bfbm(9-2016) responsible business conduct matters

RESPONSIBLE BUSINESS CONDUCT (RBC) MATTERS!

Prof.Dr.Aung Tun Thet

INTRODUCTION

INTERNATIONAL INVESTMENT DRIVES GLOBAL ECONOMY▪ Significant structural changes over past three decades

▪ Governments opened markets

▪ Businesses embraced new opportunities

▪ Unprecedented period of economic growth and inter-connectedness

INTERNATIONAL INVESTMENT DRIVES GLOBAL ECONOMY▪ Multinational enterprises (MNEs)

▪ Job creation

▪ Human capital development

▪ Efficient capital distribution

▪ Technology, knowledge and skills transfers

INTERNATIONAL INVESTMENT DRIVES GLOBAL ECONOMY▪ Contribute to development and economic growth

▪ Home and host countries

MARKET INTEGRITY ESSENTIAL▪ Healthy business environment interest of all stakeholders

▪ Demands effort by all

▪ Government protect internationally recognised fundamental rights

▪ Improve functioning of markets through good governance, fair regulations and transparency

MARKET INTEGRITY ESSENTIAL▪ Businesses adopt responsible business practices

▪ ‘Bottom line’ and impact of activities on society

▪ CSOs involved proactively and constructively

▪ International organisations provide forum for dialogue, peer learning, standard setting, analysis, and best policy recommendations

MARKET INTEGRITY: EFFORT BY ALL

GOVERNMENTS• Good governance• Fair regulations• Transparency• Protecting rights

CIVIL SOCIETY• Proactive and constructive

engagement• Ensuring accountability

BUSINESS• Responsible

Business Conduct

PROMOTING RESPONSIBLE BUSINESS CONDUCT (RBC)

PYRAMID OF CR

Philanthropic ResponsibilitiesBe a good corporate citizen.

Ethical ResponsibilitiesBe ethical.

Legal ResponsibilitiesObey the law.

Economic ResponsibilitiesBe profitable.

PRINCIPLES OF CORPORATE RESPONSIBILITY

1. Accountability

2. Transparency

3. Ethical behaviour

4. Respect for Stakeholder’s interest

5. Respect for rule of law

6. Respect for international norms of behaviour

7. Respect for human rights

RBC▪ Essential part of open international investment climate

▪ Cultural, legal and regulatory environments

▪ Complexity and intensely competitive nature

▪ Unique and specific challenges

RBC▪ Demonstrate respect for high standards of business conduct

▪ Promoting dialogue

▪ Engaging with stakeholders

▪ Addressing societal concerns

▪ Advancing enterprise interests

▪ Mutually supportive

RBC▪ Compliance with laws

▪ Respecting human rights

▪ Environmental protection

▪ Labour relations

▪ Financial accountability

RBC▪ Lasting benefits to employees, customers and societies

▪ Roles of government, business and CSO complementary and interdependent

▪ Consultation and cooperation

▪ Government

▪ Companies

▪ Professional associations

▪ CSOs

ROLE OF GOVERNMENT▪ Fulfil distinctive role effectively

▪ Provide enabling legal environment

▪ Keep and attract high quality investors

GOVERNMENT▪ Support RBC in three ways:

1. Facilitating – setting clear overall policy frameworks

2. Partnering – combining public resources with business and other actors to leverage complementary skills and resources

3. Endorsing – showing public political support for RBC practice

COMPANIES▪ Three levels of behaviour:

1. Essential actions: minimum business standards defined by national and international law

2. Expected actions: beyond legal requirement

3. Desirable actions: philanthropic or community-based initiatives

ISSUESClear separation of government and business rolesPromoting effective two-way communication: law-making

and other dialogueProviding adequate framework for corporate disclosureEnlisting business as partner in legal and regulatory systemStrengthening business case for responsible conductIntergovernmental co-operation

CLEAR SEPARATION OF GOVERNMENT AND BUSINESS ROLES ▪ Government and business roles distinct

▪ Cannot substitute for each other

CLEAR SEPARATION OF GOVERNMENT AND BUSINESS ROLES ▪ Government

▪ Look after collective interests of citizens

▪ Work with companies and other civil society organisations to create enabling environment

CLEAR SEPARATION OF GOVERNMENT AND BUSINESS ROLES ▪ Facilitate, partner and endorse business initiatives

▪ Partner with companies and business associations in promoting new environmental policies and practices

▪ Avoid ‘regime capture’

KEY CONSIDERATIONS ▪ Leadership and policy coordination

▪ Essential

▪ Support RBC principles

▪ Decide which branch of Government take lead

KEY CONSIDERATIONS ▪ Equitable enforcement

▪ Abide by international labour and environmental standards

▪ Cannot meet commercial targets undercut by competitors reducing costs by paying unfair wages or skimping on safety requirements

POLICY PRACTICES TO SCRUTINISE ▪ Human rights

▪ Employment and industrial relations

FINANCIAL ACCOUNTABILITY▪ Government establish effective legal and administrative

framework to promote transparency and reduce corruption

▪ Companies compete on equal terms – ’level playing field’

▪ United Nations Convention against Corruption (UNCAC)

PROMOTING EFFECTIVE TWO-WAY COMMUNICATION: LAW MAKING AND OTHER FORMS OF DIALOGUE

▪ Law making - communication between governments and business

▪ Effective legal system requires consultation both before laws drafted and after promulgated

▪ Citizens’ right to information respected

▪ Grievance mechanisms

PROMOTING EFFECTIVE TWO-WAY COMMUNICATION: LAW MAKING AND OTHER FORMS OF DIALOGUE

▪ Government regulation

▪ Voluntary business standards

▪ Government facilitate and endorse business initiatives beyond minimum legal threshold

▪ Bring companies and civil society organisations together

▪ Develop voluntary initiatives

KEY CONSIDERATIONS

▪ Understanding legitimate needs of private sector

▪ Business associations, chambers of commerce and multi-stakeholder groups important dialogue partners

▪ Government consult with representatives of civil society and business

KEY CONSIDERATIONS

▪ Advice on interpreting new laws

▪ Government provide channels of communication

KEY CONSIDERATIONS

▪ Freedom of information and rights of whistle blowers

▪ Local and international civil society organisations important source of independent information on human rights, labour and environmental issues

▪ Article 19 of the UN Universal Declaration for Human Rights: right to freedom of opinion and expression

▪ Rights of ‘whistle- blowers’

PROVIDING ADEQUATE FRAMEWORK FOR CORPORATE DISCLOSURE ▪ Companies policies on ‘environmental, social and

governance’ (ESG) issues

▪ Socially Responsible Investment (SRI)

▪ Revenue management of oil, gas and mining industries

KEY CONSIDERATIONS ▪ Mandating role of government

▪ Role of stock exchange

▪ Corporate codes of business principles

▪ Disclosure

▪ Combating bribery

POLICY PRACTICES TO SCRUTINISE ▪ State-owned enterprises (SOEs) serve as model -

demonstrating best practice

▪ Fulfil Corporate Social Responsibilities (CSR)

▪ State set example as investor

▪ Government procurement

ENLISTING BUSINESS AS PARTNER IN LEGAL AND REGULATORY SYSTEM

▪ Creating costs for non-compliance (costs of investigations, legal costs, fines, imprisonment and damage to reputation)

▪ Government facilitate and motivate by seeking out views on laws and enforcement practices

▪ Provide conciliation and ombudsman facilities

▪ Government acknowledge and support private initiatives to enhance compliance

KEY CONSIDERATIONS▪ Need for management systems

▪ Training

▪ Monitoring

▪ Reporting

▪ Evaluation procedures

KEY CONSIDERATIONS▪ Government take corporate culture into account when

enforcing law

▪ Effective and well-designed anti-bribery compliance programme

STRENGTHENING BUSINESS CASE FOR RESPONSIBLE CONDUCT ▪ Responsible companies more sustainable

▪ Retain social and legal ‘licence to operate’ from governments and consumers

▪ Business and moral case go hand in hand

STRENGTHENING BUSINESS CASE FOR RESPONSIBLE CONDUCT ▪ Commitment to ethical values attract and retain best

employees

▪ Strongest customer base

▪ Protecting value through risk and reputation management

▪ New value creation

▪ ‘First-mover’ advantages

STRENGTHENING BUSINESS CASE FOR RESPONSIBLE CONDUCT ▪ UN Principles for Responsible Investment (PRI )

▪ Extractive Industries Transparency Initiative (EITI)

KEY CONSIDERATIONS▪ Successful partnerships - skill, diplomacy and effort

▪ Three critical ingredients:

1. Equity

2. Transparency

3. Acceptance

KEY CONSIDERATIONS▪ Balance between government, business and civil society

participants

▪ Government endorsement and publicity

▪ Develop business codes of conduct and standards

POLICY PRACTICES TO SCRUTINISE▪ Government willing to engage with business and civil society

▪ Mechanisms for engagement

INTERGOVERNMENTAL CO-OPERATION

▪ RBC agenda international in scope: climate change and challenge of reducing carbon emissions; fight against bribery promotion of responsible labour standards among suppliers of large international companies

▪ Search for solutions equally international: pooling international expertise, sharing experience, and developing common standards

INTERGOVERNMENTAL CO-OPERATION

▪ OECD, World Bank, ILO and other UN agencies

▪ Specialist expertise

▪ Forums to develop common standards and promote best practice - discussing wider political and economic issues

POLICY PRACTICES TO SCRUTINISE▪ Government participate in intergovernmental cooperation

▪ Promote international concepts and principles for responsible business conduct

▪ OECD Guidelines for Multinational Enterprises

▪ ILO Tripartite Declaration of Principles

▪ United Nations Global Compact

THANK YOU!