2011 European Symposium on Ethics and Governance

Actualité de la chaire, Article publié sur le site le 07/12/11

                                        

The Chair of Excellence in Law and Business Ethics in cooperation with the OECD

organized the first European Symposium on Ethics and Governance

November 21 and 22, 2011

National and international experts gathered on this occasion to deal with these major topics:

Keys to success for ethical governance, Performance and compensation, Rating agencies, Conflict of interests and Social business.

 

Many thanks for a great success…

 

The scientific works of these Panels are currently being analyzed and synthesized. The Chair of Excellence of Law and Business Ethics is engaged with this work.

Scientific coordination for every stage of this Symposium is provided by Roxana Family.

For further information about this Symposium:

congres.gouvernanceethique@ml.u-cergy.fr

For upcoming events provided by the Chair of Excellence of Law and Business Ethics, go to the 'Actualites' link at the top of this page.

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“They built together the companies they could not build alone.”

(François de Salignac de La Mothe FÉNELON, Tél. XI)

Established in 2007, the Chair of Law and Business Ethics became the first University Chair of Excellence to gather researchers and professionals around a common set of themes involving corporate responsibility: governance, finance, compliance, human resources, energy and the environment.

This Chair intends to participate in the emerging European School of thought around business ethics and to contribute to the efficiency of ethical programs, compliance and integrity. Since its creation, establishing a Master’s Degree dedicated entirely to corporate responsibility, plus organizing multiple scientific demonstrations in the form of symposiums, conferences and breakfasts, has framed the activities and mission of the Chair of Law and Business Ethics.

With the European Symposium on Ethics and Governance, organized in partnership with the Organisation for Economic Co-Operation and Development (OECD), the Chair takes an innovative step forward. This biennial demonstration aims at promoting a forum for reflection and sharing good practices by gathering national and international experts. This 2011 Symposium focused on four essential current themes: performance and compensation, rating agencies, conflict of interests, and social business.

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Celebrating its 50th anniversary, the OECD now counts 34 Member States. The OECD offers governments and various stakeholders a forum to analyse situations by observing facts, comparing and sharing political experiments, identifying good practices and promoting the findings and recommendations of experts. The OECD is one of the most important and most reliable sources in the world for comparative statistical data on economics, trade, labour, migrations, health, the environment and many other subjects.

The OECD contributes actively to the mission and process of G20 States, in particular anti-corruption, investment, taxation, business ethics, the environment, development, reduction of poverty and employment. Within this framework, the OECD establishes a partnership with the Faculty of Law and the Chair of Law and Business Ethics at the University of Cergy-Pontoise.

The intersection of experts and networks from both the OECD and the Chair of Law and Business Ethics reinforces that the OECD is actively contributing to the research and development of business ethics. Cross-fertilization from these major stakeholders will contribute to the growing dynamic of this partnership.

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Introduction

The Symposium was introduced by (seated from left to right) :

  • Pascale Andreani, Ambassador, permanent representation of France at OECD
  • Rintaro Tamaki, Deputy Secretary-General of the OECD on behalf of Angel Gurría, Secretary-General of the OECD
  • Anne Houtman, Head of Representation - France, European Commission
  • Roxana Family, Co-Founder of the Chair of Law & Business Ethics, Dean of the School of Law, UCP

 

This introduction staged the framework for the next two days.

Introductory remarks (seated from left to right):

       

Photo 1 :  Pascale Andreani, Rintaro Tamaki, Anne Houtman and Roxana Family. Photo 2 :  Pascale Andreani and Rintaro Tamaki.  Photo 3. Rintaro Tamaki and Anne Houtman.

More images here : http://www.chaireethiquedesaffaires.fr/galeries/slideshow.php?id_categorie=11

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Keys to success of Ethical Governance

The first Panel, ‘Keys to success of Ethical Governance’ gathered compliance officers and ethics directors of major industrial groups and organizations. This Panel, moderated by Simon Webley, introduced the principle topic of the Symposium—ethics and governance. Each panelist introduced the ethics policy of their corporation or organization, the shared values, ethical issues and where there is still work to be done.

List of Panelists (seated from left to right) :

  • Dominique Lamoureux, Vice President, Ethics & Corporate Responsibility, Thales
  • Emmanuel Lulin, Group Director of Ethics, l’Oréal
  • Mary B. Schaefer, Unit Chief, Office of Integrity and Compliance, FBI
  • Simon Webley, Research Director, Institute of Business Ethics
  • Keith T. Darcy,  Executive Director, ECOA
  • Jean-Daniel Lainé, Senior Vice-President, Ethics & Compliance, Alstom
  • Bernard Claude, President of the Ethics Committee, Total
  • Pedro Montoya, Chief Compliance Officer, EADS
 

The following texts introduces the themes of ethics and governance focused on during the Symposium : performance and compensation, rating agencies, conflict of interests, and social business.

 Keys to success of Ethical Governance Panelists (seated from left to right) :

        

Photo 1 : Emmanuel Lulin, Mary Schaefer, Simon Webley, Keith Darcy, Jean-Daniel Lainé, Bernard Claude and Pedro Montoya.  Photo 2 : Mary Schaefer and Simon Webley. Photo 3 : Keith Darcy.  Photo 4 : Pedro Montoya.

More images here : http://www.chaireethiquedesaffaires.fr/galeries/slideshow.php?id_categorie=11

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Performance and Compensation

This Panel gathered experts from major industrial groups and organizations, law firms, a 2011 Fulbright Chair and the OECD. It was moderated by Phillppe Burger.

List of Panelists (seated from left to right) :

  • Sébastien Neuville, Professor of Law, University of Toulouse
  • Bernard Claude, President of the Ethics Committee, Total
  • Philippe Burger, Partner, Deloitte France
  • Carolyn Ervin, Director, Directorate for Financial & Enterprise Affairs, OECD
  • Darren Rosenblum, Professor of Law, Pace University (USA), Fulbright Chair 2011 UVSQ

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"What happened in the Enron affair and other scandals, especially shocked Americans and most people in the world as it is injustice. (...) In order to justify their lavish salaries, directors proclaimed that they 'had created value' and because of that the firm was the superpower. But mostly, they had built a house of cards."

Joseph E. Stiglitz, The Roaring Nineties, (p.250 of the French edition).

The challenge of the link between performance and compensation has been exacerbated in recent scandals. Reported high-profile wages of leaders has surged in recent decades, including a growing portion indexed on the market value of companies.

The perception is that corporate governance is more directed towards increasing stock prices, which has a direct impact on the valuation of stock options, than toward a performance of the company responding to the social needs of all stakeholders.

Recent bankruptcies in the financial and economic system support the idea for a need to examine the notion of performance. Performance metrics were in the past related to the growth rate of turnover, the rate of profitability for a company, and the financial value of the company on the stock market. Recently however, some companies with such a green light have experienced periods of major instability—and are seen as not well-equipped to withstand the shocks of a complex and inter-dependent global economy.

Many practices now denounce pay-to-performance as contrary to the necessary long-term visions expected from leadership. The economics of value creation historically has relied on visionary entrepreneurs, the expectations of consumer markets and competition. These goals of business development have included strategies of investment in research, innovation and development.

What are the appropriate incentives for sustainable economic development for companies?

Compensation indexed to volatile stock racing does not seem appropriate anymore, but adapting tools to measure the value of compensation based on the expected performance of leadership, their teams and employees still needs to be defined.

Is there a need to redefine the expected performance of leadership by raising the business ethic of all stakeholders—their sustainability, their accountability and their transparency?

(Text by : Carole Hommey, Chaire of Excellence in Law and Ethics)

Performance and Compensation Panelists seated from left to right.

          

Photo 1 : Sébastien Neuville, Bernard Claude and Philippe Burger. Photo 2 : Philippe Burger, Carolyn Ervin and Daniel Rosenblum. Photo 3 : Daniel Rosenblum.

More images here : http://www.chaireethiquedesaffaires.fr/galeries/slideshow.php?id_categorie=11

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Rating Agencies

This Panel gathered experts from major industrial groups, organizations, the CEO of a rating agency, law firms and the OECD.

List of Panelists (seated from left to right) :

  • Adrian Blundell-Wignall, Deputy Director in the Directorate for Financial & Enterprise Affairs, Special Advisor to the Secretary-General, OECD
  • Gretchen A. Winter, Executive Director, Center for Professional Responsibility in Business & Society, University of Illinois at Urbana-Champaign
  • Philippe Portier, Partner, Jeantet Associés AARPI
  • Emmanuel de la Ville, CEO, EthiFinance
  • Charley Hannoun, Professor of Law, UCP
  • Jérôme Da Ros, Managing Partner,  Da Ros & Creis

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The responsibility of rating agencies during times of economic and financial crisis has been widely recognized since 2008. This includes on the one hand, financial rating agencies (a concentrated market whose key players are Anglo-Saxon Standard & Poor's, Moody's or Fitch Rating) and on the other hand, extra-financial rating agencies (EthiFinance distributes in France).

Financial rating agencies have historically been developed to inform investors on the financial and legal structures of governance for well-understood stakeholders (businesses, States, local authorities, etc.), while more recently ANEF rating agencies were structured to enrich understanding of the viability of players by taking into account the environmental, social and governance factors that made up ratings.

This development exposes issues from previous rating-agency models. These issues are both structural and cyclical.

- From a structural point of view, methods and rating criteria are disputed—but also theorganizational structure and funding of financial rating agencies are accused of going against necessary neutrality and transparency. Ethical questions are numerous—for example opacity, conflict of interests and convenience.

- From a cyclical point of view, recent economic and financial failures explore and question the approach of financial criteria alone (this includes both legal and governance perspectives) promoted by financial rating agencies.

Financial rating agencies have gradually acquired the status of market regulators, approved by the Basel Accords. However, Enron, which held a largely-positive rating a few days before bankruptcy, has destabilized that trust. Models used by financial rating agencies have also failed to anticipate risk situations that triggered other recent issues such as the subprime crisis, bank failures, etc. Conversely, extra-financial rating agencies have not yet gained sufficient legitimacy. Human and financial resources at their disposal are not commensurate with those of financial rating agencies, whose growth is linked to recent decades of dynamic Anglo-Saxon financial markets. The issues raised by the failures and market restructuring of rating agencies are abundant. So while the question of renewal of confidence in ANF emerges, new players will gain legitimacy.

Adding another side to the debate, Michel Barnier, when discussing a European rating agency, critiqued in April 2010, "The rating agencies landscape is too concentrated,” raising yet another question of how to position statutes, laws, economic policies and ethical governance.

There is also the arrival of new actors. These are emerging economies or economies tied to other economic systems. As an example, China's main rating agency regularly challenges ratings from the Anglo-Saxon model.

Taking the broad range of factors into account, what rating models are acquiring legitimacy by addressing the interdependent complexity of current economic and legal systems? Also, will new ethical criteria allow better reliance on new regulatory actors?

Finally, agreements regulating global validation create a wide regulatory scope for rating agencies, but how can we also ask the perimeter be targeted? The OECD, through the voice of the Deputy Secretary General Pier Carlo Padoan, said in July 2011, "Recently, rating agencies have confirmed that they were strongly pro-cyclical." How should they prepare for the risks of any major impact on markets—for example, business, communities, States, sport clubs, etc.?

(Text by : Carole Hommey, Chaire of Excellence in Law and Ethics)

Rating Agencies Panelists seated from left to right :

    

Photo 1 : Adrian Blundell-Wignall, Gretchen Winter, Philippe Portier, Emmanuel de la Ville and Charley Hannoun.  Photo 2 : Charley Hannoun and Jérôme Da Ros.

More images here : http://www.chaireethiquedesaffaires.fr/galeries/slideshow.php?id_categorie=11

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Conflict of Interests

This Panel gathered law firms, compliance officers and ethics directors from major industrial groups, international organizations, the Vice President of the French Council of the State, the former President of the Paris Bar and the OECD. It was moderated by Sylvie Le Damany.

List of Panelists (seated from left to right) :

  • Philippe Bouchez El Ghozi, Partner, Paul Hastings
  • Murray Grainger, Head of Airbus Ethics & Compliance Programme Office, Airbus
  • Joan Dubinsky, Director of Ethics Office, United Nations
  • Nicola Bonucci, Director for Legal Affairs,  OECD
  • Sylvie Le Damany, Partner, Jeantet Associés AARPI
  • Jean-Marc Sauvé, Vice President, French Council of the State
  • Dominique de la Garanderie, Former President of the Paris Bar
  • Dominique Lamoureux, Vice President, Ethics & Corporate Responsibility, Thales
  • Roxana Family, Co-Founder of the Chair of Law & Business Ethics, Dean of the School of Law, UCP

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The concept of conflict of interests is not defined in French law—which punishes only the illegal taking of interest. The definition of conflict of interests is complex. It is widely understood that conflict of interests arise when a person is in a position to favor his own interests at the expense of another interest group. Consideration of this issue was raised through recognition of people serving public interests also having to deal with private interests. A number of scandals have recently been publicized. The Woerth / Bettencourt case has exacerbated this crisis by affecting public confidence. Before that, other scandals were raising public awareness—such as in the field of public health (contaminated blood, asbestos, etc.).

These events have shown the limits of regulation on this subject. However a legislative solution has not yet emerged as denounced Martin Hirsch in his book published in 2010 "Pour en finir avec les conflits d’intérêts."

Moreover, the evolution of this problem in the private sector is now visible. The complexity of systems shares the problem of leaders who also serve in different boards. The news has also denounced examples of investment banks acting on behalf of their customers but at the same time for their own account.

Conflict of interests introduces a major ethical issue. They question the risk of reputation before the legal risk. Principles of fairness, transparency and vigilance are expected, as provided in the recruitment recommendations of the French Institute of Directors. These principles support the notion of confidence in leadership—addressing both a sustainable economy and a viable political strategy to the public.

However, cases have shown that elites are fallible and personal interests, or human risk, can grow to be unacceptable behavior to the public.

How then should one manage these risks? A regulatory challenge is the fact that this notion of conflict of interests is both difficult to define and also to prevent as they are particularly complex—the themes are varied and touch on various skills and rights. Regulation may be made by instruments such as the French Commercial Code, French Corporate Law, etc.

Governance rules made internationally seem to favor a preliminary declaration of interests. This requires frequent updating and also needs to be supported by a strong ethical approach.

Scandals also occur when the actors themselves are not conscious they are facing an ethical dilemma—especially in cases of conflict of interests where a current system has widely-shared practices—even if these practices are not always clearly ethical and not clearly oriented toward collective interests. It is therefore very sensible to list exhaustively risk situations.

In that framework, should legislation seek to take some new rights as a template, such as environmental law, which emphasizes the principles of precaution, prevention and the principles of participation? Interests often focus on financial gains. Should orientation toward major financial penalties related to ethics be considered?

Ethics has not appeared to be sufficient to anticipate potential conflict of interests because these processes are confronted with humans that are fallible. The complementary process of ethical awareness upstream and legal sanctions downstream seems therefore to be meaningful here.

(Text by : Carole Hommey, Chaire of Excellence in Law and Ethics)

 

Conflict of Interests Panelists seated from left to right :

   

Photo 1. Philippe Bouchez El Ghozi, Murray Grainger and Joan Dubinsky.  Photo 2. Jean-Marc Sauvé and Dominique de la Garanderie.  Photo 3.  Nicola Bonucci, Sylvie Le Damany, Jean-Marc Sauvé, Dominique de la Garanderie,  Dominique Lamoureux and Roxana Family.

More images here : http://www.chaireethiquedesaffaires.fr/galeries/slideshow.php?id_categorie=11

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Social Business

This Panel gathered microfinance directors, NGO directors, law firms, consultants and the OECD. It was moderated by Carole Hommey.

List of Panelists (seated from left to right) :

  • Pierre Poret, Counsellor, Directorate for Financial and Enterprise Affairs, OECD
  • Anthony Gooch,  Director, Directorate of Public Affairs & Communications, OECD
  • Carole Hommey,  Ethics Consultant, Chair of Excellence of Law and Business Ethics
  • Christopher L. Baker, Partner, Skadden, Arps, Slate, Meagher & Flom
  • Moushumi M. Khan, Director, Legal & Compliance, BRAC Bangladesh
  • Sébastien Duquet, Director, PlaNIS, Planet Finance

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The concept of Social Business was established by the work of Professor Muhammad Yunus. The brilliant economist, originally from Bangladesh, was perplexed in the 1970's by the gap between economic theories of growth and the actual benefits achieved by people. His research found that recommended development patterns were not able to meet the social needs of the poorest populations.

Companies, he found, were focused on a response with one dimension—the search for profits—validating their response as meeting the needs of contracting parties (employees, shareholders, customers). As a response, a model proposed by M. Yunus called Social Business, prescribed that a company could position itself to have broader social responsibilities and use its economic development to meet multiple social needs—education, health, solidarity and democracy. By meeting these needs, Social Business makes new players and creates new markets for established companies by expanding the strategy called BOP, Base of the Pyramid.

These objectives could be achieved by questioning the funding cycles of companies. Here, investments would be made to both develop businesses and make them economically viable and self-sufficient. Investment would be repaid and then reinvested in another project for social development. This pattern would be carried out by micro-credit—minor amounts of money from the real economy with lower financial returns but major social impact. Financial returns could then be seen as also an investment in meaningful social activity. Another form of Social Business could be offered by holding companies responsible to the most disadvantaged—redistributing profits from activity, increasing the income of a population in distress and thereby increasing social gains.

The consistency of Social Economics and Business and the support of financial balance from micro-credit have been demonstrated by the enthusiasm around the theories of Muhammad Yunus. Recognition of his work was offered as the Nobel Prize in Economics in 2006.

Strategies to fight against poverty by integrating multi-dimensional social business models on capitalism and free trade is necessary and at the heart of many economic concerns of international actors—multinational enterprises, government regulators and international stakeholders wanting economic changes (NGOs, development partners in poor countries, etc.). However, what is the adaptability of this concept to the international economy? Mohammed Yunus provides the model of Social Business as complementary and parallel to a market economy. Recognizing this, can one surmise that the workings of Social Business are transferable to traditional players in a market economy? What are the levers for performance? What are limitations? Micro-credit is offered to support entrepreneurial initiatives. How should this expand to people in hardship, including those who are necessarily impacted? Regulatory in scope, can the principles developed by Social Business convey new levers to control current problems?

(Text by : Carole Hommey, Chaire of Excellence in Law and Ethics)

 

Social Business Panelists seated from left to right :

    

Photos 1 and 2 : Pierre Poret, Anthony Gooch, Carole Hommey, Christopher L. Baker,         Moushumi Khan and Sèbastien Duquet.

More images here : http://www.chaireethiquedesaffaires.fr/galeries/slideshow.php?id_categorie=11

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For a bibliography on the themes :             Bibliography_on_the_Symposium_themes.pdf

For a bibliography from the Speakers :      Speaker_Bibliographies.pdf

 

Participating experts were, in alphabetical order:

  • Pascale Andreani, Ambassador, Permanent Representation French delegation, OECD
  • Christopher L. Baker, Partner, Skadden, Arps, Slate, Meagher & Flom
  • Adrian Blundell-Wignall, Deputy Director in the Directorate for Financial & Enterprise Affairs, Special Advisor to the Secretary-General, OECD
  • Nicola Bonucci, Director for Legal Affairs,  OECD
  • Philippe Bouchez El Ghozi, Partner, Paul Hastings
  • Philippe Burger, Partner, Deloitte France
  • Bernard Claude, President of the Ethics Committee, Total
  • Keith T. Darcy,  Executive Director, ECOA
  • Jérôme Da Ros, Managing Partner,  Da Ros & Creis
  • Emmanuel de la Ville, CEO, EthiFinance
  • Joan Dubinsky, Director of Ethics Office, United Nations
  • Carolyn Ervin, Director, Directorate for Financial & Enterprise Affairs, OECD
  • Roxana Family, Co-Founder of the Chair of Law & Business Ethics, Dean of the School of Law, UCP
  • Dominique de la Garanderie, Former President of the Paris Bar
  • Jean-Paul Gauzès, European Deputy
  • Anthony Gooch,  Director, Directorate of Public Affairs & Communications,OECD
  • Murray Grainger, Head of Airbus Ethics & Compliance Programme Office, Airbus
  • Charley Hannoun, Professor of Law, UCP
  • Carole Hommey,  Ethics Consultant, Chair of Excellence, Law and Business Ethics
  • Anne Houtman, Head of Representation - France, European Commission
  • Moushumi M. Khan, Director, Legal & Compliance, BRAC Bangladesh
  • Jean-Daniel Lainé, Senior Vice-President, Ethics & Compliance, Alstom
  • Dominique Lamoureux, Vice President, Ethics & Corporate Responsibility, Thales
  • Sylvie Le Damany, Partner, Jeantet Associés AARPI
  • Emmanuel Lulin, Group Director of Ethics, L’Oreal
  • Philippe Montigny, President, Ethic Intelligence
  • Pedro Montoya, Chief Compliance Officer, EADS
  • Sébastien Neuville, Professor of Law, University of Toulouse
  • Pierre Poret, Counselor, Directorate for Financial and Enterprise Affairs, OECD
  • Philippe Portier, Partner, Jeantet Associés AARPI
  • Darren Rosenblum, Professor of Law, Pace University (USA), Fulbright Chair 2011 UVSQ
  • Jean-Marc Sauvé, Vice President, French Council of the State
  • Mary B. Schaefer, Unit Chief, Office of Integrity and Compliance, FBI
  • Rintaro Tamaki on behalf of Angel Gurría, Secretary-General of the OECD
  • Simon Webley, Research Director, Institute of Business Ethics
  • Gretchen A. Winter, Executive Director, Center for Professional Responsibility in Business & Society, University of Illinois at Urbana-Champaign

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For further information about this Symposium:

congres.gouvernanceethique@ml.u-cergy.fr

For upcoming events provided by the Chair of Excellence of Law and Business Ethics, go to the 'Actualites' link at the top of this page.

Related OECD publications :  Publications-OCDE-OECD-_Publications-2.pdf

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