Finance

The OECD Guidelines apply to all sectors, including financial institutions such as banks, institutional investors, asset managers, pension funds, and insurance companies. Financial institutions are expected to conduct risk-based due diligence to address adverse impacts on people and the planet connected to their operations, financial products, services, and business relationships.

The OECD has developed additional guidance explaining how these expectations apply to different financial activities, including institutional investment, corporate lending and securities underwriting, and project and asset finance. Additional guidance is also available on climate-related due diligence for institutional investors.

Financial institutions should:

• Conduct ongoing due diligence to identify actual and potential adverse impacts, including those linked to clients, investments, and other business relationships
• Take appropriate action to prevent or reduce adverse impacts, including by using their influence (leverage) over clients and investee companies to encourage responsible conduct
• Consider risks linked to their whole value chain, not just their own operations, and prioritise the most significant risks
• Meaningfully engage with affected communities, workers, and other relevant stakeholders when identifying and addressing risks
• Monitor the effectiveness of their due diligence measures and communicate publicly about how they address adverse impacts
• Provide for or cooperate in remediation where they cause or contribute to harm, and use their leverage to encourage remediation where they are directly linked to adverse impacts through business relationships.