Unit 5, Lecture 3 - OECD Guidelines for Multinational Enterprises
OECD Guidelines are recommendations on Responsible Business Conduct drawn up by governments not MNEs themselves. Governments that sign the Guidelines make a binding commitment to implement them. They are an example of a ‘soft law’ instrument.
46 governments have signed the Guidelines. One big weakness is lack of universal coverage – China, India, Russia and South Africa has not signed.
The Guidelines only apply to those MNEs headquartered in countries that have signed. They are still global in reach because they are extra-territorial and apply beyond national borders.
The Guidelines cover the enterprise’s own operations but also suppliers, sub-contractors, franchises, licensees, and other business partners. The responsibility of an enterprise is determined by its adverse impacts not its level of control or its sphere of influence.
The full range of business relationships, including in the financial sector (i.e. pension funds) are expected to conduct due diligence to identify risks of being linked to breaches of the Guidelines and to use their leverage to change the behavior of companies in which they invest, where violations of the Guidelines take place.
Governments that sign the Guidelines are required to set up National Contact Points (NCPs), which have a responsibility to help resolve complaints of alleged breaches of the Guidelines.
Trade union experience of using the Guidelines has been mixed.