The Cypriot educational organizational Non-Government organization CARDET in the framework of its capacity building and awareness actions for the 3rd year of the project Time for Change: Sustainable Production and Consumption of Raw Materials has participated in the 5th Global Forum on Sustainable Business Contact held in OECD conference building in Paris over 2 days on the 28th and 29th June 2017.
Within the conference OECD presented some positive results, a number of innovative approaches and private-public partnerships currently in place that seem to introduce a new collaborative era in how sustainability is discussed with the private multinational enterprises. This even also marked the last public appearance of OECD secretary-general Angel Gurria before his retirement.
Here are 11 of the main points from these three priority areas for RBC (Responsible Business Contact) below:
- 1 out of every 5th dollars invested by money managers are now filtered through various sustainability indexes as well as there is ramping up of shareholder overview of company’s management in terms of requirements for sustainable auditing.
- Some best examples were given about OECDs in house developed mediation mechanism, the National Contact Points. The NCPs is an underdeveloped non-judicial, non-arbitration mechanism between companies and affected stakeholders as a last resort for finding common solutions.
- Companies and shareholders tend to start to incorporate sustainable principles to their operations due to increased volatility due to climate change, environmental destruction, community and national competing interests in their eternal quest of predictability. Thus is leading towards a discussion for the need to update the definition of the fiduciary principle (the fiduciary principle is the highest corporate ethical and legal principle between the company and their shareholders; this principle was turned to mean that any sort of social responsibility beyond what is the absolutely bare minimum in the legal realm constitutes a shareholder theft and thus that the companies cannot be held responsible on improving the sustainability of their practices but only to maximize the profit of their shareholders)
- A need for global wide adoption of due diligence has to happen as 80% of global production happens within global production chains and multinationals. OECDs own research points that only 3 companies got 60% for responsible supply chain management.
- Global Supply Chain discussions are now inserted into official communiques for the G20s but governments see the issue as morally compulsive rather than obligatory which is a failing to identify its significance. Also this inaction could prove damaging to companies with good processes in place as they would be proven uncompetitive the drive towards sustainability will become a disincentive for the companies. Governments need to coordinate and push for massive mandatory adoption of sustainable principles.
- The problem is compliance both within the companies and for the regulatory authorities. For example the US conflict mineral legislation (articles 1502 and 1504) implementation sees only 20% of the companies who import conflict minerals complying fully with it.
- New Trend is monetizing the impacts of the supply chains (companies such Kering goup) and try to integrate these data into their business decisions
- There is a big challenge on how to breach the gap between CEOs and middle managements on social issues
- The role of Business schools in incorporating a holistic view for their business oriented students is finally reaching universities. United Nations PRME is currently the most widespread
- Innovative tools for responsible finance include Green bonds (10 fold increase in 4 years to 200 billion). Investors are willing to pay a premium for the chance on buying and holding these bonds for the long haul. However, the wage issue is paramount. Finance tools can be used to buy back shares in a company with the excess profit, instead of paying higher wages or creating viable pension funds and other redistributive schemes.
- Using technology for due diligence is a new category that tries to integrate and streamline the process of managing and controlling the impacts of the supply chain in real time or creating a better way to assessing that impact.