Building trust

Secretary-General of the OECD

We live in a multilateral, networked, world. It requires rules, of course, but these will never be strong without a system based on principles and values. Trade, business and science are just a few examples of areas where trust needs to be rebuilt. How ironic that mistrust should develop during today’s age of information, where knowledge and confidence, not ignorance and fear, should be the hallmarks.

The OECD’s mission is to develop intergovernmental consensus on what are the best policies to promote strong economies and social progress. We draw up principles, guidelines or, occasionally, binding rules that our members commit to follow. We interact with scores of countries around the world that wish to benefit from our collective experience and knowledge. We know best practices work, bad practices do not.

Our approach has unique merits. OECD countries are all democracies founded on the rule of law, but also on trust. Recently, we have seen the damage that flows from a breach of such trust. Once lost, rebuilding trust is a long and hard road.

The erosion of trust is harming the global economy in several ways. Take the Doha Development Agenda, the multilateral trade round that stalled in Cancún in September. It may sound simplistic to attribute this failure to a breakdown of trust, yet many members of the World Trade Organization no longer seem to have faith in the fairness of the multilateral system. This also points to a suspicion of some hidden agendas on all sides, which are the most significant saboteurs of trust.

Another area where a massive, and justified, loss of trust has affected our economies is in corporate governance. The succession of spectacular cases, from Enron to WorldCom, have hurt confidence among investors, in particular people like ourselves who have believed in the integrity of the stock markets and those who influence investment decisions. We have been betrayed. Some have lost a lifetime of savings, and worry about the future because of the actions of a few who failed in their role as trustees.

Restoring market integrity is essential to winning back public confidence and to helping economies grow. The deluge of corporate scandals has motivated OECD ministers to seek a strengthening of the OECD Principles of Corporate Governance, which since 1999 had set the path with regard to shareholder rights, disclosure, transparency, the role of the board of directors, etc. The principles have been used as a basis for numerous national codes and guidelines, including in non-OECD countries.

In the revised corporate governance principles, more emphasis will be placed on the integrity of financial disclosure processes, the role of institutional investors in monitoring management and the impact of regulations and regulatory authorities. The OECD will publish a draft on the Internet in January 2004 with a view to drawing public comment, which could help reinforce this “benchmark” for global corporate governance.

Another critical area where trust has been eroded is science and technology. Public opinion is increasingly sceptical of science and the capacity of governments to deliver safety and security. Look at nuclear power. In my youth, despite the horrors of Hiroshima and Nagasaki at the end of the Second World War, President Eisenhower’s initiative of “atoms for peace” was broadly embraced as the energy of the future. A commentary in the New York Times on 15 August 1955, said that scientists at a major international conference in Geneva had concluded that thanks to nuclear energy, “for the first time, man is assured of virtually unlimited supply of energy”.

Today, despite global warming and rising energy demand, particularly in developing countries, many countries have abandoned the nuclear option. Accidents at Three Mile Island and Chernobyl have badly damaged public and, hence political, confidence in this once so promising technology. The industry’s tendency to secrecy only makes matters worse. Its publications are often discarded as “so much propaganda”. The result? No trust.

Sadly, the public seems to lump all controversial issues involving science into the same basket of suspicion and doubt. Nuclear is one area. Genetic modification of crops is another, particularly in Europe. Failures to deal adequately with concerns in one area cascade quickly into others, with the result that the scientific facts are often lost in a flood of misperception and demagoguery.

How ironic that mistrust should develop during today’s age of information. Knowledge and confidence, not ignorance and fear, are promises the information society should help deliver. But not even the Internet is completely safe. And no new safety gadget will ever be secure enough to persuade people that their e-commerce transactions are fraud-proof or that no virus or hacker will ever penetrate their system.

The lesson is simple: trust pays. We live in a multilateral, networked, world. It requires rules, of course, but as a former lawyer, I can reaffirm that these will never be strong without a system based on principles and values.

In many ways, an increasing reliance on rules and regulations to guide behaviour has lowered sights from what is ethical and appropriate to what we can get away with, even within the rules, as though there were no need for other basic considerations, like ethics. Today, a major business transaction will never be closed on a handshake, but needs lawyers, accountants, and consultants to ensure “due diligence”.

Yes, we need rules. But leaders need to turn to the important, difficult task of restoring principles, ethics and values so that we can rebuild trust.

©OECD Observer No 240/241, December 2003




Economic data

GDP growth: +0.6% Q2 2018 year-on-year
Consumer price inflation: 2.9% Sept 2018 annual
Trade: +2.7% exp, +3.0% imp, Q4 2017
Unemployment: 5.2% Sept 2018
Last update: 13 Nov 2018

E-Newsletter

Stay up-to-date with the latest news from the OECD by signing up for our e-newsletter :

Twitter feed

Suscribe now

<b>Subscribe now!</b>

To receive your exclusive paper editions delivered to you directly


Online edition
Previous editions

Don't miss

  • Globalisation will continue and get stronger, and how to harness it is the great challenge, says OECD Secretary-General Gurría on Bloomberg TV. Watch the interview here.
  • OECD Secretary-General Angel Gurría with UN Secretary-General António Guterres at the 73rd Session of the UN General Assembly, in New York City.
  • The new OECD Observer Crossword, with Myles Mellor. Try it online!
  • Watch the webcast of the final press conference of the OECD annual ministerial meeting 2018.
  • Listen to the "Robots are coming for our jobs" episode of The Guardian's "Chips with Everything podcast", in which The Guardian’s economics editor, Larry Elliott, and Jeremy Wyatt, a professor of robotics and artificial intelligence at the University of Birmingham, and Jordan Erica Webber, freelance journalist, discuss the findings of the new OECD report "Automation, skills use and training". Listen here.
  • Do we really know the difference between right and wrong? Alison Taylor of BSR and Susan Hawley of Corruption Watch tell us why it matters to play by the rules. Watch the recording of our Facebook live interview here.
  • Has public decision-making been hijacked by a privileged few? Watch the recording of our Facebook live interview with Stav Shaffir, MK (Zionist Union) Chair of the Knesset Committee on Transparency here.
  • Can a nudge help us make more ethical decisions? Watch the recording of our Facebook live interview with Saugatto Datta, managing director at ideas42 here.
  • The fight against tax evasion is gaining further momentum as Barbados, Côte d’Ivoire, Jamaica, Malaysia, Panama and Tunisia signed the BEPS Multilateral Convention on 24 January, bringing the total number of signatories to 78. The Convention strengthens existing tax treaties and reduces opportunities for tax avoidance by multinational enterprises.
  • Rousseau
  • Do you trust your government? The OECD’s How's life 2017 report finds that only 38% of people in OECD countries trust their government. How can we improve our old "Social contract?" Read more.
  • Globalisation’s many benefits have been unequally shared, and public policy has struggled to keep up with a rapidly-shifting world. The OECD is working alongside governments and international organisations to help improve and harness the gains while tackling the root causes of inequality, and ensuring a level playing field globally. Please watch.
  • Checking out the job situation with the OECD scoreboard of labour market performances: do you want to know how your country compares with neighbours and competitors on income levels or employment?
  • Trade is an important point of focus in today’s international economy. This video presents facts and statistics from OECD’s most recent publications on this topic.
  • The OECD Gender Initiative examines existing barriers to gender equality in education, employment, and entrepreneurship. The gender portal monitors the progress made by governments to promote gender equality in both OECD and non-OECD countries and provides good practices based on analytical tools and reliable data.
  • Interested in a career in Paris at the OECD? The OECD is a major international organisation, with a mission to build better policies for better lives. With our hub based in one of the world's global cities and offices across continents, find out more at www.oecd.org/careers .
  • Visit the OECD Gender Data Portal. Selected indicators shedding light on gender inequalities in education, employment and entrepreneurship.

Most Popular Articles

OECD Insights Blog

NOTE: All signed articles in the OECD Observer express the opinions of the authors
and do not necessarily represent the official views of OECD member countries.

All rights reserved. OECD 2018