Updating the OECD Guidelines for Multinational Enterprises

The OECD Guidelines are often considered the most comprehensive multilateral corporate responsibility instrument in existence to date.  Based on recommendations for responsible business conduct, they cover ten major policy areas including human rights, supply chain management, labor relations, environmental, anti-corruption, competition taxation and consumer interests.  Essentially recommendations providing voluntary standards for responsible business practice in the 42 countries adhering to the Declaration, the guidelines are legally non-binding.

In critiques of the Guidelines, organizations like OECD Watch have noted inadequacies in that have failed to address corporate misconduct.  In one of their reports, they state:

OECD Watch believes that a binding international regulatory framework for corporate behavior is
required to provide access to effective remedies for communities that are the victims of irresponsible corporate behavior. In the absence of such a regulatory framework, the OECD Guidelines are one of the most important international instruments currently available for promoting responsible business  conduct. However, nearly 10 years after their last revision, there is a growing body of evidence and concern that the current implementation of the Guidelines is inadequate to address or prevent irresponsible corporate behavior.

OECD Watch’s view on the need for a review appears to be widely shared. Mr. Angel Gurría, the
Secretary General of the OECD, recently observed that that the crisis was the result of  “massive
regulatory, supervisory, corporate governance and risk management failures”, and he has called for the effective implementation of standards to ensure more honesty, propriety, and transparency in business conduct.

The OECD Watch report examined 45 complaints that had been filed by NGOs and community organizations in the five years since the introduction of the revised Guidelines in 2000.  In particular, OECD Watch levels criticism at the system of “National Contact Points” (NCPs). The establishment of an NCP is a requirement of each country signing up to the guidelines. This unique implementation mechanism offers the ability for resolving disputes between companies and stakeholders arising from alleged non-observance of the Guidelines. In addition to helping resolve disputes over the guidelines, their main role includes promotional activities, handling of inquiries and otherwise acting as a focal point for any points of discussion under the guidelines.

In a keynote address to National Contact Points in June 2008, the United Nations Special Representative on Transnational Corporations, John Ruggie,  has further indicated that the human rights component of the Guidelines could be expanded in a number of areas.

Such areas could include the conflicting requirements between internationally-recognized standards on human rights and host country policies, including situations where the host country has not ratified a specific human rights instrument.

Paragraphs 9-10 of the agreed Terms of Reference for an update provide that more elaborated guidance on the application of the Guidelines to human rights should be developed, including if deemed appropriate, in a separate chapter of the Guidelines.

The work on the update is expected to start during June 2010 Annual Meeting of the National Contact Points, taking place on June 30 – July 1, with the broad aim of completing the update in 2011, if at all possible, by the time of the 2011 Annual NCP Meeting.

The Right Respect will keep you informed of the updates to the Guidelines, including analysis of the extent to which they address deficiencies present in the current articulation.