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.
• The extension of due diligence expectations to the full downstream part of the value chain is in practice unworkable for business.
• It is clear the Guidelines are intended, and therefore drafted, as a set of “non-binding principles and standards” that are “voluntary” and not “legally enforceable” in their own right. However, there is a trend for the OECD Guidelines to be effectively incorporated into legal requirements, such as with examples in the EU Corporate Sustainable Due Diligence Directive (CSDDD). In that context, further clarity on, for example, the status and purpose of Guidelines commentary to support good faith efforts by enterprises to implement the principles and standards in the Guidelines is needed.
• Several broad references as well as the introduction of vague concepts and expectations must be avoided in order not to create unintended consequences and significant interpretational challenges in the context of mediation.

So, what’s the CBI doing?

CBI, as a member of Business at OECD (BIAC) – representing the business community of OECD countries – has set out our serious concerns over the proposed changes in a letter to OECD Secretary General Cormann. We are also working with the B7, bringing together the business federations of the G7 countries, to further highlight our concerns to Secretary General Cormann as well as National Ministers, including UK Minister of State Anne-Marie Trevelyan.

Ensuring close consultation and meaningful dialogue between business, governments and other stakeholders is critical to establish common expectations, and understand what is possible on the ground, and what is not.

How can you get involved?

To find out more about the guidelines and CBI’s work in this area, or to get involved in our work, get in touch with Emily Ritchey.