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No US companies among the 30 most transparent

My recent blog on “Why Transparency is Essential For Building Corporate Brand Trust” generated lots of interest, but also begged a key question – what are the most transparent multinationals in the world, and where do US companies stand in these rankings?

Transparency International is the most prominent anti-corruption research organization in the world, and their 2014 study rated the transparency of the top 124 multinationals based on three criteria: anti-corruption programs, organizational transparency, and country-by-country reporting. Surprisingly, there was not any US company near the top of the list. The best, including the composite score for each (1-10), were:

1. Eni – Italy (7.3)
2. Vodaphone – UK (6.7)
3. Statoil – Norway (6.6)
4. BHP Billiton – Australia/UK (6.1)
5. Banco Santander – Spain (6.0)
6. Arcelor Mittal – Luxembourg (5.8)
7. Deutsche Telecom – Germany (5.8)
8. E.ON – Germany (5.7)
9. Reliance Industries – India (5.6)
10. Westpac Banking Group – Australia (5.6)

European companies did best with 7 in the top 10, and Asia was the worst with 8 companies in the bottom 10. But not one US company was in the top 30, the closest being Anheuser-Busch (4.5) ranked number 32. Other reputable US companies were near the bottom: IBM (2.9), Apple (2.7), CitiGroup (2.7), Google (2.2), and Amazon (2.0). Furthermore, the European countries do a better job with anti-corruption programs, with an average score of 82% (the UK was highest with 90%), versus the US at only 74%. The low ranking for US companies was shocking to me, and probably most of you, since I have always assumed the American culture and business climate to be so open and fair.

Low transparency often breeds corruption, which is not only immoral, but also raises the cost of business. Estimates by Transparency International indicate that corruption adds 25% to the cost of procurement contracts in developing countries and adds approximately 10% to the cost of doing business globally.

So what happened to our stellar global companies, which we thought were the envy of the world?
A key reason for this low standing of US companies is due to the limitations (or loop holes?) in the US regulations for reporting on foreign subsidiaries, especially payments such as profits and taxes to local governments on a country-by-country basis. The EU has more stringent regulations for reporting earnings abroad, and in particular, the UK’s tough Bribery Act in 2011 is a main reason for its superior performance. There is a similar regulation in the Dodd-Frank Act, but the implementation of this has been delayed by an oil lobby lawsuit.

Although the US and Europe are alike in many ways, some values are very different, which has affected regulatory and competition policies. Americans strongly believe markets trump ministries when it comes to decisions on new products, prices, wages, and especially innovation. In Europe, the culture is less favorable to disruption and risk taking, often the key driver for innovation (e. g. Uber, Google, Amazon, etc.). Basically, the European culture trades off some economic growth for greater stability and job assurance.

Another stark difference is privacy. Understandably, Europeans have a greater fear of loss of privacy, as memories of the Gestapo still prevail. While this fear might jeopardize the business model of Google in Europe, it also results in regulations that force a more transparent accounting of global corporate performance.

The American bias towards open competition, and the end consumer ultimately deciding the destiny of a business will never (not should) be diminished. However, there is another trend emerging that may counter this business model and culture – the growing distrust among consumers, especially millennials, of many multinationals and their CEO’s, which will eventually lead to new demands for greater transparency and the closing of these loopholes in the future. The silver lining of these dynamics is that hopefully US global companies will realize the benefits of restoring a trustful corporate brand image and open their books more.

Jay Gronlund

Jay Gronlund is an experienced business development and branding professional with a successful track record introducing new products and services, expanding into foreign markets, re-positioning products, and facilitating ideation sessions. Jay has effectively applied proven marketing and branding principles from his background in the consumer goods industry to other industry sectors, including B2B situations. Jay’s career began in consumer packaged goods and then expanded into household products, beverages and publishing. His first company was Richardson-Vicks (now part of Proctor & Gamble), where he held new product positions in New York and in London. He continued his new product responsibilities for Arm & Hammer products at Church & Dwight (Arm & Hammer), then VP Marketing of the wine/champagne division of Seagram, and finally VP, Director of Marketing at Newsweek. Gronlund started The Pathfinder Group in New York in 1990, an international business development and brand consulting firm. Related to this, much of his work today involves re-positioning brands, ideation sessions and marketing workshops, with a primary focus on emotional branding, especially building brand trust for clients. Jay has also been teaching a marketing course at NYU since 1999, “Positioning and Brand Development". Jay recently wrote a new book, “Basics of Branding," reflecting his NYU branding course and professional experience. He has also published several articles on diverse marketing topics: “5 Steps to a Successful Ideation Session," “What B2B Marketers can Learn from B2C," “Employer Branding," “Customized Marketing for Tomorrow’s Leaders," “Sharing and Implementing New Ideas Across Borders," and “Working with the New Russians”, “Word-of-Mouth Marketing for B2B Situations," “The Future of m-Health” and “How to Build ‘Value’ for Healthcare Brands in Emerging Markets." Jay Gronlund is a graduate of Colby College and has an MBA from Tuck at Dartmouth College.

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