Home OECD & NCPs The OECD Guidelines What’s in the Guidelines? The OECD Guidelines and due diligence

The OECD Guidelines and due diligence

Has your community or environment been harmed by business activity? Do you fear a planned development project will not take into account your community’s needs? Are you trying to talk to a company, but facing closed doors? The OECD Guidelines may help you fight these problems.

What the OECD Guidelines say about due diligence

The OECD Guidelines call on companies to act responsibly, safeguarding the environment and respecting the rights of all people affected by the business – from communities, to workers, to consumers. The method the Guidelines recommend companies use to ensure responsible conduct is “due diligence” to identify and address actual or potential harms from the business activity. You can use the OECD Guidelines to demand that companies:

  • Carry out “due diligence” – a process to identify and prevent or mitigate potential harms to people and the planet, and stop and remedy harms that have occurred. When conducting due diligence, companies should focus on:
    • Harms or risks to people and the environment, not themselves.
    • Harms that have already happened as well as harms that might happen in the future.
    • Harms in their own operations and those of companies related to them everywhere in their operations (both up and downstream).
    • Preventing future harm, not just remediating past harm.
    • Addressing distinct and intersecting risks to people related to their individual characteristics or their identity in vulnerable or marginalised groups.
  • Engage meaningfully with impacted communities and workers, including throughout due diligence. Companies should work to eliminate barriers for people to engage.
  • Avoid causing or contributing to harms and address and remediate such harms when they occur.
  • Help prevent or mitigate and encourage remedy of harms directly linked to their business even if they do not cause or contribute to those harms.

Tip

Although companies should do due diligence over all their business relations, the Guidelines allow companies, especially those with lots of suppliers or other business partners, to prioritise areas where impacts are most significant and likely. Civil society should highlight the severity and likelihood of a company’s harms to underscore why as many harms as possible must be prioritised. Although companies are expected to build leverage over business partners to get them to address harms, the Guidelines assert that companies may face limits in building leverage. Civil society should explain the importance of building leverage and propose practical ways for companies to build it. Finally, while the Guidelines do not expect companies to carry out due diligence over impacts related to taxation or competition, civil society can call for companies to address such harms through their human rights and environmental due diligence processes. Civil society should also urge companies to meet the latest and best standards on responsible tax practices and competition.

Read the text

  • Chapter II (General Policies): paragraphs 11; commentaries 15-29
  • Chapter IV (Human Rights): paragraph 5; commentaries 45 and 50

Additional important information

What are the OECD Guidelines?

The OECD Guidelines for Multinational Enterprises on Responsible Business Conduct (OECD Guidelines) are recommendations from governments to companies on how to act responsibly. The OECD Guidelines set non-binding standards for responsible business conduct across a range of issues important to communities, such as human rights, workers rights, and the environment, and also cover issues such as corruption and taxation.

Governments that follow the OECD Guidelines must establish a non-judicial complaints body called a National Contact Point for Responsible Business Conduct to promote the Guidelines and handle complaints about harmful business activity. The Guidelines set good standards for all companies, but complaints can only be filed against two types of companies operating across borders:

  1. multinational enterprises headquartered in a country that follows the OECD Guidelines, or
  2. multinational enterprises operating in a country that follows the OECD Guidelines.

How can you use the OECD Guidelines?

Civil society can use the Guidelines to:

  • Raise community awareness about company standards.
  • Talk to companies to demand better conduct.
  • File complaints when companies fall below the standards.
  • Advocate for strong laws and policies on corporate responsibility.

 Further resources