshire.

The post Group Finds Foreign Bribery Enforcement at ‘Historic Low’ appeared first on Compliance Chief 360.