World Economic Forum, Annual Meeting Working Dinner
Remarks by Angel Gurria, OECD Secretary-General
Davos, Switzerland, 23 January 2013, 20h00
Ladies and Gentlemen,
It is a pleasure to be back in Davos and open this working dinner. We are here to discuss the role of Business for Society and to define a framework for action to unleash the strong economic potential of regions, such as the Middle East and North Africa as well as Eurasia.
Preparing for the Future
The global economy of today is quite different from the one of yesterday. For many years, OECD countries accounted for some 70% of global GDP. Today, their share has fallen to about 60%, and it is set to fall further. Emerging and developing economies will indeed account for nearly 60% of world GDP by 2030, according to OECD projections.
The economic dynamism in these regions has been impressive in recent times, with an annual average growth rate of GDP above 5%. However, the global crisis affected GDP growth, exacerbating poverty and income inequality, and weakening the business climate. To sustain economic growth and improve prospects for investment and trade, countries from the Middle East and North Africa region (MENA) and Eurasia will benefit from far-reaching structural reforms.
This is important because today investors are learning to look beyond the so-called “BRICs” for promising business opportunities. The countries of MENA and Eurasia can greatly benefit from this trend. But competition for capital is fierce. Over half (53%) of foreign direct investment (FDI) flows still go to OECD economies. Countries from these two regions must thus compete with the rest of the world for the remaining investments.
In order to succeed, the MENA and Eurasian governments need to harness the dynamism of their entrepreneurs and investors. The private sector is indeed a major driver of sustainable and inclusive economic growth. In the current challenging economic context, restoring the confidence of businesses is thus essential to trigger investment, encourage innovation and create jobs.
In both regions, the OECD is supporting countries’ efforts to improve economic and public governance, investment conditions and competitiveness. It does so through its multi-dimensional approaches and wide range of policy instruments. We are also working with MENA transition countries and contributing, with other organisations from the Deauville Partnership, to the elaboration of Action Plans in order to strengthen their investment frameworks.
The OECD Guidelines for Multinational Enterprises
Of course, businesses also need to do their part by contributing to sustainable development and social progress in their host economies. A recent global survey [i] noted that only 53% of respondents trusted business to do what is right, and only 38% would believe information about a company that they heard from the CEO. This is a wake-up call!
The OECD Guidelines for Multinational Enterprises is an important tool to help build public trust in the private sector. The guidelines provide guidance to enterprises on how to behave at home and abroad to obtain the so-called “social license to operate”. The Guidelines cover all major areas of business ethics, including labour and human rights, anti-corruption, environment, consumer interests, disclosure and taxation. They incorporate the principle of due diligence in supply chains.
And, most importantly, the Guidelines are applicable worldwide. Forty-four countries adhere to the Guidelines, including 10 partner countries outside the OECD membership, including Egypt, Tunisia and Morocco, while Jordan is expected to adhere in mid-2013.
The obligation of adhering governments to establish National Contact Points to support implementation, and the multi-stakeholder proactive agenda - exemplified by the work on due diligence for responsible sourcing of minerals in conflict prone areas - make the Guidelines a very valuable tool for advancing responsible business conduct. National Contact Points indeed assist implementation by communicating the expectations of the adhering governments. They also provide a quite unique mediation and conciliation platform for resolving practical and specific issues arising from the activities of multinational enterprises.
The Guidelines are a living document and were reviewed five times since their adoption in 1976. The last up-date in 2011 expanded their coverage and reinforced their implementation procedures. The changes include a new chapter on human rights, a broad operational principle to exercise due diligence, including over supply chains, and a proactive agenda to assist enterprises in better integrating the risks of adverse impacts associated with their operations.
We have decided to create a Working Party on Responsible Business Conduct to pilot this more proactive approach and strengthen dialogue between companies, governments and other stakeholders. I am pleased that the future Chair of the Working Party, Dr. Roel Nieuwenkamp, who also conducted the 2011 update, is able to join us for tonight’s discussion.
The Guidelines are an open instrument. Countries that have not adhered to the Guidelines can also benefit from the principles they embody. Opportunities exist for collaboration with adherents in supporting responsible business conduct. One of the challenges lying ahead is to ensure that they are shared as widely as possible with businesses of all sizes in all countries, developed and developing. The new Global Forum on Responsible Business Conduct will hold its inaugural meeting at the end of June this year. It will proactively engage key OECD partners in our work in this area.
Business for Society
The freedom of multinational corporations to operate globally carries with it a responsibility for their impact on society. Like governments, corporations are under closer scrutiny than ever before – from employees, customers, business partners, governments, NGOs and the media.
Responsible businesses produce less carbon, mitigate risks, motivate employees, and support local communities, all that while making a profit. In this way, businesses contribute their share in addressing key challenges in society. The support of strong and committed champions from top leadership levels in governments and the private sector is key to make responsible business conduct happen.
To ensure the greatest impact on society, we need collective action within sectors; we also need new strategic partnerships that cut across the boundaries between the profit and non-profit sectors; and we need better metrics. Let us work together to build these three key ingredients for success.
Ladies and Gentlemen,
The revised OECD Guidelines for Multinational Enterprises are here to sustain a culture of responsible business conduct worldwide. They empower enterprises to meet their responsibilities toward society and provide clearer expectations for companies. This reduces uncertainty and makes doing “good” business easier.
The implementation of the Guidelines is however a work in progress. We look forward to working with stakeholders from MENA, Eurasia and around the world to strengthen the role of business in contributing to better lives for people around the world.
[i] Edelman Trust Barometer 2012.
World Economic Forum, Davos