Responding to highly-publicized cases of poor corporate governance and the need to restore confidence in the global financial system, multilateral institutions and the business community are beefing up efforts to provide international guidance and possibly new rules in the area.
Leading the charge is the OECD, which this month begins a review of its Principles of Corporate Governance. Adopted in 1999, The non-binding principles were intended to serve as a reference point for countries’ efforts to evaluate their own legal, institutional, and regulatory frameworks. They have become a global guidepost for the largest institutional investors around the world and for organizations like the World Bank.
At their annual meeting in May 2002, OECD ministers authorized the review of the 1999 principles. With three years of experience upon which to build, the OECD will seek to evaluate gaps in the present systems of corporate oversight and identify areas that could be strengthened. Corporate governance is also expected to be high on the agenda of the next Group of Eight summit of leading industrial nations in Evian in June.
USCIB member Edwin Williamson (Sullivan and Cromwell) will chair an ad hoc group in the Business and Industry Advisory Committee (BIAC) to the OECD to advance business views on issues, recommendations and procedures for implementing governance principles.
To help meet this challenge, USCIB is forming a corporate governance working group to formulate and coordinate USCIB positions on the issues. A major early challenge in the effort will be implementation – assuring investors that governments have adopted the highest standards of governance, and that those standards are being implemented. What should be done where standards fall short and implementation is found wanting?
It is also anticipated that some governments and NGOs will seek to broaden the OECD review to embrace other issues such as human rights, labor rights and environment, issues that are more appropriately dealt with elsewhere. Both BIAC and ICC have argued against weighing down what has thus far been a very valuable multilateral exercise with non-governance issues
Staff contact: Ariel Meyerstein