The Enduring Value Of Holding Ourselves To Our Enduring Values: A Reflection Honoring The OECD’s Guidelines For Multinational Enterprises On Responsible Business Conduct

This year marks the 50th anniversary of the OECD’s Guidelines For Multinational Corporations For Responsible Business Conduct, a set of principles to which the United States, the other OECD nations, and additional signatories totaling 52 nations comprising nearly two-thirds of the world’s economic activity and the bulk of market-based, democratic nations, adhere.  In this condensed set of remarks, the longer version of which can be found here, I was honored to help set the stage for a discussion of the importance of and ways to strengthen the Guidelines among leading representatives of business, labor, and governmental stakeholders.

We gather at a time when the citizens of OECD nations have reason to be cynical about whether political and business leaders can be trusted.

Facing incontrovertible evidence that human-caused climate change is accelerating and poses enormous economic and human harm, business leaders have abandoned commitments to help arrest warming before it is too late.  Knowing that artificial intelligence poses great dangers, the AI industry has pivoted from recognizing that legal regulation is necessary to advocating a “just trust us” approach, spending enormous sums to influence the political process against responsible regulation, and seismically expanding their use of climate-harming energy.

Business leaders who had recently acknowledged their duty to help overcome discrimination against Black people and women have retreated from those commitments.

Our publics are seeing an undeniable trend toward corruption and kleptocracy in government’s interaction with the private sector.  The financial interests of political officials and their families are an insidious factor in the regulatory process, supplanting the neutral application of the rule of law. The pressure on businesses to pay political or financial tribute to gain approval is compounded by the willingness of certain politicians to threaten retaliation if companies exercise their free speech rights or fail to serve those politicians’ political interests.

Instead of strengthening cooperation among democratic, market-oriented nations to address shared threats to our values and security, some political leaders impose arbitrary tariffs on and bully their closest allies while cowering in the face of brazen Russian aggression.  International law against unprovoked aggression and the callous disregard for civilian lives has been violated with more like pride than chagrin.

These developments accompany decades of widening inequality in many OECD nations and the anxiety and risk of social discord that flows from greater economic insecurity.  Against that backdrop, it might seem strange to celebrate the 50th anniversary of a set of non-binding Guidelines to which both OECD nations and multinational enterprises have pledged to adhere voluntarily.

Even more, it might seem a bit rich to have an American help kick off this program.  Objective observers might rationally view the United States to be the OECD nation most responsible for the issues creating understandable anxiety among ordinary people, and the one most straying from its ethical moorings.

I am proud to be an American.  But our best attribute is not the self-congratulatory streak some Americans exhibit—portraying our nation as a gift to an otherwise benighted world while overlooking our failures.  The best American tradition is different.

That tradition acknowledges that our nation’s core values—that every person has unalienable rights that government cannot take away, and that every person is equal under the law—are ideals we must continually strive to realize.  It recognizes that we have too often fallen short of those ideals. It also acknowledges that although the United States has long professed a commitment to promote peace, economic development, human rights, and the democratic self-determination of other nations, we have strayed from those aspirations too often.

Our allies might think that the gap between the values long advocated by the United States and its actual conduct has grown too wide.  But if that is true not just for the United States, but also for other OECD nations and for the international business community itself, then that only makes the Guidelines—and what they signify—more, not less, important.

There is something worse than a world where citizens believe that elites are hypocrites who profess adherence to moral principles while simultaneously engaging in behavior dishonoring those principles.  The worse world is one in which there are no shared principles at all—no common standards against which to hold the powerful to account.

The OECD Guidelines anticipate the human temptation this moment presents.  Why should I behave lawfully, morally, and ethically if those in power do not? If those charged with enforcing the law flout or misuse it, doesn’t that excuse the rest of us?

The Guidelines answer clearly:

“Failure of governments to uphold the principles and standards consistent with the Guidelines or their associated international commitments does not diminish the expectation that enterprises observe the Guidelines.”

Someone else’s failure of principle does not excuse your own.

Precisely when we fear that the powerful have forsaken shared values is when we most need to remember what those values are.  The Guidelines help us do that. For half a century, they have expressed the shared values of the nations of the world’s market economies, the nations most dedicated to democracy, human freedom, civil rights, and economic fairness.

Fifty years may be a blip in the life of our planet, but it is a meaningful period in a democracy.  When principles-based Guidelines have endured for half a century, it is because they reflect values with wide acceptance by the citizens of 52 nations.

For example, for 26 of the 50 years during which the Guidelines have existed, the U.S. has had a Republican, not Democratic, President.  And during that entire period, the U.S. has supported and helped to strengthen the Guidelines.

Reading the Guidelines makes it easy to understand why. They reflect a central goal of postwar policy among democratic nations: to demonstrate that democracies with market-based economies governed by the rule of law create more shared prosperity, freedom, and human flourishing than dictatorial systems like communism or fascism.

To help deliver on that promise, the Guidelines articulate fundamental principles for responsible corporate conduct.  Companies should compete on the basis of quality and price—not through corrupt access to regulators or policymakers. As the Guidelines make clear, “Corruption is damaging to democratic institutions and the governance of corporations.  It discourages investment and distorts international competitive conditions.”

The rule of law, fairly and neutrally applied, should regulate business conduct and foster responsible practices.  The Guidelines make plain that obeying the law is the first obligation of enterprises.  At the same time, they emphasize the reciprocal duty of governments to uphold the rule of law themselves and to avoid corruption that distorts fair competition.

The Guidelines condemn corporate efforts to use political contributions or other inducements to secure exemptions from generally applicable laws.  They also recognize that government actors who seek to extract personal financial gain or political contributions as a condition of favorable treatment harm not only democracy, but sustainable economic development itself.

Consistent with the idea that business should contribute to human progress, the Guidelines emphasize that corporations should make money the right way.  They should sell useful products and services that improve their customers’ lives and do not harm them.

They also recognize the special responsibility corporations have to those most responsible for their success: their workers.  The Guidelines call on companies to listen to workers, to pay living wages, to provide humane working conditions, and to respect human rights—not only for their direct employees, but for all workers throughout their supply chains.

The Guidelines require corporations to treat their communities of operations with respect, pay their fair share of taxes, and be responsible stewards of our shared environment.  Responsible business conduct does not come at the unfair expense of someone else.  Responsible business conduct seeks sustainable profits without causing damage to people or our planet.

And by “sustainable,” the Guidelines recognize an enduring truth: corporate conduct that generates profits in the short term but imposes enormous costs on future generations is not responsible.  History has shown, through examples ranging from leaded gasoline and tobacco to opioids and now PFAS, that corporate overreach can cause lasting and widespread harm.  The existential threat posed by human-caused climate change underscores the urgency of aligning business conduct with long-term sustainability.

To make these responsibilities real, the Guidelines call on corporations to understand—and confront—the impact of their actions.  Self-awareness—which is what the required due diligence facilitates—is essential to becoming more other-regarding, to acting with greater integrity, to engaging in responsible business conduct.  Companies must identify and address adverse impacts, remedy harms where they occur, and use their leverage across supply chains to promote responsible practices.

The Guidelines go further by requiring disclosure.  Corporations must publicly address their responsible business conduct policies and disclose actual or potential adverse impacts on people, the environment, and society.  Accountability means making an honest accounting of your actions and facing public scrutiny if you don’t operate in a manner respecting society’s legitimate expectation.

This requirement to come clean to the public underscores a central theme of the Guidelines:  with corporate power comes corresponding responsibility.

In sum, the Guidelines are grounded in principles that endure because they reflect fundamental human values.  That we are far from fully realizing those principles and that our collective moral GPS may be leading us even further astray does not make them less important—it makes them more so.

Without a true north, how can we find our way?

Rather than descend into hopelessness or cynicism, we can honor the spirit of the Guidelines ourselves by fulfilling a basic human duty—the duty to try, to do what we can to make our world a better place.

In that constructive spirit, I will close with a few thoughts about how we can make meaningful progress, even in this challenging moment, thoughts meant to encourage you to voice your own positive ideas during today’s important discussions.

First, we should encourage leading public companies to adopt reporting policies that explicitly address compliance with the Guidelines.  The OECD can play an important role by engaging with existing standards setters and organizations such as B Lab to promote convergence toward a workable, unified reporting framework—one that produces clear, high-quality information about corporate effects not only on stockholders, but also on workers, consumers, communities, and the environment.

The current lack of reporting tied explicitly to the Guidelines is an obvious limitation on their positive impact. But in fairness to companies, it also reflects the fragmentation of existing reporting standards.  The incredible work of the OECD in putting together the inaugural Responsible Business Outlook report issued yesterday illustrates the need for convergence around an explicit reporting framework that maps on to the Guidelines explicitly.  The difficult task for experts of taking disparate corporate reports that do not explicitly reference the Guidelines and drawing larger conclusions illustrates how important it is to corporate accountability to make reporting on global adherence to responsible business practices clearer and more consistent.  Leadership by the OECD to promote global, not just EU, convergence would support companies that genuinely seek to act responsibly and remove excuses for those that do not.  These expectations must apply not only to publicly listed companies, but to large private multinationals whose influence on society is equally substantial.

Second, the OECD should leverage the reality that everyone on every part of the political spectrum claims to be on the side of workers.  The OECD could act on this stated consensus by making boards take more seriously their duty to set fair workforce policies.

Most large companies maintain committees that oversee executive compensation, yet very few have committees dedicated to overseeing workforce policies.  As a result, boards focus closely on what they pay senior executives and directors, while knowing far less about the wages, working conditions, and overall well-being of the broader workforce.

The result has been a striking divergence:  executive compensation and equity returns have soared during a period of increasing investor influence, while the share of corporate gains that go to other workers has plummeted.  Boards have borne too little responsibility for this unhealthy decline in gain sharing.  The Guidelines call on companies to listen to workers and respect their interests.  Establishing board-level workforce committees would provide a concrete mechanism to hold corporate directors responsible for doing just that.

Similarly, although the Guidelines call for disclosure relating to workers, they do not require disclosure of one of the most material categories of information:  what workers are paid.  Requiring companies to disclose compensation across workforce quartiles—showing what different groups of employees do and what they earn—would provide stakeholders with meaningful insight into whether companies are creating value fairly.  Extending similar disclosure expectations to contracted workers in company supply chains would further strengthen accountability.

Such transparency would also improve decision-making within companies.  It would encourage boards to consider executive compensation within the broader context of overall workforce pay and help ensure that available dollars for compensation go where they will create the most value for the company, and thus society.

Third, the Guidelines rightly recognize the risk that the undue influence of multinational enterprises may undermine democracy.  But the Guidelines do not connect the dots in this obvious and overdue way:  The Guidelines should specifically require multinational enterprises to disclose all political contributions they make in every jurisdiction where they operate, as well as all expenditures on lobbying and the identities of their lobbyists.  They should also disclose charitable or other contributions made at the request of political officials and identify the cronies who solicited them.

Sunlight would strengthen democratic accountability, reduce the risk of corruption, and help protect corporations themselves from improper demands.  When political actors know that contributions will be publicly disclosed, the incentive to seek improper advantage diminishes.

Finally, the OECD might, in concert with natural allies such as Pope Leo—gotta love that name—make a special effort to encourage the AI industry to agree to all these measures.  As the OECD’s good work on the new AI due diligence guidelines recognize, AI is the ultimate multinational—it knows and respects no borders.  AI is inescapable and has inescapable risks.  AI companies are using enormous amounts of energy and making the difficulties of solving human-caused climate change much harder.  AI is exposing vulnerable people to novel forms of harm.  AI threatens to make good jobs harder to find.  But AI also has enormous promise to solve problems and improve our lives.  Given AI’s centrality to our human condition, let’s call on those driving its ubiquity to embrace and report under the Guidelines, and to make the best interests of their workers, their consumers, and our shared climate, a central focus of their corporate governance.  Because AI has such a global impact, a focused commitment by that industry to comply with the Guidelines could have a commensurately global benefit to humanity.

And if one industry models how compliance with the Guidelines is not just feasible, but also good business, that will make it easier for other industries to do the same.

If AI is as capable as its proponents suggest, then companies in that sector should be uniquely well-positioned to show how responsible business conduct can be implemented effectively, efficiently and profitably.

Will the industry answer the call?  We will only know if we ask.

So let us resolve today to make asks like these—not only of others, but of ourselves.

Let’s resolve to live up to the durable principles embraced in the Guidelines.  Let’s resolve to have hope.  Let’s resolve to try.

And let’s resolve to try, not in isolation, but together as fellow citizens of OECD nations committed to our shared values and humanity.