OECD Due Diligence Guidance for Responsible Business Conduct

OECD Due Diligence Guidance for Responsible Business Conduct
Name	OECD Due Diligence Guidance for Responsible Business Conduct
Jurisdiction	Organisation for Economic Co-operation and Development
Established	2018
Related	OECD Guidelines for Multinational Enterprises, UN Guiding Principles on Business and Human Rights, International Labour Organization

Contents

OECD Due Diligence Guidance for Responsible Business Conduct. The OECD Due Diligence Guidance for Responsible Business Conduct is a policy instrument produced by the Organisation for Economic Co-operation and Development alongside the OECD Guidelines for Multinational Enterprises, the UN Guiding Principles on Business and Human Rights, the United Nations Global Compact, the International Labour Organization, and the World Bank. It provides a framework for companies to identify, prevent, mitigate, and account for adverse impacts across global supply chains involving jurisdictions like China, India, Brazil, United States, and Germany while aligning with instruments such as the Paris Agreement, the Universal Declaration of Human Rights, and the Convention on the Rights of the Child.

Background and Purpose

The Guidance builds on the legacy of the OECD Guidelines for Multinational Enterprises, the UN Guiding Principles on Business and Human Rights, the ILO Tripartite Declaration of Principles Concerning Multinational Enterprises and Social Policy, and commitments made at summits like the G20 Summit and the G7 Summit. It aims to operationalize responsibilities articulated by bodies including the European Commission, the Council of Europe, the African Union, and the Inter-American Commission on Human Rights for firms such as Apple Inc., Rio Tinto, Nestlé, BP, and Samsung. The Guidance responds to cases recorded by National Contact Points (NCPs), judicial developments in courts like the European Court of Human Rights and the International Criminal Court, and campaigns by NGOs such as Amnesty International, Human Rights Watch, Greenpeace, and Anti-Slavery International.

The Guidance addresses enterprises of varying size and sectoral exposure, from extractive firms like Rio Tinto and BHP to apparel brands like H&M and Zara (Inditex), and financial actors including BlackRock, HSBC, and Deutsche Bank. It delineates core expectations consistent with instruments such as the OECD Model Tax Convention, the UN Convention Against Corruption, and the Basel Convention, emphasizing principles drawn from the Universal Declaration of Human Rights, conventions of the International Labour Organization, and commitments echoing the Sustainable Development Goals. Key principles include risk-based due diligence, integration across functions comparable to practices at Siemens, Toyota, and Microsoft, transparency akin to disclosures promoted by the Financial Stability Board and the International Organization of Securities Commissions, and stakeholder engagement modeled after initiatives by Transparency International, Oxfam, and CARE International.

The Guidance outlines a five-step due diligence process—establishing policy, identifying and assessing adverse impacts, preventing and mitigating impacts, tracking responses, and communicating—paralleling methodologies used by PwC, KPMG, Deloitte, and Ernst & Young. It advises companies to perform mapping across suppliers and operations in countries such as Indonesia, Democratic Republic of the Congo, Nigeria, and Colombia, and to use tools developed by institutions like the World Bank, the International Finance Corporation, and the United Nations Development Programme. The process intersects with legal regimes including the UK Modern Slavery Act 2015, the French Duty of Vigilance Law, the German Supply Chain Due Diligence Act, and proposed legislation in the European Union and United States Congress.

Practical implementation guidance includes sectoral supplements, model clauses for contracts, and guidance on human rights impact assessments used by companies such as Apple Inc., Unilever, IKEA, and Walmart. The OECD Secretariat collaborates with entities like Organisation for Economic Co-operation and Development committees, National Contact Points, and standard-setters such as International Organization for Standardization and the Global Reporting Initiative to produce case studies and templates. Technology and data tools recommended draw on platforms by SAP SE, IBM, Oracle Corporation, and third-party auditors like SGS, Bureau Veritas, and Intertek to enable traceability for commodities like cocoa, tin, tantalum, gold, and timber.

Stakeholders include multinational enterprises, state NCPs, industry associations such as International Chamber of Commerce, trade unions like the International Trade Union Confederation, investors including Vanguard, civil society actors such as Oxfam and Médecins Sans Frontières, and affected communities represented by groups like Native American, Amazon Watch, and regional bodies including the African Union and ASEAN. Engagement modalities mirror multi-stakeholder initiatives like the Extractive Industries Transparency Initiative, the Forest Stewardship Council, and the Fairtrade International certification scheme. Financial institutions, insurers including Lloyd's of London, and multilateral development banks such as the Asian Development Bank and the European Investment Bank play roles in financing conditionality and compliance.

Adoption mechanisms include endorsement by governments party to the OECD, integration into National Contact Point procedures, uptake by corporations across stock exchanges such as the New York Stock Exchange, London Stock Exchange, and Tokyo Stock Exchange, and incorporation into procurement rules of bodies like the United Nations and the European Commission. Monitoring leverages peer reviews, reporting frameworks like those of the Global Reporting Initiative and the Task Force on Climate-related Financial Disclosures, and complaint mechanisms housed at NCPs and litigation in courts including the High Court of England and Wales and the U.S. District Courts. Enforcement remains predominantly administrative and reputational, supplemented by national laws such as the French Duty of Vigilance Law and the German Supply Chain Due Diligence Act.

Critics from organizations including Amnesty International, Human Rights Watch, Corporate Europe Observatory, and academic centres like Harvard Law School, London School of Economics, and Yale Law School argue the Guidance is non-binding, relies on voluntary uptake similar to critiques of the UN Global Compact and faces challenges in addressing supply chain opacity in countries like Democratic Republic of the Congo and Myanmar. Other challenges highlighted by commentators at World Economic Forum and International Labour Organization conferences include capacity constraints among small and medium enterprises, divergence between national laws such as the UK Modern Slavery Act 2015 and emerging EU regulation, and the limits of NCP complaint processes compared to judicial remedies pursued in forums like the European Court of Human Rights and national courts.

Category:Corporate social responsibility