On June 20, at the 2018 Global Forum on Responsible Business Conduct, the Organization for Economic Co-operation and Development (“OECD”) formally launched its new Due Diligence Guidance for Responsible Business Conduct.
Intent of the Due Diligence Guidance
The new Due Diligence Guidance is expressly intended to support all companies, both large and small, seeking to implement the due diligence expectations set forth in the OECD Guidelines for Multinational Enterprises. The guidance is also intended to assist companies in aligning their due diligence efforts with the expectations set forth in the UN Guiding Principles on Business and Human Rights and the ILO Tripartite Declaration of Principles Concerning Multinational Enterprises and Social Policy.
With the release of the Due Diligence Guidance, the OECD also hopes to promote a common understanding between companies, governments, and civil society stakeholders with respect to what companies should do in order to carry out appropriate due diligence with respect to the adverse impacts associated with their operations, supply chains, and business relationships. As with the OECD Guidelines for Multinational Enterprises, the Due Diligence is focused on impacts related to the following topics: human rights; the environment; bribery and corruption; disclosure; and consumer interests.
Notably, the Due Diligence Guidance augments — but does not replace — more detailed guidance developed by the OECD for businesses conducting due diligence in specific industry sectors and supply chains, including garments and footwear, minerals, extractives, and finance.
The Due Diligence Guidance is built around six core process expectations with respect to how companies will manage the impacts of their activities. Namely, companies should:
- “Embed responsible business conduct into policies and management systems”
- “Identify and assess actual and potential adverse impacts associated with the enterprise’s operations, products or services”
- “Cease, prevent and mitigate adverse impacts”
- “Track implementation and results”
- “Communicate how impacts are addressed”
- “Provide for or cooperate in remediation when appropriate”
For each process expectation, the guidance provides detailed suggestions as to practical actions that companies may choose to undertake in order to align their activities with OECD Guidelines.
Context for the Due Diligence Guidance
Notably, the OECD Due Diligence Guidance has been released at a time when governments are increasingly embedding due diligence expectations into national laws and regulations. Examples of this trend include the U.S. conflict minerals regulation, the UK Modern Slavery Act, and the French Duty of Vigilance law. In this context, companies should take note of the Due Diligence Guidance as an important reference for their compliance efforts.