The 50th anniversary of the Organisation for Economic Co-operation and Development’s (OECD) Guidelines for Multinational Corporations for Responsible Business Conduct, a foundational framework for ethical business practices, has been marked by a stark acknowledgment of the widening gap between professed values and observed actions by global leaders. Speaking at a forum convened to discuss the strengthening of these vital principles, Leo E. Strine, Jr., a distinguished legal scholar and former Chief Justice of Delaware, underscored the urgent need for renewed commitment to the Guidelines amidst growing public cynicism towards political and business elites. The event, held to commemorate half a century of the Guidelines, brought together prominent representatives from business, labor, and government to assess their current impact and chart a path for future efficacy.
A Trust Deficit in the Age of Accelerating Challenges
Strine’s remarks, delivered in a condensed form of his recent paper, painted a sobering picture of the current global landscape. He highlighted widespread disillusionment stemming from a perceived failure of leadership to address pressing global challenges. The accelerating impacts of human-caused climate change, despite overwhelming scientific consensus, have seen business leaders backtrack on their commitments to mitigate its effects. Similarly, the burgeoning field of artificial intelligence, while promising immense benefits, is characterized by an industry advocating for a "just trust us" approach, eschewing robust regulation and significantly increasing its reliance on energy-intensive operations that exacerbate climate concerns.
The erosion of trust is further compounded by a retreat from earlier acknowledgments of corporate responsibility in areas such as combating discrimination. Strine noted a discernible trend toward corruption and kleptocracy in the interactions between governments and the private sector. The financial interests of political officials and their families are increasingly seen as compromising the neutral application of the rule of law, leading to pressure on businesses to offer political or financial tributes for regulatory approval. This environment is exacerbated by politicians who, according to Strine, are willing to threaten retaliation against companies that exercise their free speech rights or decline to serve their political agendas.
On the international stage, Strine lamented a decline in cooperation among democratic, market-oriented nations. Instead of unified action against shared threats, some political leaders are imposing arbitrary tariffs and engaging in adversarial tactics with close allies, while appearing hesitant in the face of aggressive geopolitical actions. The violation of international law, particularly concerning unprovoked aggression and the disregard for civilian lives, has, in some instances, been met with a sense of defiance rather than remorse.
These developments occur against a backdrop of decades of widening economic inequality in many OECD nations, fueling anxiety and the risk of social discord. In this context, the 50th anniversary of the non-binding OECD Guidelines—a set of principles voluntarily adhered to by both nations and multinational enterprises—might seem an unlikely occasion for celebration.
The Enduring Significance of Principles in a Disconnected World
Strine, an American himself, acknowledged that the United States might be perceived by objective observers as a significant contributor to the issues causing public anxiety and as a nation straying from its ethical moorings. However, he posited that the true strength of the American tradition lies not in self-congratulation, but in the continuous striving to realize its core values of inalienable rights and equality under the law. He recognized that the nation has, at times, fallen short of these ideals, as have its aspirations to promote peace, economic development, and human rights globally.
Despite the potential perception of a growing chasm between stated American values and its conduct, Strine argued that this very gap, if mirrored across other OECD nations and the international business community, makes the Guidelines more, not less, important. He articulated a critical distinction: a world where citizens believe elites are hypocritical is worse than a world devoid of shared principles altogether. The OECD Guidelines, he emphasized, serve as a bulwark against such a descent, providing a common standard against which the powerful can be held accountable.
The Guidelines directly address the human temptation to abdicate responsibility when those in power fail to uphold the law. They clearly state: "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." This principle underscores a fundamental tenet: the failure of one does not excuse the failure of another.
The OECD Guidelines: A Half-Century of Shared Values
For fifty years, the OECD Guidelines have articulated the shared values of market economies, nations committed to democracy, human freedom, civil rights, and economic fairness. Their longevity, spanning a period that included 26 years of Republican presidencies in the U.S. during which the nation consistently supported and strengthened the Guidelines, attests to their broad acceptance among citizens of 52 nations.
The Guidelines reflect a central post-war objective of democratic nations: to demonstrate the superiority of market-based economies governed by the rule of law in fostering shared prosperity, freedom, and human flourishing, as compared to dictatorial systems. To achieve this, the Guidelines establish fundamental principles for responsible corporate conduct. They advocate for competition based on quality and price, rather than corrupt access to regulators, recognizing that corruption damages democratic institutions, discourages investment, and distorts competitive conditions.
The rule of law, applied fairly and neutrally, is presented as the bedrock of business conduct. The Guidelines clearly stipulate that obeying the law is the primary obligation of enterprises, complemented by the reciprocal duty of governments to uphold the rule of law and avoid corrupt practices. They explicitly condemn corporate efforts to use political contributions or other inducements to secure legal exemptions and highlight the harm caused by government officials seeking personal financial gain or political contributions in exchange for favorable treatment.
Principles for Sustainable Prosperity and Human Progress
Beyond legal compliance, the Guidelines emphasize that corporations should contribute to human progress by offering beneficial products and services that enhance, rather than harm, customer lives. A significant focus is placed on the responsibility corporations owe to their workers, calling for them to listen to employees, provide living wages, ensure humane working conditions, and respect human rights throughout their supply chains.
Furthermore, the Guidelines mandate that corporations treat their operating communities with respect, pay their fair share of taxes, and act as responsible stewards of the environment. Responsible business conduct, as defined by the Guidelines, means pursuing sustainable profits without inflicting damage on people or the planet. The concept of sustainability is framed by an enduring truth: corporate conduct that generates short-term profits at the expense of future generations is inherently irresponsible. Historical examples, from leaded gasoline and tobacco to opioids and PFAS, underscore the long-lasting harm of corporate overreach. The existential threat of climate change further amplifies the urgency of aligning business conduct with long-term sustainability.
Accountability Through Due Diligence and Disclosure
To translate these responsibilities into action, the Guidelines call for corporations to understand and confront the impact of their activities. The required due diligence is presented as a mechanism for self-awareness, fostering a more other-regarding approach and promoting integrity. Companies are expected to identify and address adverse impacts, remedy harms, and leverage their influence across supply chains to promote responsible practices.
A crucial element of accountability is disclosure. The Guidelines require corporations to publicly address their responsible business conduct policies and disclose actual or potential adverse impacts on people, the environment, and society. This transparency is framed as a means to ensure accountability, requiring an honest accounting of actions and exposing companies to public scrutiny when they fail to meet societal expectations. The principle that corporate power comes with corresponding responsibility is central to this theme.
Recommendations for Strengthening the Guidelines
Despite the challenges, Strine proposed concrete steps to enhance the impact and relevance of the OECD Guidelines. He urged for a renewed commitment to these enduring principles, grounded in fundamental human values.
Enhancing Reporting Frameworks
First, Strine advocated for leading public companies to adopt reporting policies that explicitly address compliance with the Guidelines. He suggested that the OECD could play a pivotal role in collaborating with existing standard-setters and organizations like B Lab to foster convergence toward a unified and workable reporting framework. Such a framework would generate clear, high-quality information about corporate impacts not only on stockholders but also on workers, consumers, communities, and the environment. The current fragmentation of reporting standards limits the Guidelines’ positive impact. The OECD’s inaugural Responsible Business Outlook report, released prior to Strine’s remarks, illustrates the need for such convergence. A global, rather than purely regional, approach to reporting standards would benefit companies genuinely committed to responsible practices and remove excuses for those that are not. These expectations should extend to large private multinationals, whose societal influence is as substantial as that of publicly listed companies.
Elevating Workforce Oversight
Second, Strine proposed leveraging the widespread claim of being "on the side of workers" across the political spectrum to drive action. He suggested that the OECD could facilitate this by encouraging boards of directors to take their duty to set fair workforce policies more seriously. While most large companies have committees dedicated to overseeing executive compensation, few have similar structures for workforce policies. This oversight gap results in boards focusing intensely on executive pay while having limited insight into the wages, working conditions, and overall well-being of the broader workforce. This has contributed to a stark divergence: soaring executive compensation and equity returns juxtaposed with a plummeting share of corporate gains for other workers. Establishing board-level workforce committees would provide a concrete mechanism for holding directors accountable for respecting workers’ interests, as called for by the Guidelines.
Furthermore, Strine pointed out that while the Guidelines mandate disclosure related to workers, they do not require disclosure of worker compensation across different quartiles. Requiring companies to disclose compensation by workforce quartiles would offer stakeholders meaningful insight into the fairness of value creation. Extending similar disclosure expectations to contracted workers within supply chains would further bolster accountability. This transparency would also improve internal decision-making, encouraging boards to consider executive compensation within the broader context of overall workforce pay and ensuring that compensation dollars are allocated where they generate the most value for both the company and society.
Demanding Transparency in Political Engagement
Third, Strine addressed the risk of multinational enterprises undermining democracy, a concern rightly recognized by the Guidelines. He argued for a more direct connection: multinational enterprises should be specifically required to disclose all political contributions in every jurisdiction of operation, as well as all lobbying expenditures and the identities of their lobbyists. This should also extend to charitable or other contributions made at the request of political officials, with the identities of the soliciting individuals clearly disclosed. Such transparency, he contended, would strengthen democratic accountability, reduce corruption, and protect corporations from improper demands. Public disclosure of contributions diminishes the incentive for political actors to seek improper advantage.
Engaging the AI Industry
Finally, Strine suggested a concerted effort, perhaps in collaboration with allies like Pope Francis, to encourage the AI industry to embrace these measures. He noted that AI, as recognized by the OECD’s new AI due diligence guidelines, is inherently global, transcending borders. AI presents inescapable risks, including significant energy consumption that exacerbates climate change, novel forms of harm to vulnerable populations, and the potential to reduce the availability of good jobs. However, AI also holds immense promise for solving global problems. Given AI’s centrality to the human condition, Strine called on those driving its proliferation to embrace and report under the Guidelines, prioritizing the best interests of their workers, consumers, and the shared climate within their corporate governance. A focused commitment from the AI industry could yield commensurately global benefits. If AI companies, with their presumed capabilities, can demonstrate how responsible business conduct can be implemented effectively, efficiently, and profitably, it could serve as a powerful model for other industries.
Strine concluded by urging a collective resolution to make such "asks" of others and of ourselves. He called for a commitment to live up to the durable principles embodied in the Guidelines, to maintain hope, and to try. This endeavor, he stressed, should not be undertaken in isolation but together, as fellow citizens of OECD nations united by shared values and a commitment to humanity. The enduring principles of the OECD Guidelines, even in challenging times, offer a vital compass for navigating toward a more responsible and equitable future.
