The OECD Guidelines for Multinational Enterprises

History

The OECD Guidelines for Multinational Enterprises were drawn up in the 1970s, a decade during which the activities of corporations became a topic of discussion among international organisations. The sometimes negative impact of corporations on developing countries was given increased attention and harmful activities of companies to countries where they were established met growing opposition. The legal regulation of businesses was called for and international guidelines controlling their conduct were set up by international organisations such as the OECD.

The Guidelines were adopted on 21 June 1976 by all OECD member states, except for Turkey, as part of a package which consisted of the Declaration on International Investment and Multinational Enterprises, for the facilitation of direct investment among OECD member countries, together with four instruments related to the Declaration.

The last update of the OECD Guidelines was adopted in May 2011. The new text introduces valuable provisions on human rights, workers and wages, and climate change. It establishes that enterprises should avoid causing or contributing to adverse impacts through their own activities or through business relationships, and it recommends that companies exercise due diligence to ensure they live up to their responsibilities. However, despite references to impartiality and equal treatment, the changes to the implementation procedures, which should be the cornerstone of the Guidelines, fall far short of what is needed to ensure that they are an effective and credible instrument. The update failed to provide for a system capable of ensuring observance through investigative powers and the ability to impose some kind of sanction when the Guidelines are breached.  

Content

The OECD Guidelines provide voluntary principles and standards for responsible business conduct in the following areas:

- Information disclosure
- Human Rights
- Employment and industrial relations
- Environment
- Combating bribery, bribe solicitation, and extortion
- Consumer interests
- Science and technology
- Competition and
- Taxation

Core issues include:
- Respect for labour standards
- Contribution to sustainable development
- Respect for human rights
- Environment (precautionary principle)
- Bribery and corruption
- Whistleblower protection
- supply chain responsibility

Application

The OECD Guidelines for Multinational Enterprises are still non-binding recommendations addressed by governments to multinational enterprises operating in or from adhering countries. The Guidelines are supported by the 34 OECD participating countries and 10 non-Member countries (Argentina, Brazil, Colombia, Egypt, Latvia, Lithuania, Morocco, Peru, Romania and Tunesia). The only formal obligation that the Guidelines put on countries is to set up National Contact Points (NCPs) whose primary responsibility it is to ensure the follow-up of the Guidelines. The NCPs gather information on experiences with the Guidelines, promote them, deal with enquiries, discuss matters related to the Guidelines and assist in solving problems that arises in matters covered by the Guidelines under the Specific Instance Procedure.

Originally, the Guidelines only applied to governments and companies operating within the OECD countries. However, the review of the Guidelines conducted in 2000 widened their scope. Currently the Guidelines are applicable to companies from the countries that are member of the OECD or have signed the OECD's Declaration on International Investment and Multinational Enterprises and thereby adhere to the OECD Guidelines, regardless of where in the world the alleged violation has occurred. The 2011 update of the Guidelines furthermore broadened the scope of the Guidelines by extending the supply chain responsibility provisions of the Guidelines.

Specific Instance Procedure

The OECD Guidelines have a unique complaint mechanism, called the Specific Instance Procedure, which offers parties in dispute with mediation facilities. During the Specific Instance Procedure NCPs help the parties involved in a conflict to resolve their issues by means of mediation. The complaint procedure starts with a complainant submitting a complaint against a company from one of the adhering countries of OECD Guidelines to an NCP. After having received the submitted complaint, the NCP will make an initial assessment of whether the issues raised merit further examination and respond to the party or parties raising them. If the complaint is accepted, the NCP will consult with the parties involved and try to facilitate an resolution to the problems between the complainant and the company. What this process exactly looks like differs per case. After the mediation attempt the NCP will issue a final statement with the outcome of the complaint procedure. Also if the parties involved do not reach agreement on the issues raised, the NCP should still issue a statement, and make recommendations as appropriate, on the implementation of the Guidelines.

Official text of the OECD Guidelines, Revision 2011

OECD Guidelines website

Annual Reports on the OECD Guidelines for Multinational Enterprises