Key points

  • On January 13, 2023, the OECD launched a public consultation process to gather feedback from stakeholders on potential changes to its Guidelines for Multinational Enterprises. Stakeholders wishing to provide comments should do so by February 10, 2023.
  • The guidelines serve as an influential international reference for companies on how they can ensure responsible business conduct in various areas, including human rights, labor rights, environment, corruption, consumer interests , technology and more. The Guidelines and the discussions on the update are likely to play a key role in the future national legislation and regulation of OECD members on the issue of business conduct in these areas.
  • Failure to comply with the Guidelines may expose companies to complaints lodged with national contact points and possible redress obligations. The number of complaints has increased over the years.
  • We can help clients understand the implications of proposed changes, craft thoughtful and impactful responses to public consultations, and navigate the update process.

Amendments proposed by the OECD to its Guidelines

The Guidelines for Multinational Enterprises (the “Guiding Principles”) set out recommendations for companies to ensure responsible business conduct in all areas where companies interact with society, including human rights, labor rights, the environment, corruption and consumer interests, as well as disclosure, science and technology, competition and taxation. The Guidelines are adhered to by 50 governments, including all members of the Organization for Economic Co-operation and Development (OECD) and several non-OECD economies (such as Argentina, Brazil, Egypt, Kazakhstan, Morocco and Uruguay), which together represent two-thirds of the population. international trade.

The Guidelines were adopted in 1976 and have been revised several times. The most recent revision dates back to 2011. The proposed updates were prompted by a stocktaking exercise conducted in 2021-2022 which revealed that the Guidelines needed strengthening in certain areas, including:

  • The environmental impacts of business activities, including on climate change, biodiversity and animal welfare.
  • The risks of digitalization and technology.
  • The protection of human rights defenders, trade union representatives and environmental activists.
  • The right of association and collective bargaining.

To facilitate consultations, the OECD has published a draft revision of the Guidelines. The Proposed Amendments are far-reaching and include proposed revisions to each chapter, as well as to the Guidelines implementation procedures. For example, some of the proposed changes include recommendations that companies:

The environment

  • Perform “risk-based due diligence.” . . identify, prevent and mitigate the negative impacts of their operations on the environment, health and safety. These impacts include climate change; Loss of biodiversity; air, water and soil pollution; Deforestation; harm to animal welfare; and more.
  • Contribute to “environmental remediation” to remedy the negative environmental impacts caused by their operations.
  • Incorporate into their decision-making ways of avoiding or mitigating harm to the environment; enhance the positive environmental effects of their operations; and advancing sustainable production and consumption patterns.

Human rights

  • Provide or cooperate in remediating adverse human rights impacts identified through a company’s human rights due diligence process or through other means.

Employment and Industrial Relations

  • Avoid interfering with the choice of workers to form or join a trade union or representative organization of their choice.
  • Provide a safe and healthy working environment and recognize occupational safety and health as a fundamental principle and right at work of the International Labor Organization (ILO). The promotion of these objectives should include the prevention of accidents and injuries to health resulting from, related to or occurring in the course of work by minimizing, as far as possible, the causes of risks inherent in the working environment. .

Disclosure

  • Disclose material information about compensation levels or amounts to key executives and their board members.

Technology

  • When granting licenses for the use of intellectual property rights or when transferring technology voluntarily, do so under mutually agreed terms and conditions, with appropriate safeguards to prevent and mitigate impacts negative, and in a way that contributes to the long-term sustainable development prospects of the host country and complies with export control rules.
  • Perform “risk-based due diligence.” . . in the context of the development, financing, licensing, sale, trade and/or use of technology. »
  • Adopt practices that enable “the voluntary, safe, secure and efficient transfer and rapid dissemination of technology. . . in compliance with the protection of intellectual property rights, obligations of confidentiality and respect for private life, the protection of personal data and the principles of non-discrimination.
  • Improve transparency of data access and sharing when collecting and using data, as well as encourage the adoption of responsible data governance practices.
  • Meeting the “ethical, legal and social challenges” posed by “new technologies” while promoting responsible innovation.

Consequences

The revised Guidelines could have significant implications for companies engaged in multinational operations. For example, members of the public can lodge complaints (known as “specific instances”) with their “national contact points” when they believe that a multinational company is not complying with the Guidelines. According to the OECD, more than 575 complaints had been filed in 100 countries up to 2020. The rate of complaints has increased over the years, with 54 complaints filed in 2022 alone. The largest number of complaints concerned employment and industrial relations, the environment and human rights. These complaints have been directed at companies in almost every industry.

In addition, OECD guidance is often used as a reference for national legislation and regulation in its members and beyond. In practice, the Guiding Principles can serve as a benchmark that members seek to adhere to when drafting their own laws regarding business and its relationship to human rights, labor rights, consumer interests, the environment, technology, etc. The OECD has also traditionally been an international peer pressure organization. Member governments strive to comply to avoid criticism, and “key partner” countries strive to heed recommendations and guidelines to retain access and status. The Guidelines will also serve as a point of reference for international negotiations and agreements on these subjects.

It is therefore of paramount importance to ensure that changes to these guidelines reflect a reasonable, effective and well-considered approach. Comments submitted as part of the public consultations will help shape these final provisions.

Source link

Leave A Reply