Corporate governance

New guidelines to Multinational Enterprises and the OECD Anti-bribery Convention


Remarks by Angel Gurría, OECD Secretary-General, delivred at the Manufacturers Association of Israel Seminar

Tel Aviv, Israel, 6th June 2012

(As prepared for delivery)

Ladies and Gentleman,

It is a pleasure to be back in Tel Aviv and to speak to you today.

Businesses need and deserve a level playing field to invest, to innovate and to create jobs. Put simply, when the playing field is uneven, businesses cannot make a positive contribution to economic and social development. And this is supremely important at a time the global economy is going through such difficult times.

From a policy perspective, ensuring a level playing field requires a multidimensional approach, and that is exactly what we do at the OECD. Let me give you a few examples.

Through our Codes of Liberalisation of Capital Movements and of Current Invisible Operations, and our Declaration on International Investment, we promote the non-discriminatory treatment of domestic and foreign enterprises.

Through our work on competition policy and international co-operation in competition law enforcement, we help governments, in OECD and partner countries alike, fight anti-competitive practices.

More recently we have also been exploring what governments can do to ensure that state-controlled and privately-owned firms compete on an equal footing in the domestic economy and internationally – what we refer to as “competitive neutrality”.

Two further examples are the OECD Guidelines for Multinational Enterprises and the OECD Anti-Bribery Convention. These tools are essential in promoting a level playing field. Let me tell you more about them today.

The OECD Guidelines for Multinational Enterprises
The OECD Guidelines for Multinational Enterprises provide guidance to enterprises on how they ought to behave at home and abroad to obtain the so-called “license to operate”. They are arguably one of the one most authoritative sets of guidance on such issues in existence today.

They derive this “authority” from the fact that they have been developed by governments; they cover all major areas of business ethics (including labour and human rights, anti-corruption, environment, consumer interests, disclosure and taxation) and, most importantly, they are applicable worldwide.

They encompass the bulk of operations of multinational enterprises – an estimated population of 80 000 firms and ten times more subsidiaries. Forty-four countries adhere to the Guidelines, including 10 partner countries outside the OECD membership. The major economies of Latin America and the MENA region are already signatories to the Guidelines. Russia is soon expected to adhere. 

The Guidelines are also known for their unique implementation mechanism, that of National Contact Points. The National Contact Points provide a mediation and conciliation platform for resolving practical issues arising from the activities of multinational enterprises. No other international instrument provides this facility, and let me tell you, it works. 

More than 300 alleged cases of non-observance of the Guidelines have been submitted to National Contact Points -- a majority dealing with labour and environmental issues.

Constructive outcomes have been found in several instances. For example, between G4S and UNI Global Union on an Ethical Employment Partnership for the security industry ; between Unilever and The International Union of Food, Agricultural, Hotel, Restaurant, Catering, Tobacco and Allied Workers' Associations (IUF) on the rights of workers in India , or between Cermaq and the Norwegian Forum for Environment and Development (ForUM) on the need to respect indigenous rights and apply the precautionary principle in Cermaq salmon farming in Chile .

Furthermore, the 2011 Update expanded the coverage of the Guidelines 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.

In addition to the successful update of the Guidelines, 2011 also saw the UN Human Rights Council unanimously endorse the Guiding Principles for Business and Human Rights, the upgrade of the IFC’s Sustainability Framework and the adoption of the ISO 26000 standard on corporate social responsibility. 

These developments represent an unprecedented moment of international convergence: convergence in the baseline standards for how businesses should understand and address the social risks of their operations; convergence in the understanding of how governments should support and promote responsible business conduct.

The outcome of these developments speaks for itself: clearer and more predictable standards that empower enterprises to meet their social responsibilities and empower stakeholders to hold them to account as compared to reasonable expectations.

These developments are good news for business because clearer expectations reduce uncertainty and make doing “good” business easier.

The OECD Anti-Bribery Convention
The same can be said for adopting clear and effective anti-corruption compliance programmes. Left to its own devices bribery distorts markets and increases the cost of doing business. Engaging in bribery makes it impossible to run a successful and sustainable business in increasingly competitive and globalised markets.

But these risks are not always easy to avoid. The OECD Anti-Bribery Convention is the first and only legally-binding international instrument to focus exclusively on active bribery in business. It aims to cut off the supply side of bribery in international business transactions.

The OECD works with governments — including Israel’s — to implement this Convention and make sure it is a crime to bribe foreign public officials in international business deals.

We are also working directly with companies like yours. The best form of protection against the risks of corruption is to have strong well-functioning anti-corruption compliance programmes.

The OECD Good Practice Guidance is a good place to start. It is the first and only anti-corruption guidance adopted at an inter-governmental level and it responds to the need for companies to put in place more effective preventive measures against bribery and corruption in international business. This is true for all companies: small, medium and large. No company is immune from corruption.

The Good Practice Guidance provides companies with a better idea of how their governments expect them to behave, a very important part of the public-private dialogue and essential in achieving a level play field.

Future priorities

So, we have the tools. But this doesn’t mean that we don’t have big challenges ahead of us. In particular, we need to ensure that these expectations for business conduct are shared as widely as possible: businesses of all sizes in all countries, developed and developing.

At the OECD we are working towards this objective on a number of fronts. For instance:

First, having successfully updated the OECD Guidelines, we are ramping up our efforts to promote this instrument as well as to communicate the principles it embodies well beyond the 44 adhering countries. We are organizing promotional activities in emerging economies, especially in Asia and MENA. And we are launching a new Global Forum on Responsible Business Conduct precisely to engage key partners in our work in this area.

Second, we are gaining traction with our proactive agenda to assist multinational enterprises in better meeting their corporate responsibility challenges. First proposed by BIAC, this proactive agenda seeks to bring stakeholders together to solve problems and manage the risks faced by firms in similar circumstances. 

Our Due Diligence Guidance for Responsible Supply Chains of Minerals from Conflict-Affected and High-Risk Areas is one good example of how the proactive agenda can succeed. It takes us beyond a “naming and shaming” approach, to one that creates incentives for individual firms to develop practical approaches to improve performance across the board.

We have now embarked on the implementation phase to assess how enterprises are integrating this new Due Diligence Guidance in their day-to-day activities. Hundreds of enterprises have expressed their interest to be involved, and even reviewed, which is an achievement in itself and will allow the OECD to make a real difference on the ground.

And last but not least, we continue to work with our partners in government and the private sector to combat bribery in business. Effective enforcement of the Anti-Bribery Convention is one of the best tools we have for ensuring a stronger, cleaner and fairer world economy. As a Party to the OECD Guidelines for Multinational Enterprises and Anti-Bribery Convention, Israel sets an example—both globally and here in the Middle East—for fighting bribery and promoting responsible corporate behaviour.

Ladies and Gentlemen,

I would like to underscore the crucial link between responsible, corruption-free business and well-functioning markets. The economic crisis that started in 2007 gave rise to a crisis of legitimacy and a widespread collapse of trust in markets, in firms, and in the governance of our economies. We need to build up that trust again.

In this regard, responsible business conduct is more important today than ever. It needs to be part of the solution for putting our economies back on a sustainable growth path and for promoting durable economic and social progress.

Responsible business conduct generates trust in markets and entrepreneurial activity; it strengthens the basis of mutual confidence with societies; and it helps improve the investment climate, a necessary condition for durable economic growth.

With the revised Guidelines for Multinational Enterprises and the Anti-Bribery Convention, as well as a number of other tools, the OECD is well placed to play a leadership role as we move forward on the proactive agenda for responsible business in support of a level playing field that fosters sustainable growth and development for all.

Thank you.



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