Part 1; The U.S. National Contact Point--Corporate Social Responsibility Between Nationalism, Internationalism and Private Markets Based Globalization

 (Pix Source HERE)

This Blog Essay site devotes every February to a series of integrated but short essays on a single theme. For 2013 this site introduces a new theme: The U.S. National Contact Point: Corporate Social Responsibility Between Nationalism, Internationalism and Private Markets Based Globalization.

Part 1:  The OECD and Its Corporate Governance Project

This series builds on some ideas I have been working through for a number of years relating to a fundamental shift in the approaches to corporate governance that broaden the ambit of corporate governance issues from a singular focus on internal governance (the relationships among officers, shareholders and directors) to one that includes corporate behavior and the standards by which officers, directors and shareholders exercise their respective governance authority. This shift also changes the scope of what is understood as "law" to be applied to issues of corporate governance, from one principally focused on national law to governance norms that may be sourced in the declarations and other governance interventions of public and private international bodies. Lastly, it appears to point to an evolution to the role of the state from the principal source of standards and enforcer of law to a vehicle for the implementation of international standards  in which enforcement power is left to global market actors--principally consumers and investors function of the decisions of global actors.  All of this is inconsistent with traditional notions of the role of law, the scope of corporate governance and the nature of corporate social responsibility int he United States.  The extent to which the United States participates in the construction of these autonomous international systems may suggest the direction in which government policy may be moving away from the traditional consensus of corporate responsibility to something perhaps entirely new.

This post focuses on the Organization for Economic Cooperation and Development and its governance role in corporate behavior.

 

 (Pix from http://www.oecd.org/)

  
The OECD and Its Corporate Governance Project

The OECD originated in the Marshall Plan. The antecedent of The Organization for Economic Co-operation and Development (OECD) was the Organization for European Economic Co-operation (OEEC), which came into being on 16 April 1948. It was created to administer the aid dispersed by the Marshall plan to rebuild the European economy after the destruction of World War II. But it was also tasked with contributing to European economic integration. (OECD, The OEEC).The OEEC almost disappeared in the 1950s as a consequence of shifts in U.S: policy away from economic to military integration, the difficulties of harmonizing the cometing interests of its member states, and the turn from the OEEC framework to economic integration grounded in the European Economic Communities model which came to being with the execution of the Rome Treaties. 

The OEEC declined after 1952 due to the unexpected end of the Marshall Plan and a subsequent shift in favour of NATO. The mutual security policy that blended economic aid and military assistance - the OEEC being replaced for some purposes on 1 January 1952 by the Mutual Security Agency (MSA) - almost dealt the organisation a fatal blow. The debate on using NATO in lieu of the OEEC as the preferred vehicle for economic aid began. The military threat had given Atlanticists the idea of utilising the OEEC and its committees, teams of experts and statistical output, with a view to promoting the alliance's rearmament while controlling the difficult problems of inflation and allocation of raw materials. In the name of efficient rearmament, the British took a position in favour of a NATO economic committee, with the hope of dispossessing the OEEC. A compromise was reached: the September 1951 NATO conference in Ottawa set up a special committee (Monnet, Harriman, Plowden) charged with studying the question of the economic development of NATO countries in relation to the economic possibilities of each of the members. It was decided that the OEEC would deal with European economic questions, including those relating to the functioning of NATO, on its own. Other autonomous agencies developed to fill out the sphere of OEEC's activities.OECD, The OEEC).

In September 1961 the OEEC was superseded by the Organisation for Economic Co-operation and Development (OECD), reconstituted as a multi-lateral body. It initially consisted of the European founder countries of the OEEC plus the United States and Canada. It now includes 34 countries and is likely to grow more in the coming decades.  More interestingly, the OECD has managed to remain relevant even as its founding organizational ideologies--the advancement of Western style democracy and constitutionalism through free market economic development as a tool in the war against the sphere--became irrelevant in the 1990s. Where once it had been the economic arm of the West's total war against its ideological enemies within the Soviet bloc, after the 1990s, the OECD became one of the champions of multi-lateralism, internationalism and a networked world order of states through international public norm creation for the management of international consensus in the service of economic globalization. 

 In this changing world, OECD Members continue to form a community of nations committed to the values of democracy based on rule of law and human rights, and adherence to open and transparent market-economy principles. The Organisation’s essential mission is to promote stronger, cleaner, fairer economic growth and to raise employment and living standards. We rely on it to do so by identifying key economic, social and environmental policy challenges and designing policies to improve the well-being of people around the world. (OECD Council Ministerial Meeting,OECD 50th Anniversary Vision Statement C/MIN(2011)6 (2011))

This idea is mirrored by one of the principal members of the OECD.   The U.S. ambassador to the OECD recently emphasized the necessary transformation of the OECD in conformity with the realities of globalization, but with an eye to the traditional mission of the OECD.

Then the U.S. worked with the Secretary General and other member countries to use the occasion of the 50th Anniversary of the OECD to adopt a new cross-cutting Vision for the organization, committing it to become an outward looking “global policy network” working with the BRICs but also developing countries.

A forum in Busan, South Korea brought together developed, emerged and developing countries to usher in a new era of development, this new era focuses on mutual learning and shifts the focus from aid to development. Now at the OECD we are focusing on how to use the embedded knowledge of the organization to help developing countries grow, as it once helped Europe grow. (Remarks, U.S. Ambassador to the OECD Karen Kornbluh, on Leveling the Playing Field for International Business, at the Harvard Business School Club of France, March 5, 2012, Paris, France).

Thus the objectives of the OECD are embedded in a mission of internationalizing something like a consensus based set of principles that originate with developed states and are naturalized globally through the structures and architecture of globalization.  This reflects the mechanics and operational objectives of other international organizations, principally the  G20's Financial Stability Board framework.  See Larry Catá Backer, "Private Actors and Public Governance Beyond the State: The Multinational Corporation, the Financial Stability Board and the Global Governance Order," Indiana Journal of Global Legal Studies 18(2):751 (2011). The OECD speaks the language of development, but their techniques are managed norm making from the center to the periphery--outward rather than inward.

The Convention of the OECD provides useful snapshot of its purposes and the scope of its authority.  Its Preamble suggested the ideological internationalism that served as its foundation.  The Preamble thus declares that "economic strength and prosperity are essential for the attainment of the purposes of the United Nations, the preservation of individual liberty and the increase of general well-being. (OECD Convention Preamble). These ideals--individual liberty tied to economic prosperity--are cemented by the premise that stringer economic integration can make war less likely and that their was an obligation on the part of the powerful states to help develop less advanced and more dependent states ("that the economically more advanced nations should co-operate in assisting to the best of their ability the countries in process of economic development") (ibid.).  To this end, the OECD has now transformed itself into an engine of managed governance, in which consensus is developed among a community of powerful states which can then signal movement toward consensus and can also provide a base of technical expertise to ensure transposition into the domestic legal orders of both Member States and those which are necessarily dependent on them.

Throughout its history, the OECD, whose origins lie in the Marshall Plan, has assisted countries in fostering good governance and reforming and improving their economic policies to generate greater economic growth. The success of these efforts helped build a wider consensus for market economies and democracy. TheOECD is a world leader in designing structural reforms that promote growth and equity. Its committees of national experts, high-quality Secretariat, world-class data collection and analysis, robust peer reviews, and evidence-based policy recommendations help countries by benchmarking policies and disseminating best practices. Its collaborative work with regulators and policy makers, industry leaders, trade unions, and civil society brings key stakeholders together to share ideas and learn from each other, and to develop best practices, policy guidelines, and legal instruments. (OECD Council Ministerial Meeting,OECD 50th Anniversary Vision Statement C/MIN(2011)6 (2011))

Lastly, it suggested the basis of globalization as inherent in its mission--"the further expansion of world trade is one of the most important factors favouring the economic development of countries and the improvement of international economic relations" (OECD Convention Preamble). Though likely less clearly understood in 1961, the language ultimately suggested the need for the permeability of borders and the reduction of the power of states within networks of integrated states operating through international organizations that leads to the current state of structuring economic development.

The focus of the organization was the management of the world economy (OECD Convention Article 1) by contributing "to the expansion of world trade on a multilateral, non-discriminatory basis in accordance with international obligations."  (Article 1( c)). To that end, the member states agreed to certain common objectives:

(a) promote the efficient use of their economic resources;
(b) in the scientific and technological field, promote the development of their resources, encourage research and promote vocational training;
(c) pursue policies designed to achieve economic growth and internal and external financial stability and to avoid developments which might endanger their economies or those of other countries;
(d) pursue their efforts to reduce or abolish obstacles to the exchange of goods and services and current payments and maintain and extend the liberalisation of capital movements; and
(e) contribute to the economic development of both Member and non-member countries in the process of economic development by appropriate means and, in particular, by the flow of capital to those countries, having regard to the importance to their economies of receiving technical assistance and of securing expanding export markets. (OECD Convention Article 2).

Collective action was to be based on three principles: transparency, consultation, and coordination.  (Ibid Article 3). Collective action was to be taken through the work of a governance architecture set up for that purpose. It is typical of organization of this kind.  All member states are members of the organization (Article 4).  The organization was structured to function autonomously of its members.  All states agree to be bound by the actions of the organization (Article 5(a)); the organization may make recommendations ot its members that are not binding (Article 5(b)); and the organization may enter into agreements with states or other international organizations (Article 5(c)). But the inter-governmentalism of the organizational form also limits the ability of the organization to act over the objection of any Member (decisions made by mutual agreement and decisions are not binding on members until it has complied with the requirements of its own constitutional procedures) (Article 6). The operations of the organization are administered through a Council (Article 7) that may designate and executive committee and any number of special purpose bodies to undertake tasks (Article 9), all of which are presided over by a Secretary General (Article 10) and a secretariat (Article 11).

As thus constituted, the OECD tends to focus on knowledge production and consensus based programs that are meant to be adopted, but only to the extent of the political will of the member states. The organization is also grounded on leadership by example.  More important, because it is made up of the most developed states on the planet, programs and standards adopted through the OECD tend to be quite influential, and are likely to trickle down to both other states and private regulatory bodies. Cf. Backer, Larry Catá, Private Actors and Public Governance Beyond the State: The Multinational Corporation, the Financial Stability Board and the Global Governance Order (August 13, 2010). Indiana Journal of Global Legal Studies, Vol. 17, 2011.

The OECD's 50th Anniversary Vision Statement (OECD Council Ministerial Meeting,OECD 50th Anniversary Vision Statement C/MIN(2011)6 (2011)) suggest the approaches of this organization to developing normative framework with application within domestic legal orders or otherwise to multinational enterprises.  First, the OECD will "actively pursue strategies for growth and jobs by making the best use of OECD expertise in multidisciplinary analysis and structural reforms. Sustainable economic growth is a critical objective and future OECD strategies will promote green growth." (Ibid.). Second, the OECD committed itself to "aid as well as the priority we give to achieving the Millennium Development Goals. We will continue our efforts to make aid more effective by better aligning donor and partner priorities, empowering developing countries to build capacity and assume greater ownership for their own futures, and strengthening mutual accountability." (Ibid.).  Last, the OECD would increase its capacity to generate expertise and to provide technical assistance so that its work can be transposed and internalized into the law and practice of states.  "The OECD will continue to expand its network with new ideas and new partners while maintaining the high quality of its analysis, instruments, and standards, the objectivity of its recommendations, and its rigorous peer review process." (Ibid.).  The objective is to develop expertise and standards that may be adopted by states but which may in any case serve as athe basis for legitimating private behavior through norm making.  "As we go forward, the OECD will operate as a results-oriented, rigorous but flexible network based on high standards with the goal of developing effective and innovative policy choices for governments around the world."

The OECD's Article 9 authority has provided the organization with the flexibility to structure a large number of substantive area groups that have become an international resource for technical expertise and for the development of global normative standards. (Online Guide to OECD InterGovernmental Activity). The OECD has structured its programs along substantive lines. These provide a way to better target expertise internally and to extend it to the specific needs of states seeking consultation.  It also provides an efficient way to develop conduct standards compatible to the forms and divisions of domestic law. These include Agriculture and fisheries; Bribery and corruption; Chemical safety and biosafety; Competition; Corporate governance; Development; Economy; Education; Employment; Environment; Finance; Green growth and sustainable development; Health; Industry and entrepreneurship; Innovation; Insurance and pensions; International migration; Internet; Investment; Public governance; Regional, rural and urban development; Regulatory reform; Science and technology; Social and welfare issues; Tax; and Trade. This is particularly important in the contexrt of a newly developed OECD Strategy on Development.

The Strategy will provide a strengthened framework for collaboration with developing economies and encourage closer interaction within the Organisation in the formulation of development-related outputs. The Strategy will also foster collaboration with key partner countries and organisations with longstanding experience and presence in the field,providing a platform for knowledge sharing with emerging and developing countries and putting our work in many policy fields at the service of the world’s poorest. (OECD Strategic Orientations by the Secretary-General, May 23, 2012)

Of particular importance to this study is the work of the  OECD Investment Committee.  It is responsible for the OECD "liberalisation instruments in the field of international investment and services. It interprets and implements the 1976 Declaration and Decisions on International Investment and Multinational Enterprises and is the guardian of the Codes of Liberalisation of Capital Movements and Current Invisible Operations." (OECD Investment Committee).  It was formed in 2004 when the Committee on International Investment and Multinational Enterprises (CIME) and the Committee on Capital Movements and Invisible Transactions (CMIT) were merged. The U.S. has recognized the importance of this committee in shaping international normative consensus that may have or produce legal effect on either the national or international arena.  "As lead U.S. negotiators in the OECD Investment Committee, we increase global understanding, develop international rules, and advance worldwide investment policy reform and international co-operation." (U.S. State Department, Representing the USG in the OECD Investment Committee).

To shape the behavior of enterprises and states, the OECD has produced a regulatory program of soft power frameworks. These rules apply beyond the limits of the territorial boundary of states and they do not reflect the power of a single state to project its own laws beyond its own territory.  Collective space, collective action, and the internationalization of regulation on a consent basis mark the structures of these efforts.  The underlying premise of this approach is the assumptions that soft law can “provide incentives for the management of a values-based behavior structure” for international corporations and businesses. (Larry Catá Backer, "From Moral Obligation to International Law: Disclosure Systems, Markets and the Regulation of Multinational Corporations," 39 Georgetown Journal of International Law 591 (2008)). Transnational corporations cannot extricate themselves from the social context of any society (Ibid), so they must then conform to it. The power of cultural and social expectations, these pressures can apply force toward corporations. These methods can systematize a societal norm that would be able to influence private organizations and other governance institutions within this societal context. (Ibid). With the mixture of soft power mechanisms, the attempt to internationalize this “regulation” is a way remedy abuses and force corporations to act in due diligence. (Ibid.). Theses framework are not directly binding, yet they do create a normative consensus where investor and stakeholder expectations become to driver for regulation. As John Ruggie has reiterated with respect to the Guiding Principles on Business and Human Rights (to be discussed later in this series):

The Guiding Principles’ normative contribution lies not in the creation of new international law obligations but in elaborating the implications of existing standards and practices for States and businesses; integrating them within a single, logically coherent and comprehensive template; and identifying where the current regime falls short and how it should be improved. They do so under each of the Framework’s three pillars: Protect Respect and Remedy. (A/HRC/17/31).

Of greatest interest to us is the OECD's corporate governance project, undertaken for the most part through this committee.  "Corporate governance deals with the rights and responsibilities of a company’s management, its board, shareholders and various stakeholders. How well companies are run affects their performance, market confidence and private sector investment." (OECD Corporate Affairs). The OECD's most important corporate law project center of the development of an integrated set of principles and guidelines for the internal and external conduct of enterprises.  "These Principles are an international benchmark providing best practice recommendations on corporate governance." (OECD Corporate Affairs).

1.The OECD Principles of Corporate Governance (OECD 2004) provide a generalized framework reflecting the consensus among developed states of the basis for corporate organization in the context of a markets-based, welfare maximizing economic system. Chapter 5 of the Principles, with its associated commentary, is dedicated to disclosure and transparency practices. (Ibid., 22-23).  Emphasizing potential market benefits for companies that make effective use of disclosure mechanisms, the Commentary delineates a series of concerns regarding obstacles to good faith corporate disclosure, paying particular attention to the importance of the validity of third party auditors and the accessibility of publicly disclosed information. (Ibid., 49-57). These concerns form a foundation upon which other, more targeted agreements build. The OECD Principles are one of the 12 key standards for international financial stability of the Financial Stability Board and form the basis for the corporate governance component of the Report on the Observance of Standards and Codes of the World Bank Group. The OECD Corporate Giovernance Principles have become well established in international governance and serve to protect the conventional basic premises of domestic corporate law.  "First released in May 1999 and revised in 2004, the OECD Principles are one of the 12 key standards for international financial stability of the Financial Stability Board and form the basis for the corporate governance component of the Report on the Observance of Standards and Codes of the World Bank Group." (OECD, OECD Principles of Corporate Governance).

2. The OECD Guidelines on Corporate Governance of State- Owned Enterprises (OECD 2005) were crafted specifically as a complement to the Principles of Corporate Governance. (Ibid., 9). Drafted from the perspective of the state as owner, they are meant to reflect the necessary restructuring of the state economic sector in light of globalization, technological changes and emerging regimes of free movement of goods, services and capital across borders. (Ibid., 10). Mirroring the Principles of Corporate Governance in structure, Chapter 5 of the state-owned enterprises (SOEs) document also addresses transparency and disclosure at length. (Ibid., 41-46). Its basic premise is that state-owned enterprises (SOEs) should, at a minimum, generally be held to a disclosure and accounting standard fully equal to that of privately held corporations. "Whether they are owned by shareholders or states, all companies should operate on a level playing field consistent with the principles of competitive neutrality." (OECD Corporate Affairs). Central to this parity mandate is the implementation of independent auditing systems and annual (or, ideally, biannual) reporting procedures. (Ibid., Para. E).  More important, these principles are meant to conform the operation of state owned enterprises to the logic and normative framework of economic globalization. "Adapting to the globalisation, liberalisation and technological changes, OECD governments have undertaken reforms in the way they run their SOEs. Many non OECD countries are also looking towards the OECD experience to guide their own reforms because they usually have a big state sector." (OECD, OECD Guidelines on Corporate Governance of State-Owned Enterprises).

3.The Guidelines on Multinational Enterprises (2011) provide a comprehensive framework for guiding the behavior of economic activity that crosses borders. They were originally produced as an Annex to the OECD's 1976 Declaration om International Investment and Multinational Enterprises and represented a policy commitment by adhering governments to provide an open and transparent environment for international investment and to manage the forms in which multinational enterprises can make to economic and social progress, as those notions were developed by the international community. Specifically, the object of these Guidelines, among many, is to encourage positive contributions “to economic, environmental and social progress and to minimise the difficulties to which their various operations may give rise.” (Ibid., 11). Like the Principles of Corporate Governance and Guidelines for SOEs, the Guidelines for Multinational Enterprises focus disclosure on financial matters geared toward shareholder concerns. (Ibid., 15-16).  But because disclosure is grounded on “information . . . regarding [enterprise’s] activities, structure, financial situation and performance,”(Ibid., 15) enterprises are also “encouraged” to include additional information that “could include” value statements or statements of business conduct, policies or other codes of conduct adopted by the enterprise, including performance in relation to those codes, information on internal audits and information on relationships with labor and stakeholders. (Ibid., 15-16).

Taken together, these three integrates standards and principles provide a self constituted regulatory space under which enterprises may be assessed and monitored, and their conduct can be vested with consequences, by states, investors and consumers, to produce a functionally coercive through formally non-binding space. With respect to these three I have suggested:

Taken together, the three OECD governance frameworks suggest the contours for a system of monitoring and reporting that have potentially significant application to issues of environmental transparency. These frameworks suggest the outlines of a social norm standard for transparency in general, including environmental effects on transparency. Such social norms are then meant to be enabled and facilitated through the instrumentalities of states, without invoking the formal structures of the domestic legal orders of participating states.122 The effects can be quite substantial, but they remain grounded in politics, and the social norm systems that fall outside the comfortable and well-established parameters of law and the state system.123 (Larry Catá Backer, Transparency Between Norm, Technique and Property in International Law and Governance: The Example of Corporate Disclosure Regimes and Environmental Impacts, 22 Minnesota Journal of International Law 1 (2013)). 

More importantly, the three together provide a basis for enterprise governance that touch on all aspects of corporate activity. Their object is to provide an internalized framework for their regulation compatible with the basic premises of economic globalization.

The OECD is a unique forum where the governments of 30 democracies work together to address the economic, social and environmental challenges of globalisation. The OECD is also at the forefront of efforts to understand and to help governments respond to new developments and concerns, such as corporate governance, the information economy and the challenges of an ageing population. (Pamphlet OECD Guidelines for Multinational Enterprises (2011)). )

There are contradictions, of course.  The Principles of Corporate Governance are based on a shareholder wealth maximization model for the internal organization of the enterprise that is undermined, to some extent, by the Guidelines on Multinational Enterprises that are based on a stakeholder welfare maximization model for the external relations of the enterprise (that is with stakeholders of the than officers, directors and shareholders).  Likewise it seeks to advance a premise of autonomy for state owned enterprises at odds with the role of shareholders advanced in the principles of corporate governance. Still, taken together, the three instruments also acquire a character of governance  that is complete and self-referencing enough to support a a complete code of behavior autonomous of those written into the corporate laws of any state. These acquire a characteristic of obligation on private enterprises.  

These have provided an avenue for the development of a substantial body of knowledge production designed to deepen a construction of corporate norms guiding governance at the international level. This project has produced a number of publications that touch on a variety of issues of corporate governance.

Board Member Nomination and Election, 2012
Competitive Neutrality: Maintaining a level playing field between public and private business, 2012
Corporate governance, value creation and growth: The bridge between finance and enterprise, 2012
OECD Corporate Governance Working Papers
Related Party Transactions and Minority Shareholder Rights, 2012
Corporate Reporting of Intangible Assets: A Progress Report, 2012
The Role of Institutional Investors in Promoting Good Corporate Governance, 2011
Brochure on Corporate Governance in Asia, 2011 (pdf)
Board Practices: Incentives and Governing Risks, 2011
Corporate governance country reviews: Chile, Israel, Slovenia, 2011
Corporate Governance in Asia - Progress and Challenges, 2011
Accountability and Transparency: a Guide for State Ownership, 2010
The Financial Crisis: Reform and Exit Strategies, 2009
Practical Guide to Corporate Governance: Experiences from the Latin American Companies Circle, 2009
Privatisation in the 21st Century: Report on Good Practices, 2009 (pdf)
Using the OECD Principles of Corporate Governance: A Boardroom Perspective, 2008 (pdf)
Guide on Fighting Abusive Related Party Transactions in Asia, 2009 (pdf)
Policy Brief on Improving Corporate Governance of Banks in the Middle East and North Africa, 2009(pdf)
The Financial Crisis: Reform and Exit Strategies
Latin American White Paper on Corporate Governance
Methodology for Assessing Implementation of The OECD Principles on Corporate Governance , 2007 (pdf)
Survey of Corporate Governance Developments in OECD Countries, 2004 (pdf)

But the contradictions also evidence the tensions that remain unresolved between national law-making relating to corporate governance that focus on corporate philanthropy as the basis for corporate social responsibility, and internaitonal norm-making that focuses on the application of evolving internaitonal human rights norms to states and business enterprises, especially those enterprises opeerating across borders within globalized economic space. The OECD's inernal regulations point to the power of national law premises, the Guidelines for Multinational Enterprises look toward the obligations of international human rights obligations transposed to corporations irrespective of the limits or dictates of domestic law regimes. The harmonization of the two remains an on-going project, but also acocunts for the resistence by states, of attempts to develop anything but voluntary governance stabndards and principles at the internaitonal level. 

Yet, taken together, the OECD's corporate governance enterprise creates an alternative source of corporate norm-making that may either be used to develop the laws of its member states or to create a governance space beyond the state. Backer, Larry Catá, Governance Without Government: An Overview and Application of Interactions Between Law-State and Governance-Corporate Systems,  in Beyond Territoriality: Transnational Legal Authority in an Age of Globalization 87-123 (Günther Handl, Joachim Zekoll, Peer Zumbansen, editors, Leiden, Netherlands & Boston, MA: Martinus Nijhoff, 2012) ("A set of recent decisions suggests both the autonomy of the governance enterprise, its relationship to “the state”, yet independent from states, and the integration of networks of soft-law norms to construct a set of coherent governance standards for a functionally-differentiated group of actors - focused on the corporation and its stakeholders." Ibid., 116). The OECD thus contributes to a regulatory structure in which the state plays a peripheral and consequential role. But it also contributes to one in which law itself plays a less central role.

The OECD has not been making law--they have been managing the development of norms and standards that, once they come into common acceptance, are enforced privately and eventually are transposed into the domestic legal orders of participating states.  But the key feature is the ability of these efforts to affect the social space, rather than the legal space occupied exclusively by states. Corporate governance standards are the product of a community of states developing common positions rather than reflecting the will of the electorate of a particular state memorialized in law. This is indirect representative democratic governance making perhaps, and ironically far the from the principles that underlie the OECD's mission than it might otherwise be comfortable with.  OECD states takes strong comfort in the idea that the international norms they create may not be applied as law within their territory without their consent, democratically derived.  Yet, as we will see starting with the next post, they may be at the forefront of a creation of social norms that are increasingly understood as applicable to business enterprises in addition to the laws of states in which they operate.