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Objectives and Content of the OECD Guidelines for Multinational Enterprises

The OECD Guidelines are the most comprehensive multilateral code of conduct for promoting responsible entrepreneurship in international business. The OECD Guidelines provide recommendations for the international business of companies in the areas of information disclosure, human rights, employment, the environment, anti-corruption, consumer protection, science and technology, competition and taxation. An important aspect of the OECD guidelines is due diligence. This is the process by which companies can identify, prevent, and mitigate the actual and potential negative effects of their business activities, supply chains and other business relationships, as well as how they can deal with these effects.

The OECD Guidelines for Multinational Enterprises

The OECD Guidelines for Multinational Enterprises are the only multilaterally agreed instrument of responsible business conduct that adhering governments have committed to promote. They cover all major areas of business ethics. Their recommendations are set out in 11 chapters:

1. Concepts and principles

This chapter sets out the concepts and principles that put into context all the recommendations in the subsequent chapters. They are the backbone of the OECD Guidelines

2. General policies

This chapter is the first to contain specific recommendations to enterprises in the form of general policies that set the tone and establish a framework of common principles for the subsequent chapters. They include the need to carry out due diligence to identify and prevent actual and potential adverse impacts of business activities as well as to encourage local capacity building and engage in stakeholder dialogues on responsible supply chain management.

3. Disclosure

The OECD Guidelines call upon enterprises to ensure that timely and regular information is disclosed on all material matters regarding their activities and the impact they may have. Disclosure policies of enterprises include financial information as well as social-, environment- and risk-related data and should be tailored to the nature, size and location of the enterprise.

4. Human Rights

Irrespective of the states' duty to protect human rights, enterprises have the responsibility to respect human rights in their locations, activities and along the entire supply chain. This chapter, introduced during the 2011 update, provides important criteria for enterprises on how to observe due diligence and prevent violations of human rights and is consistent with the United Nations Guiding Principles on Business and Human Rights (Ruggie Principles).

5. Employment and industrial relations

The OECD Guidelines request observance of the core labour standards of the International Labour Organisation (ILO): freedom of association and negotiation, elimination of all forms of forced or child labour as well as non-discrimination in employment and occupation. Other recommendations concern an open approach to providing information on changes in an enterprise's operations as well as recommendations on the recruitment and training of local workers.

6. Environment

The text of the Environment Chapter broadly reflects the principles and objectives of the most important international agreements in this area (Rio Declaration on Environment and Development, Agenda 21, Aarhus Convention). Enterprises are encouraged to avoid adverse impacts of their activities on the environment. To this end, the recommendations of the OECD Guidelines include the introduction of an efficient environmental management system as well as transparent environmental reporting on compliance with the precautionary approach. Moreover, enterprises are to develop contingency plans for emergencies.

7. Combating bribery, bribe solicitation and extortion

Bribery and corruption pose a threat to democratic institutions and the governance of corporations. Enterprises have an important role to play in combating these practices. The recommendations of the OECD Guidelines on combating corruption are based on international agreements such as the OECD Convention on Combating Bribery. Enterprises should not, directly or indirectly, offer, promise, give, or request bribes. They should resist the solicitation of bribes and disclose their efforts made to combat acts of corruption.

8. Consumer interests

The OECD Guidelines call upon enterprises to ensure fair business, marketing and advertising practices as well as the quality and reliability of the goods and services they provide – specifically with a view to complying with standards for consumer health and safety, furnishing transparent product information, establishing user-friendly systems for customer enquiries and respecting consumer privacy. The Consumer interests Chapter draws, inter alia, on the work of the OECD Committee on Consumer Policy, the International Chamber of Commerce and the United Nations.

9. Science and technology

The OECD Guidelines underscore the potential of enterprises for technology transfer across borders: research and development activities can help enhance the economic and social progress in the host countries, while opening up new commercial opportunities in these markets. With due regard to the protection of intellectual property rights and fair competition, enterprises should tap this potential through the transfer and rapid diffusion of technologies and know-how, e.g. by cooperation with local universities and research entities.

10. Competition

The recommendations of the OECD Guidelines on the protection of fair competition comprise compliance with all applicable competition laws and regulations taking into account the competition laws of all host jurisdictions. For this purpose enterprises are requested, inter alia, to refrain from entering into anti-competitive agreements and to cooperate with investigating competition authorities.

11. Taxation

It is important that enterprises contribute to the public finances of host countries by making timely payment of their tax liabilities. Tax revenue is used to finance public services such as education systems, infrastructure and healthcare facilities of which, in turn, the enterprises benefit. The recommendations of the OECD Guidelines relate in particular to compliance with tax laws, the inclusion of such compliance in risk management systems and the provision of information to tax authorities.

Due Diligence

The OECD guidelines include recommendations for the value-added/supply chains of businesses, always provided that the affected enterprise actually has ways and means to influence them.

The OECD has for years been developing guidelines and hands-on manuals to foster and facilitate due diligence procedures in enterprises as foreseen by the OECD Guidelines. Initially, the OECD concentrated on specific sectors, and on 31 May 2018 it published a guidance that covers all sectors – another milestone for developing due diligence along the supply chain. The guidance can be applied to all businesses and constitutes an addendum to the sector-specific guidelines.

Guidelines for Due Diligence:

EU initiatives to comply with due diligence

Over recent years, compliance with due diligence has increasingly gained in importance at EU level. In Regulation 2017/821/EU, known as the conflict minerals regulation, EU legislators for the first time mandated due diligence obligations in the supply chain for specified minerals and ores from high-risk regions that are binding for EU importers. Starting on 1 January 2021, these obligations apply to the management system, risk management duties, the obligation to carry out checks by third parties and disclosure duties of EU importers. The regulation complies with the OECD standards on due diligence.

Due Diligence Ready!

In order to make it easier for small and medium-sized enterprises to comply with due diligence, the EU has published on the internet a large number of training materials under the heading of “Due Diligence Ready”. The material is also available in German, aiming to provide enterprises with an understanding of due diligence and enable them to effectively implement it in their business activities.

Contact Information:

Mario Micelli
Austrian NCP for the OECD Guidelines for Multinational Enterprises
Federal Ministry for Digital and Economic Affairs
E-Mail: NCP-Austria@bmdw.gv.at
Telephone: (+43) 1 711 00-805240 or 805050
Fax: (+43) 1 711 00-8045050
http://www.oecd-leitsaetze.at/