CAUX PRINCIPLES

Established 1994

Sponsor Caux Round Table (CRT), a network of business leaders from Japan, Europe
and North America

Players in development Multinational enterprises

Target audience Multinational enterprises

Purpose The Caux Principles are a guide for companies to develop, re-examine,
implement and monitor their own internal principles. The Principles offer a
foundation for dialogue and action for business leaders worldwide and affirm
the necessity for moral values in business decision-making.

Principles covered
 General: Economic and social impact of business, business behavior,
respect for rules, support for multilateral trade, respect for the
environment, and avoidance of illicit operations.
 Stakeholder: Businesses have a responsibility to customers,
employees, owners/investors, suppliers, competitors, and communities.

Implementation The Caux Principles are a guide for companies to develop, re-examine,
procedures implement and monitor their own internal principles, as a result there are no
implementation procedures.

The Caux Round Table is an international organization of senior business executives aiming to promote
ethical business practice. It was founded in 1986 by Frits Philips, president of Philips, and Olivier Giscard
d'Estaing, along with Ryuzaburo Kaku, president of Canon. Frits Philips had been alarmed to hear from
reliable sources that the Japanese were dumping their products on the western market and he feared a
growing trade war. He saw the need for trust building between international executives and for Corporate
Social Responsibility practices. The CRT’s Principles for Business were published in 1994, incorporating
western concepts (human dignity...) and Japanese ones (kyosei, interpreted as “living and working
together for the common good”). An international code of good practices written by such senior
industrialists from such varied backgrounds remains exceptional today. It was presented to the UN Social
Summit in Copenhagen in 1994. It has since become a standard work, translated into 12 languages, and
has been used as basis for their internal ethical assessments by international companies such as Nissan.
The CRT's principal activities are an annual meeting and the publication of best-practice guides for
various types of organization. Every three years, the annual meeting is held at Caux, Switzerland, where
the original initiative took place in 1986. Its chief executive is Stephen B. Young; it has set up chapters in
many regions of the world.
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 behavior. It has sought to
begin a process that identifies shared values, reconciles different values and thereby develops a
shared perspective on business behavior 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
.
• Key areas
•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.

(iii) 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. justice 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 behavior should be beyond 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 liberalization 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: Employees :

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 behavior 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 CAUX principles 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 globalization of business.