Brics companies need to be more transparent: report
Companies in emerging economies such as the Brics (Brazil, Russia, India, China and South Africa) nations must become more publicly accountable, a new report by anti-corruption group Transparency International says.
The report, Transparency in Corporate Reporting: Assessing Emerging Market Multinationals, scored 100 of the fastest-growing, companies based in 16 emerging markets.
Companies in the report were rated on a scale of 0 – 10 in terms of transparency reporting, where 0 represents no transparency, while a 10 represents full transparency.
Scores were based on publicly available information about anti-corruption measures, transparency in reporting, on how the companies structure themselves and the amount of financial information they provide for each country they operate in.
According to the group, three quarters of the emerging market companies scored less than 5 out of 10, while the average score for the index was 3.4.
Chinese companies, which account for more than a third of the assessed companies, had the weakest overall performance among the Brics countries.
According to Transparency International, this highlights the need for China and its business community to take immediate action to raise their standards.
“The time has come for emerging markets to play their part in the global fight against corruption,” said Transparency International chair Huguette Labelle.
“As emerging market companies expand their influence they should seize the opportunity to play a bigger role stopping corruption internationally.”
Brics average
South Africa and Brics
Three South African companies were covered by the report, namely: Bidvest group, Sappi and Sasol, which entered the list with an index score of 4.9, 5.1 and 5.4, respectively.
Sasol was the highest ranked South African company, placing 18th overall, while Sappi (23rd) and Bidvest were ranked lower (27th). The South African companies reviewed all indexed higher than the average transparency score of 3.4.
Looking specifically at the Brics nations, South African companies performed better than the other countries in the group across 2 of the 3 general categories.
Seventy-five of the 100 companies in the report come from the Brics, which have contributed 50 per cent of world growth since the global economic crisis, Transparency International said.
Brics anti-corruption
Brics organisational transparency
However, with only 3 companies reviewed, South Africa has far less representation than Russia (6 companies), Brazil (13 companies), India (20 companies) and China (33 companies).
On the country average, South Africa (5.1) was rates less transparent than India (5.4), but above the other Brics nations.
“Thanks to national laws obliging publication of key financial information on their subsidiaries, Indian firms perform best in the Brics with a result of 5.4 out of a maximum of 10,” the report said.
In country-by-country reporting, Indian firms scored 29%, compared to 9% on average and 1% in China.
Brics reporting
“Given their growing political and economic clout among emerging markets and globally, companies in the Brics group of countries should strive to lead the way with the most advanced anti-corruption and transparency practices,” Transparency International said.
“Brics companies should take this opportunity to challenge companies from developed economies not only in their products and services, but in all aspects of their business, including their anti-corruption behaviour.”
More on South Africa
Mobile set to rock SA Internet
Fix the internet, boost employment: economist
SA internet holding back economic growth
Loading ...