The Draft OECD Corporate Governance Principles

In early 2014, the Organisation for Economic Cooperation and Development (OECD) launched a review and revision of two of its flagship guidelines on corporate governance:

• The OECD Corporate Governance Principles - an international benchmark for policy makers, investors, corporations and other stakeholders worldwide for improving corporate governance. The Principles provide specific guidance for legislative and regulatory initiatives in both OECD and non-OECD countries.  They are one of the 12 key standards for international financial stability of the Financial Stability Board (FSB) and form the basis for the corporate governance component of the Report on the Observance of Standards and Codes of the World Bank Group.  The OECD review of the Corporate Governance Principles, the first in ten years, is “to ensure the continuing high quality, relevance and usefulness of the Principles” while taking into account recent developments in the corporate sector and capital markets and input from stakeholders.  
• The OECD Guidelines on Corporate Governance of State-Owned Enterprises - an internationally agreed standard on how governments should exercise ownership of SOEs. The revision is intended to assist states to manage more effectively their responsibilities as company owners, thus helping to make state-owned enterprises more competitive, efficient and transparent. In September 2014, IHRB submitted a response to the consultation on the OECD Guidelines on Corporate Governance of State-Owned Enterprises welcoming the reference in the draft Guidelines to the UN Guiding Principles on Business and Human Rights, while pointing out that one of the innovations introduced by the UN Guiding Principles is in making human rights an operational consideration for Governments and SOEs.

The IHRB submission on the draft Corporate Governance Principles draws attention to the need to assess whether “the Principles are fit for purpose in the 21st Century” as intended and reflect an approach to managing companies for the long-term, with a focus on sustainable value for the company, society and the environment. IHRB’s submission welcomes strengthened references to high ethical standards and to human rights, but makes numerous suggestions on strengthening the Principles, including integrating human rights considerations into risk management to better reflect modern visions of corporate responsibility.