Background1. The basis for Norges Bank's corporate governance activities
2. How Norges Bank will exercise ownership rights and promote good corporate governance
3. Corporate objectives, strategy and communication
4. Corporate governance and structure
5. The long-term sustainability of the company's activities
6. Reporting
Attachment 1: The OECD Principles for Corporate Governance
Attachment 2: The Global Compact
Attachment 3: OECD guidelines for multinational enterprises

pdf (550KB)

Corporate governance is fundamentally about ensuring that capital invested in a company will provide a reasonable return in relation to the risk taken. All company stakeholders - employees, suppliers, customers, lenders and owners - have contracts that protect their interests to a greater or lesser degree. The rights of equityholders are generally the least well protected. While lenders are contractually protected by means of collateral in the company's assets, the shareholders receive what remains when the other contract counterparties have received their share.

In Norges Bank's opinion, good corporate governance is primarily about protecting the interests of the shareholders. In some situations, the majority owners have considerable control over companies, and then the particular challenge is to protect the interests of minority shareholders. Another challenge for shareholders is influencing top management. This challenge arises in particular in companies with dispersed ownership, where each shareholder only represents a small ownership stake. The challenge here will be to protect shareholders' interests with respect to potential conflicts of interest with top management, for example, by preventing management from enriching themselves to the detriment of the shareholders and from aiding or participating in corruption etc.

Norges Bank engages in corporate governance activities in order to protect the financial assets under management. The basis for the Principles is internationally accepted principles for good corporate governance, as expressed in the OECD's Principles of Corporate Governance. In light of this, a number of requirements have been specified with regard to a company's objectives, strategy and transparency. Other requirements involve company structure, type of management and long-term sustainability - companies must take into account the impact of their activities on the environment and society in general.Compliance with internationally recognised principles and conventions enables companies to conduct business correctly in relation to the surroundings in which they operate. Examples of such conventions are the UN's Global Compact and the OECD's Guidelines for Multinational Enterprises.

Norges Bank manages the equity portfolios that are part of the Government Petroleum Fund. The Bank also manages the long-term investment portfolio of its own foreign exchange reserves. These Principles apply for both portfolios and are based on the overriding guidelines for exercising ownership rights in the Government Petroleum Fund stipulated by the Ministry of Finance on 19 November 2004.

These Principles may be amended over time as Norges Bank's corporate governance activities develop and the Bank acquire more knowledge and experience in this area. The Principles must also adopt changes in national and international regulations and guidelines. Changes will also occur gradually in corporate management and control systems as market demands, guidelines and principles develop. Norges Bank's engagement in corporate governance issues will therefore be under continual development.

1. The basis for Norges Bank's corporate governance activities

Norges Bank's responsibility for protecting and developing the capital that has been invested in a company provides the basis for exercising ownership rights. Companies' dealings may be influenced by the underlying time horizon, but an overriding objective for good corporate governance should be to maximise long-term financial returns.

Norges Bank is a very long-term investor with a wide range of investments. As a long term investor we expect companies to take into account the impact of their activities on the surroundings in which they operate. These requirements are described in more detail in section 5 below. Norges Bank's Principles are based in part on internationally accepted principles that are expressed in the OECD's Principles of Corporate Governance.¹

• protect the rights of shareholders
• encourage equitable treatment of shareholders
• recognise the legal rights of other stakeholders
• encourage timely and correct disclosure of information
• encourage the board's strategic management, supervision of the day-to-day management, as well as their responsibilities vis-à-vis the shareholders

An important starting point is that it is the company's board and management who are responsible for ensuring that the company has adequate routines and internal control systems to meet the requirements that originate from these internationally recognized principles.

2. How Norges Bank will exercise ownership rights and promote good corporate governance

The means employed by Norges Bank shall be thoroughly appraised and predictable so that companies and other investors have confidence in the way Norges Bank engages in corporate governance issues. Norges Bank will weigh the resources used against potential results. Norges Bank will use several means in its exercising of ownership rights and corporate governance activities:

Communication of principles

Norges Bank will inform the companies and the general public about these Principles, including the Petroleum Fund's ethical guidelines formulated by the Ministry of Finance. Norges Bank may engage in a dialogue with individual companies in cases where it is appropriate in order to inform them of these Principles.

Voting

Norges Bank may vote on proposals put forward at companies' general meetings when these proposals may have a substantial impact on the financial assets under management. Norges Bank will make decisions on the basis of its own assessments of what will best serve the financial interests of assets under management within the framework of these Principles. Decisions on voting may be delegated to external managers.

Participation in international networks and organisations

Norges Bank will consider participation in international networks and organisations to promote good principles for corporate governance. Such participation will depend on the network's objectives, structure and transparency, as well as the significance to the network of having Norges Bank as a member.

One aspect of Norges Bank's engagement in corporate governance issues is to help ensure that government agencies, stock exchanges, etc. develop and monitor regulations that protect ownership rights in accordance with the Principles. This may be accomplished by participating in networks that include other institutional investors with the same fundamental views and by providing input to hearings etc.

Contact with individual companies

In addition to expressing general opinions about good principles for corporate governance, Norges Bank may also discuss specific subjects or situations with companies. Norges Bank's Principles are broadly based on internationally recognised principles for good corporate governance. Norges Bank, as owner, may require or expect companies to provide an account of how well they comply with these internationally recognised principles.

Cooperation with other investors on individual matters

Norges Bank may participate in or initiate cooperation between institutional investors and individual companies in cases where this is an appropriate and effective means of achieving good corporate governance.

3. Corporate objectives, strategy and communication

It follows from this principle that

• A company's primary objective should preferably be to maximise the owners' long-term returns. If the primary objective is to be something else, the company's articles of incorporation must state this clearly.
• A company must have a clearly defined business strategy which is described openly and distinctly for the owners. All decisions that entail a significant change in business strategy must be approved by the company's shareholders.
• The company must submit accurate, adequate and timely information concerning its financial position and all other important factors that may influence the company's share price. As a minimum the information must satisfy the requirements for participation in the markets where the company is listed, and must enable investors to make well-founded decisions regarding the purchase and sale of shares.

4. Corporate governance and structure

Important aspects of this principle imply that companies

• ensure that each ordinary share that is issued carries one vote, with no maximum limit for the use of voting rights. Shareholders in the same share class should receive equitable treatment;
• ensure owners' rights to cast votes at the general meeting, including providing adequate information well in advance concerning matters that are on the agenda. Shareholders shall have the opportunity to pose questions to the board of directors and propose items and resolutions for the agenda;
• ensure that all significant changes that may decrease shareholders' financial interests are not made without shareholder approval; and
• shall not introduce structures that can work against shareholders' interests.

The principle implies that a company's board of directors

• ensures proper organisation of activities adapted to the company's strategy;
• establishes internal management and control systems adapted to the company's business;
• takes a stand concerning internationally recognised principles of good corporate governance (such as the OECD's Principals of Corporate Governance, the UN's Global Compact and the OECD's Guidelines for Multinational Enterprises) and how companies incorporate these principles in their activities;
• supervises the day-to-day management and the company's operations, including overseeing that the management does not enrich themselves to the detriment of the shareholders, or aid or participate in corruption etc;
• consists of a sufficient number of members with relevant and adequate qualifications and that the majority are independent.
• shall be accountable for their decisions;
• should comprise a fixed number of members. Election of board members should be conducted confidentially and votes should be counted by an independent member. The same person should not hold the roles of both chairman of the board and managing director; and the board
• should ensure that important board committees handling compensation to the top management, nomination of board members and auditing consist only of independent board members.

Board members shall also

• jointly and individually protect the interests of all shareholders:
• must stand for re-election at regular intervals, and provide shareholders with complete information concerning their background and qualifications as well as factors that may influence their independence; and
• allocate resources commensurate with satisfactory performance in their board position. This should be reflected in the number of board positions held by each member.

All compensation agreements that involve allocation of shares or options must be approved by the general meeting. Total compensation to each board member and the companies' top executives should be public information so that shareholders may evaluate whether the compensation is in accordance with the shareholders' interests.

5. The long-term sustainability of the company's activities

As a long-term investor with diversified equity portfolios, Norges Bank expects individual companies to base their decisions on a long-term strategy and to see their activities in relation to the surroundings in which they operate.

The companies must acknowledge that:

• good corporate governance not only includes the ability to create profits, but also the ability and willingness to obey national and international laws and conventions, and respect fundamental ethical and environmental principles;
• a lack of ability or willingness to take such principles into consideration may set the company's reputation at risk and cause loss of market opportunities;
• companies that do not respect fundamental ethical and environmental principles may destroy assets for themselves and other companies in which Norges Bank has invested; and
• the authorities in all countries where Norges Bank invests have endorsed the principles concerning a company's responsibility to act with appropriate consideration for its surroundings, and they have instruments to deal with companies that commit serious infringements of these principles.

Norges Bank expects that companies have internal management and control systems to handle the social, ethical and environmental consequences of their own activities. Norges Bank also expects that companies are aware of potential ethical and environmental consequences of new activities. Norges Bank expects that companies will clearly communicate their policies in this area to the entire organisation. The company should set specific targets for improvements where this is deemed necessary.

A company's board of directors is responsible for the existence of a strategy and policy for dealing with ethical and environmental challenges in both the short and long term. The board must also ensure that the company is transparent in its reporting in these areas so that the owners are capable of evaluating the board's decisions and actions. The company must publicise information on its policies on ethical and environmental issues, the measures and results achieved, how the company handles its relationship with employees and other stakeholders, as well as the company's assessment of risk associated with social, ethical and environmental issues and any systems for managing risk and complying with laws and regulations in the area.

In Norges Bank's opinion, the principles in the UN's Global Compact and the OECD's Guidelines for Multinational Enterprises offer guidance as to how enterprises should incorporate ethical and environmental considerations into their activities. The main content of these are summarised below.

The United Nation's Global Compact²

The United Nation's Global Compact covers human rights, labour standards, the environment and anti-corruption. Through the following 10 principles, the United Nation's Secretary-General encourages businesses to

• support and respect the protection of internationally proclaimed human rights; and
• make sure that they do not engage in human rights abuses.
• businesses should uphold the freedom of association and the effective recognition of the right to collective bargaining;
• the elimination of all forms of forced and compulsory labour;
• the effective abolition of child labour; and
• the elimination of discrimination in connection with employment and occupation.
• businesses should support a precautionary approach to environmental challenges;
• undertake initiatives to promote greater environmental responsibility: and
• encourage the development and diffusion of environmentally friendly technologies.
• businesses should combat all forms of corruption, including extortion and bribery.

The OECD's Guidelines for Multinational Enterprises³

These guidelines consist of recommendations by governments to multinational enterprises operating in or from member countries. The purpose of the guidelines is to encourage multinational enterprises to contribute to economic, social and environmental progress. The guidelines provide principles and standards for responsible corporate behaviour in a number of areas, including good corporate governance and social responsibility. All OECD member countries, as well as a number of other countries, have made a commitment to ensuring that the guidelines are followed. The guidelines deal with:

• respect for human rights and contribution to sustainable development
• disclosure of information
• employment and industrial relations
• environmental protection
• fighting corruption
• protecting consumer interests
• contribution to the transfer of technology and knowledge to host countries
• refraining from agreements that hamper competition
• timely payment of taxes

6. Reporting

Norges Bank will provide information by means of annual reporting to the Ministry of Finance concerning how ownership rights are exercised and the promotion of good corporate governance on behalf of the Government Petroleum Fund. This information will be available in the Petroleum Fund's Annual Report which is available to the public. Norges Bank recognises that it is very important to be transparent concerning these issues. The primary objective is to have a positive influence. In some cases, especially in connection with informal contact with enterprises and other investors in individual matters, the Bank can however achieve the greatest influence when everyone concerned is confident that the dialogue will not be made public.

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Attachment 1

The OECD's Principles of Corporate Governance

(as of 2004)

The OECD Principles cover six main areas and these are cited below. In addition, the OECD Principles contain more detailed descriptions.

I Ensuring the Basis for an Effective Corporate Governance Framework

The corporate governance framework should promote transparent and efficient markets, be consistent with the rule of law and clearly articulate the division of responsibilities among different supervisory, regulatory and enforcement authorities.

II The Rights of Shareholders and Key Ownership Functions

The corporate governance framwork should protects and facilitate the exercise of shareholders' rights

III The Equitable Treatment of Shareholders

The corporate governance framework should ensure the equitable treatment of all shareholders, including minority and foreign shareholders. All shareholders should have the opportunity ti obtain effective redress for violation of their rights.

IV The Role of Stakeholders in Corporate Governance

The corporate governance framework should recognise the rights of stakeholders established by law or through mutual agreements and encourage active co-operation between corporations and stakeholders in creating wealth, jobs, and the sustainability of financially sound enterprises.

V Disclosure and Transparency

The corporate governance framework should ensure that timely and accurate disclosure is made on all material matters regarding the corporation, including the financial situation, performance, ownership, and governance of the company.

VI The Responsibilities of the Board

The corporate governance framework should ensure that strategic guidance of the company, the effective monitoring of management by the board, and the board's accountability to the company and the shareholders.

Attachment 2

The Global Compact

(as of 2004)

The Global Compact's ten principles in the areas of human rights, labour, environment and anri-corruption enjoy universal consensus are derived from:

• The Universal Declaration of Human Rights
• The International Labour Organization's Declaration on Fundamental Principles and Rights at Work
• The Rio Declaration on Environment and Development
• The United Nations Convention Against Corruption

The Global Compact asks companies to embrace, support and enact, within their sphere of influence, a set of core values in the areas of human rights, labour standards, the environment, and anti-corruption. The principles are as follows:

Human Rights

• Principle 1: Businesses should support and respect the protection of internationally proclaimed human rights; and
• Principle 2: make sure that they are not complicit in human rights abuses.

Labour Standards

• Principle 3: Businesses should uphold the freedom of association and the effective recognition of the right to collective bargaining;
• Principle 4: the elimination of all forms of forced and compulsory labour;
• Principle 5: the effective abolition of child labour; and
• Principle 6: the elimination of discrimination in respect of employment and occupation.

Environment

• Principle 7: Businesses should support a precautionary approach to environmental challenges;
• Principle 8: undertake initiatives to promote greater environmental responsibility; and
• Principle 9: encourage the development and diffusion of environmentally friendly technologies

Anti-Corruption

• >Principle 10: Businesses should work against all forms of corruption, including extortion and bribery

Attachment 3

OECD guidelines for multinational enterprises

(as of Revision in 2000)

I. Concepts and Principles

1. The Guidelines are recommendations jointly addressed by governments to multinational enterprises. They provide principles and standards of good practice consistent with applicable laws. Observance of the Guidelines by enterprises is voluntary and not legally enforceable.
2. Since the operations of multinational enterprises extend throughout the world, international co-operation in this field should extend to all countries. Governments adhering to the Guidelines encourage the enterprises operating on their territories to observe the Guidelines wherever they operate, while taking into account the particular circumstances of each host country.
3. A precise definition of multinational enterprises is not required for the purposes of the Guidelines. These usually comprise companies or other entities established in more than one country and so linked that they may co-ordinate their operations in various ways. While one or more of these entities may be able to exercise a significant influence over the activities of others, their degree of autonomy within the enterprise may vary widely from one multinational enterprise to another. Ownership may be private, state or mixed. The Guidelines are addressed to all the entities within the multinational enterprise (parent companies and/or local entities). According to the actual distribution of responsibilities among them, the different entities are expected to co operate and to assist one another to facilitate observance of the Guidelines.
4. The Guidelines are not aimed at introducing differences of treatment between multinational and domestic enterprises; they reflect good practice for all. Accordingly, multinational and domestic enterprises are subject to the same expectations in respect of their conduct wherever the Guidelines are relevant to both.
5. Governments wish to encourage the widest possible observance of the Guidelines. While it is acknowledged that small- and medium-sized enterprises may not have the same capacities as larger enterprises, governments adhering to the Guidelines nevertheless encourage them to observe the Guidelines recommendations to the fullest extent possible.
6. Governments adhering to the Guidelines should not use them for protectionist purposes nor use them in a way that calls into question the comparative advantage of any country where multinational enterprises invest.
7. Governments have the right to prescribe the conditions under which multinational enterprises operate within their jurisdictions, subject to international law. The entities of a multinational enterprise located in various countries are subject to the laws applicable in these countries. When multinational enterprises are subject to conflicting requirements by adhering countries, the governments concerned will co operate in good faith with a view to resolving problems that may arise.
8. Governments adhering to the Guidelines set them forth with the understanding that they will fulfil their responsibilities to treat enterprises equitably and in accordance with international law and with their contractual obligations.
9. The use of appropriate international dispute settlement mechanisms, including arbitration, is encouraged as a means of facilitating the resolution of legal problems arising between enterprises and host country governments.
10. Governments adhering to the Guidelines will promote them and encourage their use. They will establish National Contact Points that promote the Guidelines and act as a forum for discussion of all matters relating to the Guidelines. The adhering Governments will also participate in appropriate review and consultation procedures to address issues concerning interpretation of the Guidelines in a changing world.

II. General Policies

Enterprises should take fully into account established policies in the countries in which they operate, and consider the views of other stakeholders. In this regard, enterprises should:

1. Contribute to economic, social and environmental progress with a view to achieving sustainable development.
2. Respect the human rights of those affected by their activities consistent with the host government's international obligations and commitments.
3. Encourage local capacity building through close co-operation with the local community, including business interests, as well as developing the enterprise's activities in domestic and foreign markets, consistent with the need for sound commercial practice.
4. Encourage human capital formation, in particular by creating employment opportunities and facilitating training opportunities for employees.
5. Refrain from seeking or accepting exemptions not contemplated in the statutory or regulatory framework related to environmental, health, safety, labour, taxation, financial incentives, or other issues.
6. Support and uphold good corporate governance principles and develop and apply good corporate governance practices.
7. Develop and apply effective self-regulatory practices and management systems that foster a relationship of confidence and mutual trust between enterprises and the societies in which they operate.
8. Promote employee awareness of, and compliance with, company policies through appropriate dissemination of these policies, including through training programmes.
9. Refrain from discriminatory or disciplinary action against employees who make bona fide reports to management or, as appropriate, to the competent public authorities, on practices that contravene the law, the Guidelines or the enterprise's policies.
10. Encourage, where practicable, business partners, including suppliers and sub-contractors, to apply principles of corporate conduct compatible with the Guidelines.
11. Abstain from any improper involvement in local political activities.

III. Disclosure

1. Enterprises should ensure that timely, regular, reliable and relevant information is disclosed regarding their activities, structure, financial situation and performance. This information should be disclosed for the enterprise as a whole and, where appropriate, along business lines or geographic areas. Disclosure policies of enterprises should be tailored to the nature, size and location of the enterprise, with due regard taken of costs, business confidentiality and other competitive concerns.
2. Enterprises should apply high quality standards for disclosure, accounting, and audit. Enterprises are also encouraged to apply high quality standards for non-financial information including environmental and social reporting where they exist. The standards or policies under which both financial and non-financial information are compiled and published should be reported.
3. Enterprises should disclose basic information showing their name, location, and structure, the name, address and telephone number of the parent enterprise and its main affiliates, its percentage ownership, direct and indirect in these affiliates, including shareholdings between them.
4. Enterprises should also disclose material information on:
   1. The financial and operating results of the company;
   2. Company objectives;
   3. Major share ownership and voting rights;
   4. Members of the board and key executives, and their remuneration;
   5. Material foreseeable risk factors;
   6. Material issues regarding employees and other stakeholders;
   7. Governance structures and policies.
5. Enterprises are encouraged to communicate additional information that could include:
   1. Value statements or statements of business conduct intended for public disclosure including information on the social, ethical and environmental policies of the enterprise and other codes of conduct to which the company subscribes. In addition, the date of adoption, the countries and entities to which such statements apply and its performance in relation to these statements may be communicated;
   2. Information on systems for managing risks and complying with laws, and on statements or codes of business conduct;
   3. Information on relationships with employees and other stakeholders.

IV. Employment and Industrial Relations

Enterprises should, within the framework of applicable law, regulations and prevailing labour relations and employment practices:

	1.	a)	Respect the right of their employees to be represented by trade unions and other bona fide representatives of employees, and engage in constructive negotiations, either individually or through employers' associations, with such representatives with a view to reaching agreements on employment conditions;
		b)	Contribute to the effective abolition of child labour;
		c)	Contribute to the elimination of all forms of forced or compulsory labour;
		d)	Not discriminate against their employees with respect to employment or occupation on such grounds as race, colour, sex, religion, political opinion, national extraction or social origin, unless selectivity concerning employee characteristics furthers established governmental policies which specifically promote greater equality of employment opportunity or relates to the inherent requirements of a job.
	2.	a)	Provide facilities to employee representatives as may be necessary to assist in the development of effective collective agreements;
		b)	Provide information to employee representatives which is needed for meaningful negotiations on conditions of employment;
		c)	Promote consultation and co-operation between employers and employees and their representatives on matters of mutual concern.
	3.	Provide information to employees and their representatives which enables them to obtain a true and fair view of the performance of the entity or, where appropriate, the enterprise as a whole.
	4.	a)	Observe standards of employment and industrial relations not less favourable than those observed by comparable employers in the host country;
		b)	Take adequate steps to ensure occupational health and safety in their operations.
	5.	In their operations, to the greatest extent practicable, employ local personnel and provide training with a view to improving skill levels, in co-operation with employee representatives and, where appropriate, relevant governmental authorities.
	6.	In considering changes in their operations which would have major effects upon the livelihood of their employees, in particular in the case of the closure of an entity involving collective lay-offs or dismissals, provide reasonable notice of such changes to representatives of their employees, and, where appropriate, to the relevant governmental authorities, and co-operate with the employee representatives and appropriate governmental authorities so as to mitigate to the maximum extent practicable adverse effects. In light of the specific circumstances of each case, it would be appropriate if management were able to give such notice prior to the final decision being taken. Other means may also be employed to provide meaningful co-operation to mitigate the effects of such decisions.
	7.	In the context of bona fide negotiations with representatives of employees on conditions of employment, or while employees are exercising a right to organise, not threaten to transfer the whole or part of an operating unit from the country concerned nor transfer employees from the enterprises' component entities in other countries in order to influence unfairly those negotiations or to hinder the exercise of a right to organise.
	8.	Enable authorised representatives of their employees to negotiate on collective bargaining or labour-management relations issues and allow the parties to consult on matters of mutual concern with representatives of management who are authorised to take decisions on these matters.

V. Environment

Enterprises should, within the framework of laws, regulations and administrative practices in the countries in which they operate, and in consideration of relevant international agreements, principles, objectives, and standards, take due account of the need to protect the environment, public health and safety, and generally to conduct their activities in a manner contributing to the wider goal of sustainable development. In particular, enterprises should:

1. Establish and maintain a system of environmental management appropriate to the enterprise, including:
   1. Collection and evaluation of adequate and timely information regarding the environmental, health, and safety impacts of their activities;
   2. Establishment of measurable objectives and, where appropriate, targets for improved environmental performance, including periodically reviewing the continuing relevance of these objectives; and
   3. Regular monitoring and verification of progress toward environmental, health, and safety objectives or targets.
2. Taking into account concerns about cost, business confidentiality, and the protection of intellectual property rights:
   1. Provide the public and employees with adequate and timely information on the potential environment, health and safety impacts of the activities of the enterprise, which could include reporting on progress in improving environmental performance; and
   2. Engage in adequate and timely communication and consultation with the communities directly affected by the environmental, health and safety policies of the enterprise and by their implementation.
3. Assess, and address in decision-making, the foreseeable environmental, health, and safety-related impacts associated with the processes, goods and services of the enterprise over their full life cycle. Where these proposed activities may have significant environmental, health, or safety impacts, and where they are subject to a decision of a competent authority, prepare an appropriate environmental impact assessment.
4. Consistent with the scientific and technical understanding of the risks, where there are threats of serious damage to the environment, taking also into account human health and safety, not use the lack of full scientific certainty as a reason for postponing cost-effective measures to prevent or minimise such damage.
5. Maintain contingency plans for preventing, mitigating, and controlling serious environmental and health damage from their operations, including accidents and emergencies; and mechanisms for immediate reporting to the competent authorities.
6. Continually seek to improve corporate environmental performance, by encouraging, where appropriate, such activities as:
   1. Adoption of technologies and operating procedures in all parts of the enterprise that reflect standards concerning environmental performance in the best performing part of the enterprise;
   2. Development and provision of products or services that have no undue environmental impacts; are safe in their intended use; are efficient in their consumption of energy and natural resources; can be reused, recycled, or disposed of safely;
   3. Promoting higher levels of awareness among customers of the environmental implications of using the products and services of the enterprise; and
   4. Research on ways of improving the environmental performance of the enterprise over the longer term.
7. Provide adequate education and training to employees in environmental health and safety matters, including the handling of hazardous materials and the prevention of environmental accidents, as well as more general environmental management areas, such as environmental impact assessment procedures, public relations, and environmental technologies.
8. Contribute to the development of environmentally meaningful and economically efficient public policy, for example, by means of partnerships or initiatives that will enhance environmental awareness and protection.

VI. Combating Bribery

Enterprises should not, directly or indirectly, offer, promise, give, or demand a bribe or other undue advantage to obtain or retain business or other improper advantage. Nor should enterprises be solicited or expected to render a bribe or other undue advantage. In particular, enterprises should:

1. Not offer, nor give in to demands, to pay public officials or the employees of business partners any portion of a contract payment. They should not use subcontracts, purchase orders or consulting agreements as means of channelling payments to public officials, to employees of business partners or to their relatives or business associates.
2. Ensure that remuneration of agents is appropriate and for legitimate services only. Where relevant, a list of agents employed in connection with transactions with public bodies and state-owned enterprises should be kept and made available to competent authorities.
3. Enhance the transparency of their activities in the fight against bribery and extortion. Measures could include making public commitments against bribery and extortion and disclosing the management systems the company has adopted in order to honour these commitments. The enterprise should also foster openness and dialogue with the public so as to promote its awareness of and co-operation with the fight against bribery and extortion.
4. Promote employee awareness of and compliance with company policies against bribery and extortion through appropriate dissemination of these policies and through training programmes and disciplinary procedures.
5. Adopt management control systems that discourage bribery and corrupt practices, and adopt financial and tax accounting and auditing practices that prevent the establishment of "off the books" or secret accounts or the creation of documents which do not properly and fairly record the transactions to which they relate.
6. Not make illegal contributions to candidates for public office or to political parties or to other political organisations. Contributions should fully comply with public disclosure requirements and should be reported to senior management.

VII. Consumer Interests

When dealing with consumers, enterprises should act in accordance with fair business, marketing and advertising practices and should take all reasonable steps to ensure the safety and quality of the goods or services they provide. In particular, they should:

1. Ensure that the goods or services they provide meet all agreed or legally required standards for consumer health and safety, including health warnings and product safety and information labels.
2. As appropriate to the goods or services, provide accurate and clear information regarding their content, safe use, maintenance, storage, and disposal sufficient to enable consumers to make informed decisions.
3. Provide transparent and effective procedures that address consumer complaints and contribute to fair and timely resolution of consumer disputes without undue cost or burden.
4. Not make representations or omissions, nor engage in any other practices, that are deceptive, misleading, fraudulent, or unfair.
5. Respect consumer privacy and provide protection for personal data.
6. Co-operate fully and in a transparent manner with public authorities in the prevention or removal of serious threats to public health and safety deriving from the consumption or use of their products.

VIII. Science and Technology

Enterprises should:

1. Endeavour to ensure that their activities are compatible with the science and technology (S&T) policies and plans of the countries in which they operate and as appropriate contribute to the development oflocal and national innovative capacity.
2. Adopt, where practicable in the course of their business activities, practices that permit the transfer and rapid diffusion of technologies and know how, with due regard to the protection of intellectual property rights.
3. When appropriate, perform science and technology development work in host countries to address local market needs, as well as employ host country personnel in an S&T capacity and encourage their training, taking into account commercial needs.
4. When granting licenses for the use of intellectual property rights or when otherwise transferring technology, do so on reasonable terms and conditions and in a manner that contributes to the long term development prospects of the host country.
5. Where relevant to commercial objectives, develop ties with local universities, public research institutions, and participate in co operative research projects with local industry or industry associations.

IX. Competition

Enterprises should, within the framework of applicable laws and regulations, conduct their activities in a competitive manner. In particular, enterprises should:

1. Refrain from entering into or carrying out anti-competitive agreements among competitors:
   1. To fix prices;
   2. To make rigged bids (collusive tenders);
   3. To establish output restrictions or quotas; or
   4. To share or divide markets by allocating customers, suppliers, territories or lines of commerce;
2. Conduct all of their activities in a manner consistent with all applicable competition laws, taking into account the applicability of the competition laws of jurisdictions whose economies would be likely to be harmed by anti-competitive activity on their part.
3. Co-operate with the competition authorities of such jurisdictions by, among other things and subject to applicable law and appropriate safeguards, providing as prompt and complete responses as practicable to requests for information.
4. Promote employee awareness of the importance of compliance with all applicable competition laws and policies.

X. Taxation

It is important that enterprises contribute to the public finances of host countries by making timely payment of their tax liabilities. In particular, enterprises should comply with the tax laws and regulations in all countries in which they operate and should exert every effort to act in accordance with both the letter and spirit of those laws and regulations. This would include such measures as providing to the relevant authorities the information necessary for the correct determination of taxes to be assessed in connection with their operations and conforming transfer pricing practices to the arm's length principle.