Critical Analysis of the Issue
Bribery and corruption are pervasive problems inextricably linked to social and environmental issues globally. Rather than operate sustainably, big corporations driven by a pure pursuit of profits commit violations such as adopting unsustainable production and using child labor in Nestlé’s Ivory Coast cocoa operations (Perkiss et al., 2021). These unethical practices often arise when demand outstrips sustainable production. In the global business context, corruption may be experienced on the demand side (kickbacks) or supply-side (investors offering bribes) (Bahoo, Alon & Paltrinieri 2020). In both instances, the goal is to influence policies or procedures on sustainable natural resource exploitation. In this context, societal interests should supersede private or corporate benefits (Muff, Liechti & Dyllick 2020). Therefore, a high corruption ranking would lead to less stringent environmental preservation policies.
Corruption’s destructive effect on environmental sustainability is most profound in supply chains. According to Freise and Seuring (2015), firms in the apparel industry must manage supplier-related risks such as poor working conditions and environmental concerns. To control these risks, companies must green firm-level policies and stringent requirements for suppliers to produce raw materials sustainably. For example, accountability was lacking in Nestlé’s supply chain, leading to unsustainable cocoa farming practices (Perkiss et al., 2021). This problem is more common in corporations with fragmented supply chains that are challenging to manage. Many top global brands in the clothing industry, including Adidas and Nike, have to defend themselves against accusations of unsustainable sourcing of raw materials (Freise & Seuring, 2015). This scenario highlights the value of monitoring ethical conduct across the supply chain.
Business ethics have a strong link to corrupt practices in the international business context. In a corrupt environment, less ethical but politically connected corporations will offer bribes or cover their unsustainable operations (Bahoo, Alon & Paltrinieri 2020). As a result, supply chains become less transparent or visible, which has a reputational risk. Corporations such as Nestlé, Nike, and Adidas have been on the media to defend themselves against the use of child labor, unsustainable farming, and poor work conditions in their offshore operations or suppliers (Freise & Seuring, 2015; Perkiss et al., 2021). Therefore, creating an ethical supply chain is critically important to organizations. In a study by Aschendbrand, Proctor, and Trebilcock (2018), 74% of supply chain professionals considered safeguarding against corruption highly important to their organization presently. In addition, responsible labor practices, environmental sustainability, and human rights are also a priority to most firms. Therefore, multinational enterprises (MNEs) should audit their supply chains to eliminate unsustainable practices such as bribery and the use of child labor and promote socially and environmentally responsible production.
Current Status
Currently, Saudi Airlines has a business ethics code that all strategic business units and partners must follow to protect against corruption and bribery. It includes rules on ethical conduct by staff and guidelines on how to detect, report, and manage potential risks to promote integrity. The code also contains policies on conflict of interest and reporting bribery. To ensure sustainable supply chains, Saudi Airlines requires its agents, representatives, and suppliers to use this code as well.
Recommendations
- Saudi Airlines should employ third-party tools and resources to foster ethical conduct across its supply chains. Examples include EPA SmartWay and Rainforest Alliance, which can enforce supplier compliance with the airline’s ethical code (Aschendbrand, Proctor & Trebilcock 2018). By enforcing ethics, the risk of corruption, environmental damage, and labor malpractices will decline.
- Saudi Airlines should collaborate with regional non-governmental organizations (NGOs) to manage ethical risks in the international business context. Demands from NGOs operating in specific countries will promote measures for operating ethically and sustainably in unfamiliar markets (Freise & Seuring, 2015). Thus, this collaboration will ensure ethical and environmental aspects are incorporated into operations to avoid reputational damage.
- While the airline’s ethical code is a positive step in combating corruption, more specific anti-bribery measures are required. Establishing an anti-corruption system in MNEs will help prevent corruption and bribery (Bahoo, Alon & Paltrinieri 2020). Saudi Airlines should create an anti-corruption unit to tackle ethical risks internally.
Reference List
Aschendbrand, J, Proctor, J & Trebilcock, B 2018, The ethical supply chain, Web.
Bahoo, S, Alon, I & Paltrinieri, A 2020, ‘Corruption in international business: A review and research agenda’, International Business Review, vol. 29, no. 4, pp. 1-24, Web.
Freise, M & Seuring, S 2015, ‘Social and environmental risk management in supply chains: a survey in the clothing industry’, Logistics Research, vol. 8, no. 2, pp. 1-12, Web.
Muff, K, Liechti, A & Dyllick, T 2020, ‘How to apply responsible leadership theory in practice: a competency tool to collaborate on the sustainable development goals’, Corporate Social Responsibility and Environmental Management, vol. 27, no. 5, pp. 2254-2274, Web.
Perkiss, S, Bernardi, C, Dumay, J & Haslam, J 2021, ‘A sticky chocolate problem: impression management and counter accounts in the shaping of corporate image’, Critical Perspectives on Accounting, vol. 81, pp. 1-11, Web.