Identifying clear incentives that apply to both the public and private sector is essential to the business integrity agenda. Corruption fundamentally is about understanding human behavior, power dynamics and accountability mechanisms. Thus, transformational change in the business environment will only occur if selective incentives are in place, including a system of rewards and punishments that will motivate compliance.

Standards and compliance can challenge ingrained traits of corruption in many contexts and provide systems of checks and balances. Multinational Companies (MNCs) and larger companies have the capacity to adhere to business integrity standards and regulations. However, small-and medium-sized enterprises (SMEs), which play a significant role in the ASEAN economy, often struggle to comply with these regulations and standards. Thus, there is a need for engaging SMEs at an early stage and strengthening their capacities to comply and contribute to a more transparent business environment. Companies that meet anti-corruption established standards are more likely to access new market opportunities.

While creating an awareness around business integrity is important, it is also crucial to effectively communicate with the smaller players, unpacking “what is in it for them” if they follow these standards and requirements. For example, ‘naming and shaming’ may work well in some contexts, while in others it would be better to trigger positive competition in terms of indicator rankings, such as on transparency, business integrity disclosure, good corporate governance etc. (e.g. Myanmar Centre for Responsible Business)

In addition, MNCs play an important role in developing the emerging markets (i.e. Southeast Asian economies), particularly in influencing SMEs and local businesses which are part of their global supply chains. The challenge is to get the MNCs involved and interested in promoting a culture of integrity and accountability through their supply chains. With a global mindset, there is potential in bringing global MNCs into this conversation.

The investment industry remains weak in terms of its role in improving corporate transparency and accountability - this is a concern but also a huge opportunity. Any action to activate the investment industry can reap benefits, especially when engaging with the large asset owners as well as sovereign wealth funds to take a leading role in the market. This is particularly important for public/statutory asset owners. They should be leading by example (demonstrating to the private sector the best practices and market expectations). To date, only limited action has been taken.

The region has made large strides to improve disclosure for companies, in addition to improving accountability (for e.g. identifying responsible persons). However, putting in place reporting requirements is only the first step and many companies are still grappling with what to communicate (i.e. what is relevant to the business and sector) and how to communicate (what format to use and for which audience). This needs to be supplemented with ongoing efforts to improve quality and quantity of information, for instance training for issuers, enhanced regulatory requirements, etc.

Taking an integrated approach, bundling ‘corruption risks’, ‘environmental risks’ and ‘labor risks’ together, and presenting them to companies in a holistic manner, can be a far more efficient way to address these three areas of risks simultaneously. This is especially true given that corruption undermines companies’ ability to uphold environmental standards, diversity and so on.

Digital solutions could be another lever to advance transparency. Nonetheless, for example using AI for accounting is challenging in the region because businesses do not want to divulge their data and digitize their information and incentives are not in place encouraging greater financial transparency. In a situation where the whole supply chain is corrupt, complying with the laws comes at a huge cost to businesses. There is a need to study the whole supply chain to identify the integrity risks – both through the supply chain flow and supply chain finance – to identify the real problems and stakeholders.

On gender diversity, there is an increasing number of stock exchanges which are part of the sustainable stock exchange, requiring compulsory reporting on key indicators (for example the proportion of women on company boards and at senior management level). This gives a signal to companies that they are also being assessed in the market based on this component, and actions are encouraged to ensure progress in gender inclusiveness.

The discussion on the concept of stewardship and fiduciary duty remains relevant to the region because this is introducing (and ultimately institutionalizing) the role of businesses and how accountability and transparency is important for markets’ long-term growth and development. The next step will be to translate these dialogues into practical regulations and guidelines.