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OECD Secretary-General

Roundtable on Sustainable Business Conduct

 

Remarks by Angel Gurría

OECD Secretary-General 

23 November 2018 - Madrid, Spain

(As prepared for delivery)

 

 

Ladies and gentlemen,


I am delighted to participate in this very important event on Responsible Business Conduct. Just like the issue we addressed here last year, corporate governance, the subject that now brings us together is of special relevance to our businesses. I should like to thank the organisers for inviting me, and give special thanks to Ambassador Escudero, who is such a champion of this agenda, for his initiative.

 

I am certain that this forum will help to build a solid evidence base around how responsible business conduct can help Spanish businesses to grow and internationalise, while contributing towards a more prosperous, more inclusive and more sustainable economy and society.

 

Responsible business conduct offers business and sustainable development opportunities

Although responsible business conduct is a duty for businesses, it also offers major business opportunities. There are numerous studies showing that socially responsible businesses get better financial results, thanks to their enhanced reputation, their capacity to attract and retain more highly qualified staff, and the broader “social licence to operate” they enjoy.

 

Moreover, responsible business conduct helps companies contribute actively to the Sustainable Development Goals (SDGs), which serve as our guide for action, so that we can leave behind a habitable, sustainable planet for future generations. And, in this regard too, the business opportunities are huge. It is estimated that the SDGs represent new market opportunities worth 12 trillion dollars.

 

The OECD contributes to the dialogue through the Guidelines for Multinational Enterprises

To help businesses benefit from adopting responsible business conduct, the OECD has developed the most comprehensive standard to date in this matter in the OECD Guidelines for Multinational Enterprises.

 

The Guidelines are recommendations that governments give to companies in nine areas, including human rights, labour relations, the environment, disclosure, and bribery. In turn, they maintain a close link to attainment of the SDGs. For example, a company observing Chapter V on labour relations of the OECD Guidelines will contribute to SDG 8 on Decent Work and Economic Growth.

 

The Guidelines have been updated five times since 1976, the last time in 2011, and today 48 countries adhere to them, covering 80% of global outward foreign direct investment. In each of them, the effectiveness of the Guidelines is ensured by a unique implementation mechanism: the National Contact Point (NCP) for Responsible Business Conduct.

 

NCPs are national bodies tasked with promoting the Guidelines and handling complaints against companies that do not observe them. In Spain, the NCP is hosted by the Ministry of Industry, Trade and Tourism, and will be undergoing a peer review in 2019, so that it can learn from the experience of other countries. Because, ultimately, a great deal remains to be done, and the success of the NCPs depends on the resources, autonomy, authority and scope for action they have. Our objective is to continue bolstering that success.

 

The standards must be applied with due diligence

The OECD Guidelines work in tandem with other leading international initiatives, such as the UN Guiding Principles on Business and Human Rights. For example, both standards require that companies apply risk-based due diligence appropriate to their activities. This means that companies should take steps to identify, address and remedy the negative impacts their operations or supply chains may have.

 

This is a complex process. For example, how does a technological company ensure that the metals in your telephone, mostly sourced from a low-governance country, do not finance conflict? If you are an agrifood company, how do you certify that the palm oil you source does not contribute to deforestation? If you are a garment retail company, how do you verify that the clothes you sell were not sewn by children?

 

To help meet this challenge, the OECD has issued guidance to respond specifically to the due diligence challenges of particularly sensitive sectors: garment and footwear, extractive industries, minerals, agriculture and the financial sector. In May 2018, after intense consultation, including with the private sector, we also issued “general” Guidance for Responsible Business Conduct to help companies of all sizes and all sectors develop good due diligence practices.

 

Governments can help provide incentives for positive conduct by businesses

For a long time, RBC was purely voluntary, and indeed, the OECD Guidelines for Multinationals are not binding on companies. However, governments must continue to encourage companies to become more responsible, as Spain is, for example, doing through its National Action Plan on Business and Human Rights. This Plan, approved in 2017, seeks to implement the OECD Guidelines and the UN Guiding Principles with companies through awareness-raising and training actions, and this with the support of the Spanish NCP.

 

But, increasingly, governments are also adopting regulations which “harden” certain aspects of RBC. For example, almost exactly a year ago, Spain transposed the 2014 EU “non-financial disclosure” directive. This new law requires companies to include in their annual report information on their environmental, social and human rights impacts.

 

Another example in this connection is the regulation adopted by the European Union in May 2017, laying down supply chain due diligence obligations for Union importers of certain minerals originating from conflict-affected and high-risk zones. This regulation is based on the OECD Due Diligence Guidance on Responsible Supply Chains of Minerals, and will be directly applicable in Spain as of 2021.

 

To continue promoting business activities favouring corporate social responsibility contributing to a more human, sustainable economy, we recently launched the Business for Inclusive Growth platform at the Paris Peace Forum, together with Jeffrey Sachs, Director of the United Nations Sustainable Development Solutions Network, and Emmanuel Faber, CEO of Danone. This platform has three objectives: (i) to identify complementary government policies and business actions that promote inclusive growth; (ii) to analyse factors and tools that can encourage the adoption of these policies in practice; (iii) to advocate for other businesses to adopt these measures by disseminating best business practices and case studies.

 

I invite all the enterprises present today to join this platform. It is not only a matter of responsibility and good citizenship: it will soon be the only way to operate in global markets that increasingly set store by the commitment of the business, not only to its shareholders but also to society as a whole.

 

Ladies and gentlemen,

In a globalised and increasingly interconnected world, businesses are becoming ever more aware of the importance of their role in society. Responsible business conduct not only contributes to the enterprise’s own prosperity, but is a key element in achieving more inclusive and more sustainable economic, social and human development. The OECD will continue to work with all of you to achieve this major objective: improving our tools and making them more effective by updating them as circumstances change. We are counting on you all. Thank you.

 

 

 

See also:

OECD work on Investment

OECD work with Spain

 

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