Collective Action

In the face of the widespread and deep-rooted corruption problem that affects society in general, governments, their procuring entities and the private sector in equal measure, it is highly unlikely that any individual activities alone will be sufficient to bring about significant ethical changes and improve the transparency of business processes.

Collective Action is therefore critical as it enables corruption to be fought collectively, with various interest groups, working together and building an alliance against corruption so that the problem can be approached and resolved by multiple stakeholders.

The advantages of Collective Action:

• Collective Action calls for cooperation on the part of participants from the worlds of politics, business and society at large.
• The ultimate goal is to create fair and equitable market conditions – a “Level Playing Field" – for all marketplace participants and to eliminate the risk of corruption for all those concerned.
• Collective Action helps to set up the conditions for fair competition in high-risk countries and sectors
• Collective Action promotes innovation, as bidders are selected solely on the basis of price, quality and capacity to innovate.
• Observance of anti-trust law when collaborating with other companies will be ensured by a neutral monitor (e.g. in the form of a non-governmental organization (NGO).
• Collective Action can, if necessary, cover gaps in legislation or replace or augment inadequate local law.

At Siemens, Collective Action is a key strategic response to the fight against corruption, and is embedded within the Siemens Business Conduct Guidelines: "Numerous markets in which we operate present significant compliance challenges. A key strategic response to these challenges is Collective Action. Together with the public and private sectors, we establish integrity and compliance pacts with our partners for business cooperation and support binding agreements. Through these joint efforts, which include the Siemens Integrity Initiative, we aim to create fair, level, and clean market conditions for all participants."

Project-specific initiatives: Integrity Pacts

Integrity Pacts ensure that the award of orders in the case of public-sector contracts is free from corruption. They were developed by the non-governmental organization “Transparency International”, and are intended to guarantee transparency in the order-awarding process and to rule out bribery in the awarding of public-sector contracts.

Following an invitation to tender from a public-sector customer, the bidding companies sign legally binding contracts, and commit themselves to behave with integrity from the start of the tender process until the end of the project. If the contract is breached, sanctions are imposed which can be as severe as the exclusion of the company from further invitations to tender. An independent monitor supervises the contract-awarding process and observance of the Integrity Pact. The Integrity Pact ensures that the bidder is selected on the basis of fair criteria, and serves all the stakeholders as a means of protecting the integrity of the project. This aspect is covered largely through the work under our Siemens Integrity Initiative projects.

Project-specific initiatives: Compliance Pacts

Project-specific Compliance Pacts are agreements established by all relevant stakeholders to ensure that a particular project adheres to the relevant legal, regulatory, organizational, and industry-specific requirements throughout its lifecycle.

In committing formally to acting in compliance with applicable laws and regulations, compliance is designated as a topic of utmost importance for the project.

The agreements will provide a general compliance framework to be referenced during project implementation, and typically include anti-corruption, anti-money laundering, and antitrust laws, details on avoiding conflict of interest, and may include agreements to train relevant employees on the topic of compliance on a regular basis.

Such Compliance Pacts are important in order to address risk mitigation, transparency, and accountability, and will reflect a commitment for clean business.

Sector-wide initiatives

Companies from the same sector get together and draw up a code of ethics or code of conduct. These can take various forms, ranging from principles-based provisions to legally binding agreements like industry-specific Compliance Pacts. In the latter case, companies that violate the anti-corruption code are penalized with sanctions.

However the principles-based codes also have a high degree of effectiveness, as the public commitment to anti-corruption and transparency exerts increased pressure on the participating companies not to breach the agreement. This type of Collective Action is particularly suitable in oligopolistic markets.

The uncompromising support of senior management within the companies concerned is critical to the success of the initiative. In order to avoid breaches of anti-trust law, it is vital to enlist the services of an external, independent monitor.

Long-term initiatives

Long-term initiatives are particularly effective in states rated as being prone to corruption, as they pave the way to the establishment of an anti-corruption culture. Collaboration between government, commercial companies and society in the fight against corruption contributes to the raising of awareness among politicians and the general public. The acknowledgment that bribery and corrupt behavior damage the entire economy of a state brings long-term benefits for all stakeholders.

Long-term initiatives set out the fundamental conditions that will enable project-specific Integrity Pacts, project-specific and/or industry-specific Compliance Pacts to come to fruition and achieve general acceptance. Their success contributes towards a world free of corruption and helps to direct the investment of many millions of dollars and other resources towards their intended destination.

Siemens Integrity Initiative: Putting Collective Action into practice

Corruption erodes the fabric of society, negatively impacts the planet and restricts competitiveness and growth.
Since 2009, we strive to create a level playing field for businesses globally with the Siemens Integrity Initiative by supporting the fight against fraud and corruption in our relevant markets. Our initiative strengthens policy and legal frameworks and supports governments and institutions by building trust and enabling ethical mindsets for current and future leaders.

Established in 2009 after a comprehensive settlement with the World Bank Group and Siemens, the main objective of the Siemens Integrity Initiative is to create fair market conditions for all market participants by supporting Collective Action and Education and Training projects with US$ 100 million in funding over 15 years.
This funding was supplemented in 2013 by a separate Settlement with the European Investment Bank (EIB) for EUR 13,64 million over 5 years.

As of June 2024, the full amount of both Settlements was committed to 85 Projects in over 50 countries over three Funding Rounds and the Golden Stretch, and all funds were disbursed to our Project Partners in accordance with the agreed Funding Agreements in fulfillment of the Settlement cash-out obligations.