Responsible Business Conduct andOECD Guidelines For Multinational Enterprises

Cabinet Ministers Club, Kyiv, Ukraine17 September 2015Tihana Bule, Economist/Policy Analyst, OECD

• Global policy network for standard setting and peer learning– Peer reviews and engagement

• Established in 1961• 34 governments • Global network• 250 committees • 40 000 senior government

officials• 2 500 secretariat staff• Official voices of business, trade

unions and NGOs reflected

The OECD

Wide Range of Policy Areas

• Policy commitment to provide an open and transparent investment environment, based on four instruments:– OECD Guidelines for Multinational Enterprises– National Treatment, Conflicting Requirements, and International

Investment Incentives and Disincentives

• Open to non-OECD members, currently 46 adherent governments from all regions of the world– 34 OECD members– 12 non-OECD members

• OECD Investment Committee – Working Party on Responsible Business Conduct only body of its kind

in the world– Regular consultations with stakeholders

OECD Declaration on International Investment and Multinational Enterprises

Adherents to the OECD Declaration

WHAT IS RESPONSIBLE BUSINESS CONDUCT?

• Goes beyond philanthropy …

• … to include an expectation that all enterprises make:

1. Positive contribution to economic, environmental, and social progress in the countries in which they operate

2. Avoid and address negative impacts of their activities

• RBC as a core component of business operations and risk management

• Risk-based due diligence is key; includes supply chain and activities linked by business relationships

Responsible business conduct

• Improving the business environment – Integration into global value

chains– High quality investment– Sustainable development

• Protecting public interest and stakeholder rights

• Updated Policy Framework for Investment

It matters for governments too

• Since 2011, clearer and stronger principles and standards on what constitutes RBC– OECD Guidelines for Multinational Enterprises – UN Guiding Principles on Business and Human Rights– Core ILO conventions

• RBC also increasingly the subject of numerous international, regional and domestic commitments: G7 leaders statement, UNSC Resolutions, trade agreements, EU CSR Strategy and new directives, US NAP

• Shared understanding of baseline responsibilities

• More predictable business environment

Global convergence and coherence

THE OECD GUIDELINES FOR MULTINATIONAL

ENTERPRISES

• Most comprehensive and only government-backed international instrument for promoting responsible business conduct

• Recommendations from governments to businesses operating in or from adhering countries

• Cover all major areas of business ethics

• Purpose: to ensure business operations are in harmony with government policies; strengthen the basis of mutual confidence with the society; help improve foreign investment climate; enhance contribution to sustainable development

• Unique implementation mechanism

• Endorsed by business, trade unions and civil society organizations

OECD Guidelines for Multinational Enterprises

NOT COVERED BY ANY OTHER RBC

INSTRUMENT

NEW

Concepts and PrinciplesGeneral PoliciesDisclosureHuman RightsEmployment and Industrial RelationsEnvironmentCombating Bribery, Bribe Solicitation and ExtortionConsumer InterestsScience and Technology Competition Taxation

Scope

• New human rights chapter consistent with UN Guiding Principles on Business and Human Rights

• A new and comprehensive approach to due diligence and responsible supply chain management, including in business relationships

• Important changes to many specialised chapters, such as: Employment and Industrial Relations; Combating Bribery, Bribe Solicitation and Extortion; Environment; Consumer Interests; Disclosure; and Taxation.

• Clearer and reinforced procedures to strengthen the role of NCPs, improve their performance and foster equivalence

• Sector projects to assist enterprises in meeting their responsibilities as new challenges arise

• New provisions on Internet Freedom and Stakeholder Engagement

2011 Update

• Implement the Guidelines and encourage their use by businesses (domestic and foreign)

• Provide a policy environment that supports and promotes responsible business conduct

• Establish National Contact Points to further the effectiveness of the Guidelines

Responsibilities of adhering governments

• Maximise positive impacts, minimise adverse impacts

• Carry out due diligence to identify, prevent and mitigate actual and potential adverse impacts

• Covers not only impacts related to own operations; but also throughout the supply chain and linked by business relationship

• Ongoing sector projects– Due diligence guidance for responsible minerals supply chains– Guidance on meaningful stakeholder engagement in extractives

sector– Guidance for responsible textiles supply chains– Guidance for agricultural supply chains– RBC in the financial sector

Responsibilities of businesses

Impact focus

NATIONAL CONTACT POINTS

• All governments adhering to the OECD Declaration must set up a National Contact Point for the OECD Guidelines for Multinational Enterprises

• Governments must provide sufficient resources, human and financial, to allow the NCP to function

What are National Contact Points?

• Main responsibility is to further the effectiveness of the Guidelines– Undertake information and promotion

activities– Engage with stakeholders actively – Report on their activities– Offer good offices to resolve issues with the

implementation of the Guidelines and contribute to improving access to remedy

– Identify areas where additional guidance for companies is needed (i.e. sectors, regions, etc.)

Main responsibilities

• Governments free to decide on structure (mono- or multi- ministry, multipartite, independent, oversight or advisory body, etc.) …

• … as long as NCP can – handle breadth of issues covered by the Guidelines – operate impartially and with accountability– develop and maintain relationships with

stakeholders

Structure

NCP Structure - 2015

49%

22%

20%

10%Single government Ministry

Two or more gov-ernment Ministries

Multistakeholder

Independent

• To ensure that all NCPs operate in a comparable way, NCPs have to follow four core criteria in their activities:

– Visibility– Accessibility– Transparency– Accountability

• Criteria not mutually exclusive – reinforce each other

Core Criteria for Functioning

What Do Core Criteria Look Like In Practice?

Visibility Accessibility Transparency AccountabilityEnsure that the NCP and the availability of its services are known to the wider public and take an active role in promoting the Guidelines.

Facilitate easy access to NCP services and deal with issues in an efficient and timely manner.

Be transparent in all activities, taking into account the need for confidentiality in offering good offices.

Be accountable, with the goal to retain confidence of stakeholders and foster the public profile of the Guidelines.

- Host seminars and events

- Communicate in a clear manner through appropriate channels (e.g. online; in national language)

- Raise awareness and make the Guidelines better known and available, including with non-adhering governments

- Define and publish procedures for dealing with specific instances in line with the Guidelines

- Be clear about the requirements and on indicative timeframes and processes to lodge a complaint.

- Publish reports on NCP functioning and its activities

- Proactively share information

- Respond to requests for information and be reachable

 

- Report to national authorities as appropriate, as well as to the OECD

- Attend NCP meetings

- Participate in peer reviews and peer learning exercises

- Develop and maintain relationships with stakeholders, seek their active support and take their views into account

RESOLVING ISSUES IN PRACTICE - CASES

Specific Instance Process

Goal: successful resolution of issues

Water supply; sewerage, waste management and remedia-tion activities

Other

Construction

Other service activities

Electricity, gas, steam and air conditioning supply

Wholesale and retail trade

Mining and quarrying

1%2%

4%4%4%4%4%4%4%

6%7%

11%18%

35%

Percentage of cases by industry sector

Science and technology

Taxation

Competition

General concepts and principles

Consumer interests

Combating bribery, bribe solicitation and extortion

Disclosure

Environment

Human rights

General policies

Employment and industrial relations

1%

2%

3%

6%

5%

8%

14%

21%

22%

43%

56%

Percentage of cases by theme

mneguidelines.oecd.org

tihana.bule@oecd.org

Thank you!