fall 2020
Challenges with the OECD Guidance for Responsible Business Conduct
– comments from GLOBAL CSR
In 2018, the OECD released a highly anticipated guidance on how to interpret the OECD Guidelines for Multinational Enterprises (OECDG) in a business setting. The guidance has since inspired and informed a wide variety of companies and other guides. In this blog, we discuss some challenges with the OECD guidance.
Three main questions we raise are:
Who risks impacting human rights?
When is gender relevant to human rights due diligence?
How should businesses approach responsibility in business relationships?
This blog is especially for readers of the OECD guidance, Sustainability/CSR professionals and to researchers in the field of sustainability.
The OECD guidance is useful in many aspects for implementing the requirements of the OECDG, as well as the global minimum standard: the UN Guiding Principles on Business and Human Rights (UNGPs), referenced in the OECDG. However, implementation of the requirements from the OECDG and UNGPs is in its early stages of implementation globally. Hence current tendencies reflected in the OECD guidance are not necessarily pointing to pragmatic solutions to implementation.
We hope a discussion on the guidance can spur further discussions that can inspire and inform future guidance and, more importantly, practices.
Challenge 1: Who risks impacting human rights?
“Some business operations, products or services are inherently risky because they are likely to cause, contribute to, or be directly linked to adverse impacts on RBC (Responsible Business Conduct, ed.) issues. In other contexts, business operations may not be inherently risky, but circumstances (…) may result in risks of adverse impacts” (OECD Guidance 2018, pg. 16, our italics).
The OECD Guidance states in a section discussing the identification of human rights risks, that some business operations may not have any risks of adverse impacts. We believe such a statement is misleading. With more than 20 years of experience in the field, we can confidently disclose that any business in the world, no matter its context or industry, inherently is at risk of causing or contributing to adverse impacts on at least 14-16 human rights of the 48 human rights reflected in the International Bill of Human Rights. Consider, for example, the right to be free from discrimination, the right to rest, leisure and paid holidays, or the right to privacy. Even if my business merely has one employee, it would hold sensitive or private information on that person, and be at risk of reducing the person’s ability to enjoy her right to rest and leisure; for instance by expecting overwork, when the business is meeting heightened demands on our services, or is faced with short deadlines on deliveries. And yes, even these, often minor risks, are risks of reducing our employee’s opportunity to enjoy her human rights. Unattended, such risks may disrupt the business at any point in the future.
Risks of adverse impacts on human rights are simply inherent to running a business. Of course, the risk patterns of any business change from location to location. The same business may have different risks depending on whether you look, for example, at its production site, its headquarters or its outlets. At a production facility, you may face increased risks in relation to the right to safe and healthy working conditions, i.e. heavy lifting. Whereas the risks in relation to the right to safe and healthy working conditions are more often related to stress or ergonomic needs for desk-jobs at headquarters.
Challenge 2: When is gender relevant to human rights due diligence?
The OECD Guidance states on Pg. 41 under Q2: “It is important to be aware of gender issues and women’s human rights in situations where women may be disproportionately impacted”.
You should always consider gender issues in your due diligence process. The International Bill of Human Rights clearly states that it is foundational that every human right must be considered with awareness of how impacts may disproportionately affect vulnerable groups in a society. This means all discrimination grounds should be part of a company’s considerations during their due diligence processes. The reason this is raised as a challenge, despite our agreement with the statement, is due to the challenge of the guidance highlighting only one discrimination ground at the possible neglect of other discrimination grounds. Further, the guide does not regard the ways in which different discrimination grounds may overlap or influence each other. Think of for example, how experiences of gender-discrimination may vary for a woman using and not using a wheelchair both in their daily work and with regard to their (un)equal opportunities in hiring and promotion. We also worry that the guidance’s specific focus on women may lead to a neglect of the adverse impacts trans persons, including nonbinary and genderqueer people, experience disproportionately in companies.
Challenge 3: How should businesses approach responsibility in business relationships?
On Pg. 67 Q26, the guidance discusses how you should assess your business relationships:
”For most types of risks, an assessment will cover the following:
– Actual adverse impacts or risks of impacts caused or contributed to by the business relationship (…).”
We must stress that it is NOT your responsibility to conduct impact assessments on any other business relationship. According to the UNGPs and the OECDG all your business relationships should conduct their own due diligence – i.e. regular impact assessments – and communicate the results of such assessments to you. Your responsibility with business relationships is to require that they manage their own risks and communicate their results to you, in alignment with the OECDG (and the UNGPs). In cases of known severe impacts with business relationships, you should use or build your leverage to make the relationship stop the impact. This is also the only way you can ensure accountability with your relationships; they commit to responsible business conduct, and they manage their risks of impacts.
With mutual accountability against the global minimum standard, you both take responsibility for your own actions and reciprocally hold each other accountable. In our experience, such standard alignment can improve accountability dramatically compared to former practices in the area of responsible procurement. Importantly, risk management in your value chain in alignment with the standard enables respectful collaboration between business relationships. Doing impact assessments on business relationships in the manner alluded to by the OECD Guidance is both feeble, resource consuming, and invasive. Requiring your relationships to take responsibility in alignment with the globally agreed standard for managing impacts constitutes a reasonable expectation and may effectively scale up responsible business conduct worldwide.
We raise these issues though we appreciate the efforts in and effects from developing global and regional expectations on responsible business conduct, such as the guidance coming from the OECD. We hope that sharing challenges may spur conversations of importance to the development of a sustainable future.
Click here to read the guide