Transcript The Caux Round Table

The Caux Round Table
and
[Country Name]
OVERCOMING POVERTY
CRT ACTION PLAN
Use CRT Principles for Governments,
12 Core Best Practice Standards, and
CRT Principles for Business
set goals and objectives
for national development
to
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CRT Goal:
Investment of Private Equity Capital in New Wealth Creation
-
Supports Debt
-
Higher Revenues for Public Sector
-
Introduces Technological Change
-
Creates Jobs
CRT Vision:
Responsible Government Opening Investment Doors for
Responsible Private Ownership and Risk-Taking
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Necessary Capital Resources for Growth
Available Today in the Private Sector
- Annual Official ODA - $50 billion
- Annual Cross-border Investment - $250 - 350 billion
- Annual Trade Settlements - $1 - 9 trillion
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GLOBALIZATION HAS SHIFTED POWER FROM GOVERNMENTS TO MARKETS
Combined central bank foreign
exchange reserves in US, UK,
Japan, Germany, Switzerland
(in US$ Billions)
1,124
Average daily FX turnover in
New York, London, Tokyo
(in US$ Billions)
870
623
375
278
172
139
284
197
Governments
no longer possess
the reserves to
materially affect the
global capital
markets
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1983
1986
1992
1995
2000
5
PRIVATE FINANCIAL SECTOR MARKET POWER OVERWHELMS
OFFICIAL MULTILATERAL LENDERS
2001
Market investors - US$35 trillion
Buy & hold
(pension funds,
insurance
companies)
Official lenders - US$296 billion
66.0%
Buy & hold
(mutual funds)
32.6%
79.4%
Dynamic investors
(hedge funds,
proprietary trading
desks)
1.4%
20.6%
World Bank
(IBRD, IDA)
IMF credit
outstanding
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FINANCIAL STOCK HAS MORE THAN DOUBLED
Distribution of financial stock outstanding
79.3 US$ trillions
35.5 US$ trillions
10,295
10.7 US$ trillions
Elements of
financial stock
22,000
Equities
7,930
Corporate bonds
27,220
Government bonds
4,750
International bonds
17,400
Money supply
3,550
8,875
963
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1,926
2,782
1,420
11,360
4,815
1980
1992
2000
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Problem:
Private wealth not flowing to developing
countries
(Actually annual net outflow of capital – dirty
money – from poor countries)
Answer:
Transparency and accountability of institutions
- public
- private
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The CRT National Development System
Principles, Policies,
Practices, Values
Macro Level
Ideals
Aspirations
Tools
What Governments
Should Do
What Companies
Should Do
CRT Principles
for Business
(Stakeholders)
Civil
Society
CRT Principles
for Government
(Rule of Law)
12 Core
Best Practice
Standards
Self-Assessment
and
Improvement
Process
Micro Level
Individual
Outcomes
Results
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Economic Development Progress Gradient
Companies
CRT
Principles
for Business
Wealthy
Portfolio
Foreign
Direct
Investments
Exports
Micro-Credit
Charity
Poor
Property
Rights
Rule of
Law
12 Core
Standards
Governments
CRT Principles for Governments
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The Just Government
Kyosei
Human Dignity
Moral Sense
Ideal of Justice
CRT Principles for
Governments
Success Feedback
Principles
Constitution
Rights
Elections
Separation
of powers
Courts
and
Police
Due
process
Admin
Law
Policies and Practices
Outcomes
Property
and
Contract
Law
eStandards: 12 core
best practices
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CRT PRINCIPLES FOR GOVERNMENTS
Fundamental Principle
1.
Public power is held in trust for the community.
General Principles for Governments
1.
Discourse ethics should guide application of public power.
2.
The Civic Order shall serve all those who accept the responsibilities of citizenship.
3.
Public Servants shall refrain from abuse of office, corruption and shall demonstrate
high levels of personal integrity.
4.
Security of persons, individual liberty and ownership of property are the foundation
for individual justice.
5.
Justice shall be provided.
6.
General welfare contemplates improving the well-being of individual citizens.
7.
Transparency of government ensures accountability.
8.
Global cooperation advances national welfare.
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12 Core Best Practice Standards
Subject Area:
Key Standard:
Issuing Body:
Monetary and financial Code of Good Practices on Transparency in
policy transparency
Monetary and Financial Policies
International Monetary Fund
Fiscal policy transparency Code of Good Practices in Fiscal Transparency
International Monetary Fund
Data dissemination
Special Data Dissemination Standard (SDDS)
International Monetary Fund
Accounting
International Accounting Standards
International Accounting
Standards Committee (IASC)
Auditing
International Auditing Standards
International Federation of
Accountants (IFAC)
Corporate Governance
Principles of Corporate Governance
Organization for Economic
Cooperation and Development
(OECD)
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12 Core Best Practice Standards (continued)
Subject Area:
Key Standard:
Issuing Body:
Insolvency
Insolvency Principles and Guidelines
World Bank on Effective Systems
Payment and Settlement Core Principles for Systemically Important Payment
Bank for International Settlements
Systems and the Responsibilities of Central Banks (BIS) and the Committee on Payment
in applying the Payment System Principles
and Settlement Systems (CPSS)
Money Laundering
The Forty Recommendations on
Money Laundering
Financial Action Task Force on
Money Laundering (FATF)
Banking Supervision
Core Principles for Effective Banking Supervision Basel Committee on Banking
Supervision (BCBS)
Securities Regulation
Objectives and Principles of Securities Regulation International Organization
of Securities Commissions (IOSCO)
Insurance Supervision
Insurance Supervisory Principles
International Association of
Insurance Supervisors (IAIS
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eStandards Forum
(CRT Associate)
• Maintains public website database
• 83 countries included in database
• Each country evaluated on its
implementation of the 12 core best practice
standards
• Investors use country analysis in risk
assessments
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The Responsible Business
Ideals, Aspirations, Meaning
(core authentic value proposition)
Kyosei
Human Dignity
Moral Capitalism
Sustain
CRT Principles for Business
Success Feedback
Principles
Inform
CRT Self-Assessment Process
Standards
Elaborate and Quantify
Return on
Investment
(owners)
OECD
Corporate
Governance
Guidelines
SA8000
(employees)
12 anti-corruption
measures;
Wolfsburg
measures; Triple
Bottom Line
reporting
(community)
ISO9000
ISO14000
(customers) (environment)
Stakeholder Benchmarks
Focus
Corporate Action
Management
decision-making
(Principled Business
Leadership)
Accountable for
Outcomes
Metrics; Data Points;
GRI; TSI Fund;
S&P Corporate16
Governance Ranking
CRT Principles for Business
Seven Principles:
1. Recognize stakeholder constituencies
2. Create wealth for development of the world
3. Act with sincerity, candor and truthfulness
4. Respect the law
5. The World is one economic community
6. Sustain the environment
7. Avoid corruption and illicit dealings
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CRT Principles for Business
Stakeholder Constituencies
1. Customers
2. Employees
3. Owners/Investors
4. Suppliers
5. Competitors
6. Communities
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CRT Principles for Business
Grounded on:
Kyosei
Human Dignity
Stewardship of wealth
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CRT Principles for Business
Reflect
Humanity’s Religious Faiths
Both Embody Stewardship Ethics
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Self-sustaining
Domestic
Wealth Creation
eStandards Country Profiles
Wealthy
Implement 12
Core Best
Practices
Post
Take-off
eStandards
A List
Step 6
Step 5
Take-off
Step 4
Establish
Framework for
Take-off
Step 3
eStandards
B List
Step 2
Poor
No
Growth
Endemic Poverty
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Steps to National Prosperity
Step 7
CRT Principles for Governments
Step 6
Step 5
Step 4
Step 3
Step 2
Poor
12 core best
practices; CRT
Principles for
Business
12 core best
practices; CRT
Principles for
Business
Portfolio; all 12 core
best practices;
sustained growth; CRT
Principles for Business
FDI; JV’s; most 12 core best
practices; resource capital outflow;
CRT Principles for Business
Banks; exports; technology transfers;
energy capacity; SME’s; professions;
commercial/corp. law; some 12 core best
practices; CRT Principles for Business
Rule of law; rural credit,
education; cash crops;
entrepreneurs; savings funds
Security; micro-credit;
admin. justice; property
rights; health; HID;
safety net
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Development Assistance and Capital Flows
IMF; capital
markets
Wealthy
Investment
banks; IMF,
capital markets
Step 6
Step 5
Step 4
Step 3
Step 2
Poor
FDI/Portfolio:
capital markets;
IMF; technical assistance-high level
World Bank; IMF; private
capital: IESC; FSVC:
technical assistance-mid level
UNDP; ODA; World Bank; private
capital: technical assistance traininglow level; IESC; FSVC
UNDP; ODA;
World Bank;
foundations; IESC
UNDP; ODA; World
Bank; foundations;
NGO’s: CARE,
UNICEF
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Values Influence
Business Behavior
and
Conditions of Economic
Growth
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Crony Capitalism
Ideal
Social Dominance
Rent Seeking; Insider
Favoritism; Buy
Obedience; Use Police
State for Security
Principles
Insider Networks; Capture of State
Functions; Monopolies & Cartels;
No Accountability
Standards
Stakeholder
Benchmarks
Customers
Capture with
Monopolies
& Cartels;
Price at
Monopoly
Premium
Employees
Indentured
Retainers
Owners/
Investors
Families;
Political
Insiders; No
Corporate
Governance
Suppliers Competitors
Price
Removed by
Takers; Government
Low
Fiat
Quality
Communities
Maximum
Externalization
of Costs;
Corruption of
Politics
Outcomes
Mafia-style Administration; Kleptocracy;
Large Scale Transfer of Wealth to Elite Families
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Traditional Chinese Business Value
Ideal
(Mo Tzu-“Ta-Tong”;
Confucius-“Ch’un Ch’un, Ch’en
Ch’en, Fu fu, Tzu Tzu”; Yin/
Yang School—Balance “Ch’i” )
order; peace; harmony
“T’ai He”
manipulate “shih”;
channel self-interest;
repress autonomy;
prevent “lun”
Principles
hierarchy; licenses; seek
permission; conform to
government policies and wishes
Standards
Stakeholder
Benchmarks
Customers
compete on
price; caveat
emptor
Employees
paternalism;
dependency;
low wages;
routine
tasks; follow
orders
Owners/
Investors
“quan xi”
cronies;
family; share
risks; no
transparency
Suppliers
low cost
Competitors
Communities
cartel;
seek government
Divide
favors; “quan
markets
xi”; responsible
only for assigned
duties; no
transparency
Outcomes
Steady sustained growth; little innovation; corruption
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Traditional Japanese Corporate Value Pyramid
“Ninjo”
experience,
acceptance and security
Ideal
“giri-on”
reciprocal relationships;
Keiretsu
Principles
group process; cross-holdings;
insider boards; stability;
inflexible strategy;
flexible contracts
Standards
Stakeholder
Benchmarks
Customers
market share
Employees
lifetime
employment
Owners
Suppliers
debt over
Keiretsu;
equity; low just in time;
margins; no share risk
bankruptcy;
Japan, Inc.
Competitors
Japan, Inc.;
divide
markets; live
and let live
Outcomes
Upmarket — Growth: 1954—1990
Downmarket — Stagnation: 1990—2002
Community/
environment
“tanin”/ low
value
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One Suggested Value Pyramid for Japan
Mutuality: “kyosei”
Shinto: sincerity of mind/service
Mahayana: compassion
Confucian: “jen hsin”
Christian: love thy neighbor
Ideal
Principles
CRT Principles
for Business
Standards
CRT SAIP
Stakeholder
Benchmarks
Consumers
market
share
(no change)
Employees
autonomy;
mobility;
private
savings;
health care
Owners
ROI; share
profits;
transparency;
corporate
governance;
bankruptcy
Suppliers
Competitors
just in time; price/quality
share risk competition;
no fixed
market share
Outcome
Start an Upmarket Cycle — Sustained Growth
Communities
transparency;
no corrupt ties
to government;
protect
environment
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Traditional Mexican Business Value Pyramid
Dominion
(“hacendado”; “patron” ideal)
Ideal
Honor;
respect
Standards
Position;
title
Benchmarks
Stakeholders
Consumers
compliant;
accept
product as
offered
Employees
paternalism;
obedience; no
responsibility;
low
productivity;
many positionstitles;
procedure
Personal
discretion
Ownership
prerogatives
Owners /
Investors
equity over
debt; few
trusted
insiders;
family
Property;
“territory”
Scope of
influence;
number of
“dependencias”
Suppliers
submissive
Competitors
enemies;
buy political
influence
Community
little or no value
or importance
except as
subordinates;
buy influence social and
political
Outcomes
Small entrepreneurial middle class; wide gaps in wealth/income;
capital flight; weak civil society; low social capital; high mistrust
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Proposed Mexican Business Value Pyramid
Ideal
Honor;
Respect for human dignity
Standards
CRT Principles for Business;
fiduciary ideal
Benchmarks
SAIP 49 cell matrix
Stakeholders
Consumers
valued
clients;
service
orientation
Employees
colleagues in
common
effort
Owners /
Investors
sustained
returns; good
corporate
governance;
transparency
Suppliers
buy on
quality
Competitors
compete on
quality and
innovation
Community
pay returns on
social capital;
sustainability
Outcomes
Economic growth with social justice
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Country Action Process to Stimulate
Economic Development
•
•
•
•
•
•
Present CRT Strategy
Form Country Team
Place Country Profile on CRT Website
Improve eStandards Ranking
Suggest Government Declaration
Develop Benchmarks for Country Action Plan
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Draft Declaration
The government of _____declares that improving the prosperity and welfare of our
citizens in peaceful conditions is a matter of highest national priority
This government embraces the opportunities and the responsibilities of participation in the
global economic and financial system and believes that such participation is indispensable
to the promotion of sustainable development in _____.
We believe that an open international trading system, a market economy and responsible
private domestic and foreign equity investment in income and employment generating
activities are the only realistic, effective paths to achieve stable growth. We wish all
friends of ______ to know that this government and its loyal opposition is committed to
international practices, and a moral/ethical climate to facilitate our growth and
development.
We urge those who would invest in ______ to be guided by the Caux Principles for
Business augmented by the growth and service oriented values articulated by the
International Chamber of Commerce, Rotary International and the United Nations Global
Compact, and all other like-minded institutions and individuals. This government will do
its utmost to assure a positive experience for investors who respect these values in32the
conduct of their affairs in our country.
Country Profile
• Declaration Adopted
• General Policies - 12 Qualitative Indicator Index, Rating, Publishes Article IV, Favorable
Conclusions, Publishes Private Sector, Dialogue With CRT, Country Team
• Best Practice Standards - Standards Executive Summary/Index/Trend Call
• Values - Corruption Perception Index, Bribe Payers Index
• Human Development Index/Rank
• Economic Indicators - GNP, GDP, GDP Implicit Deflator, Current Account Balance, Gross
Capital Formation, Foreign Direct Investment
• Freedom Index
• Economic Freedom Ratings
• Globalization Index
• PWC Opacity Index
• Investment Climate - ICRG Rating, Moody’s, Standards and Poors
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Outcomes
- [Country Name} receives ever-growing share of
global private sector investment
- Socially responsible private sector wealth creation
- New jobs
- Rising living standards
- Increasingly accountable and successful public
sector
- Improved social capital
- Higher tax revenues
- Lower corruption
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CRT Network
•
•
•
•
•
•
•
•
•
•
•
eStandards Forum
UN Development Program
UN Global Compact
International Executive Service Corp
Financial Service Volunteer Corp
Rotary International
International Chamber of Commerce
US Committee for International Business
Institute for Business Ethics - London
The Copenhagen Center
World Bank
•
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Oxford Analytica
Freeman Center at Univ. of Minnesota
Hubert H. Humphrey Institute
Center for International Private Enterprise
Department for International Development
Social Accountability International
Canadian Centre for Ethics and Corporate
Responsibility - Toronto
International Bar Association
Keidanren
CSR Europe - Brussels
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CRT Academic Advisors
• G. Edward Schuh (Chair)
University of Minnesota
Freeman Center for International Economic Policy
• Sam Huntington
Harvard University
• David Landes
Harvard University
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CRT World Advisory Council
•
Sir Anthony Cleaver
United Kingdom
•
Hon. Anand Panyarachun
Thailand
•
Mr. Michel d’Halluin
France
•
Mr. James J. Schiro
USA
•
Mr. Toru Hashimoto
Japan
•
Mr. Lodewijk C. van Wachem
The Netherlands
•
Dr. Ing E.h. Eberhard v. Kuenheim
Germany
•
Mr. John C. Whitehead
USA
•
Mr. Joseph J. Melone
USA
•
Dr. Herman H.F. Wijffels
The Netherlands
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Evolution of the CRT Network
• Stage 1 - 1986-1991
Quiet venues - forum to discuss sensitive issues
Fritz Phillips & Olivier Giscard d’Estaing
• Stage 2 - 1992-1998
Develop and distribute Principles for Business
Ryuzaburo Kaku & John Loupe Dherse
• Stage 3 - 1999-2002
Get the strategy right
Winston Wallin
• Stage 4 - 2003
Execution
George Vojta
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Thank you
39