Board Accountability, Stakeholders and the
OECD Instruments for Corporate
Responsibility
Presentation for the Fourth Eurasian Corporate Governance Roundtable,
Dr. Rainer Geiger, Deputy Director, OECD
Bishkek, October 2003
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Directors responsibilities are not limited to carrying out the core
functions of conducting business and obeying laws

Businesses also have to respond to the expectations of the
democratic societies in which they operate – expectations that are
often not written down as formal laws.

“Corporate responsibility” refers to the actions taken by
businesses in response to such expectations in order to enhance
the mutually dependent relationship between business and
societies.

Shareholders expect their corporations to meet society’s
demands, consistent with maximising the value of the firm.

Experience has shown that companies that do so are the best
performers in the long run.
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The challenges of meeting these expectations have
become more complex in today’s global economy
Globalisation has raised legitimate public concerns:
 Some of them are directed at multinational enterprises (MNEs), as
agents of globalisation
 MNEs are often accused of being party to serious problems:
corruption of public officials, human and labour rights abuses,
environmental damage
 If ignored, such concerns may lead to legal or ethical troubles and
would affect company profitability and financial performance by an
impact on:

Company reputation;

Cost reductions (reduction of gas emissions may increase energy
efficiency, waste-disposal may create additional revenues
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Both corporate responsibility and corporate governance
concerns encourage corporations to focus on serving
shareholders or stakeholders
Corporate
responsibility
Corporate
governance
• Generally refers to responsibly grounded
business decision-making that
• Considers the broad impact of corporate
actions on:
 people,
 community and
 environment
• CG focuses specifically on the legal and other
mechanisms that hold the corporation
accountable to shareholders and other
stakeholders in achieving corporate goals.
The goal of providing the goods and services needed or desired by
members of society can be – and should be – fully compatible with
addressing corporate responsibility concerns and vice versa.
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The OECD Declaration on International Investment and
MNEs and Guidelines for MNEs
Promotes a comprehensive and balanced
approach for:
The Delcaration
 Governments’ treatment of foreign direct
investment (FDI) and for
 Enterprises’ activities in adhering countries.
A multilaterally enforced, non-binding code,
addressed to MNE:
 One of four main instruments of the Declaration
The Guidelines
 The other three include the National Treatment
instrument (non less favourable then for domestic
enterprises;
 On Conflicting Requirements on MNEs: calls for
their avoidance by governments in different
countries
 International Investment Incentives and
Disincentives – calls for improved multilateral cooperation on this issue
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Main Characteristics of the Guidelines
 The OECD recognises that MNEs have the opportunity
to implement policies for development that will ensure
coherence between social, economic and
environmental objectives.
 Many such enterprises have shown that high
standards for business conduct can enhance growth
 Adopted by the governments of 30 OECD member
countries and 7 non-members (Argentina, Brazil,
Chile, Estonia, Israel, Lithuania and Slovenia)
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Main Characteristics of the Guidelines (cont’d)
 The aim of these governments is to encourage the
positive contributions MNEs make to society and
minimise the difficulties caused by their operations
 Adhering countries are the source of most of the
world’s FDI and are home to most major MNEs.
 In spite of the multitude of business codes of conduct
currently available, the Guidelines are the only
multilaterally endorsed and comprehensive code
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The Guidelines are broken down in sections
 General policies
 Disclosure
 Employment and Industrial relations
 Environment
 Combating bribery
 Consumer interests
 Science and technology
 Competition
 Taxation
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Key provisions of some of these sections. Companies
should:
• Regularly
Disclosure
disclose information regarding their
activities, structure and financial performance
•Provide high standards for disclosure, accounting,
auditing, and social/environmental reporting
• Respect
Employment
& Industrial
Relations
the rights of free association and collective
bargaining
• Contribute to the abolition of child and forced labour
• Refrain from discrimination
• Provide a safe working environment
• When possible, employ local personnel with a view
of training them
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Implementation of the Guidelines
The National Contact Point (NCP) - often a government
office – is responsible for encouraging observance and for
ensuring that the Guidelines are well known and understood
nationally.
●
●Governments promote the Guidelines in conferences,
mailings to businesses, but also through concrete measures
in the trade and investment area.
●The Committee on International Investment and MNEs is the
OECD body responsible for overseeing the functioning of the
Guidelines by:
 taking steps to enhance their effectiveness;
 issuing clarifications on their application;
 consulting with the OECD business and labour advisory committees and NGOs.
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To conclude
The Guidelines cover the full
range of areas relevant to standards of
responsible business conduct and so provide
to corporations a most valuable international
benchmark of society’s expectations
Good corporate governance and corporate responsibility
are no-longer add-ons to markets, they are integral to them.
They are the basis on which public-private partnerships
can grow. Further improving the “fit” between
corporations and societies in which they
operate is a key goal of the OECD
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For More Information on the Guidelines
www.oecd.org
www/oecd.org/daf/investment/guidelines
Rainer.Geiger@oecd.org
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