India has the most transparent companies because of a strong regulation system firmly in place, a new report revealed on Monday, adding that China on the other hand has weak or non-existent anti-corruption policies and has the most opaque firms.
The vast majority of the worldâ€™s biggest emerging market companies have failed when it comes to transparency, creating an environment for corruption to thrive in their businesses and in the places they operate, said the report from Germany-based Transparency International.
"Hundred of the fastest-growing companies based in 15 emerging market countries and operating in 185 countries around the world scored an average of 3.4 out of 10 where 0 is the least transparent and 10 is the most transparent," revealed the report titled "Transparency in Corporate Reporting: Assessing Emerging Market Multinationals".
Seventy-five companies from BRICS countries (Brazil, Russia, India, China and South Africa) failed to beat the average score as poorly performing Chinese companies dragged the whole group lower.
Companies from BRICS countries produce about 30 per cent of global GDP, giving them a clear obligation to take responsibility for their actions.
Indian companies have the highest average score of any country -- they all score 75 per cent or more -- in organisational transparency largely due to the Companies Act.
Chinese companies, which account for a third of those assessed, had the weakest overall performance. This underscores the need for China and its business community to take immediate action to raise their standards.
The average score fell slightly by 0.2 compared to the last time the survey was taken in 2013, the report noted.
"Pathetic levels of transparency in big emerging market companies raises the question of just how much the private sector cares about stopping corruption, stopping poverty where they do business and reducing inequality," said JosĂ© Ugaz, Chair of Transparency International, in a statement.
"Time and again, we see huge corruption scandals involving multinationals, such as Odebrecht Group or China Communications Construction Company, doing immense damage to local economies," Ugaz added.
The very weak Chinese results stem from weak or non-existent anti-corruption policies and procedures, or a clear failure to disclose them in line with international best practices.
"Through adequate transparency and anti-corruption measures and will from the top this could have been prevented. Although many companies say they want to fight corruption, this is not enough. Action speaks louder than words,â€ť Ugaz noted.
Across emerging markets, all companies need to do much more to pursue comprehensive public reporting to address corruption and provide the transparency that is the basis for robust and accountable governance, the report added.