OECD head: Large corporations must regain public's trust
By NADAV SHEMER
The events of 2007 gave rise to a “crisis of legitimacy” for governments, institutions and large corporations, says Angel Gurría.
Large corporations must focus their efforts on regaining public confidence lost
since the global financial crisis, OECD Secretary-General Angel Gurría said in
Tel Aviv Wednesday.
He made the comment while addressing a
corporate-responsibility conference hosted by the Justice Ministry, the
Industry, Trade and Labor Ministry and the Manufacturers Association of
The events of 2007 gave rise to a “crisis of legitimacy” for
governments, institutions and large corporations, said Gurría, who was on a
two-day visit to the country. Overcoming this crisis is not just a question of
achieving economic goals or restarting job growth, but also of rebuilding the
trust that was lost.
“In this respect, responsible business conduct is
more important than ever,” he said. “[It] generates trust in markets and trust
in entrepreneurial activity. It strengthens the basis of mutual confidence with
societies and helps improve the investment climate.”
reached an “unprecedented moment of international convergence” on the issue of
corporate responsibility, Gurría said, referring to a series of recent
international agreements, including the OECD’s own updated Guidelines for
Multinational Enterprises (GME), which has been signed by the organization’s 34
member states plus 10 more countries.
“[This represents] convergence in
the baseline standards for how businesses should understand and address the
social risks of their operations; convergence in the understanding of how
governments should support and promote responsible business conduct,” he said.
“The outcomes of these developments speak for themselves: clearer and more
predictable standards that empower enterprises to meet their social
responsibilities and that empower stakeholders to hold them to
Israel, one of the 34-nation Organization for Economic
Cooperation and Development’s newest members, is a signatory to its GME and
Anti-Bribery Convention. As a party to these agreements, “Israel sets an example
both globally and here in the Middle East for fighting bribery and promoting
responsible corporate behavior,” Gurría said.
Momo Mahadav, CEO of
Ma’ala, an umbrella organization of about 130 of Israel’s largest companies that
is dedicated to promoting corporate social responsibility, said last summer’s
public protests over socioeconomic issues presented the perfect opportunity for
companies to address their behavior.
There has been a correlation in the
growth in companies addressing corporate responsibility, adopting codes of
ethics and making financial contributions to the community on the one hand, and
growing public distrust of the companies on the other hand, he said. What this
proves is that CSR indexes must used be for internal purposes only, but that “in
the end the public will be the judge,” he added.
Mahadav demonstrated his
point with an analogy.
“There was a time when the police would hold a
press conference every year, in which they would declare that they had managed
to reduce crime by X%,” he said. “The media and public would say, ‘Big deal,
just because you said you reduced crime from 12% to 11% doesn’t make us feel any
safer walking the streets.’ The police eventually understood this and started
using these data as internal indexes to assess their performance, while
broadcasting different messages to the public.”
If companies really want
to deal with corporate responsibility, Mahadav said, they must embrace a number
of new tactics, such establishing a “never-ending” forum between senior
management and employees, in which attention can be raised to the hard
This would help the companies demonstrate that they are more
genuine and will ultimately benefit them, he said.