OECD announces updates to Guidelines for Multinational Enterprises on Responsible Business Conduct

The OECD yesterday launched a revised version of its Guidelines for Multinational Enterprises on Responsible Business Conduct, 12 years after they were last updated to include a chapter on human rights.

The OECD Guidelines, which cover all key areas of business responsibility, including human and labour rights, the environment, bribery, corporate disclosure, competition and taxation, have been revised to include new or updated recommendations relating to:

• climate change (including adopting decarbonisation targets and prioritising emissions reductions over offsetting);
• biodiversity;
• supply chain due diligence; and
• the Just Transition (amongst other topics).

There have also been a number of amendments related to the OECD Guidelines’ in-built grievance mechanism, the National Contact Points (NCPs). The changes are geared towards increasing the effectiveness of the mechanism, which can vary NCP by NCP depending on jurisdiction and level of resource. One of the key updates in relation to the NCPs is the clear expectation that an NCP will issue a decision on a complaint, regardless of whether or not the organisation subject to the complaint has engaged with the process or not. The NCPs do not have the power to compel companies to take part in the process, but this update may help increase levels of engagement in an effort to avoid adverse statements about corporate practices at a time when those practices are being so heavily scrutinised.

The changes to the OECD Guidelines are in line with the recent broader direction of travel and come at a time of heightened stakeholder expectation of companies (whether NGOs, customers, regulators or otherwise). This shift in the sustainability landscape has notably seen the driving of an ambitious legislative agenda by the EU, a number of the regimes developed by which reference the OECD Guidelines in some way. They are, for instance, incorporated into the Principal Adverse Impacts in the EU's SFDR and the minimum safeguards in the EU Taxonomy. These changes are therefore not only noteworthy for those who have previously committed to align with the OECD Guidelines, but all those implementing regimes incorporating them.

Even with the summer break approaching, the sustainability landscape continues to develop – and the new OECD Guidelines are the latest to make it onto the holiday reading list.