OECD updates corporate due diligence guidelines –

The Organisation for Economic Co-operation and Development, the global club of wealthy countries, released its updated guidelines for responsible business conduct on Thursday (8 June), while stakeholders in the EU continue negotiating new corporate accountability rules.

The OECD guidelines, adopted by 51 governments including all EU member states except Bulgaria, Cyprus, and Malta, set out voluntary principles and standards to ensure multinational companies embed due diligence practices, identify and mitigate risks and remediate adverse impacts along their value chain.

Together with the UN guiding principles on business and human rights and the ILO Tripartite Declaration, they represent the international reference for due diligence practices.

Allan Jorgensen, head of the OECD Centre for Responsible Business Conduct, said the update is important as the guidelines provide “a global baseline” for due diligence initiatives and are adopted by governments representing two-thirds of global trade.

“They are widely used by businesses in global supply chains in all sectors and they are increasingly used as a reference point for policymaking by governments,” he told EURACTIV, pointing to several initiatives, including the proposed corporate sustainability due diligence directive (CSDDD) currently being negotiated at EU level.

EU Parliament agrees common position on corporate due diligence law

Despite last-minute pushback against key parts of the text, EU lawmakers adopted a common position on the proposed EU rules to make companies accountable for human rights and environmental violations along their value chains, opening the way for negotiations with member states.

“The update is something that is expected to have an impact” on these discussions, he said, adding that the guidelines have previously fed into due diligence laws in Germany and France, as well as some sectoral legislation, like the EU conflict minerals law.

Unlike the national and EU laws, which set out mandatory requirements, the OECD guidelines remain voluntary.

The update to the guidelines – last updated in 2011 – comes into force from 8 June and mainly concerns due diligence recommendations related to climate, technology, the use of services and products and the protection of at-risk people.

Climate, technology and use

According to the update, companies should ensure their emission reduction targets are science-based, in line with the temperature goals agreed in the Paris Agreement and up to date with the IPCC (Intergovernmental Panel on Climate Change) assessments.

Moreover, the updated guidelines set out recommendations on due diligence related to the use of technology, which is becoming increasingly relevant, especially in the context of social media and artificial intelligence, Jorgensen said.

The guidelines also focus more generally on due diligence checks on the downstream part of the value chain. For example, how a product will or can be used should also be part of companies’ due diligence assessments, according to the updated guidelines.

Both the concept of science-based climate targets and due diligence requirements on the use of products and services have recently been excluded from the European Parliament’s position on the CSDDD law and are unlikely to resurface during current negotiations with member states.

Corruption and rights defenders

The OECD update strengthens recommendations to fight corruption, seen as one of the main enablers of adverse impacts along the value chains. Besides bribes, the guidelines now include other forms of corruption, such as trading in influence, embezzlement and misuse of donations.

According to the OECD, enterprises should also enhance attention to adverse impacts on human rights and environmental defenders and indigenous people.

The updated guidelines urge companies to refrain from reprisals against those raising concerns and investigating their activities and increase guidance in relation to free, prior and informed consent, which allows indigenous people to give or deny consent for projects affecting them or their territories.

In its position on the CSDDD, the European Parliament added a reference to the need to take corruption into account when conducting due diligence and stressed that companies should prevent any harm to rights defenders linked to their activities, while also engaging with them as relevant stakeholders.

These amendments will be subject to negotiations with EU member states in the coming months.

[Edited by János Allenbach-Ammann/Zoran Radosavljevic]

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