The OECD Guidelines for Multinational Enterprises are a set of recommendations for responsible business conduct (RBC) covering all areas of business responsibility including disclosure, human rights, employment and industrial relations, environment, anti-corruption, competition and taxation. They are not a substitute for, nor should they be considered to override domestic law and regulation.
The Guidelines focus on two aspects of the business-society relationship:
1) positive contribution MNEs can make to sustainable development, and
2) avoiding adverse impacts and addressing them when they do occur.
Recommendations of the Guidelines are listed in 11 chapters and cover topics such as providing information, human rights, employment and labour, the environment, anti-corruption and consumer protection, as well as three areas – science and technology, competition and taxes.
The Guidelines are intended for all entities within multinational companies (parent company and/or local entities) and they cover company activities and business relationships between companies.
The Guidelines also provide a grievance mechanism. Under the mechanism, countries that have acceded to the Guidelines are required to establish a National Contact Point (NCP) to lead stakeholders through a special process to resolving issues arising from alleged non-compliance with the Guidelines.
More than 400 proceedings have been initiated since 2000, with most of them initiated by NGOs and trade unions with labour law, human rights and the environment being the dominant topics. These specific instances concern activities in both adhering and non-adhering countries and across diverse sectors, most notably in the extractive and manufacturing sectors.
The OECD Due Diligence Guidance for Responsible Business Conduct provides practical support to companies in implementing OECD Guidelines for Multinational Enterprises on Responsible Business by providing clear clarifications for due diligence and related provisions. Implementation of these Guidance helps companies avoid and also address adverse effects that may arise in the course of business, supply chains and other business relationships, relating to workers, human rights, the environment, bribery, consumers and corporate governance. The Guidance include additional clarifications, tips, and illustrative examples of in-depth analysis.
To promote effective compliance with the Guidance, the OECD has also developed sector recommendations that help companies identify and address risks to people, the environment and society related to business, products or services in specific sectors:
Responsible Business Conduct in the Financial Sector
Responsible Mineral Supply Chains
Significant Stakeholder Engagement in the Extractive Sector
Responsible Supply Chains in the Garment and Footwear Sector
Responsible Agricultural Supply Chains
The National Contact Point (NCP) is a body established by each government that has acceded to the Guidelines for Multinational Enterprises on Responsible Business.
NCP has two main goals:
Specific Instances are not legal cases, and NCPs are not judicial bodies. The focus is on problem solving where NCPs offer good services and facilitate access to consensual and non-adversarial procedures (e.g., conciliation or mediation).
“RBC” and “ESG” terminology both relate to environmental, social and governance considerations, which drive and define sustainable finance approaches and activities. “ESG” is commonly used to discuss environmental, social and governance issues which pose financial risks. RBC risks refer specifically to the risks of adverse impacts with respect to issues covered by the OECD Guidelines for Multinational Enterprises — impacts on society (including human rights and labour) and the environment, independent of financial impact to the company itself. In practice, RBC risks can also have financial implications (negative or positive) for the company concerned.