The OECD Guidelines: What Your Business Needs to Know

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The OECD (Organisation for Economic Co-operation and Development) Guidelines for Multinational Enterprises (MNEs) provide an interesting framework for businesses to tackle modern slavery. Adopted by 46 member or adhering countries, they encourage ethical business conduct and corporate responsibility and could carry significant implications for your company.

Here is what you need to know:

  • The OECD Guidelines revolve around three major concepts: identify, prevent, and mitigate. MNEs are expected to do their “due diligence” to identify any behavior that could be in violation of the Guidelines. If an MNE finds itself in violation, the MNE should immediately seek to prevent or mitigate any adverse effects linked “to their operations, products or services by a business relationship.”
  • The Guidelines cover a wide range of topics: Human Rights, Employment and Industrial Relations, the Environment, Bribery and Corruption, Consumer Interests, Science and Technology, Competition, and Taxation.
  • Important Note: While the Guidelines are voluntary, Member or adhering countries make a binding commitment to implement them through National Contact Points (NCPs). NCPs are government offices tasked to “promote the Guidelines and handle complaints about ‘specific instances’ of alleged company misconduct.” The UK Government has emphasized it “expects business based or operating in the UK to engage with the NCP where complaints are made against them.”
  • The NCP process consists of four main stages: initial assessment, mediation, determination, and the final statement. In the initial assessment, the NCP interviews the reporting and defending parties to gather more information on the complaint. The NCP will then mediate both parties to try and reach an optimal solution. If mediation is unsuccessful, the NCP will make another assessment before issuing a final statement. A final statement could include an outline of the issues and the alleged violation, as well as recommendations for future compliance.
  • Hard Consequences: NCP violations can cause serious reputational damage, and resulting financial losses, for multinational enterprises. As governments, banks, the media, and the general public ramp up pressure on companies to be corporately responsible, a violation of the OECD Guidelines could spell trouble for your business. Additionally, because some of the Guidelines are covered under national law or international commitments, a violation could carry legal ramifications.

Compliance with the OECD Guidelines can aid your business in compliance with other legislation. Recently, the UK Government has recommended the OECD Guidelines as a useful framework for businesses seeking to respond to or prevent modern slavery as specified under the UK Modern Slavery Act of 2015.

Full Text of OECD Guidelines