Global companies, global transparency

Global companies, global transparency

Cover of Transparency in Corporate Reporting

What do the world's largest companies do in your backyard? How much in taxes do they pay? Are they making sure their relations with your government are above board?

The Transparency in Corporate Reporting report looks at exactly what you can find in answer to those questions if you visit the websites of the world's 124 largest publicly traded companies.

Some of these companies, from 25 countries and worth US$14 trillion, make a lot of information about their operations available, but many do not.

A zero tolerance approach to corruption

The world's largest companies are increasingly committed to reporting on their measures for preventing corruption.

All but three of the 124 companies in the report commit to complying with anti-corruption laws. The vast majority of companies have codes of conduct and a policy of zero tolerance for corruption.

We will not tolerate any form of bribery.”

– Vodafone Code of Conduct

However, 68 don't disclose political contributions and only 56 say they forbid facilitation payments – small bribes paid to grease the wheels of commerce. A company that doesn't publicly state it won't give facilitation payments is sending the wrong message to officials and business partners.

The report shows the impact of strong legislation, with UK companies scoring 90 per cent on average, compared to 20 per cent in China. All US companies enable staff to report corruption, in line with strong updated 2011 whistleblowing legislation.

Financial sector
As a sector, financial services companies make up a quarter (31) of the top 124 publicly traded companies in the world. Yet they perform below the overall average in every aspect evaluated in the report.

For anti-corruption programmes, the average score of the 31 financial companies is 58 per cent, below the overall average of 70 per cent.

Only half of the financial companies (16) provide a whistleblowing channel through which employees can report suspected breaches of anti-corruption policies, and allow for confidential and/or anonymous reporting. Only 12 disclose their political contributions.

Financial sector companies should be more transparent and accountable to the public if they are to win back trust.

An opaque web of corporate structures

Multinationals operate through networks of entities such as subsidiaries incorporated in different countries, and therefore under different legislation, often while carrying out operations in yet more countries.

Sometimes a subsidiary can be registered in a second country but operate in a third. Without transparency, many of these entities are almost impossible to trace.

Only 23 of the companies score more than 50 per cent in this category. Particularly worrying is how few companies disclose in what countries their subsidiaries and minority holdings operate.

By contrast, all evaluated German companies disclosed the full lists of their subsidiaries, associates and joint-ventures, without applying any materiality criterion (a threshold set by regulators which defines the significance of a subsidiary). Meanwhile, 11 out of 44 US companies disclosed the full lists of their subsidiaries despite regulatory requirements which do not demand this level of disclosure.

We need more transparency from multinational companies, whose power in the world economy closely rivals the biggest countries. With greater economic power comes greater responsibility.”

– José Ugaz, Chair of Transparency International

Disclosing local impact

Screenshot of Statoil's country by country reporting
An example of clear country-by-country
reporting, from Norway's

People want to know the impact of multinational companies in their country. Legislation is increasingly making this possible. New EU and US laws are set to create a new mandatory global transparency standard for the extractive industries in the coming years. These laws could and should be extended to the wider economy.

If you visit the website of a select group of the more transparent companies, you can see where they operate, how much tax they paid in each country and how much money they made there.

Yet the average score for all 124 companies in the report is a paltry 6 per cent, a poor increase from 4 per cent in 2012. No company scored 100 per cent. More than 50 companies scored zero per cent.

Telecoms and oil/gas companies lead the way in this category. Consumer services, financial, tech and health care firms are the least transparent.

 

Some findings from the report
Of the 124 companies surveyed in our report:

  • 54 do not disclose revenue/sales in any country of foreign operations
  • 90 do not disclose income tax in any country of foreign operations

Explore the findings

See how global giants performed, using the data behind the report.

The XLS charts below show how companies scored according to corruption-relevant indicators. For each criterion, companies received one point for a measure in place or data disclosed and 0.5 for partial disclosure. They scored zero when the information was not available or a click away from the parent company website.

Chart 1: What are companies doing to fight corruption?
Based on guidelines for companies preparing anti-corruption measures, section one scores companies for reporting on anti-corruption programmes, including measures such as facilitation payments and political contributions.

Chart 2: What do companies reveal about their sub-entities?
Complex corporate structures can hide tax evasion and bribes. This table looks at how much of their operations companies reveal: who are their subsidiaries, where they operate and where they are based for tax purposes.

Chart 3: How transparent are companies operating in your country?
The disclosure of key information such as profits, revenues and payments to governments by the 124 companies is evaluated across the foreign countries where they operate.

Here companies are rated for disclosure. This information shows citizens the contributions companies make to their communities, and allows them to monitor how the government manages the money that comes from these companies. Explore the findings in our detailed country-by-country file.

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