Staying competitive in world markets

Trade

Where is the weakest link?

By Brendon Wilson

Reputational risk in International Trade is measured by banks and international rating agencies, based on countries’ rankings in the Transparency International Corruption Perceptions Index. For some years New Zealand has deservedly held a high ranking and benefitted from the reputation that it gives us. Recently, however, New Zealand’s drop in score adds to other worrying signs that we are slipping in many measures against competitive countries. With dairy prices falling, now more than ever, it is time to focus more on what’s required to keep our position high so that other New Zealand trading activities can balance the impact. This requires understanding of how companies and our country’s governance leads to ensure we don’t trip up. By improving practice and focusing on the gaps, New Zealand can improve its competitive advantage.

The two sides to New Zealand’s ranking

There are two sides to consider when assessing New Zealand’s ranking. First, individual companies’ reputation and trust are largely the responsibility of and within the control of those organisations, they present our individual trustworthiness and also combine to make up our New Zealand reputation. Second, New Zealand’s overall ranking and reputation are what we all rely on as we do business.

So it makes sense that we all look after our own reputations by our own internal top-down commitment to policies, processes and ethical practice, showing plans, training and compliance with for example the Organised Crime and Anti-Corruption legislation.

It makes equal sense that if there is any part of New Zealand’s structure which lowers our international ranking or endangers our joint reputation, then this is a mill-stone around all our necks in the world of trade – we should all demand that those weak links be repaired – and fast.

For example, companies that have built their business and strength by providing goods or services to Volkswagen must be very anxious about risk to their business by recent public exposures. It is likely to be more challenging for them to show their own investors, suppliers and trading partners’ reassurance of their long-term stability. The solution is in the rigorous action to investigate and repair the VW problem. Weak links need to be fixed so all business is possible – and before a crisis is better than after.

Business reputation is critical in today's marketplace

Recently, Adrian Orr, NZ Superannuation Fund CEO told a business audience in Welllington about the success of the NZ Superannuation Fund. The Fund is based on the Responsible Investment Framework, which features rigorous standards of trusted ethical, responsible, open policies and reporting.

With an experienced view of the value of New Zealand companies, Adrian suggests that without upfront, unambiguous, in-depth reporting on ethical standards and investment, New Zealand companies will be in trouble. He notes it is now normal for overseas companies looking to set up trade relationships or buy into worthwhile investment opportunities to investigate ethics. Fund managers refuse to consider companies that don’t normally and clearly report on their ethical standards and investment – showing both the governance and daily practice processes required to prevent bribery and corruption. International business expectation really is that high. Without this focus and reporting, many companies could be unable to gain investment and conduct worthwhile trade, and so be out of business by 2020.

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Recent Activity

Public Sector Integrity Media Release
State Services Commission took a very positive step in addressing a key recommendation of TINZ's Integrity Plus 2013 New Zealand National Integrity System Assessment by advertising a role for Deputy Commissioner, Integrity, Ethics and Standards. 11 May, 2017

Defence Inquiry Media Release
Transparency needed to support the integrity of our Defence Force 2 Apr, 2017

Corruption Perceptions Index 2016 TINZ media release
Transparency International 25 Jan, 2017

TINZ OGP Submission
Transparency International New Zealand (TINZ) submitted recommendations for New Zealand’s second Open Government Partnership (OGP) National Action Plan (NAP). Among the recommendations were a call for more ambition in creating NAPs and developing channels of communication for improving engagement with citizens. 19 Aug, 2016