On June 8, 2023, the OECD released the update of the Guidelines for Multinational Enterprises on Responsible Business Conduct (OECD Guidelines), reviewing the 2011 version to respond to urgent social, environmental and technological priorities facing societies and businesses. Key updates include recommendations for companies to align with internationally agreed goals on climate change and biodiversity, expanded due diligence recommendations to all forms of corruption and recommendations on disclosure of responsible business conduct information.
This article will only cover changes made to Chapter II. General Policies, Chapter IV. Human Rights and Procedures related to the National Contact Point (NCP).
Chapter II. General Policies
Lobbying
Absent from the 2011 version, lobbying is now addressed in the update. Under the new version, when engaging in public advocacy, companies should consider the Recommendation on Principles for Transparency and Integrity in Lobbying (Recommendation on Lobbying) and ensure that their lobbying activities are consistent with their commitments and goals on topics covered by the OECD Guidelines.
The central role played by lobbying in major global challenges remains underestimated despite increasing evidence that the abuse of lobbying can have a profound impact on the progress (or lack thereof) in many policy areas, as underlined in the 2021 Report on the Implementation of the Recommendation on Lobbying. Moreover, information disclosed over lobbying is usually incomplete and does not allow for public scrutiny as disclosures tend to focus on “who” is conducting lobbying activities and less on “what” decisions and public organisations were targeted. As for lobbying and human rights, in 2022, the UN Working Group on Business and Human Rights reported that relatively few companies appear to have acknowledged that their human rights due diligence responsibilities extend to their political activities and that insufficient transparency often results in misalignment between a company’s public human rights statement and policies and the goals and/or outcomes of their political engagement.
Protection for at-risk persons and groups
The update strengthens the protection of individuals and groups against reprisals, including by entities with which companies have business relationships. Companies should take steps to create a space where concerns about adverse impacts related to their activities or the activities of entities with which they have a business relationship can be safely expressed. Reprisals include retaliatory or discriminatory actions that are intended to censor, intimidate, harm or silence critics such as threats, reputational smears, slurs, harassment, intimidation, surveillance, strategic lawsuits against public participation, attempts to criminalise lawful activities, physical attacks and killings.
Due diligence and business relationships
The update clearly states that the measures companies take to conduct due diligence should be risk-based, commensurate to the severity and likelihood of the adverse impact and appropriate and proportionate to its context. Additionally, risk-based due diligence related to a company’s products or services should take into account know or reasonably foreseeable circumstances related to the use of the product or service in accordance with its intended purpose, or under conditions of reasonably foreseeable improper use or misuse, which may give rise to adverse impacts.
The update also extends the notion of business relationships to cover business partners, sub-contractors, franchisees, investee companies, clients and joint venture partners, entities in the supply chain which supply products or services that contribute to the company’s operations, products or services or which receive, licence, buy or use products or services from the company, and any other non-State or State entities directly linked to its operations, products or services. It includes relationships beyond contractual, first tier or immediate relationships.
Meaningful engagement with stakeholders
Meaningful stakeholder engagement is recognised as a key component of the due diligence process and may even be in some cases a right in and of itself. Such engagement is defined as ongoing engagement with stakeholders that is two-ways, conducted in good faith by the participants on both sides and responsive to stakeholders’ views. To be meaningful and effective, stakeholder engagement should be timely, accessible, appropriate and safe for stakeholders. Potential barriers to engaging with stakeholders in positions of vulnerability or marginalisation should be identified and removed.
Chapter IV. Human Rights
Publicly available policy
In the 2011 version of the OECD Guidelines, companies where expected to have a policy commitment to respect human rights. The commentary added that it should be publicly available (§44). Under the new version, the ‘publicly available’ criterion is directly mentioned in the core text of the Guidelines.
Protection of vulnerable peoples
The update develops the notion of specific groups or populations that require particular attention. Companies should pay special attention to any particular adverse impacts on individuals, such as human rights defenders, who may be at heightened risk due to marginalisation, vulnerability or other circumstances, individually or as members of certain groups or populations, including indigenous peoples.
Conducting human rights due diligence may involve considering distinct and intersecting risks, including those related to individual characteristics or to vulnerable or marginalised groups.
Enhanced due diligence
While the 2011 version of the OECD Guidelines stated that in situations of armed conflict, companies should respect the standards of international humanitarian law, the update adds that enhanced due diligence should be conducted in such situations or in the context of heightened risk of gross abuses.
Grievance mechanism
The update aligns the criteria of grievance mechanisms with those defined in the UN Guiding Principles on Business and Human Rights by adding the criteria of legitimacy, rights-compatibility and source of continuous learning.
Procedures – National Contact Points
Effectiveness criteria
In addition to visibility, accessibility, transparency and accountability, the update adds that NCPs must operate in a way that is impartial and equitable, predictable and compatible with the OECD Guidelines. The update also states that achieving functional equivalence with other NCPs means that all NCPs function with an equivalent degree of effectiveness through achieving the effectiveness criteria (level playing field).
Institutional arrangements
The update requires governments to organise NCPs in a way that ensures compliance with the effectiveness criteria. To that end, NCPs must be sufficiently resourced, have access to expertise on all relevant aspects of their mandate and maintain stakeholder confidence. Governments are encouraged to include representatives of the business community, worker organisations and other non-governmental organisations in advisory or oversight bodies where useful to assist NCPs in their tasks.
Specific instances
To improve accessibility and predictability, NCPs are now required to publish procedures they follow in handling specific instances. NCPs are also encouraged to consult their stakeholders in developing such procedures.
Regarding the final statement, irrespective of the outcome of the proceedings and consultation with the parties involved, the statement must contain the parties’ respective positions, the steps taken by NCPs in considering the submission and parties’ engagement in the proceedings. When an agreement is reached, NCPs may also include recommendations on the implementation of the OECD Guidelines. When no agreement is reached or when a party is unwilling to participate in the proceedings, if allowed by applicable law and NCPs’ case-handling procedures, NCPs may, at their own discretion, set out their views in the final statement on whether the company observed the OECD Guidelines.
The update also institutionalises follow up where relevant once the specific instance has closed, on the implementation of recommendations or on the agreement reached by the parties. Intent to conduct follow up should be referred in the final statement and a follow up statement should be published.
Finally, throughout the process, NCPs should take all appropriate steps within their capacities to address risks of reprisals against parties to a specific instance.
Conclusion
Despite filling important gaps, it can be underlined that the update missed the opportunity to address gender issues. While gender-specific impacts of business is widely documented, the new text only mentions gender in relation to employment and corruption.