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Corruption and Sustainability: Like Oil & Water Do Not Mix

RP Siegel | Friday January 20th, 2012 | 2 Comments

Recently, the Guardian ran a post addressing the question of why eliminating corruption is crucial for sustainability. A first glance the two topics might seem unrelated—the one about criminal behavior and the other about something like environmental responsibility.

Where exactly then, do the two ideas come together?

Merriam-Webster defines corruption as, “impairment of integrity, virtue, or moral principle,” and also as “inducement to wrong by improper or unlawful means (as bribery).”

A sustainable business, on the other hand, is one whose practices must be in alignment with the company’s core values, which, in turn, must be aligned with those of the larger system and the greater good, both in the immediate present, and with an eye towards future generations. Thus there is an implicit integrity involved.

Corruption short-circuits that alignment, and undermines that integrity, diverting valuable resources into the narrow coffers of a greedy few. It also breaks the chain of responsiveness to market, evolutionary, environmental, or compassionate signals and replaces them with a rigid reordering that has only resource diversion as its sole purpose.

This loss of resiliency results in a brittle structure of misaligned objectives, at cross-purposes, both to each other and the greater good that will not endure, but threatens to take down the host system when it collapses.

The following facts pertaining to corruption are from Transparency International UK.

Although it is inherently difficult to measure, the estimated annual cost of corruption worldwide is $1 trillion. It tends to reduce the GDP growth rate by 0.5-1% in any country in which it occurs. Efforts to fight corruption show as much as a 400% return on investment. 15 percent of companies worldwide (40% in Asia, 60% in the former Soviet Union) are required to pay bribes to win or retain business. Corruption costs Africa roughly 25% of its GDP each year. And in Mexico, nearly half of all bribe demands involved extortion and threat of physical harm.

Corruption rapidly depletes natural resources as environmental regulations are circumvented. As an example, an estimated $50 per cubic meter of timber felled in Cambodia was paid out in bribes. The resulting deforestation led to massive revenue losses equivalent to 73% of the national budget.

Corruption also raises the cost of meeting the Millennium Development Goals in developing countries by an estimated $48 billion, roughly half the annual global outlays.

And, as the Guardian authors point out, not only does corruption hinder social and economic growth, it delays the emergence of developing economies and undermines essential governance and the rule of law.

Sometimes, there is a fine line between corruption and “legitimate commerce,” when a law or regulation, that may have found its way onto the books improperly, is the only thing separating the two.

Fighting corruption is not easy. According to a survey, 89% of those asked for a bribe in Kenya did not report the incident. Of the 109 countries in which bribery is known to exist, only 48 have initiated any kind of international anti-bribery effort.

What organizations are currently engaged in fighting corruption? Today, there is a UN Convention Against Corruption, the OECD Bribery Convention. Other, voluntary initiatives include the UN Global Compact and the Extractive Industries Transparency Initiative.

In specific countries, the 1998 US Foreign Corrupt Practices Act (FCPA) and the 2010 UK Bribery Act, were established to root out corruption wherever it occurs in the world. The Securities & Exchange Commission (SEC) is responsible for enforcing the FCPA. They prosecuted 12 cases in 2011 and 16 cases in 2010. Those charged with violations include Alcoa, Daimler AG and Siemens AG, against who some $1.6bn in fines were levied. The new UK law is expected to produce similar results.

When we talk about sustainability and the triple bottom line of people, planet,and profit, we must recognize that integrity is the glue that binds these three things together. Corruption in antithetical to integrity and as such is a direct threat to sustainability.

[Image Credit: PropagandaTimes: Flickr Creative Commons]

 

RP Siegel, PE, is the President of Rain Mountain LLC. He is also the co-author of the eco-thriller Vapor Trails, the first in a series covering the human side of various sustainability issues including energy, food, and water. Now available on Kindle.

Follow RP Siegel on Twitter.


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  • http://greenandprofitable.com Shel Horowitz-Green Marketer

    Thanks for this. I’ve shared it on my blog, at http://greenandprofitable.com/how-corruption-worsens-the-environment/ – and on social media.

  • MWinslow

    Good points.  Here is a little related story:  When I was in Mexico City in the early 1990s studying air pollution I spoke with the head of the pollution prevention equipment manufacturers consortium.  He told me that Mexico City has plenty of air pollution regulations in place but the polluters payed bribes to keep them from being enforced.  He added that if only the rules were enforced, the pollution equipment manufacturers could make a lot of money and then they could pay bribes to be sure that the regulations continued to be enforced.