Corporate governance

Fourth Global Forum on Responsible Business Conduct

 

Opening remarks by Angel Gurría,

Secretary-General, OECD

8 June 2016

OECD, Paris

(As prepared for delivery)

 


Dear Ladies and Gentlemen,


Welcome to the fourth Global Forum on Responsible Business Conduct. This year is a special year – we are celebrating the 40th anniversary of the OECD Guidelines for Multinational Enterprises, the OECD’s main instrument for promoting better business practices. And this is a good moment to reflect on the potential multilateralism. In the past year the global community has reached a breakthrough climate agreement at COP21 and established an ambitious set of Sustainable Development Goals. OECD instruments like the MNE Guidelines have a crucial role to play in this sort of successful multilateral action. They are the gold standard in international cooperation in their area.


That multilateral spirit is what this Global Forum is built on and what I believe is the source of the success of the Guidelines – only through active dialogue can we hope to address the serious issues that persist in global supply chains. I encourage you to approach the next two days in this spirit as you discuss the action necessary to make our global economy work for all people in a sustainable way.


Impact matters


40 years ago, a landmark deal was struck here at the OECD. Governments committed themselves to building open investment environments, while also setting common standards for responsible business; the idea being that globalisation can have negative as well as positive consequences, and therefore that the rights and responsibilities of both governments and business need to be spelled out. The Guidelines, still the most comprehensive set of recommendations for responsible business conduct, were a crucial component of this deal.


Have we lived up to the goals of 40 years ago? Today we have over 3000 bilateral investment treaties, through which investors can hold governments accountable for not meeting their commitments to investor protection. So progress has certainly been made on the goal of creating an open investment environment. But what about the other goal? Some National Contact Points, government bodies in charge of supporting the implementation of the Guidelines, remain underfunded and lack visibility. And we still have a long way to go to ensure that supply chain responsibility – a key issue for responsible globalisation – becomes a regular way of doing business.


The growing global momentum to promote and enable responsible business conduct tells me that we still have work to do, but also that we are doing something right. After five updates, the Guidelines remain as relevant as ever. One crucial development, reflected in the 2011 update of the Guidelines, and just last year supported by the G7, was the recognition that companies’ responsibility extends beyond their own walls and covers their supply chain. Another important change in 2011 concerned the role of the National Contact Points.


The results of these updates are tangible.


Since their creation in the year 2000, National Contact Points have considered over 360 cases of alleged business misconduct in over 100 countries. The outcomes of many of these cases have resulted in greater awareness by companies and changes to company policies in order to better integrate RBC standards and improvements in working conditions. Our work with businesses has been instrumental. We just issued two new guidances – one on meaningful stakeholder engagement in the extractive sector and one on responsible agricultural supply chains. Two further guidances are on the way – one on responsible garment and footwear supply chain and another for the financial sector. We are also developing a new general due diligence guidance across sectors.
In addition, we are continuing to work with emerging and developing economies, notably through exchanging experiences and sharing lessons learned. Just yesterday, as part of this forum, the OECD hosted a roundtable for policymakers from all over the world to discuss how responsible business conduct can be promoted on all levels. I am also pleased that we are launching a project to work together with our partners in Asia and the ILO to promote responsible global value chains, with the support of the EU.


Action - based on the Guidelines - has led to changes on the ground


This is the fourth year that I am delivering this opening address, and as I reflect on my previous interventions, there is one feature that connects all the progress made since: leadership. Leadership by many of you in this room, representing governments, businesses, trade unions, and civil society, who have actively championed responsible business conduct.


2015 was a year of leadership for responsible business conduct!


First, by governments: With the passage of the UK Modern Slavery act, it is now illegal for UK businesses not to take action to prevent modern slavery in their supply chains. The US recently closed a loophole in its enforcement framework with the passing of the US Trade Facilitation & Enforcement Act; US customs agents are now able to stop goods at the border that are believed to be made by forced labour. Also in the United States, over 1,000 of the largest publicly listed companies recently filed reports to the SEC on the steps they’ve taken to implement the OECD Due Diligence Guidance for Responsible Mineral Supply Chains of Minerals from Conflict-Affected and High-Risk Areas; for 19 of them (up from only 7 the previous year), these reports were independently audited, including those for Apple, Intel, AVX and Haliburton. Large EU companies must now disclose non-financial information.


Developing economies are embracing responsible business conduct as a way to improve the investment and business environment and to support the implementation of the Sustainable Development Goals and the Paris Climate Change agreements. And most recently-concluded trade and investment agreements contain language on sustainable development or responsible business conduct, including the new agreements by the EU with important emerging economies like Viet Nam. The Trans-Pacific Partnership also includes references to responsible business conduct.


We are particularly proud of the results of last year’s G7 summit in Schloss Elmau, where with German leadership and the support of our Sherpa and her team, the G7 strengthened their commitment to live up to the standards of the MNE Guidelines by conducting peer reviews and strengthening implementation through effective National Contact Points. We are already looking forward to working with the G20 Presidency (Germany again) to broaden the impact of the Guidelines.


Business is also showing leadership. We will hear later this morning from business leaders from the financial sector that are using their significant leverage to make a change in the companies they invest in. Just think about the fact that 1,500 signatories from over 50 countries that back the Principles for Responsible Investment have assets under management exceeding 60 trillion dollars.


The willingness of these investors to put their money behind their rhetoric follows increasing evidence that better business practices make sense business-wise! Our chief economist will lead a discussion about some empirical evidence relating to the impact of responsible business conduct on business performance. Recent OECD research examining trade in manufactured goods between advanced and emerging economies showed compelling evidence that regulation to curb pollution and energy use has not harmed firms’ competitiveness.


Progress is good – but more remains to be done


Let me end by noting that these positive developments do not mean that all problems have been solved – far from it. For example, the Panama Papers are a reminder that much remains to be done to address the policies that allow millions to be hidden offshore from tax authorities. The session on RBC and taxation will allow for a lively discussion on what society expects from business in terms of paying taxes in the countries in which they make their profits.


We have also seen that human trafficking and modern slavery remains an issue in global supply chains, and there is no doubt that accountability is lacking in many areas, including major sports events. All of these issues are going to be discussed over the two days.


Ladies and Gentlemen,


While we might not always find immediate agreement, we should keep trying. This is not meant to diminish the hard realities, but to pose a challenge and to ask – what are we going to do about it? The public has never been more aware about irresponsible business behaviour, and never more determined to demand accountability. Let us respond to that call. Have an excellent conference!

 

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