Vanguard Magazine

www.vanguardcanada.com JUNE/JULY 2025 27 AI is especially valuable in pro- curement and financial controls, where it can detect irregularities early and reduce the likelihood of fraudulent activity. It is also being used in ESG monitoring and geopolitical risk assessments — essential in defence contract- ing environments. However, CANSEC participants emphasized the im- portance of maintaining human oversight. Ethics requires judg- ment, empathy, and the ability to weigh competing considerations. The most effective systems combine AI's efficiency with human discernment, enabling better decision-making and governance. To realize AI's full potential in E&C, companies must prioritize governance. This includes establishing policies for responsible AI use, training staff on AI literacy, and embedding transparency and accountability into every stage of the technology lifecycle. Compa- nies that neglect these elements may find that poorly governed AI introduces new risks rather than solving old ones. Responsible use of AI in E&C requires transparency, explain- ability, and documented oversight. This aligns with the emerging guidance of the EU AI Act and ISO 42001, which call for clarity in how AI systems make decisions and how they are monitored. Embedding E&C in Company Culture Technology and policy can only go so far without a supportive cul- ture. E&C must be lived across the organization—not just docu- mented in a code of conduct. A strong E&C culture fosters trust, resilience, and accountability. CANSEC participants from companies with mature programs cit- ed board and executive leadership as the single most important driv- er of cultural integrity. When leadership models ethical behaviour, invests in compliance infrastructure, and communicates consistently, it sends a message that E&C is integral to the company's mission. This shift is also being shaped by younger generations in the workforce. Gen Z and millennials are more likely to demand ac- countability, report unethical behavior, and choose employers based on shared values. Companies are responding by developing speak-up programs, offering training that connects ethics to daily decisions, and measuring culture as part of their risk assessments. SMEs face distinct challenges. Many lack internal expertise or fear that a formal E&C program may be too costly or complex. However, practical, scalable solutions are available. A few large de- fence firms at CANSEC shared how they are mentoring or partner- ing with smaller suppliers to promote shared standards and values. Ethics and compliance should be positioned not as barriers, but as strategic assets that attract talent, protect reputation, and im- prove competitiveness. The E&C function must be integrated into operations and treated as a partner to the business and its strategic success, not a detached control mechanism or cost centre. Incentivizing Stronger E&C Programs: A Call to Action To drive improvement across the industry, participants at CAN- SEC agreed stronger incentives for companies are needed to dem- onstrate E&C leadership. Including E&C maturity scoring as a weighted criterion in government procurement decisions was one idea. Such a model would reward proactive organizations and en- courage lagging firms to prioritize improvements. This would go beyond an integrity declaration or check-the-box exercise where a company would need to provide data on the scope and effectiveness of their E&C program – ostensively similar data provided to boards monitoring E&C efforts. This could be especially benefi- cial for SMEs, providing motivation and structure to build or expand their programs adapted to their size and risk profile. SMEs do not have the resources to implement the same level of E&C sophistication as larger companies but can learn from them and their best practices if they wish to be onboarded as a trusted partner. This approach would help reduce disparities between large and small players while strengthening the entire supply chain. However, incentives alone are not enough. The industry must adopt a collective action approach, where companies share best practices, co-create resources, and participate in cross-sector in- tegrity networks. This cooperative model has proven effective in other high-risk industries and can build resilience across the de- fence ecosystem. A Collective action integrity initiative—such as an industry fo- cussed integrity network – would facilitate exchange, pooled risk data, and shared due diligence frameworks—can enable compa- nies to raise standards while reducing costs. They also demonstrate to regulators and the public that the industry is taking proactive, united steps to promote responsible conduct. A great example of this is the Maritime Anti-Corruption Network (MACN). Conclusion The evolution of ethics, compliance, and anti-corruption in the defence industry is unmistakable. Once considered a cost of doing business, E&C is now a strategic function that enables growth, enhances resilience, and builds trust with stakeholders. This means reinforcing culture, enabling cross-functional collab- oration, and ensuring both SMEs and multinationals are aligned in their ethical commitments. As risks evolve and technologies like AI expand the toolkits available to E&C professionals and companies, the challenge will be to ensure that programs are embedded, trusted, and forward- looking. Success rests on being agile and adaptable to manage risk and uncertainty in a challenging world. The foundation for this success requires an E&C culture anchored on a risk manage- ment mindset. By adopting E&C as a strategic imperative, the defence industry can not only improve its capacity and effective- ness in managing risks but can also enhance its image with stake- holders and the public. Pat Poitevin is the Co-founder and Executive Director of the Cana- dian Centre of Excellence for Anti-Corruption (CCEAC) – an NGO dedicated to assisting organizations in improving their E&C and anti-corruption capacity. He is also Co-founder & CEO of boutique advisory firm Active Compliance and Ethics Group (ACEG). https:// www.linkedin.com/in/patpoitevin/ A N T I - C O R R U P T I O N

• Cover