Revised OECD Guidelines on Responsible Business Conduct: what you need to know

The Organisation for Economic Co-operation and Development (OECD) is currently looking to update its guidelines for multinational enterprises on responsible business conduct. These guidelines, last updated in 2011, set out recommendations from governments to businesses for ensuring responsible business conduct in all areas where business interacts with society, including areas such as human rights, labour rights, and the environment.

The draft updates to the guidelines are currently being discussed ahead of the OECD Council Ministerial taking place in June, and look to ensure the guidelines remain fit for purpose and to advance their uptake and promotion.

What’s at stake?

Whilst these are non-binding guidelines, they have an important impact globally and can often influence national legislation.

Business from across OECD countries have raised serious concerns with the proposed updates. A key priority is to ensure that the guidelines are workable, proportionate, and effective. We need norms on responsible business conduct that lead to real impact on the ground, while avoiding unintended consequences and significant administrative burden. Nevertheless, the proposed changes could be leading us in a different direction.

We have a number of specific concerns and recommendations as set out below:

• While the private sector has a major role to play in spreading responsible practices, companies cannot be expected to replace effective government action and diplomatic dialogue. Governments need to take responsibility and share the burden when it comes to due diligence.
• Unintended consequences of due diligence legislation and norms must be avoided. Due diligence processes are important to help business promote responsible practices throughout the value chain. However, the de facto obligation to exercise due diligence must be proportionate to the size and means of the company in question. Too burdensome and rigid supply chain rules risk being counterproductive, forcing companies to disengage from markets and leaving the field to competitors who may not be as responsible in their conduct.