OECD Due Diligence Guidance

OECD Due Diligence Guidance
Name	OECD Due Diligence Guidance
Type	Guidance document
Founded	2011 (minerals) / 2016 (broadening)
Founder	Organisation for Economic Co-operation and Development
Location	Paris

OECD Due Diligence Guidance is a set of non-binding instruments and tools developed to help companies identify, prevent, and mitigate adverse impacts associated with supply chains and business operations. It complements international instruments such as the United Nations Guiding Principles on Business and Human Rights, the UN Global Compact, and multilateral initiatives including the G20 and the World Trade Organization. The Guidance has informed national laws, corporate policies and multi-stakeholder initiatives across sectors and regions.

Overview

The Guidance provides practical steps grounded in the standards of the Organisation for Economic Co-operation and Development and aligned with instruments like the International Labour Organization declarations, the Basel Convention, and the UN Framework Convention on Climate Change. It addresses corporate responsibilities connected to human rights, conflict minerals, environmental harms and corruption, and interfaces with policies from the European Commission, the United States Department of State, and the African Union. The documents are intended for use by multinational enterprises, small and medium-sized enterprises, civil society organizations such as Amnesty International and Human Rights Watch, and investor groups including PRI signatories and the International Finance Corporation.

History and development

The Guidance originated from OECD workstreams on responsible business conduct and was first crystallized in instruments focused on minerals from conflict-affected and high-risk areas, supported by members like Germany, United Kingdom, France, Japan, and United States. Its evolution reflects contributions from stakeholders including Global Reporting Initiative, Transparency International, Business and Human Rights Resource Centre, and commodity-specific bodies like the Kimberley Process. Key milestones include alignment with the United Nations Guiding Principles and incorporation into discussions at forums such as the G7 Summit, the Rio+20 Conference, and the UN General Assembly sessions on business and human rights.

Key principles and framework

The Guidance structures due diligence into core components—policy commitment, risk identification, risk mitigation, and tracking—reflecting concepts present in the UN Guiding Principles and procedural parallels with the ISO 26000 standard. It prescribes risk-based approaches familiar to practitioners from World Bank safeguards and the International Organization for Standardization. The framework emphasizes stakeholder engagement with actors like local community representatives, representatives of International Committee of the Red Cross, indigenous groups represented in fora such as the United Nations Permanent Forum on Indigenous Issues, and trade unions including the International Trade Union Confederation.

Implementation and uptake

Implementation has occurred via supply-chain programs promoted by multinational corporations from sectors represented by associations such as the International Council on Mining and Metals, Consumer Goods Forum, and International Chamber of Commerce. Governments have referenced the Guidance in legislative instruments like the UK Modern Slavery Act, the EU Conflict Minerals Regulation, and proposals in the United States Congress. Financial institutions informed by the Guidance include the European Investment Bank, Asian Development Bank, and private asset managers adhering to Task Force on Climate-related Financial Disclosures recommendations. Civil society monitors from Oxfam, Earthworks, and Forest Stewardship Council have tracked corporate disclosure practices tied to the Guidance.

Sectoral and regional applications

The Guidance has been adapted for sectors including mining and minerals (notably tin, tantalum, tungsten, and gold), garments and textiles, agriculture (including palm oil and cocoa), and electronics supply chains involving companies like Apple Inc. and Samsung Electronics. Regional adaptations have targeted contexts such as the Great Lakes Region of Africa, the Amazon Basin, and Southeast Asian supply chains tied to Indonesia and Malaysia. It has been integrated into commodity-specific due diligence schemes like those associated with the Extractive Industries Transparency Initiative and regional programs supported by United Nations Development Programme country offices.

Criticism and challenges

Critics from organizations including Human Rights Watch, Amnesty International, and academic commentators at institutions like Harvard University and London School of Economics have argued that the Guidance's non-binding nature limits enforcement and accountability. Implementation challenges cited by stakeholders such as Small and medium-sized enterprises advocates and representatives from Global South producers include capacity constraints, costs of compliance, and tension with trade secrecy laws upheld in jurisdictions like Switzerland and Singapore. Other critiques reference overlaps and fragmentation with instruments such as the European Commission disclosure rules and national legislation like the French Duty of Vigilance Law.

Impact and monitoring

Monitoring mechanisms involve OECD peer reviews, reporting by national contact points within the OECD National Contact Points Network, and assessments by audit firms and civil society actors including Business & Human Rights Resource Centre and Accountability Counsel. Evaluations point to improved corporate policies among firms listed on exchanges such as the London Stock Exchange and the New York Stock Exchange, greater investor engagement from groups like BlackRock and Vanguard Group, and incorporation into trade agreements negotiated at fora like World Economic Forum annual meetings. Ongoing debates involve measuring outcomes against Sustainable Development Goals tracked by the United Nations and developing metrics comparable to those of the Global Reporting Initiative and the International Integrated Reporting Council.

Category:Organisation for Economic Co-operation and Development