This week the OECD launched its new Due Diligence Guidance for Responsible Business Conduct (the Guidance). Due diligence has emerged as the fundamental and essential behaviour expected of any responsible business. The 2011 revision of the OECD Guidelines for Multinational Enterprises (OECD Guidelines) and the adoption of the UN Guiding Principles on Business and Human Rights (UNGPs) raised the expectation of due diligence by companies to an international consensus. Until now, however, there was no agreement over what due diligence really means.
The new Guidance resolves that by clarifying exactly what is expected of business to prevent harm and conduct business responsibly. The guidance is intended for use in all sectors of the economy and by all companies, regardless of size, geographical location or value chain position. It was developed over a two-year period through a credible, multi-stakeholder process involving governments, business, unions, and civil society.
According to the Coordinator of OECD Watch, Joseph Wilde-Ramsing, who led the civil society delegation negotiating the text of the Guidance, “The endorsement of the Guidance by the OECD Council means that it will be the most authoritative international elaboration of due diligence available for many years. States have made a high-level political commitment to promote the Guidance and actively monitor its implementation by business. Civil society can and should use it in advocacy to hold companies accountable for their behaviour.”
Given its authoritative nature, the Guidance is sure to have a role in future developments including national, regional and international requirements for due diligence.
Prevention and remediation are key
The Guidance clarifies and elaborates several key concepts related to responsible business conduct and provides recommendations to business on how to fulfil these expectations.
“The Guidance makes clear that due diligence is first and foremost about preventing harm”, said Gabriela Quijano, legal adviser at Amnesty International. “Companies must consult individuals and communities whose human rights might be at risk from their activities, and provide them with all the relevant information to allow them to make informed decisions. Under the Guidance, disclosure is the rule, not the exception.”
The Guidance also clarifies that due diligence means more than “do no harm” and involves bundles of interrelated iterative processes, many of which must involve pro-active behaviour. And when companies do cause or contribute to impacts, the Guidance is clear that they must remediate them.
According to Joseph Wilde-Ramsing, this is important because “When it comes to adverse impacts, there are only two things that count in the end: one is prevention and the other is remedy.”