WORLD TRADE
ORGANIZATIONWT/WGTI/W/93
31 October 2000
(00-4561)
Working Group on the Relationship
between Trade and InvestmentOriginal: English
COMMUNICATION FROM THE OECD
Reproduced hereunder is the statement made by the observer representative of the OECD at
the meeting of the Working Group on the Relationship between Trade and Investment held on11 October 2000.
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Revised OECD Guidelines for Multinational Enterprises
1. One of the most important exercises that the OECD has undertaken over the past few years is
the Review of the Guidelines for Multinational Enterprises .  The first version of this instrument,
which is one of four that are part of the OE CD Declaration on International Investment and
Multinational Enterprises, appeared in 1976.  This  year’s revisions, which were two years in the
making, were designed to ensure their continued relevance and effectiveness in the rapidly changing
global economy.  At the June Ministerial meeting, the governments of 29 member countries and four
non-members – Argentina, Brazil, Chile and the Slovak Republic – adopted this new set of Guidelines
and enhanced implementation procedures.
2. OECD Ministers noted in their June statement “Shaping Globalisation” that “The Guidelines
provide a robust set of recommendations for responsible corporate  behaviour world-wide consistent
with existing legislation.”  While many busines ses have developed their own codes of conduct in
recent years, the OECD Guidelines  are the only multilaterally endorsed and comprehensive code that
governments are committed to promoting. The Guidelines  express the shared values of the
governments of countries that are the source of most of the world’s direct investment flows and home
to most multinational enterprises. They apply to business operations world-wide.
3. The revised Guidelines  have been warmly welcomed as a timely initiative. It is widely
recognised that foreign investment is importa nt for economic growth and that multinational
enterprises contribute to economic, social and environmental progress.  At the same time, public
concerns remain about the impact of their activities on home and host countries. The new Guidelines
represent an important step in responding to some of these concerns within the rubric of improvingthe climate for international investment. The basic premise of the Guidelines  is that principles agreed
internationally can help prevent conflict and build an atmosphere of confidence between multinational
enterprises and the societies in which they operate.  In addition, they complement other initiatives,
including those on anti-corruption and corporate gove rnance, that have also characterised OECD work
over recent years.  All these non-binding initiatives seek to improve not only the environment forenterprises, but within and among enterprises and the societies in which they operate.
4. The Guidelines  are not a substitute for the law.  They represent supplementary principles and
standards of behaviour.  The new text of the Guidelines  contains far-reaching changes that reinforce
the economic, social and environmental elements of the sustainable development agenda.WT/WGTI/W/93
Page 2
Recommendations have been added on the elimination of child labour and forced labour consistent
with the 1998 ILO Declaration on Fundamental Principl es and Rights at Work, so they now cover all
internationally recognised core labour standards.1 A recommendation on human rights has been
introduced [“Enterprises should…respect the human rights of those affected by their activities
consistent with the host government’s international obligations and commitments”], and new chapterson combating corruption and consumer protection have been added.  The environment section now
encourages multinational enterprises to raise their environmental performance through improved
internal environmental management and better contingency planning for environmental impacts.  The
chapter on disclosure and transparency has been upda ted to reflect the OECD Principles on Corporate
Governance and to encourage social and environmental accountability.
5. Implementation procedures have been significantly improved, although it should be noted that
the Guidelines  were already unique as an international initiative in the area of corporate conduct with
implementation procedures.  While the Guidelines’  recommendations are addressed to business,
governments through a network of National Cont act Points are responsible for promoting the
Guidelines , handling enquiries and helping to resolve issues that arise in specific instances.  The
Review has provided considerable guidance to help National Contact Points and the Committee on
International Investment and Multinational Enterprises (CIME) to carry out their duties and it hasestablished mechanisms for promoting transparency, accountability and best practice which are
outlined in the documents associated with the Guidelines available before you, as well as at:
http://www.oecd.org/daf/investment/guidelines/index.htm .  The OECD Committee on International
Investment and Multinational Enterprises (CIME) remains the responsible body for clarifying the
meaning of the Guidelines  and overseeing their effectiveness.
6. The review process itself was an important aspect of the Review’s success.  The CIME
conducted extensive consultations with the business community, labour representatives, non-
governmental organisations and non-member countries .  Non-Member countries that do not adhere to
the OECD instruments were consulted on Guidelines-related issues at meetings in Paris in September
1999 and February 2000.  Another innovative aspect of  the process associated with the Review was
that opportunities for public comment were offered via the Internet.  This effort towards increased
transparency and openness provided essential inputs and reflects an important evolution in the way
OECD goes about its business.
7. With respect to non-adhering countries, the fact that no National Contact Points exist in these
countries can be a complicating factor in their implementation.  Nonetheless the Guidelines represent
expectations of enterprise behaviour wherever they operate.  Clearly, further dialogue on this issue is
necessary, and governments from OECD and other adhering countries are committed to this.  Indeedthe first event of this nature since the Review will take place on 12 December in Paris.
8. During the Review it became evident that businesses have been responding to public concerns
over their activities in a variety of ways.  Preliminary OECD research on well over 200 private
initiatives in this regard indicate commitments covering a vast array of issues including core labour
standards, environmental stewardship, human rights, disclosure, corporate governance, public safety,protection of privacy and consumer protection.  La bour relations and environmental stewardship are
the most common broad issue areas covered in the codes.  Not coincidentally, the Guidelines  address
many of these issues, and the revised Guidelines  do a better job of in some cases echoing, in some
cases leading, these private sector initiatives.
                                                     
1 Complementarities between ILO and OECD instruments in this area have existed since the 1970s, the
ILO drafting its Tripartite Declaration of Principles concerning Multinational Enterprises and Social Policy in
1977, one year after the initial OECD MNE Guidelines.WT/WGTI/W/93
Page 3
9. Why have companies increasingly adopted codes, many of which include mechanisms for
aiding internal compliance? The reasons for this are complex; that is to say “public concerns” reflect a
multiplicity of factors.  Investment does not take place in a vacuum.  While the activities of private
citizens and NGOs in both the developed and developing world have had an effect, these are by no
means the only influences on corporate behaviour. There is ample evidence to indicate that many oftoday’s firms are already are aware of the importa nce of the sorts of provisions embodied in the
Guidelines , independent of government recommendations:
• First, as just noted, corporations from many countries have issued codes themselves.
These tend to be backed up by management support, recognising the importance ofthese non economic issues and their desire to contribute in this regard to societies in
which they invest.
• Second, the development of independent standards such as ISO 14000 on
environmental management are increasingly important, and enjoy widespread
business, NGO, and government support.
2  The Global Reporting Initiative, or GRI, is
another example in a similar vein, which encourages an “…  international, multi-
stakeholder effort to create a common framework for voluntary reporting of the
economic, environmental, and social impact of organisation-level activity”.3
• Third, and perhaps most importantly, as noted in a recent study by Dow Jones in the
USA and Sustainability Asset Management in Switzerland, “companies with an eye
on their ‘triple bottom line’ – economic, environmental and social sustainability –
[tend to] outperform their less fastidious peers on the stock market”4
• Finally, there are increasing indications that large institutional investors are including
corporate social responsibility amongst the variables in determining their investment
strategies.5  This, in turn, can be seen as an expression of public expectations for
business support of environmental, social, and other standards.
10. It should be noted that the processes described above do not mean that the role of government
may be overlooked.  On the contrary, the Guidelines  are just one example of recent initiatives that
have often been taken in partnership between business and government, sometimes with the co-
operation of other actors.  In the draft operational guidelines of the Compliance Advisor Ombudsman
(CAO) of the International Finance Corporation (an arm of the World Bank group), for instance,
mechanisms have been drafted whereby “any community, group of two or more persons, or another
party affected or likely to be affected by an IFC or MIGA project, may make a complaint to the
                                                     
2 For further information on ISO14000 standards, see http://www.iso.ch .
3 See http://www.globalreporting.org/ .
4 The Economist , 11 Sept, 1999, p. 24.  The study, released as the “Dow Jones Sustainability Group
Index”, maintained that that the world’s top 200 “sustainable” firms tend to outperform their peers in almost all
sectors, including basic materials, energy, and technology.  See the report on the Dow Jones SustainabilityGroup Indexes GmbH (DJSGI GmbH) website on http://indexes.dowjones.com/djsgi/news/press.html .  See also
Dow Jones Sustainability Group Index Guide, September 2000, at:  http://www.sustainability-
index.com/pdf/guidebook.pdf .
5 Recently, the board of one of the world’s largest institutional investors, CalPERS (California Public
Employees Retirement System, with assets of US$160 bn.), announced the endorsement of the “Global SullivanPrinciples” on human rights.  According to Global Proxy Watch , a newsletter on international corporate
governance and shareholder value, if a firm breaches the Global Sullivan Principles, CalPERS “…wouldconsider writing to and meeting with company executives, or sponsoring dissident shareholder resolutions” (SeeGlobal Proxy Watch ,  Massachusetts, USA, 17 September, 1999).  The article went on to note that a senior
CalPERS lawyer confirmed that CalPERS would also apply its social responsibility criteria to non-U.S.
corporations.WT/WGTI/W/93
Page 4
Ombudsman”.6  The Global Compact initiative of the United Nations, encompassing input from the
ILO, UNEP, and  OHCHR [Office of the High Commissioner for Human Rights], is working with
private partners as well.7
11. The fact that the standards embodied in the Guidelines  are recommendations by governments
indicates that governments care about the sorts of issues dealt with in the Guidelines .  Governments
further demonstrate this commitment by participatin g in various degrees in all of the existing and
prospective implementation procedures, and, of course, the Guidelines  have also drawn support from
the business community, trade unions, and NGOs.
12. OECD governments, as well as other governments that adhere to the Guidelines , have
confirmed that the Guidelines  should be viewed as an integral element within the package of
investment instruments that comprise the OECD  Declaration on International Investment and
Multinational Enterprises.
13. Indeed for decades, the OECD has promoted co-operation on international investment
through this Declaration.  The Declaration sets forth non-binding principles and standards addressed
both to governments and to enterprises.  The Guidelines , which are addressed to enterprises, remain
an important part of this balanced package which seeks to contribute to a favourable investment
climate.  The other elements of the package contain commitments by governments to provide nationaltreatment for foreign-controlled enterprises, to av oid imposing conflicting requirements on enterprises
and to co-operate regarding investment incent ives and disincentives.  Non OECD Members are
encouraged to adhere to this Declaration.
14. As a final point, I would like to emphasise that the task of making the Guidelines  a
meaningful instrument for the international business community has only just begun.  The continuingsupport and involvement of the business community, as well as labour representatives and non-
governmental organisations will be crucial if the revised Guidelines  are to be a useful reference point
and tool for promoting corporate social responsibility.  Non-adhering governments too have an
important contribution to make, as OECD and other adhering country Ministers implicitly
acknowledged during this year’s Ministerial.  Ultimately, the success and effectiveness of theGuidelines  will depend on the responsibility and good faith of all parties involved with their
promotion and implementation.
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6Office of the Compliance Advisor Ombudsman of the International Finance Corporation (of the World
Bank Group), at:  http://www.ifc.org/cao/ .  Draft Operational Guidelines at:
http://www.ifc.org/cao/guidelines/GUIDELINES.PDF .
7At the World Economic Forum, Davos, on 31 January 1999, UN Secretary-General Kofi A. Annan
“challenged world business leaders to ‘embrace and enact’ the Global Compact, both in their individual
corporate practices and by supporting appropriate public policies. These principles cover topics in human rights,
labour and environment.”  For further information, see http://www.unglobalcompact.org/ .