Revision of OECD Guidelines on Corporate Governance of State-Owned Enterprises
Vincent Tophoff | January 31, 2014 |
In addition to the revision of the OECD Principles of Corporate Governance (see “Revision of the OECD Corporate Governance Principles”), the Organisation for Economic Co-operation and Development (OECD) is also revising its Guidelines on Corporate Governance of State-Owned Enterprises. These guidelines give concrete advice to countries on how to more effectively manage their responsibilities as company owners, thus helping to make state-owned enterprises more competitive, efficient, and transparent. The revision will take into account developments since the guidelines’ adoption and the experiences of the growing number of countries that have taken steps to implement their recommendations.
Through its membership in the Business and Industry Advisory Committee to the OECD, IFAC is also involved in this revision. One of the recommendations IFAC made to the OECD Corporate Governance Committee's Working Party on State Ownership and Privatisation Practices is that the revised guidelines should emphasize that state-owned enterprises should have an overarching mission to ensure that they are acting in the public interest at all times—balancing economic, social, and environmental intended outcomes. This means that state-owned enterprises should take a longer-term view and be transparent about where there are potential conflicts between the enterprise’s intended outcomes and shorter-term factors, such as political cycles, which favor short-term decision making, and other external pressures including loyalty to a political party.
The OECD’s revision project will continue throughout 2014 and 2015. What else should be revised? Are there other recommendations that should be made?