PFI TOOLKIT › Policy areas › Responsible business conduct

Chapter 7 of the Policy Framework for Investment addresses promoting responsible business conduct. The PFI asks 6 questions relating to: Clear separation of government and business roles Promoting effective two-way communication: law-making and other dialogue Providing an adequate framework for corporate disclosure Enlisting business as a partner in the legal and regulatory system Strengthening the business case for responsible conduct Intergovernmental co-operation   Download Policies for promoting responsible business conduct

Overview

Responsible business conduct (RBC) entails above all compliance with laws, such as those on respecting human rights, environmental protection, labour relations and financial accountability, even where these are poorly enforced. It also involves responding to societal expectations communicated by channels other than the law, e.g. inter-governmental organisations, within the workplace, by local communities and trade unions, or via the press. Private voluntary initiatives addressing this latter aspect of RBC are often referred to as corporate social responsibility (CSR).

Companies are best able to promote RBC when governments fulfil their own distinctive roles effectively. This point goes to the heart of the PFI: to the extent that governments provide an enabling legal environment for responsible businesses, they are more likely to keep and attract high quality investors who might otherwise be tempted to go elsewhere. At the same time, firms that adhere to high RBC standards are more likely to bring lasting benefits to employees, customers and the societies in which they operate. The roles of government, business and civil society are both complementary and interdependent.

The prime tasks of government are to define and, just as importantly, to implement the laws and regulations that underpin RBC. But going beyond these tasks, governments can and should support RBC initiatives in three main ways:

• Facilitating – setting clear overall policy frameworks
• Partnering – combining public resources with those of business and other actors to leverage complementary skills and resources
• Endorsing – showing public political support for particular kinds of RBC practice in the market place or for particular companies
   

Similarly, companies’ commitment to RBC does not begin and end with legal compliance. In a model that may be applied to a number of RBC issues, the Business Leaders’ Initiative on Human Rights (www.blihr.org) defines three levels of company behaviour:

• Essential actions refer to minimum business standards defined by national and international law.
• Expected actions go beyond what is legally required to meet the additional expectations of key stakeholders such as investors, employees, customers, and suppliers as well as NGOs and the wider community. As standards improve, some of today’s expectations could become tomorrow’s essential requirements.
• Desirable actions are often company-specific and may include pioneering philanthropic or community-based initiatives.

The process of defining and promoting these aspects of RBC requires consultation and cooperation among government, companies, professional associations and other civil society.