THE CAUX PRINCIPLES

Introduction:
A group of international executives based in CAUX (Switzerland) developed some
principles. The CAUX round table strongly believes that the world business community
should play an important part in promoting economic and social conditions. The CRT
(CAUX Round Table) provides a worldwide vision for ethical and responsible corporate
behaviour. It has sought to begin a process that identifies shared values, reconciles
different values and thereby develops a shared perspective on business behaviour
acceptable by all.

These principles have two basic ethical ideals, KYOSET and human dignity. KYOSET is
a Japanese concept of living and working together for the common good. Co-operation
and mutual prosperity to co-exist with healthy and fair competition.

Human dignity refers to the sacredness or value of each person as an end and not simply
as a means to satisfy the wants of others.
Nissan Motor Company of Japan has used a strategy to implement these principles. This
company has selected the following key areas to enrich the lives of people.
• Kevareas
• Integrity Quality Safety
• Economic Contribution Environment Value chain
• Brand Employment Philanthropy

The CRT is a process of identifying shared values, reconciling differing values and
thereby developing a shared perspective on business behavior. Business is the first
contact between nations and it causes social and economic changes.

Section 1 Preamble
(i) Due to the mobility of factors of production, business is becoming increasingly global.
(ii) Laws and market forces are necessary. But these are not sufficient for guiding the
conduct.
(Hi) Responsibility for policies and actions and respect for the dignity and interests of
stakeholders are fundamentals.
(iv) Shared values are important both for smaller communities and global community.
(v) Business is a powerful agent of positive social change. Hence moral values have to be
incorporated in business decision making.

General principles:
1) Beyond shareholders.
2) Innovation, justice and world community.
3) Spirit of trust.
4) Respect for rules.
5) Support for multilateral trade.
6) Respect for the environment.
7) Avoidance of illicit operations.
8) Customers.
9) Employees.
10) Investors.
11) Suppliers.
12) Competitors.
13) Community.

Principle 1:
The responsibilities of business should go beyond shareholders toward stakeholders:
The value of a business to society is the wealth and generation of employment. It is
providing the consumers good products at reasonable prices. Mere survival is not a
sufficient goal. A business should maintain its own economic health and viability.
Business should improve the lives of stakeholders.
Principle 2:
The economic and social impact of business towards innovation. iustice and world
community:
Business should promote social development. It should contribute to human rights,
education, welfare and vitalization of countries where they operate. There should be
effective and prudent use of resources. There should be free and fair competition.
Innovation should take place in all areas like technology, production, marketing and
communications.

Principle 3:
Business behaviour should be bevond the letter of law and towards a spirit of trust:
Business should recognize sincerity, truthfulness and transparency. It should promote
efficient business transactions on the international level.

Principle 4: Respect for rules:

Business should respect international and domestic rules. It should recognize that some
behaviour although legal may have adverse effects.

Principle 5: Support for multilateral trade:

Business should support the multilateral trade systems of WTO and other international
agreements. Business should cooperate in efforts to promote the progressive process of
liberalisation of trade.
The progress of global trade should not be hindered. Of course, the due respect has to be
given to the national trade policy.

Principle 6: Respect for the environment:

A good business should protect the environment, promote sustainable development and
prevent the wastage of natural resources.
Principle 7: Avoidance of illicit operations:
A good business should not participate in bribery, money laundering and other corrupt
practices. It should not participate in terrorist activities, drug traffic and other organized
crimes.

Principle 8: Customers:
All the customers have to be treated with dignity.
Customers have to be provided with quality products and services.
Remedies are to be undertaken for the dissatisfaction of the customers.
Health and safety of the customers have to be safeguarded.
The environment has to be protected.
Marketing and advertisement are to be in accordance with the culture of customers.

Principle 9: Emplovees:
The dignity and interests of employees are to be taken into account.
Jobs have to be provided according to the aptitude and interests of employees. There
should be a fair compensation to deal a decent living.
There should be a provision of good working conditions. A two-way honest
communication system should prevail. The suggestions, ideas, requests and complaints of
employees have to be seriously taken into account.
Fair negotiations have to take place in order to settle the conflicts. There should be no
discrimination on the basis of gender, age, race, nationality and religion. Employment
should be provided to differently abled people in places of work where they can be
useful.
The employees should be assisted in developing relevant skills and knowledge.

Principle 10: Investors:

Application of professional and diligent management to secure a fair and competitive
return on investment.
Disclosure of relevant information to the investors.
Protection and increase of investor's assets.
Respect the requests, suggestions, complaints and resolutions of investors.

Principle 11: Suppliers:

Mutual respect to suppliers. Seeking fairness and truthfulness in all activities like pricing,
licensing and quality. It should be free from coercion and unnecessary litigation.
There should be a long-term stability in the supplier relationship.
Prompt payment for suppliers in accordance with terms of trade.

Principle 12: Competitors:

Promoting open markets for trade and investment.
Promoting the competitive behaviour in order to be socially and environmentally
beneficial.
There should be a demonstration of mutual respect among the competitors.
Respect for intellectual property rights.
Refuse to collect market information through industrial espionage.

Principle 13: Community:

Respecting and promoting human rights and democratic institutions.
Promotion of social responsibility of business.
Providing service activities for the weaker sections of society.
Acting as a bridge between the policy of the government and needs of society.

Conclusion:
The CAUXprinciples have suggested ways and means of institutionalizing ethics in a
global economy.
These principles promote transparency, trade, co-operation, anti-corruption,
environmental protection and a world community. These principles have captured the
moral imagination of so many countries around the world. These principles reflect the
ethical traditions of both east and west.
A mere articulation of principles does not produce any effort. These principles have to be
operated in all areas of the globe. Ethical aspirations have to be converted in terms of
actions. The global business community should play an important role in improving
economic and social conditions.

Summary
Questions
Section 'c'
(1) Evaluate the Caux principles in the context of modern globalisation of business.
104