OECD DUE DILIGENCE GUIDANCEFOR RESPONSIBLE
BUSINESS CONDUCTOECD DUE DILIGENCE GUIDANCE FOR RESPONSIBLE BUSINESS CONDUCTOECD DUE DILIGENCE GUIDANCEFOR RESPONSIBLE
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OECD DUE DILIGENCE GUIDANCE FOR RESPONSIBLE BUSINESS CONDUCT
2FOREWORD
The objective of the OECD Due Diligence Guidance for Responsible Business Conduct (Guidance)
is to provide practical support to enterprises on the implementation of the OECD Guidelines
for Multinational Enterprises by providing plain language explanations of its due diligence
recommendations and associated provisions. Implementing these recommendations helps
enterprises avoid and address adverse impacts related to workers, human rights, the environment,
bribery, consumers and corporate governance that may be associated with their operations, supply
chains and other business relationships. The Annex to the Guidance includes additional explanations,tips and illustrative examples of due diligence.
This Guidance also seeks to promote a common understanding among governments andstakeholders on due diligence for responsible business conduct. The UN Guiding Principles on
Business and Human Rights as well as the ILO Tripartite Declaration of Principles Concerning
Multinational Enterprises and Social Policy also contain due diligence recommendations, and this
Guidance can help enterprises implement them.
The Guidance responds to the G7 Leaders’ Declaration adopted on 7-8 June 2015 in Schloss
Elmau, which recognised the importance of establishing a common understanding on due
diligence, in particular for small and medium-sized enterprises, and encouraged enterprises
active or headquartered in their countries to implement due diligence in their supply chains. In
their Declaration adopted on 8 July 2017 in Hamburg, G20 Leaders committed to fostering theimplementation of labour, social and environmental standards and human rights in line withinternationally recognised frameworks in order to achieve sustainable and inclusive supply chains,
and underlined the responsibility of businesses to exercise due diligence in this regard.
The development of this Guidance was overseen by the OECD Working Party on Responsible
Business Conduct (WPRBC) and involved a multi-stakeholder process with OECD and non-OECD
countries and representatives from business, trade unions and civil society. A first draft was
submitted to the WPRBC and institutional stakeholders of the OECD for comment in May 2016.
A public consultation on a revised draft of this Guidance was held in February 2017. A multistakeholder advisory group was formed in June 2017 to support the WPRBC in integrating
stakeholder comments and completing the Guidance. United Nations Human Rights collaborated
extensively in this process.
This Guidance was approved by the OECD Working Party on Responsible Business Conduct on
6 March 2018 and by the OECD Investment Committee on 3 April 2018. An OECD Recommendationon the Guidance was adopted by Council at Ministerial level on 30 May 2018.
The OECD has also developed guidance to help enterprises carry out due diligence for responsible
business conduct in specific sectors and supply chains, namely: minerals; agriculture; garment
and footwear; extractives; and finance.

OECD DUE DILIGENCE GUIDANCE FOR RESPONSIBLE BUSINESS CONDUCT
3

ACRONYMS AND ABBREVIATIONS
EIA

Environmental impact assessment

EPZ

Export processing zone

ESIA

Environmental and social impact assessments

HRIA

Human rights impact assessment

KYC

Know your counterparty

MNE

Multinational enterprise

NHRI

National human rights institution

NCP	National Contact Point for the OECD Guidelines
for Multinational Enterprises
OLGM

Operational-level grievance mechanism

RBC

Responsible business conduct

RBC issues	Human rights, including workers and industrial
relations, environment, bribery and corruption,
disclosure, and consumer interests
SME

Small and medium-sized enterprise

WPRBCOECD Working Party on Responsible
Business Conduct

OECD DUE DILIGENCE GUIDANCE FOR RESPONSIBLE BUSINESS CONDUCT
4TABLE OF CONTENTS

I.

II.

INTRODUCTION

9OVERVIEW OF DUE DILIGENCE FOR RESPONSIBLE BUSINESS CONDUCTAdverse impacts and risk
Why carry out due diligence?
Characteristics of due diligence – the essentials

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DUE DILIGENCE PROCESS
1.  Embed responsible business conduct into policies and management systems
2.  Identify and assess actual and potential adverse impacts associated with the

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3. 
4. 
5. 
6. 

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enterprise’s operations, products or services
Cease, prevent and mitigate adverse impacts
Track implementation and results
Communicate how impacts are addressed

Provide for or cooperate in remediation when appropriate

 NNEX: Questions related to the overview of due diligenceAfor responsible business conduct
Q1.  What are some examples of adverse impacts on matters covered by
the OECD Guidelines for MNEs?
Q2.  How can an enterprise integrate gender issues into its due diligence?
Q3.  How can an enterprise make decisions with respect to prioritisation?
Q4.  At what stages of the due diligence process is prioritisation relevant?
Q5. How does prioritisation differ for human rights risks than for otheradverse impacts?
Q6. How can resource constraints be addressed?
Q7. How can due diligence be appropriate to an enterprise’s circumstances?
Q8. Who are the enterprise’s stakeholders?
Q9. What is “meaningful stakeholder engagement”?
Q10. When is stakeholder engagement important in the context of due diligence?
Q11.  How can an enterprise engage with potentially vulnerable stakeholders?
Q12. How can enterprises collaborate in carrying out due diligence?
Q13. Can collaboration pose risks under competition law?

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Questions related to the due diligence process
A.1. Embed responsible business conduct into policies
and management systems
Q14. What goes into RBC policies?
Q15. What expertise can be drawn upon in developing RBC policies?
Q16. Which teams or business units will be relevant to consider whendeveloping and aligning objectives with the enterprise’s RBC policies?
Q17. What are the distinctions in the role of the board and management inensuring RBC is embedded?
Q18. How can RBC expectations be built into business relationships?
A.2. Identify and assess actual and potential adverse impacts associatedwith the enterprise’s operations, products or services
Q19. What is meant by scoping and how broad should an enterprise’s
scoping exercise be?
Q20. What is meant by sector, product, geographic, and enterprise-level risks?
Q21. What are example sources of information for desk-based research?
Q22. How might information deficits be addressed?
Q23. How can an enterprise assess risks of adverse impacts in its own activities?
Q24. How can an enterprise prioritise which of its own operations or business
relationships to assess first?
Q25. How can enterprises carry out assessments of business relationships
prioritised during its scoping?
Q26. What can an assessment of business relationships cover and who should
conduct these assessments?
Q27. When to assess business relationships?
Q28. How can enterprises assess business relationships with whom they do nothave contractual relationships?
Q29. What is meant by adverse impacts that are “caused”, “contributed to” by
the enterprise or are “directly linked” to its operations, products or services
by a business relationship?
Q30. Why does the way an enterprise is involved with adverse impacts matter?
Q31. How can an enterprise prioritise its actions when seeking to prevent andmitigate adverse impacts across its activities and business relationships?

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A.3. Cease, prevent and mitigate adverse impacts
Q32. What is the difference between preventing adverse impacts andmitigating adverse impacts?
Q33. How should an enterprise prevent and mitigate actual or potential impacts
it may cause or contribute to?
Q34. How can an enterprise seek to prevent and mitigate actual or potential
impacts directly linked to its operations, products or services by a business
relationship?
Q35. How can an enterprise modify its operations or activities to prevent andmitigate adverse impacts linked to its business relationships?
Q36. How can an enterprise use its leverage?
Q37. How can a lack of leverage be addressed?
Q38. How can an enterprise support a business relationship in the prevention or
mitigation of adverse impacts?
Q39. How can an enterprise approach disengagement?
A.4. Track implementation and results
Q40. How can an enterprise seek to prevent and mitigate adverse impacts
linked to business relationships with whom it does not have acontractual relationship?
Q41. What information is tracked under due diligence?
Q42. How can an enterprise track implementation and results?
Q43. Who is involved in tracking implementation and results within anenterprise?
Q44. How can an enterprise respond to the results of its tracking?
Q45. How to prioritise tracking activities?
A.5. Communicate how impacts are addressed
Q46. What are appropriate forms of communicating publicly and to impacted
stakeholders?
Q47. When information is commercially sensitive, how can relevant information
still be communicated?

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A.6. Provide for or cooperate in remediation when appropriate
Q48. What is the relationship of remediation to due diligence?
Q49. What is meant by “remediation” and “remedy”?
Q50. How can an enterprise identify appropriate forms of remedy?
Q51. What are “legitimate remediation mechanisms”?
Q52. What does it mean to “cooperate with legitimate remediation
mechanisms”?
Q53. In which circumstances are various processes to enable remediation
appropriate?
Q54. What is the difference between an early warning system anda process to enable remediation?

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REFERENCES

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OECD DUE DILIGENCE GUIDANCE FOR RESPONSIBLE BUSINESS CONDUCT8INTRODUCTIONBASIS This Due Diligence Guidance for Responsible Business Conduct (Guidance) is based on the OECD
Guidelines for Multinational Enterprises (OECD Guidelines for MNEs). The OECD Guidelines for
MNEs are non-binding recommendations addressed to multinational enterprises by governments on responsible business conduct (RBC). They acknowledge and encourage the positive
contributions that business can make to economic, environmental and social progress, and also
recognise that business activities can result in adverse impacts related to workers, human rights,
the environment, bribery, consumers and corporate governance. The OECD Guidelines for MNEs
therefore recommend that businesses carry out risk-based due diligence to avoid and address
such adverse impacts associated with their operations, their supply chains and other business
relationships.

PURPOSEThis Guidance helps businesses (enterprises) to understand and implement due diligence for RBC
as foreseen in the OECD Guidelines for MNEs (due diligence). This Guidance also seeks to promote
a common understanding amongst governments and stakeholders on due diligence for RBC.
T he OECD Guidelines for MNEs provide enterprises with the flexibility to adapt the characteristics, specific measures and processes of due diligence to their own circumstances. Enterprises
should use this Guidance as a framework for developing and strengthening their own tailored
due diligence systems and processes, and then seek out additional resources for further in-depth
learning as needed.
 OECD Guidelines for MNEs have a unique promotion and grievance mechanism – theThe
National Contact Points (NCPs). This Guidance is a useful resource for NCPs in understanding andpromoting the OECD Guidelines for MNEs. usee Box 8 for further information on NCPs

SCOPE
TABLE 1. SCOPE OF THE OECD DUE DILIGENCE GUIDANCE FOR RBC
Enterprisesl All multinational enterprises (MNEs), regardless of their ownership

structure, in all sectors and of all sizes operating or based in countries
adhering to the OECD Guidelines for MNEs, including multinational, small
and medium-sized enterprises (SMEs).
l All
 the entities within the MNE group – parent and local entities,

including subsidiaries.
l Multinationaland domestic enterprises are subject to the same

expectations in respect of their conduct wherever the OECD Guidelines for
MNEs are relevant to both.

OECD DUE DILIGENCE GUIDANCE FOR RESPONSIBLE BUSINESS CONDUCT9INTRODUCTIONTABLE 1. SCOPE OF THE OECD DUE DILIGENCE GUIDANCE FOR RBC
Topics coveredin due diligence(RBC issues)*l Human
Rights (OECD, 2011, Chapter IV)
l Employment
and Industrial Relations (OECD, 2011, Chapter V )l Environment(OECD, 2011, Chapter VI)
l Combating
Bribery, Bribe Solicitation and Extortion (OECD, 2011,

Chapter VII)l ConsumerInterests (OECD, 2011, Chapter VIII)l Disclosure(OECD, 2011, Chapter III)

Businessrelationships
covered bydue diligence

All types of business relationships of the enterprise – suppliers, franchisees,
licensees, joint ventures, investors, clients, contractors, customers,
consultants, financial, legal and other advisers, and any other non-State orState entities linked to its business operations, products or services.

* Three chapters of the OEC D Guidelines for MNEs are not covered by the Guidance: Science and Technology;
Competition; and Taxation.

TARGET AUDIENCES
The primary audience of the Guidance is practitioners tasked with implementing due diligencewithin an enterprise. Given the wide range of topics covered by the OECD Guidelines for MNEs
and the cross-functional nature of implementing due diligence across an enterprise’s varied
operations and business relationships, there are likely to be a number of different business units,
functional areas and individuals responsible for implementing due diligence. This Guidance
may also be useful for other parties, such as sector-wide and multi-stakeholder initiatives thatfacilitate collaboration on due diligence activities, and for workers, trade unions and workers’
representatives1 and civil society organisations.

STRUCTURE
The Guidance begins with a brief summary of each chapter of the OECD Guidelines for MNEs. It thenprovides an overview of due diligence, including some key concepts and characteristics, so readers
can easily understand the due diligence approach recommended in the OECD Guidelines for MNEs.
The main body of this Guidance describes the due diligence process and supporting measures in a
step-by-step fashion, although in practice the process of due diligence is ongoing, iterative and notnecessarily sequential, as several steps may be carried out simultaneously with results feeding into
each other. “Practical actions” are included in each step to further illustrate ways to implement, or

1. This Guidance uses the terms workers’ representatives, trade unions and representative organisations of their own
choosing, as understood by international labour standards: ILO Conventions No. 87 (Freedom of Association),
No. 98 (Right to Organise and Collective Bargaining) and No. 135 (Workers’ Representatives).

OECD DUE DILIGENCE GUIDANCE FOR RESPONSIBLE BUSINESS CONDUCT10INTRODUCTION

adapt as needed, the supporting measures and due diligence process. The practical actions are not meant
to represent an exhaustive “tick box” list for due diligence. Not every practical action will be appropriate
for every situation. Likewise, enterprises may find additional actions or implementation measures useful insome situations.
Additional explanations, tips and illustrative examples of due diligence are referenced and crosslinked
throughout this Guidance. These are presented in a “question and answer” format and associated withspecific sections of the Guidance.

LINKS TO OTHER PROCESSES AND INSTRUMENTS
OECD sector guidance on responsible business conduct
The OECD has developed sector-specific due diligence guidance for the minerals, agriculture andgarment and footwear supply chains, and good practice papers for the extractives and financial sectors(see OECD, 2016a; OECD, 2016b; OECD, 2016c; OECD, 2017a; and OECD, 2017b). These were developed inclose co-operation with governments, business, trade unions and civil society. Approaches articulated
under the sector guidance align with the approach of this Guidance, but provide more detailed recommendations tailored to specific contexts or sectors. This Guidance is not intended to replace or otherwise
modify, but can supplement, existing sector-specific or thematic OECD guidance on RBC. Where questions arise, enterprises should use the guidance that is most specific and relevant to their operations,
supply chain or sector.
Other OECD instruments
The OECD Guidelines for MNEs are referenced in a range of other OECD instruments that reinforce
the interlinkages between RBC and these other areas, including: the G20/OECD Principles of Corporate
Governance; the Guidelines on Corporate Governance of State-Owned Enterprises; the Common
Approaches for Officially Supported Export Credits and Environmental and Social Due Diligence; thePolicy Framework for Investment; the Recommendation of the Council on Public Procurement; and the
Recommendation of the Council for Further Combating Bribery of Foreign Public Officials in International Business Transactions (see OECD, 2015a; OECD, 2015b; OECD, 2016d; OECD, 2015c; OECD, 2015d;
and OECD, 2009).

Other multilateral processes and instruments
In relation to human rights issues, including the human rights of workers, this Guidance seeks
to align with the UN Guiding Principles on Business and Human Rights, the ILO Declaration on
Fundamental Principles and Rights at Work, the ILO Conventions and Recommendations referenced
within the OECD Guidelines for MNEs, and the ILO Tripartite Declaration of Principles concerning
Multinational Enterprises and Social Policy (see UN, 2011; ILO, 1998; and ILO, 2017).

OECD DUE DILIGENCE GUIDANCE FOR RESPONSIBLE BUSINESS CONDUCT11INTRODUCTION

CHAPTERS OF THE OECD GUIDELINESDISCLOSURE

HUMAN RIGHTSRIGHTS

I. Concepts and Principles
The first chapter of the
Guidelines sets out
concepts and principles
that put into context all of therecommendations in the subsequent chapters. These concepts
and principles (e.g. obeying
domestic law is the first obligationof enterprises) are the backboneof the Guidelines and underline
the fundamental ideas behind
the Guidelines.

DISCLOSUREDISCLOSURE

CONCEPTSDISCLOSURE
AND PRINCIPLES

GENERALDISCLOSURE
POLICIESENVIRONMENTDISCLOSUREDISCLOSUREEMPLOYMENTAND INDUSTRIAL
RELATIONSENVIRONMENTENVIRONMENTCOMBATING
BRIBERY, BRIBESOLICITATIONSAND EXTORTION

IV. Human Rights
Enterprises can havean impact on virtually
the entire spectrum ofinternationally recognised humanrights. As such, it is important thatthey meet their responsibilities.
This new chapter of the Guidelines
draws on and is aligned with the
UN “Protect, Respect and Remedy”
Framework and the Guiding Principles on Business and Human Rightsthat operationalise that framework.
CONCEPTSDISCLOSURE
AND PRINCIPLESHUMAN RIGHTSRIGHTSENVIRONMENTDISCLOSUREDISCLOSURE

PEGGY KING COINTEPAS / DESIGN

VI. Environment
The environment
chapter provides a setof recommendations for
MNEs to raise their environmental
performance and help maximise
their contribution to environmental
protection through improved
internal management and better
planning. It broadly reflects theprinciples and objectives of the
Rio Declaration on Environmentand Development and Agenda 21.

GENERAL
GENERAL
CONCEPTSDISCLOSUREDISCLOSUREDISCLOSUREDISCLOSUREDISCLOSURE
POLICIES
POLICIESAND PRINCIPLESENVIRONMENTENVIRONMENTENVIRONMENTENVIRONMENTENVIRONMENTENVIRONMENTEMPLOYMENTEMPLOYMENTCOMBATINGHUMAN RIGHTSRIGHTSAND INDUSTRIAL
AND INDUSTRIAL
BRIBERY, BRIBE
RELATIONSRELATIONSSOLICITATIONSAND EXTORTION

1 2 3 4 5 6

CONSUMER
INTERESTSDISCLOSURE

ENVIRONMENTENVIRONMENTCOMBATING
BRIBERY, BRIBESOLICITATIONSAND EXTORTION

1 2 3 4 5 6

CONSUMERCOMPETITIONTAXATIONCOMPETITIONSCIENCE ANDSCIENCE ANDTAXATIONINTERESTSTECHNOLOGYTECHNOLOGYPEGGY KING COINTEPAS / DESIGNDISCLOSUREDISCLOSURETAXATIONTAXATION

6, QUAI DES CÉLESTINS 75004 PARIS / STUDIO@PFFK.NET6, QUAI /DES
+33CÉLESTINS(0) 6 76 4875004
81 36PARIS/ WWW.PFFK.NET/ STUDIO@PFFK.NET / +33 (0) 6 76 48ICONS
81 36 // WWW.PFFK.NET
OECD GUIDEINES FOR MULTINATIONAL ENTERPRISESICONS / OECD
/ R5 GUIDEINESMARCH 2018
FOR MULTINATIONAL ENTERPRISES / R5 MARCH 2018

1 2 3 4 5 6

CONSUMER
INTERESTSSIGN

SCIENCE ANDTECHNOLOGY

II. General Policies
This chapter is the firstto contain specificrecommendations toenterprises in the form of generalpolicies that set the tone andestablish a framework of common
principles for the subsequent
chapters. It includes important
provisions such as implementing
due diligence, addressing adverse
impacts, engaging stakeholders,and others.

RIS / STUDIO@PFFK.NET / +33 (0) 6 76 48 81 36 / WWW.PFFK.NET

DISCLOSURE

CONCEPTSDISCLOSURE
AND PRINCIPLESEMPLOYMENTAND INDUSTRIAL
RELATIONSTAXATIONTAXATIONCOMPETITIONENVIRONMENT

1 2 3 4 5 60) 6 76 48 81 36 / WWW.PFFK.NET

DISCLOSURE

GENERALDISCLOSURE
POLICIESENVIRONMENTENVIRONMENTCOMPETITION

V. Employment andIndustrial Relations
The ILO is thecompetent bodyto set and deal withinternational labour standards
and to promote fundamental
rights at work as recognisedin the ILO 1998 Declaration on
Fundamental Principles and Rights
at Work. This chapter focuses on
the role the Guidelines have inpromoting observance among
MNEs of the international labour
standards developed by the ILO.

CONCEPTSDISCLOSURE
AND PRINCIPLES

GENERALDISCLOSURE
POLICIESENVIRONMENTDISCLOSUREDISCLOSURE

HUMAN RIGHTSRIGHTSEMPLOYMENTAND INDUSTRIAL
RELATIONSENVIRONMENTENVIRONMENTCOMBATING
BRIBERY, BRIBESOLICITATIONSAND EXTORTIONCONSUMER
INTERESTSSCIENCE ANDTECHNOLOGYCOMPETITIONDISCLOSUREDISCLOSURE

ENVIRONMENTENVIRONMENTCOMBATING
BRIBERY, BRIBESOLICITATIONSAND EXTORTIONPEGGY KING COINTEPAS / DESIGNSCIENCE ANDTECHNOLOGYDISCLOSUREICONS / OECD GUIDEINES FOR MULTINATIONAL ENTERPRISES / R5 MARCH 2018DISCLOSURE

GENERALDISCLOSURE
POLICIESENVIRONMENTDISCLOSURE

1 2 3 4 5 6

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III. Disclosure
Clear and complete
information on theenterprise is important
to a variety of users. This chapter
calls on enterprises to be transparent in their operations and responsive to increasingly sophisticatedpublic demands for information.

ENVIRONMENTTAXATIONTAXATIONICONS / OECD GUIDEINES FOR MULTINATIONAL ENTERPRISES / R5 MARCH 2018DISCLOSUREDISCLOSURE

ENVIRONMENTENVIRONMENTCOMBATING
BRIBERY, BRIBESOLICITATIONSAND EXTORTION

1 2 3 4 5 6

COMPETITIONTAXATIONTAXATION

OECD DUE DILIGENCE GUIDANCE FOR RESPONSIBLE BUSINESS CONDUCT12ICONS / OECD GUIDEINES FOR MULTINATIONAL ENTERPRISES / R5 MARCH 2018

DISCLOSUREDISCLOSUREDISCLOSUREDISCLOSURE

INTRODUCTION
CONCEPTSDISCLOSURE
AND PRINCIPLESDISCLOSURE

ENVIRONMENT

1 2 3 4 5 6

COMPETITIONDISCLOSUREDISCLOSURE
CONCEPTSDISCLOSURE
ENVIRONMENTAND PRINCIPLES

GENERALDISCLOSURE
POLICIESENVIRONMENTDISCLOSUREDISCLOSURE

ENVIRONMENTENVIRONMENTCOMBATING
BRIBERY, BRIBESOLICITATIONSAND EXTORTION

ENVIRONMENTFOR MULTINATIONAL ENTERPRISESHUMAN RIGHTSRIGHTS

GENERALDISCLOSURE
POLICIESENVIRONMENTGENERALDISCLOSURE
POLICIESENVIRONMENT

VII. C ombating Bribery, Bribe
Solicitations and Extortion
Bribery and corruption
are damaging to democratic institutions andthe governance of corporations.
Enterprises have an important roleto play in combating these practices. The OECD is leading global
efforts to level the playing field forinternational businesses by fighting
to eliminate bribery. The recommendations in the Guidelines are
based on the extensive work theOECD has already done in this field.
DISCLOSUREDISCLOSURE

ENVIRONMENTENVIRONMENTCOMBATING
BRIBERY, BRIBESOLICITATIONSAND EXTORTIONPEGGY KING COINTEPAS / DESIGNEMPLOYMENTAND INDUSTRIAL
RELATIONSENVIRONMENTENVIRONMENTEMPLOYMENTHUMAN RIGHTSRIGHTSCOMBATING
BRIBE
BRIBERY,AND
INDUSTRIAL
SOLICITATIONSRELATIONSAND EXTORTIONDISCLOSUREDISCLOSURE

VIII. Consumer Interests
The Guidelines call on
enterprises to apply fairbusiness, marketing,and advertising practices and toensure the quality and reliability ofthe products that they provide.
This chapter draws on the work of
the OECD Committee on Consumer
Policy and the Committee on
Financial Markets, and of otherinternational organisations,
including the International
Chamber of Commerce, theInternational Organisation forStandardization and the UN.
1 2 3 4 5 6

CONSUMER
INTERESTS

IX. Science and Technology
This chapter recognisesthat MNEs are the main
conduit of technology
transfer across borders. It aims topromote technology transfer tohost countries and contribution totheir innovative capacities.
1 2 3 4 5 6

COMPETITIONTAXATIONCONSUMER TAXATIONSCIENCE AND
INTERESTSTECHNOLOGY
GENERAL
CONCEPTSDISCLOSUREDISCLOSURE
POLICIESAND PRINCIPLESENVIRONMENTPEGGY KING COINTEPAS / DESIGNSCIENCE ANDTECHNOLOGYCOMPETITIONTAXATIONTAXATIONDISCLOSUREDISCLOSURE

ENVIRONMENTQUAI DES CÉLESTINS 75004 PARIS / STUDIO@PFFK.NET+33 (0) 6 76FOR
48 81
36 / WWW.PFFK.NET6, QUAI DES CÉLESTINS 75004 PARIS / STUDIO@PFFK.NET / +33 (0) 6 76 48 81 36 /6,
WWW.PFFK.NET
ICONS / OECD/ GUIDEINESMULTINATIONALENTERPRISES / R5 MARCH 2018 ICONS / OECD GUIDEINES FOR MULTINATIONAL ENTERPRISES / R5 MARCH 2018

TAXATIONTAXATIONICONS / OECD GUIDEINES FOR MULTINATIONAL ENTERPRISES / R5 MARCH 2018

HUMAN RIGHTSRIGHTSEMPLOYMENTAND INDUSTRIAL
RELATIONSCONSUMER
INTERESTSSCIENCE ANDTECHNOLOGYPEGGY KING COINTEPAS / DESIGN

6, QUAI DES CÉLESTINS 75004 PARIS / STUDIO@PFFK.NET / +33 (0) 6 76 48 81 36 / WWW.PFFK.NET

HUMAN RIGHTSRIGHTSDISCLOSUREDISCLOSURE

CONCEPTSDISCLOSURE
AND PRINCIPLES

GENERALDISCLOSURE
POLICIESENVIRONMENTEMPLOYMENTAND INDUSTRIAL
RELATIONSENVIRONMENTSCIENCE ANDTECHNOLOGYCOMPETITION

1 2 3 4 5 6

CONSUMER
INTERESTSPEGGY KING COINTEPAS / DESIGN

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ENVIRONMENTENVIRONMENTCOMBATING
BRIBERY, BRIBESOLICITATIONSAND EXTORTION

X. Competition
This chapter focuseson the importance of
MNEs carrying out theiractivities in a manner consistent
with all applicable competition
laws and regulations, taking into
account the competition laws of all
jurisdictions in which their activities
may have anti-competitive effects.
Enterprises need to refrain fromanti-competitive agreements,
which undermine the efficient
operation of both domestic andinternational markets.
1 2 3 4 5 6

COMPETITIONTAXATIONTAXATIONICONS / OECD GUIDEINES FOR MULTINATIONAL ENTERPRISES / R5 MARCH 2018DISCLOSUREDISCLOSURE

ENVIRONMENTENVIRONMENTCOMBATING
BRIBERY, BRIBESOLICITATIONSAND EXTORTION

XI. Taxation
The Guidelines are
the first international
corporate responsibility instrument to cover taxation,
contributing to and drawing upona significant body of work on
taxation, most notably the OECD
Model Tax Convention and the UN
Model Double Taxation Convention
between Developed and Developing Countries. This important
chapter covers fundamental
taxation recommendations.
TAXATIONTAXATIONICONS / OECD GUIDEINES FOR MULTINATIONAL ENTERPRISES / R5 MARCH 2018

OECD DUE DILIGENCE GUIDANCE FOR RESPONSIBLE BUSINESS CONDUCT13I.

OVERVIEW OF DUE DILIGENCE
FOR RESPONSIBLE BUSINESS CONDUCTOECD DUE DILIGENCE GUIDANCE FOR RESPONSIBLE BUSINESS CONDUCT14OVERVIEW OF DUE DILIGENCE FOR RESPONSIBLE BUSINESS CONDUCT	The OECD Guidelines for MNEs acknowledge and encourage the positive contributions that business can make to economic, environmental and social progress, but also recognise that businessactivities may result in adverse impacts related to corporate governance, workers, human rights,
the environment, bribery, and consumers. Due diligence is the process enterprises should carryout to identify, prevent, mitigate and account for how they address these actual and potential
adverse impacts in their own operations, their supply chain and other business relationships, as
recommended in the OECD Guidelines for MNEs. Effective due diligence should be supported byefforts to embed RBC into policies and management systems, and aims to enable enterprises toremediate adverse impacts that they cause or to which they contribute. usee Figure 1

ADVERSE IMPACTS AND RISK	Due diligence addresses actual adverse impacts or potential adverse impacts (risks) related to
the following topics covered in the OECD Guidelines for MNEs: human rights, including workers
and industrial relations, environment, bribery and corruption, disclosure, and consumer interests(RBC issues). The OECD Guidelines for MNEs chapters provide detailed provisions on the type of
conduct recommended for each RBC issue. The likelihood of adverse impacts increases in situations where an enterprise’s behaviour or the circumstances associated with their supply chainsor business relationships are not consistent with the recommendations in the OECD Guidelines
for MNEs. A risk of adverse impacts may exist when there is the potential for behaviour that isinconsistent with the recommendations in the OECD Guidelines for MNEs because it involves
impacts that may occur in the future. usee Annex Q1

BOX 1. U NDERSTANDING RISK UNDER THE OECD GUIDELINES FOR MNES
For many enterprises, the term “risk” means primarily risks to the enterprise – financial risk, market risk, operational risk, reputational risk, etc. Enterprises are concernedwith their position in the market vis-à-vis their competitors, their image and long-term
existence, so when they look at risks, it is typically risks to themselves. The Guidelines
however refer to the likelihood of adverse impacts on people, the environment andsociety that enterprises cause, contribute to, or to which they are directly linked. In otherwords, it is an outward-facing approach to risk.
Enterprises can identify risks on RBC issues by looking for divergences between what
is recommended in the OECD Guidelines for MNEs on the one hand, and the circumstances associated with their operations, supply chains or business relationships on
the other. usee Annex Q1

OECD DUE DILIGENCE GUIDANCE FOR RESPONSIBLE BUSINESS CONDUCT15OVERVIEW OF DUE DILIGENCE FOR RESPONSIBLE BUSINESS CONDUCTWHY CARRY OUT DUE DILIGENCE?
	Some business operations, products or services are inherently risky because they are likely tocause, contribute to, or be directly linked to adverse impacts on RBC issues. In other contexts,
business operations may not be inherently risky, but circumstances (e.g. rule of law issues, lackof enforcement of standards, behaviour of business relationships) may result in risks of adverse
impacts. Due diligence should help enterprises anticipate and prevent or mitigate these impacts.
In some limited cases, due diligence may help them decide whether or not to go ahead with or
discontinue operations or business relationships as a last resort, because the risk of an adverse
impact is too high or because mitigation efforts have not been successful.
	Effectively preventing and mitigating adverse impacts may in turn also help an enterprisemaximise positive contributions to society, improve stakeholder relationships and protect its
reputation. Due diligence can help enterprises create more value, including by: identifying opportunities to reduce costs; improving understanding of markets and strategic sources of supply;
strengthening management of company-specific business and operational risks; decreasing
the probability of incidents relating to matters covered by the OECD Guidelines for MNEs; anddecreasing exposure to systemic risks. An enterprise can also carry out due diligence to help it
meet legal requirements pertaining to specific RBC issues, such as local labour, environmental,
corporate governance, criminal or anti-bribery laws.

CHARACTERISTICS OF DUE DILIGENCE – THE ESSENTIALSlD ue diligence is preventative.

		The purpose of due diligence is first and foremost to avoid causing or contributing toadverse impacts on people, the environment and society, and to seek to prevent adverse
impacts directly linked to operations, products or services through business relationships.
When involvement in adverse impacts cannot be avoided, due diligence should enable enterprises to mitigate them, prevent their recurrence and, where relevant, remediate them.
l Due diligence involves multiple processes and objectives.

		The concept of due diligence under the OECD Guidelines for MNEs involves a bundle ofinterrelated processes to identify adverse impacts, prevent and mitigate them, track implementation and results and communicate on how adverse impacts are addressed with respect
to the enterprises' own operations, their supply chains and other business relationships.
Due diligence should be an integral part of enterprise decision-making and risk management. In this respect it can build off (although it is broader than) traditional transactionalor “know your counterparty” (KYC) due diligence processes. Embedding RBC into policies
and management systems helps enterprises prevent adverse impacts on RBC issues andalso supports effective due diligence by clarifying an enterprise’s strategy, building staff
capacity, ensuring availability of resources, and communicating a clear tone from the top.

OECD DUE DILIGENCE GUIDANCE FOR RESPONSIBLE BUSINESS CONDUCT16OVERVIEW OF DUE DILIGENCE FOR RESPONSIBLE BUSINESS CONDUCTlD
 ue diligence is commensurate with risk (risk-based).

		Due diligence is risk-based. The measures that an enterprise takes to conduct due diligenceshould be commensurate to the severity and likelihood of the adverse impact. When thelikelihood and severity of an adverse impact is high, then due diligence should be more
extensive. Due diligence should also be adapted to the nature of the adverse impact on
RBC issues, such as human rights, the environment and corruption. This involves tailoring
approaches for specific risks and taking into account how these risks affect different groups,
such as applying a gender perspective to due diligence. usee Annex Q2l Due
diligence can involve prioritisation (risk-based).

		Where it is not feasible to address all identified impacts at once, an enterprise should
prioritise the order in which it takes action based on the severity and likelihood of theadverse impact. Once the most significant impacts are identified and dealt with, the enterprise should move on to address less significant impacts. Where an enterprise is causing orcontributing to an adverse impact on RBC issues, it should always stop the activities that are
causing or contributing to the impact and provide for or cooperate in their remediation. The
process of prioritisation is also ongoing, and in some instances new or emerging adverse
impacts may arise and be prioritised before moving on to less significant impacts. In thecase of prioritising risks to human rights, the severity of a potential adverse impact, such aswhere a delayed response would make the impact irremediable, is the predominant factor
in prioritising responses. usee Annex Q3-5l Duediligence is dynamic.

		The due diligence process is not static, but ongoing, responsive and changing. It includes
feedback loops so that the enterprise can learn from what worked and what did not work.
Enterprises should aim to progressively improve their systems and processes to avoid andaddress adverse impacts. Through the due diligence process, an enterprise should be
able to adequately respond to potential changes in its risk profile as circumstances evolve(e.g. changes in a country’s regulatory framework, emerging risks in the sector, the development of new products or new business relationships).
lD ue diligence does not shift responsibilities.

		Each enterprise in a business relationship has its own responsibility to identify and address
adverse impacts. The due diligence recommendations of the OECD Guidelines for MNEs are
not intended to shift responsibilities from governments to enterprises, or from enterprises
causing or contributing to adverse impacts to the enterprises that are directly linked toadverse impacts through their business relationships. Instead, they recommend that eachenterprise addresses its own responsibility with respect to adverse impacts. In cases where
impacts are directly linked to an enterprise’s operations, products or services, the enterpriseshould seek, to the extent possible, to use its leverage to effect change, individually or incollaboration with others.

OECD DUE DILIGENCE GUIDANCE FOR RESPONSIBLE BUSINESS CONDUCT17OVERVIEW OF DUE DILIGENCE FOR RESPONSIBLE BUSINESS CONDUCTl 	Due diligence concerns internationally recognised standards of RBC.
		
The OECD Guidelines for MNEs provide principles and standards of RBC consistent with applicable laws and internationally-recognised standards. They state that obeying domestic laws in
the jurisdictions in which the enterprise operates and/or where they are domiciled is the firstobligation of enterprises. Due diligence can help enterprises observe their legal obligations
on matters pertaining to the OECD Guidelines for MNEs. In countries where domestic laws
and regulations conflict with the principles and standards of the OECD Guidelines for MNEs,
due diligence can also help enterprises honour the OECD Guidelines for MNEs to the fullest
extent which does not place them in violation of domestic law. Domestic law may also in someinstances require an enterprise to take action on a specific RBC issue, (e.g. laws pertaining to
specific RBC issues such as foreign bribery, modern slavery or minerals from conflict-affected
and high-risk areas).
l 	Due diligence is appropriate to an enterprise’s circumstances.

	The nature and extent of due diligence can be affected by factors such as the size of theenterprise, the context of its operations, its business model, its position in supply chains, andthe nature of its products or services. Large enterprises with expansive operations and many
products or services may need more formalised and extensive systems than smaller enterprises with a limited range of products or services to effectively identify and manage risks.
usee Annex Q6-7 and Table 4l 	Due diligence can be adapted to deal with the limitations of working withbusiness relationships.
		Enterprises may face practical and legal limitations to how they can influence or affect business
relationships to cease, prevent or mitigate adverse impacts on RBC issues or remedy them.
Enterprises, in particular SMEs, may not have the market power to influence their business
relationships by themselves. Enterprises can seek to overcome these challenges to influencebusiness relationships through contractual arrangements, pre-qualification requirements,
voting trusts, license or franchise agreements, and also through collaborative efforts to poolleverage in industry associations or cross-sectoral initiatives.
l 	Due diligence is informed by engagement with stakeholders.
		
Stakeholders are persons or groups who have interests that could be affected by an enterprise’s
activities.2 Stakeholder engagement is characterised by two-way communication. It involves
the timely sharing of the relevant information needed for stakeholders to make informed
decisions in a format that they can understand and access. To be meaningful, engagement
involves the good faith of all parties. Meaningful engagement with relevant stakeholders isimportant throughout the due diligence process. In particular, when the enterprise may
cause or contribute to, or has caused or contributed to an adverse impact, engagement

2. E xamples of stakeholders include workers, workers’ representatives, trade unions (including Global Unions)community members, civil society organisations, investors and professional industry and trade associations.

OECD DUE DILIGENCE GUIDANCE FOR RESPONSIBLE BUSINESS CONDUCT18OVERVIEW OF DUE DILIGENCE FOR RESPONSIBLE BUSINESS CONDUCTwith impacted or potentially impacted stakeholders and rightsholders will be important.
For example, depending on the nature of the adverse impact being addressed, this could
include participating in and sharing results of on-site assessments, developing risk mitigation
measures, ongoing monitoring and designing of grievance mechanisms.3l 	Due diligence involves ongoing communication.
		Communicating information on due diligence processes, findings and plans is part of the due
diligence process itself. It enables the enterprise to build trust in its actions and decision-making,and demonstrate good faith. An enterprise should account for how it identifies and addresses
actual or potential adverse impacts and should communicate accordingly. Information shouldbe accessible to its intended audiences (e.g. stakeholders, investors, consumers, etc.) and be
sufficient to demonstrate the adequacy of an enterprise’s response to impacts. Communication
should be carried out with due regard for commercial confidentiality and other competitive4
or security concerns. Various strategies may be useful in communicating to the extent possible
while respecting confidentiality concerns. usee Annex Q47

BOX 2. COLLABORATION IN CARRYING OUT DUE DILIGENCEEnterprises can collaborate at an industry or multi-industry level as well as with relevant stakeholders throughout the due diligence process, although they always remain
responsible for ensuring that their due diligence is carried out effectively. For example,
collaboration may be pursued in order to pool knowledge, increase leverage and scaleup effective measures. Cost sharing and savings is often a benefit to sector collaborationand can be particularly useful for SMEs. usee Annex Q12While in many cases, enterprises can collaborate on due diligence without breachingcompetition law, enterprises, and the collaborative initiatives in which they are involved,
are encouraged to take proactive steps to understand competition law issues in theirjurisdiction and avoid activities which can be seen as breach of competition law.
usee Annex Q13

3. Annex Q8 provides an explanation of the terms relevant stakeholders, impacted or potentially impacted
stakeholders and rightsholders. Annex Q8-11 provides more information about stakeholder engagement.
4. C ompetitive concerns should be interpreted in light of applicable competition law.

OECD DUE DILIGENCE GUIDANCE FOR RESPONSIBLE BUSINESS CONDUCT
19

II.

THE DUE DILIGENCE PROCESSOECD DUE DILIGENCE GUIDANCE FOR RESPONSIBLE BUSINESS CONDUCT
20THE DUE DILIGENCE PROCESSTaking into account that due diligence should be commensurate with risk and appropriate toa specific enterprise’s circumstances and context, the following section outlines measures:(1) to embed RBC into the enterprise’s policies and management systems; to undertake due diligence by (2) identifying actual or potential adverse impacts on RBC issues, (3) ceasing, preventing
or mitigating them, (4) tracking implementation and results, (5) communicating how impacts are
addressed; and (6) to enable remediation when appropriate. usee Figure 1
The practical actions provided are not meant to represent an exhaustive “tick box” list for due
diligence. Not every practical action will be appropriate for every situation. Likewise, additional
practical actions or implementation measures not described in this Guidance may be useful insome situations.
FIGURE 1. DUE DILIGENCE PROCESS & SUPPORTING MEASURESIDENTIFY & ASSESSADVERSE IMPACTS
IN OPERATIONS, SUPPLY CHAINS& BUSINESS RELATIONSHIPSCOMMUNICATEHOW IMPACTS
ARE ADDRESSED

5

2
1
EMBED
RESPONSIBLE
BUSINESS CONDUCTINTO POLICIES &MANAGEMENT SYSTEMS

4
TRACK
IMPLEMENTATION
AND RESULTS

6

PROVIDE FOR OR
COOPERATEIN REMEDIATION
WHEN APPROPRIATE

3CEASE, PREVENT OR MITIGATE
ADVERSE IMPACTS

OECD DUE DILIGENCE GUIDANCE FOR RESPONSIBLE BUSINESS CONDUCT21

1
EMBED RESPONSIBLE BUSINESS CONDUCTINTO POLICIES AND MANAGEMENT SYSTEMS

1.1	Devise, adopt and disseminate a combination of policies on RBC issues that articulate theenterprise’s commitments to the principles and standards contained in the OECD Guidelines for MNEs and its plans for implementing due diligence, which will be relevant for theenterprise’s own operations, its supply chain and other business relationships.
usee Annex Q14-15

i PRACTICAL ACTIONS		

a. R eview and update existing policies on RBC issues (e.g. labour, human rights,
environment, disclosure, consumer protection, governance, anti-bribery andcorruption) to align with the principles and standards of the OECD Guidelines
for MNEs.

		b. D evelop specific policies on the enterprise’s most significant risks, building on
findings from its assessment of risk, in order to provide guidance on the enterprise’s
specific approach to addressing those risks. Consider making the enterprise’s due
diligence plans part of these policies.

		c. Make the enterprise’s policies on RBC issues publicly available, e.g. on the enterprise’s
website, at the enterprise’s premises, and when relevant, in the local languages.

		

d. C
 ommunicate the policies to the enterprise’s own relevant employees and otherworkers, e.g. during staff orientation or training and periodically as needed tomaintain awareness.

		e. Update the enterprise’s policies as risks in the enterprise’s operations, supply chain
and other business relationships emerge and evolve.

OECD DUE DILIGENCE GUIDANCE FOR RESPONSIBLE BUSINESS CONDUCT
22

EMBED RESPONSIBLE BUSINESS CONDUCT INTO POLICIES AND MANAGEMENT SYSTEMS

1.2	Seek to embed the enterprise’s policies on RBC issues into the enterprise’s oversightbodies. Embed the enterprise’s policies on RBC issues into management systems
so that they are implemented as part of the regular business processes, taking into
account the potential independence, autonomy and legal structure of these bodies
that may be foreseen in domestic law and regulations.

i PRACTICAL ACTIONS		

a. A
 ssign oversight and responsibility for due diligence to relevant senior management
and assign board level responsibilities for RBC more broadly. usee Annex Q16		b. Assign responsibility for implementing aspects of the policies across relevant
departments with particular attention to those workers whose actions and decisions
are most likely to increase or decrease risks. usee Annex Q16		c. 	Develop or adapt existing information and record-keeping systems to collectinformation on due diligence processes, related decision-making and responses.

		d. 	Establish channels of communication, or utilise existing channels of communication,
between relevant senior management and implementing departments for sharing
and documenting information on risk and decision-making.

		e. 	Encourage alignment across teams and business units on relevant aspects ofthe enterprise’s RBC policies. This could be done for example by creating crossfunctional groups or committees to share information and decision-making aboutrisks, and including business units that can impact observance of the RBC policies
in decision-making. usee Annex Q16		f. 	Provide training to workers to help them understand and implement relevant
aspects of RBC policies and provide adequate resources commensurate with theextent of due diligence needed.

		g. 	Develop incentives for workers and business units that are compatible with theenterprise’s RBC policies.

		h. 	Develop, draw from or adapt existing complaint procedures for workers to raiseissues or complaints related to RBC issues (e.g. labour practices, corruption,
corporate governance).

		

i.	Develop processes to respond to or, where appropriate, provide remedies insituations where the RBC policy is not observed (e.g. through additional fact-finding,capacity building or disciplinary actions/sanctions).

OECD DUE DILIGENCE GUIDANCE FOR RESPONSIBLE BUSINESS CONDUCT
23

EMBED RESPONSIBLE BUSINESS CONDUCT INTO POLICIES AND MANAGEMENT SYSTEMS

1.3 	Incorporate RBC expectations and policies into engagement with suppliers andother business relationships. usee Annex Q18

i PRACTICAL ACTIONS		

a. C ommunicate key aspects of the RBC policies to suppliers and other relevantbusiness relationships.

		b. Include conditions and expectations on RBC issues in supplier or business
relationship contracts or other forms of written agreements.

		c.	Develop and implement pre-qualification processes on due diligence for suppliers
and other business relationships, where feasible, adapting such processes to thespecific risk and context in order to focus on RBC issues that have been identified as
relevant for the business relationships and their activities or area(s) of operation.

		d. P rovide adequate resources and training to suppliers and other business
relationships for them to understand and apply the relevant RBC policies andimplement due diligence.

		e. Seek to understand and address barriers arising from the enterprise’s way of doing
business that may impede the ability of suppliers and other business relationships
to implement RBC polices, such as the enterprise’s purchasing practices andcommercial incentives.

OECD DUE DILIGENCE GUIDANCE FOR RESPONSIBLE BUSINESS CONDUCT
24

2


IDENTIFY AND ASSESS ACTUAL AND POTENTIAL
ADVERSE IMPACTS ASSOCIATED WITH THE ENTERPRISE’SOPERATIONS, PRODUCTS OR SERVICES

2.1 	Carry out a broad scoping exercise to identify all areas of the business, across its
operations and relationships, including in its supply chains, where RBC risks are most
likely to be present and most significant. Relevant elements include, among others,
information about sectoral, geographic, product and enterprise risk factors, including
known risks the enterprise has faced or is likely to face. The scoping exercise should
enable the enterprise to carry out an initial prioritisation of the most significant risk
areas for further assessment. For enterprises with less diverse operations, in particularsmaller enterprises, a scoping exercise may not be necessary before moving to thestage of identifying and prioritising specific impacts. usee Annex Q19-22

i PRACTICAL ACTIONS		

a. C reate an initial, high-level picture of the enterprise’s areas of operation and types ofbusiness relationships to understand what information will be relevant to gather.

		b.	Gather information to understand high-level risks of adverse impacts related to thesector (e.g. products and their supply chains, services and other activities), geography(e.g. governance and rule-of-law, conflict, pervasive human rights or environmental
adverse impacts) or enterprise-specific risk factors (e.g. known instances ofcorruption, misconduct, implementation of standards for RBC). usee Annex Q20
Sources might include reports from governments, international organisations, civilsociety organisations, workers’ representatives and trade unions, national humanrights institutions (NHRIs), media or other experts. usee Annex Q21-22		

c.	Where gaps in information exist, consult with relevant stakeholders and experts.

		d.	Consider information raised through early warning systems (e.g. hotlines) andgrievance mechanisms.

		e.	Identify the most significant RBC risk areas and prioritise these as the starting point
for a deeper assessment of potential and actual impacts.

		f. Review the findings of the scoping exercise on a regular basis.

		g.	Update the scoping exercise with new information whenever the enterprise makes
significant changes, such as operating in or sourcing from a new country; developing
a new product or service line that varies significantly from existing lines; changing
the inputs of a product or service; restructuring, or engaging in new forms ofbusiness relationships (e.g. mergers, acquisitions, new clients and markets).

OECD DUE DILIGENCE GUIDANCE FOR RESPONSIBLE BUSINESS CONDUCT
25

IDENTIFY AND ASSESS ACTUAL AND POTENTIAL ADVERSE IMPACTS ASSOCIATED
WITH THE ENTERPRISE’S OPERATIONS, PRODUCTS OR SERVICES

2.2	Starting with the significant areas of risk identified above, carry out iterative andincreasingly in-depth assessments of prioritised operations, suppliers and other business relationships in order to identify and assess specific actual and potential adverse
RBC impacts. usee Annex Q23-28

i PRACTICAL ACTIONS		

a. M
 ap the enterprise’s operations, suppliers and other business relationships, including
associated supply chains, relevant to the prioritised risk.

		

b. C
 atalogue the specific RBC standards and issues applicable to the risk being
assessed, including relevant provisions from the OECD Guidelines for MNEs, as wellas domestic laws and relevant international and industry-specific frameworks on
RBC issues.

		c. Obtain, when appropriate and feasible, relevant information about business
relationships beyond contractual relationships (e.g. sub-suppliers beyond “tier 1”).
Establish processes individually or collaboratively to assess the risk profile of more
remote tiers of the relationship, including by reviewing existing assessments, andengaging with mid-stream actors and “control points” in the supply chain to assess
their due diligence practices against this Guidance.

		

d. A
 ssess the nature and extent of actual and potential impacts linked to prioritised
operations, suppliers or other business relationships (i.e. which RBC issue is impacted
and in what ways, the scope of the impact, etc.). Where available, use informationfrom the enterprise’s own, or third parties’, environmental impact assessments(EIA), environmental and social impacts assessments (ESIA), human rights impact
assessments (HRIA), legal reviews, compliance management systems regarding
corruption, financial audits (for disclosure), occupational, health and safety
inspections; and any other relevant assessments of business relationships carriedout by the enterprise or by industry and multi-stakeholder initiatives, including
environmental, social and labour audits, corruption assessments and KYC processes.

		e. Identify activities that may not be carried out in an appropriate legal and institutionalframework sufficient to protect the rights of all persons and enterprises involved.
f. Consider the RBC risks prior to a proposed business activity (e.g. an acquisition,
restructuring, new market entry, new product or service development) projecting
how the proposed activity and associated business relationships could have adverse
impacts on specific RBC issues.

				g. R eassess impacts at regular intervals as needed: prior to major decisions or changes
in the activity (e.g. market entry, product launch, policy change, or wider changes
to the business); in response to or in anticipation of changes in the operating
environment (e.g. rising social tensions); and periodically throughout the life of anactivity or relationship.

OECD DUE DILIGENCE GUIDANCE FOR RESPONSIBLE BUSINESS CONDUCT
26

IDENTIFY AND ASSESS ACTUAL AND POTENTIAL ADVERSE IMPACTS ASSOCIATED
WITH THE ENTERPRISE’S OPERATIONS, PRODUCTS OR SERVICES		

h. F or human rights impacts, consult and engage impacted and potentially
impacted rightsholders, including workers, workers’ representatives andtrade unions, to gather information on adverse impacts and risks, taking into
account potential barriers to effective stakeholder engagement. Where directly
consulting with rightsholders is not possible, consider reasonable alternatives
such as consulting credible, independent expert resources, including humanrights defenders, trade unions and civil society groups. Consult potentially
impacted rightsholders both prior to and during projects or activities that may
affect them (e.g. through site-level assessments). usee Annex Q8-11 and Q25

		i. In assessing impacts related to human rights, pay special attention to potential
adverse impacts on individuals from groups or populations that may have aheightened risk of vulnerability or marginalisation, and to different risks that
may be faced by women and men.

		j. 	For enterprises with multiple entities within an enterprise group, support
local entities to carry out their own assessments.

2.3	Assess the enterprise’s involvement with the actual or potential adverse
impacts identified in order to determine the appropriate responses (see 3.1 and
3.3). Specifically, assess whether the enterprise: caused (or would cause) theadverse impact; or contributed (or would contribute) to the adverse impact; orwhether the adverse impact is (or would be) directly linked to its operations,products or services by a business relationship. usee Annex Q29-30

i PRACTICAL ACTIONS		a. 	Consult with business relationships, other relevant enterprises and otherrelevant stakeholders.

		b. 	Consult with impacted stakeholders and rightsholders or their legitimate
representatives.

		c. Seek relevant internal or external expertise as needed.

		

d. 	If impacted stakeholders or rightsholders disagree with the enterprise’s
assessment of its involvement with any actual or potential adverse impact,cooperate in good faith with legitimate mechanisms designed to help resolve
the disagreements and provide remediation. usee Annex Q51-52

OECD DUE DILIGENCE GUIDANCE FOR RESPONSIBLE BUSINESS CONDUCT
27

IDENTIFY AND ASSESS ACTUAL AND POTENTIAL ADVERSE IMPACTS ASSOCIATED
WITH THE ENTERPRISE’S OPERATIONS, PRODUCTS OR SERVICES

2.4	Drawing from the information obtained on actual and potential adverse impacts,
where necessary, prioritise the most significant RBC risks and impacts for action,
based on severity and likelihood. Prioritisation will be relevant where it is notpossible to address all potential and actual adverse impacts immediately. Oncethe most significant impacts are identified and dealt with, the enterprise should
move on to address less significant impacts. usee Annex Q3-5 and Q31

i PRACTICAL ACTIONS		a.	Identify which potential or actual impacts may be addressed immediately, at least to
some degree (e.g. update contract terms with suppliers, amend audit protocols tofocus on risks that may have been previously missed during audits).

		b.	Prioritise for action any activities that are causing or contributing to adverse impacts
on RBC issues, based on the enterprise’s assessment of their involvement withadverse impacts as per 2.3.

		c.	For impacts involving business relationships, assess the extent to which business
relationships have appropriate policies and processes in place to identify, preventand mitigate relevant RBC risks themselves.

		d.	Where it is not possible to address all real and potential adverse impacts directly
linked to the enterprise’s operations, products or services by business relationships(or to address them to the full extent desirable), evaluate the likelihood and severityof the identified impacts or risks to understand which issues should be prioritised
for action.

		e.	Consult with business relationships, other relevant enterprises and impacted or
potentially impacted stakeholders and rightsholders on prioritisation decisions.

		f. Seek relevant internal or external expertise as needed.

OECD DUE DILIGENCE GUIDANCE FOR RESPONSIBLE BUSINESS CONDUCT28

3CEASE, PREVENT AND MITIGATE ADVERSE IMPACTS

3.1	Stop activities that are causing or contributing to adverse impacts on RBC issues, basedon the enterprise’s assessment of its involvement with adverse impacts as per 2.3.
Develop and implement plans that are fit-for-purpose to prevent and mitigate
potential (future) adverse impacts. usee Annex Q32-33

i PRACTICAL ACTIONS		a.	Assign relevant senior responsibility for ensuring that activities that cause orcontribute to adverse impacts cease, and for preventing activities that may cause orcontribute to adverse impacts in the future.

		b	In the case of complex actions or actions that may be difficult to stop due tooperational, contractual or legal issues, create a roadmap for how to stop theactivities causing or contributing to adverse impacts, involving in-house legal
counsel and impacted or potentially impacted stakeholders and rightsholders.

		c.	Update the enterprise’s policies to provide guidance on how to avoid and address
the adverse impacts in the future and ensure their implementation.

		d.	Provide training that is fit-for-purpose for the enterprise’s relevant workers
and management.

		e.	Draw from the findings of the risk assessment to update and strengthen
management systems to better track information and flag risks before adverse
impacts occur. usee Section 1.2

		f.	Consult and engage with impacted and potentially impacted stakeholders andrightsholders and their representatives to devise appropriate actions and implement
the plan. usee Annex Q 8-Q11

		g.	In the case of collective or cumulative impacts (i.e. where the enterprise is only
one of several entities contributing to the adverse impact occurring) and, whereappropriate, seek to engage with other involved entities to cease the impacts andprevent them from recurring or to prevent risks from materialising, e.g. throughindustry initiatives and engagement with governments. usee Annex Box 6		h.	In cases where the enterprise is contributing to adverse impacts or risks that arecaused by another entity, it should take necessary steps to cease or prevent its
contribution as described above, also building and using leverage to mitigate any
remaining impacts to the greatest extent possible. usee Section 3.2 (c) – (e)and Annex Q34

OECD DUE DILIGENCE GUIDANCE FOR RESPONSIBLE BUSINESS CONDUCT29

CEASE, PREVENT AND MITIGATE ADVERSE IMPACTS

3.2	Based on the enterprise’s prioritisation (see Section 2.4), develop and implement plansto seek to prevent or mitigate actual or potential adverse impacts on RBC issues which
are directly linked to the enterprise’s operations, products or services by business relationships. Appropriate responses to risks associated with business relationships may attimes include: continuation of the relationship throughout the course of risk mitigation
efforts; temporary suspension of the relationship while pursuing ongoing risk mitigation;or, disengagement with the business relationship either after failed attempts at mitigation, or where the enterprise deems mitigation not feasible, or because of the severityof the adverse impact. A decision to disengage should take into account potential socialand economic adverse impacts. These plans should detail the actions the enterprise will
take, as well as its expectations of its suppliers, buyers and other business relationships.
usee Annex Q34-40

i PRACTICAL ACTIONS		a.	Assign responsibility for developing, implementing and monitoring these plans.

		b.	Support or collaborate with the relevant business relationship(s) in developing
fit-for-purpose plans for them to prevent or mitigate adverse impacts identified
within reasonable and clearly defined timelines, using qualitative and quantitative
indicators for defining and measuring improvement (sometimes referred to as“corrective action plans”). usee Annex Q38

		c.	Use leverage, to the extent possible, to prompt the business relationship(s) toprevent or mitigate adverse impacts or risks. usee Annex Q36 and Q40		d.	If the enterprise does not have sufficient leverage, consider ways to build additional
leverage with the business relationship, including for example through outreachfrom senior management and through commercial incentives. To the extent
possible, cooperate with other actors to build and exert collective leverage, forexample through collaborative approaches in industry associations, or throughengagement with governments. usee Annex Q37

		e.	To prevent potential (future) adverse impacts and address actual impacts, seek tobuild leverage into new and existing business relationships, e.g. through policies orcodes of conduct, contracts, written agreements or use of market power.
usee Section II, 1.3 and Annex Q36

		f.	For human rights impacts, encourage entities causing or contributing to adverse
impacts to consult and engage with impacted or potentially impacted rightsholders
or their representatives in developing and implementing corrective action plans.
usee Annex Q8-Q11

OECD DUE DILIGENCE GUIDANCE FOR RESPONSIBLE BUSINESS CONDUCT30

CEASE, PREVENT AND MITIGATE ADVERSE IMPACTS

		g.	Support relevant suppliers and other business relationships in the prevention or
mitigation of adverse impacts or risks, e.g. through training, upgrading of facilities, or
strengthening of their management systems, striving for continuous improvement.
usee Annex Q38

		h.	Consider disengagement from the supplier or other business relationship as alast resort after failed attempts at preventing or mitigating severe impacts; whenadverse impacts are irremediable; where there is no reasonable prospect of change;or when severe adverse impacts or risks are identified and the entity causing theimpact does not take immediate action to prevent or mitigate them. Any plans fordisengagement should also take into account how crucial the supplier or business
relationship is to the enterprise, the legal implications of remaining in or ending therelationship, how disengagement might change impacts on the ground, as wellas credible information about the potential social and economic adverse impacts
related to the decision to disengage. usee Annex Q39

		i.	If an enterprise decides to remain in a relationship, it should be prepared to accountfor its ongoing risk mitigation efforts and be aware of the reputational, financial or
legal risks of the continuing connection.

		J.	Encourage relevant authorities in the country where the impact is occurring toact, e.g. through inspections, enforcement and application of existing laws andregulations. usee Box 6OECD DUE DILIGENCE GUIDANCE FOR RESPONSIBLE BUSINESS CONDUCT
31

4TRACK IMPLEMENTATION AND RESULTS
4.1	Track the implementation and effectiveness of the enterprise’s due diligence activities, i.e. its measures to identify, prevent, mitigate and, where appropriate, support
remediation of impacts, including with business relationships. In turn, use the lessons
learned from tracking to improve these processes in the future. usee Annex Q41-Q45

i PRACTICAL ACTIONS		a.	Monitor and track implementation and effectiveness of the enterprise’s own
internal commitments, activities and goals on due diligence, e.g. by carrying out
periodic internal or third party reviews or audits of the outcomes achieved andcommunicating results at relevant levels within the enterprise.

		b.	Carry out periodic assessments of business relationships, to verify that risk mitigation
measures are being pursued or to validate that adverse impacts have actually been
prevented or mitigated.

		

c.	For human rights impacts the enterprise has, or may, cause or contribute to, seek
to consult and engage impacted or potentially impacted rightsholders, including
workers, workers’ representatives and trade unions. usee Annex Q8-Q11

		d.	Seek to encourage periodic reviews of relevant multi-stakeholder and industry
initiatives of which the enterprise is a member, including their alignment with this
Guidance, and their value to the enterprise in helping it identify, prevent or mitigate
adverse impacts linked to its business, taking into account the independence of
these initiatives. usee Annex Q12		e.	Identify adverse impacts or risks that may have been overlooked in past due
diligence processes and include these in the future.

		f.	Include feedback of lessons learned into the enterprise’s due diligence in order toimprove the process and outcomes in the future. usee Annex Q44

OECD DUE DILIGENCE GUIDANCE FOR RESPONSIBLE BUSINESS CONDUCT32

5COMMUNICATE HOW IMPACTS ARE ADDRESSED

5.1	Communicate externally relevant information on due diligence policies, processes,
activities conducted to identify and address actual or potential adverse impacts,
including the findings and outcomes of those activities. usee Annex Q46-Q47

i PRACTICAL ACTIONS		a.	Publicly report relevant information on due diligence processes, with due regard forcommercial confidentiality and other competitive or security concerns, e.g. throughthe enterprise’s annual, sustainability or corporate responsibility reports or otherappropriate forms of disclosure. Include RBC policies, information on measures taken
to embed RBC into policies and management systems, the enterprise’s identified
areas of significant risks, the significant adverse impacts or risks identified, prioritised
and assessed, as well as the prioritisation criteria, the actions taken to prevent or
mitigate those risks, including where possible estimated timelines and benchmarks
for improvement and their outcomes, measures to track implementation and results
and the enterprise’s provision of or co-operation in any remediation.

		b.	Publish the above information in a way that is easily accessible and appropriate,e.g. on the enterprise’s website, at the enterprise’s premises and in local languages.

		c.	For human rights impacts that the enterprise causes or contributes to, be prepared
to communicate with impacted or potentially impacted rightsholders in a timely,
culturally sensitive and accessible manner, the information above that is specifically
relevant to them, in particular when relevant concerns are raised by them or on theirbehalf. usee Section II, 2.4 and Section II, 2.12

OECD DUE DILIGENCE GUIDANCE FOR RESPONSIBLE BUSINESS CONDUCT33

6PROVIDE FOR OR COOPERATE IN REMEDIATION
WHEN APPROPRIATE
6.1	When the enterprise identifies that it has caused or contributed to actual adverse
impacts, address such impacts by providing for or cooperating in their remediation.
usee Section 2.3 and Annex Q48-Q50

i PRACTICAL ACTIONS		a.	Seek to restore the affected person or persons to the situation they would be in had
the adverse impact not occurred (where possible) and enable remediation that is
proportionate to the significance and scale of the adverse impact.

		b.	Comply with the law and seek out international guidelines on remediation whereavailable, and where such standards or guidelines are not available, consider aremedy that would be consistent with that provided in similar cases.
The type of remedy or combination of remedies that is appropriate will dependon the nature and extent of the adverse impact and may include apologies,
restitution or rehabilitation (e.g., reinstatement of dismissed workers, recognitionof the trade union for the purpose of collective bargaining), financial or non-financial
compensation (for example, establishing compensation funds for victims, or for
future outreach and educational programmes), punitive sanctions (for example, thedismissals of staff responsible for wrongdoing), taking measures to prevent futureadverse impacts. usee Annex Q50

		c.	In relation to human rights impacts, consult and engage with impacted
rightsholders and their representatives in the determination of the remedy.
usee Annex Q8-Q11 and Q50

		d.	Seek to assess the level of satisfaction of those who have raised complaints with theprocess provided and its outcome(s).

OECD DUE DILIGENCE GUIDANCE FOR RESPONSIBLE BUSINESS CONDUCT34

PROVIDE FOR OR COOPERATE IN REMEDIATION WHEN APPROPRIATE

6.2	When appropriate, provide for or cooperate with legitimate remediation mechanisms through which impacted stakeholders and rightsholders can raise complaints
and seek to have them addressed with the enterprise. Referral of an alleged impact
to a legitimate remediation mechanism may be particularly helpful in situations
where there are disagreements on whether the enterprise caused or contributed
to adverse impacts, or on the nature and extent of remediation to be provided.
usee Section II, 2.3 and Annex Q 51-54

i PRACTICAL ACTIONS		a.	Cooperate in good faith with judicial or non-judicial mechanisms. For example if
a specific instance is submitted to an NCP or through initiatives that provide othertypes of grievance mechanisms involving the conduct of the enterprise. If theactual adverse impact caused constitutes a criminal or administrative offense, theenterprise may be subject to criminal prosecution or administrative sanctions.

		b.	Establish operational-level grievance mechanisms (OLGM), for example in-house
worker complaint mechanisms or third-party complaint systems. This may involve
setting up a complaints process including: a roadmap for remediation and resolving
complaints; timelines for resolving grievances; processes to respond to complaints
if agreement is not reached or if impacts are particularly severe; determining thescope of the OLGM’s mandate; consulting with relevant stakeholders on appropriate
forms of OLGMs and ways to resolve complaints that are culturally appropriate andaccessible; staffing and resourcing the OLGM; and tracking and monitoring theperformance of the OLGM. For human rights impacts, align OLGMs with core criteriaof legitimacy, accessibility, predictability, equitability, compatibility with the OECD
Guidelines for MNEs, transparency and dialogue-based engagement.

		c.	Engage with workers’ representatives and trade unions to establish a process
through which they can raise complaints to the enterprise, for example, throughgrievance mechanisms set forth in any collective agreements or through Global
Framework Agreements.

OECD DUE DILIGENCE GUIDANCE FOR RESPONSIBLE BUSINESS CONDUCT
35

ANNEXQUESTIONS RELATED TO
THE OVERVIEW OF DUE DILIGENCE
FOR RESPONSIBLE BUSINESS CONDUCTEXAMPLES AND EXPLANATIONS ON DUE DILIGENCE
FOR RESPONSIBLE BUSINESS CONDUCT
These examples and explanations are intended to provide
selective illustrations of recommendationsof the OECD Due Diligence Guidance for Responsible Business Conduct.
They do not introduce any new or additional recommendations
with respect to due diligence approaches.

OECD DUE DILIGENCE GUIDANCE FOR RESPONSIBLE BUSINESS CONDUCT37QUESTIONS RELATED TO THE OVERVIEW OF DUE DILIGENCE FOR RESPONSIBLE BUSINESS CONDUCT Due diligence addresses actual adverse impacts or potential adverse impacts (risks) related to thefollowing topics covered in the OECD Guidelines for MNEs: human rights, including workers andindustrial relations, environment, bribery and corruption, disclosure, and consumer interests.
usee Section I, Adverse Impacts and Risk

Q1.	What are some examples of adverse impacts on matters covered by theOECD Guidelines for MNEs?
TABLE 2. EXAMPLES OF ADVERSE IMPACTS ON MATTERS COVERED BY
THE OECD GUIDELINES FOR MNEs
TOPIC

EXAMPLES OF ADVERSE IMPACTS1

Disclosure2

l F ailing to disclose material information on the financial andoperating results of the enterprise; enterprise objectives, major shareownership and voting rights, remuneration policy for membersof the board and key executives, and information about board
members, related party transactions, foreseeable risk factors, issues
regarding workers and other relevant stakeholders, governancestructures and policies.
lF ailing to provide the public and workers with adequate,

measureable and verifiable (where applicable) and timely
information on the potential environment health and safety impactsof the activities of the enterprise.

Human rightslF orced labour.3lW age discrimination for equal work or work of equal value.
lG ender-based violence or harassment including sexual harassment.
lF ailing to identify and appropriately engage with indigenous

peoples where they are present and potentially impacted by theenterprise’s activities.
l Involvement in reprisals against civil society and human rights

defenders who document, speak out about, or otherwise raisepotential and actual human rights impacts associated with projects.
l Restriction on people’s access to clean water.

OECD DUE DILIGENCE GUIDANCE FOR RESPONSIBLE BUSINESS CONDUCT38QUESTIONS RELATED TO THE OVERVIEW OF DUE DILIGENCE FOR RESPONSIBLE BUSINESS CONDUCTTABLE 2. EXAMPLES OF ADVERSE IMPACTS ON MATTERS COVERED BY
THE OECD GUIDELINES FOR MNEs
Employment andindustrial relationslF ailing to respect the right of workers to establish or join tradeunions or representative organisations of their own choosing and have
trade unions and representative organisations of their own choosing
recognised for the purpose of collective bargaining.
(OECD, 2011, Chapter V, Para. 1.b)lF ailing to engage in constructive negotiations, either individuallyor through employers’ associations, with such representatives
with a view to reaching agreements on terms and conditions of
employment. (OECD, 2011, Chapter V, Para. 1.b)lC
 hild labour, including worst forms of child labour.

(OECD, 2011, Chapter V, Para. 1.c)
l D iscrimination against workers with respect to employment or

occupation on such grounds as race, colour, sex, religion, politicalopinion, national extraction or social origin, or other status.
(OECD, 2011, Chapter V, Para. 1.e)lF ailing to adapt machinery, equipment, working time, organisationof work and work processes to the physical and mental capacities ofworkers. (OECD, 2011, Chapter V, 1.e; ILO, 1981, No. 155)lF
 ailing to replace hazardous substances by harmless or lesshazardous substances wherever possible. (ILO, 1988, No.167)
lP ayment of wages that do not meet the basic needs of workers andtheir families. (OECD, 2011, Chapter V, Para. 4.b)lT hreatening to transfer the whole or part of an operation unit inorder to hinder workers from forming or joining a trade union.
(OECD, 2011, Chapter V, Para. 7)
Environmentl Ecosystem degradation through land degradation, water resource

depletion, and/or destruction of pristine forests and biodiversity.
lU nsafe levels of biological, chemical or physical hazards in products

or services.
lW
 ater pollution (e.g. through discharging waste water without

regard to adequate wastewater infrastructure).

OECD DUE DILIGENCE GUIDANCE FOR RESPONSIBLE BUSINESS CONDUCT39QUESTIONS RELATED TO THE OVERVIEW OF DUE DILIGENCE FOR RESPONSIBLE BUSINESS CONDUCTTABLE 2. EXAMPLES OF ADVERSE IMPACTS ON MATTERS COVERED BY
THE OECD GUIDELINES FOR MNEs
Bribery,
Bribe Solicitationand Extortionl Bribery of public officials to win public procurement contracts.
lB
 ribery of public officials to obtain favourable tax treatment or otherpreferential treatment or access to confidential information.
lB
 ribery of public officials to obtain customs clearance.
lB ribery of public officials to obtain authorisations or permits.

l S
 elling products to government agencies at an elevated price toprovide public officials with a share of the profit.
l B ribing public officials to ignore or avoid regulations or controls.
l P roviding gifts, meals and entertainment to those with whom theenterprise does business without adequate controls or records.
l R
 eceiving gifts from business partners or public officials without
adequate controls or record.
Consumer InterestslG oods and services do not meet all agreed or legally required

standards for consumer health and safety, including those pertaining
to health warnings and safety information.
(OECD, 2011, Chapter VIII, Para 1).
lF ailing to provide accurate, verifiable and clear information that is
sufficient to enable consumers to make informed decisions, including
information on the prices and, where appropriate, content, safe use,environmental attributes, maintenance, storage and disposal of goods
and services. (OECD, 2011, Chapter VIII, Para. 2)
l R
 epresentations or omissions of information, or any other practices,that are deceptive, misleading, fraudulent or unfair.
(OECD, 2011, Chapter VIII, Para. 4)
1. 	This list is illustrative and not exhaustive. Adverse impacts may be caused or contributed to by an enterprise, or be
directly linked through a business relationship.
2.	The concept of risk of adverse impacts may be particularly challenging to understand when applied to thechapter on “Disclosure” in the OECD Guidelines for MNEs, which primarily concerns potential impacts on
corporate governance, financial markets, investors and workers. For that reason, the OECD Guidelines for MNEs
provide principles and standards against which activities can be benchmarked and tracked.
3.	Universal Declaration of Human Rights, Articles 4 and 13; ILO Declaration on Fundamental Principles and Rights
at Work.

OECD DUE DILIGENCE GUIDANCE FOR RESPONSIBLE BUSINESS CONDUCT40QUESTIONS RELATED TO THE OVERVIEW OF DUE DILIGENCE FOR RESPONSIBLE BUSINESS CONDUCT

 ue diligence should also be adapted to the nature of the adverse impact on RBC
D
issues, such as on human rights, the environment and corruption. This involves tailoring approaches for specific risks and taking into account how these risks affectdifferent groups, such as applying a gender perspective to due diligence whenappropriate. usee Section I, Characteristics of Due Diligence – Due diligence is commensuratewith risk (risk-based)
Q2. How can an enterprise integrate gender issues into its due diligence?
	Applying a gender perspective to due diligence means thinking through how real or potential
adverse impacts may differ for or may be specific to women.

5	FOR EXAMPLE, it is important to be aware of gender issues and women’s humanrights in situations where women may be disproportionately impacted:l In contexts where women face severe discrimination.
			l In contexts where the enterprise’s activities significantly affect the local economy,			environment and access to land and livelihoods.
l In conflict and post-conflict areas.
			l In sectors and global supply chains in which large numbers of women are employed,			such as apparel, electronics, tourism, health and social care, domestic work,
agriculture and fresh cut flowers.
	Additionally it involves adjusting, as appropriate, the actions that enterprises take to identify, prevent,mitigate and address those impacts to ensure these are effective and appropriate.

5

FOR EXAMPLEl Collecting
and assessing sex-disaggregated data and understanding whether enterprise			
activities impact differently on men and women.
l Developing,
designing and evaluating gender sensitive and gender responsive policies
			and plans to mitigate and address real and potential adverse impacts identified.
l Identifying
overlapping/ accumulated vulnerabilities (e.g. indigenous, illiterate,			
female worker).
l Developing
gender sensitive warning systems and protection of whistleblowers.
			l Supporting
women’s equal and meaningful participation in consultations
			and negotiations.
l Assessing
whether women benefit equitably in compensation payments or other			

forms of restitution.

OECD DUE DILIGENCE GUIDANCE FOR RESPONSIBLE BUSINESS CONDUCT41QUESTIONS RELATED TO THE OVERVIEW OF DUE DILIGENCE FOR RESPONSIBLE BUSINESS CONDUCT			l Consulting women outside the presence of men and facilitating separate spaces for
women to express opinions and provide input on business decisions.
l Identifying
gender-specific trends and patterns in actual or potential adverse impacts
			that have been overlooked in the due diligence processes.
l Assessing whether grievance mechanisms are gender-sensitive, taking into
			
consideration the obstacles that may prevent women from accessing them.

Due diligence can involve prioritisation (risk-based) – Where it is not feasible to address all identified impacts at once, an enterprise should prioritise the order in which it takes action basedon the severity and likelihood of the adverse impact. usee Section I, Characteristics of Due Diligence– Due diligence can involve prioritisation (risk-based)
Q3. How can an enterprise make decisions with respect to prioritisation?
	As noted in the Guidance, it may not always be possible for enterprises to identify and respond to all
adverse impacts related to their activities and business relationships immediately. In this respect, theOECD Guidelines for MNEs also clarify that where “enterprises have large numbers of suppliers, they
are encouraged to identify general areas where the risk of adverse impacts is most significant and,based on this risk assessment, prioritise suppliers for due diligence”5 Enterprises are responsible foraddressing any adverse impacts that they have caused or contributed to.
	The significance of an adverse impact is understood as a function of its likelihood and severity.

Severity of impacts will be judged by their scale, scope and irremediable character.
		
Scale refers to the gravity of the adverse impact.
		
Scope concerns the reach of the impact, for example the number of individuals
that are or will be affected or the extent of environmental damage.
		Irremediable character means any limits on the ability to restore the individuals
or environment affected to a situation equivalent to their situation before theadverse impact.
	Severity is not an absolute concept and it is context specific. For examples of indicators of scale,scope and irremediable character across adverse impacts covered by the OECD Guidelines
for MNEs (Table 3). These indicators are illustrative and will vary according to an enterprise’s
operating context.

5. OECD (2011), Commentary on General Policies, Para 16.
OECD DUE DILIGENCE GUIDANCE FOR RESPONSIBLE BUSINESS CONDUCT42QUESTIONS RELATED TO THE OVERVIEW OF DUE DILIGENCE FOR RESPONSIBLE BUSINESS CONDUCTTABLE 3. EXAMPLES OF INDICATORS OF SCALE, SCOPE AND IRREMEDIABLE CHARACTER
ADVERSEIMPACT

EXAMPLES OF SCALE

EXAMPLES OF SCOPE

EXAMPLES OF THE
IRREMEDIABLE CHARACTER

Environmentl Extentof impact onl Geographicreach of thel Degreeto which rehabilitation

human healthl Extentof changes in species
compositionl Water
use intensity (% useof total available resources)l Degreeof waste andchemical generation(tons; % of generation)

impactl Numberof species impactedof the natural site is possibleor practicable
l The

length of time
remediation would takel Monetaryamount ofl Frequency
at which bribes

l Extentof damage to society

the bribel Lossof life or severe bodily
harm caused by briberyl Criminalnature of the bribel Extentof impact on markets,
people, environment andsociety due to decisions
made based on briberyl Sizeof the profit gained
from the bribery

are paidl Geographic
spread of bribery
l Number
and/or level ofofficials, employees or agents
engaged in briberyl Extentof activities linked
with bribery
l Numberof identifiable groups
impacted by decisions basedon bribery

due to loss of public fundsl Extentto which activities
undertaken and enabledby bribery will lead toirremediable adverse impacts

l Extentof impact on workers’

l Numberof workers/l Extentto which thehealth or safetyl Whether
the violation
concerns a fundamental
right at work

employees impacted
l Extentto which impacts
are systemic (e.g. to aparticular geography,
industry or sub-sector)
l Extent
to which somegroups are disproportionately
affected by the impacts(e.g. minorities, women, etc.)

impact can be rectified(e.g. through compensation,
reinstatement, etc.)l Whether
the workers
affected can be restored tothe prior enjoyment of theright in question
l The

extent to which
intimidation of workers
for forming or joining a
trade union will effectively
deny workers the right torepresentation

Corruption

LabourOECD DUE DILIGENCE GUIDANCE FOR RESPONSIBLE BUSINESS CONDUCT43QUESTIONS RELATED TO THE OVERVIEW OF DUE DILIGENCE FOR RESPONSIBLE BUSINESS CONDUCTTABLE 3. EXAMPLES OF INDICATORS OF SCALE, SCOPE AND IRREMEDIABLE CHARACTER
ADVERSEIMPACT

EXAMPLES OF SCALE

EXAMPLES OF SCOPE

EXAMPLES OF THE
IRREMEDIABLE CHARACTER

Human
RightsExtent of infringement ofaccess to basic life necessities
or freedoms (e.g. education,
livelihood, etc.)

l Numberof people impacted

l The

extent to which thel% of identifiable groups of

impact can be rectified(e.g. through compensation
or restitution)l Whether
the people affected
can be restored to their
exercise of the right inquestion

people impacted

Disclosurel Extentto which theConsumerinterestsl Extentof impact on humanl Numberof consumers

health or safetyl Extentof financial loss
to consumers

impactedl Numberof identifiablegroups of consumers
impactedl% of identifiable group of
consumers impacted

Extent to which lack of orl Extentto which decisions
false disclosure will lead toinadequate or false disclosure were made based onof information is material
inadequate or false disclosure irreparable financial losses orirremediable adverse impacts
l Extentof impacts onl Numberof people
markets, people, environment, (e.g. shareholders) impacted
and society due to decisions l Numberof identifiable groups
made based on theimpacted by decisions madeinadequate or false disclosure based on false or inadequate
disclosure
The extent to which the impact
can be rectified (e.g. throughcompensation or restitution)

	The OECD Guidelines for MNEs themselves do not attempt to rank the severity of adverse impacts.
It is not necessary for an impact to have more than one of these characteristics (scale, scope andirremediable character) to be considered ‘severe’, although it is often the case that the greater the
scale or the scope of an impact, the less it is ‘remediable’.

OECD DUE DILIGENCE GUIDANCE FOR RESPONSIBLE BUSINESS CONDUCT44QUESTIONS RELATED TO THE OVERVIEW OF DUE DILIGENCE FOR RESPONSIBLE BUSINESS CONDUCT	Where the risk of adverse impacts is most significant will be specific to the enterprise, its sector
and its business relationships. In some instances this may be a judgement call. Therefore enterprises may wish to consult with relevant stakeholders on how to prioritise and communicate
their rationale through their RBC policies. Publically communicating the rationale behind how
prioritisation decisions are made and why can be useful for establishing trust in the enterprise’s
due diligence approach. In some cases prioritisation may also be informed by domestic legal
obligations.

5FOR EXAMPLE, certain domestic laws require enterprises in a certain jurisdiction to
conduct due diligence to avoid and address the risk of human trafficking in their supply
chains or of sourcing minerals that finance conflict.
	Although enterprises should prioritise their due diligence based on significance of risk, the options
available to them to respond to identified risks will depend on legal and practical limitations, suchas their ability to effect change in the behaviour of their business relationships, and how crucial
that supplier is to the enterprise. usee Annex Q7 and Q34-Q40

Q4. At what stages of the due diligence process is prioritisation relevant?
	Prioritisation will be necessary where it is not feasible for enterprises to identify and respond to
all adverse impacts associated with their activities and business relationships immediately. Prioritisation of significant risks or impacts will be relevant both when enterprises identify impacts,
as well as when they seek to prevent and mitigate impacts. Impacts that are prioritised for prevention and mitigation will also be those that should be tracked to ensure they are addressed.
usee Annex Q24, Q31, Q45 on how prioritisation can be applied to these steps in practiceQ5. 	How does prioritisation differ for human rights risks than for otheradverse impacts?
	Overall the process of prioritisation for human rights impacts will reflect recommendations in
Section II, 2.4 of the Guidance. The OECD Guidelines for MNEs state that in the case of human rights,
severity is a greater factor than likelihood in considering prioritisation. Thus where prioritisation isnecessary enterprises should begin with those human rights impacts that would be most severe,
recognising that a delayed response may affect remediability.

5	FOR EXAMPLE, if a potential adverse impact can result in loss of life, it may beprioritised even if it is less likely (e.g. establishment of measures to prevent damage andloss life in case of natural disasters at a power facility).

OECD DUE DILIGENCE GUIDANCE FOR RESPONSIBLE BUSINESS CONDUCT45QUESTIONS RELATED TO THE OVERVIEW OF DUE DILIGENCE FOR RESPONSIBLE BUSINESS CONDUCT

 ue diligence is appropriate to an enterprise’s circumstances – The nature and extent of due
Ddiligence can be affected by factors such as the size of the enterprise, the context of its operations, its business model, its position in supply chains, and the nature of its products or services
usee Section I, Characteristics of Due Diligence - Due Diligence is appropriate to an enterprise’s circumstances
Q6. How can resource constraints be addressed?
	Due diligence involves human and financial resource implications. While resource constraints
may be a challenge for all enterprises, small enterprises particularly may have fewer personnel
and financial resources to carry out due diligence. At the same time, they often have greater flexibility in policy-making and implementation and may have fewer impacts or suppliers to manage
as compared to larger enterprises. The size or resource capacity of an enterprise does not change
its responsibility to conduct due diligence commensurate with the risk, but may affect how anenterprise carries it out. Enterprises with resource constraints may rely more heavily on collaborative approaches in carrying out due diligence and may have to make more careful decisions in
the context of prioritisation. They may also take advantage of existing resources such as model
policies or public information on risks in certain supply chains and seek technical assistance fromindustry associations they are members of. usee Table 4 for more information

Q7. How can due diligence be appropriate to an enterprise’s circumstances?
	How an enterprise carries out due diligence can be affected by factors such as the size of theenterprise, the context of its operations, its business model, positions in supply chains, and thenature of its products or services. usee Table 4 for examples
TABLE 4. E XAMPLES OF HOW AN ENTERPRISE’S DUE DILIGENCE MAY BE ADAPTEDTO BE APPROPRIATE TO ITS CIRCUMSTANCES
Factors

ExamplesSize of the enterpriselA SME with limited leverage over its suppliers and limited resources

to allocate towards building the capacity of suppliers to meet RBC
requirements, may consider establishing robust prequalification
processes whereby only suppliers that meet high thresholds of RBC
are engaged. In doing so the SME reduces the extent of resources
necessary in identifying, monitoring or preventing impacts once a
supplier has been engaged.
lA
 large multinational with numerous suppliers and business
relationships across a range of higher-risk contexts, may draw fromin-country offices with allocated and trained personnel responsible
for overseeing due diligence on the ground.

OECD DUE DILIGENCE GUIDANCE FOR RESPONSIBLE BUSINESS CONDUCT46

QUESTIONS RELATED TO THE OVERVIEW OF DUE DILIGENCE FOR RESPONSIBLE BUSINESS CONDUCTTABLE 4. E XAMPLES OF HOW AN ENTERPRISE’S DUE DILIGENCE MAY BE ADAPTEDTO BE APPROPRIATE TO ITS CIRCUMSTANCES
Context of the enterprise’s As part of its stakeholder engagement an enterprise sourcing
operations
from conflict-affected or unsafe regions may engage with bilateral
aid agencies (e.g. donor agencies) who have means, access andexpertise over these areas or civil society within the region, whereas
an enterprise operating in safer contexts may engage directly with
impacted or potentially impacted stakeholders and rightsholders.
Business modelof the enterprise

An infrastructure enterprise with long-term investments in developing
economies may find that it is effective to engage with the governmentand help them address systemic issues in the region where it isoperating alongside other risk prevention and mitigation measures,
as a means of preventing adverse impacts linked to its operationsin the long term. Conversely, it may not be appropriate for a bankfinancing a shorter-term project (e.g. upgrading of a facility) in adeveloping economy to address systemic issues within the region,
but rather may focus its efforts on carrying out robust human rights
impact assessments of its financing and tailoring provisions of thefinancing appropriately.

Position of
the enterprisein the supply chain

A downstream enterprise (e.g. retailer) may carry out assessments

Nature of the enterprise’s
products or services

An enterprise that provides an online platform for peer-to-peer
services (such as accommodation) may not carry out on-site
assessments of its individual operators (e.g. those providing lodging)as an enterprise with more traditional services may do. However, theenterprise may establish robust grievance mechanisms and stringent
requirements for operators that are monitored to guard against
any breaches to its code of conduct and operating policies so as todiscourage and quickly react to offenders.

on mid-stream suppliers to assess how they are carrying out due
diligence on their upstream suppliers to identify risks of child labour.
An enterprise operating mid-stream in a supply chain may establish
traceability to upstream business relationships operating in higherrisk areas to identify risks of child labour. In both cases, child labour
would be prioritised, but the way each enterprise identified the risk isdifferent depending on their position in the supply chain.

OECD DUE DILIGENCE GUIDANCE FOR RESPONSIBLE BUSINESS CONDUCT47

QUESTIONS RELATED TO THE OVERVIEW OF DUE DILIGENCE FOR RESPONSIBLE BUSINESS CONDUCT

 ue diligence is informed by engagement with stakeholders – Stakeholders are perD
sons or groups who have interests that could be affected by an enterprise’s activities.
usee Section I, Characteristics of Due Diligence-Informed by stakeholders
Q8. Who are the enterprise’s stakeholders?
	Stakeholders are persons or groups who have interests that are or could be impacted by an enterprise’s activities. Not all individuals and groups considered as stakeholders will have intereststhat can be affected by a specific activity carried out by an enterprise. It will therefore be important for the enterprise to identify the individuals and groups with interests that must be taken
into account with respect to a specific activity (relevant stakeholders). Moreover, due diligenceconcerns the interests of stakeholders that have been affected (impacted stakeholders) as well as
those whose interests have not been affected but could be (potentially impacted stakeholders).
Additionally, not all interests are of equal importance and it is not necessary to treat all stakeholders in the same way. Where the interest is individual human rights or collective rights (held bygroups such as indigenous peoples) the stakeholders whose human rights are or may be affected
can be referred to as “rightsholders”.

Stakeholders will differ depending on the enterprise and its activities.

5FOR EXAMPLE, impacted and potentially impacted stakeholders and rightsholders
may include:			
l communities

at local, regional or national levell workersand employees including under informal arrangements within supply chains			and trade unions
l consumers
or end-users of products			 dditionally, relevant stakeholders that may be important for meaningful engagementA
may include:
l NGOs,
local civil society organisations, NHRIs
			l community-basedorganisations and local human rights defenders			l industry peers			l host
governments (local, regional and national)
			l business
partners
			
l investors/shareholders			Many resources exist to help enterprises identify their stakeholders (e.g. OECD, 2015).

OECD DUE DILIGENCE GUIDANCE FOR RESPONSIBLE BUSINESS CONDUCT48

QUESTIONS RELATED TO THE OVERVIEW OF DUE DILIGENCE FOR RESPONSIBLE BUSINESS CONDUCT	In situations where there are a vast number of impacted or potentially impacted stakeholders or
rightsholders, an enterprise may engage with credible stakeholder representatives, in particularwhere engaging with individuals can undermine certain rights or collective interests.

5	FOR EXAMPLE, when deciding to restructure or close a factory, it may be important
to engage with trade unions, rather than individual workers, in order to mitigate
the employment impacts of the decision, as the right of workers to form or join tradeunions and their right to bargain collectively are internationally-recognised
human rights.
	Enterprises can prioritise the most severely impacted or potentially impacted stakeholders or rightsholders for engagement. The degree of impact on stakeholders or rightsholders may inform thedegree of engagement.

Q9. 	What is “meaningful stakeholder engagement”?
		l Stakeholder
engagement involves interactive processes of engagement with
relevant stakeholders. Stakeholder engagement can take place through, for example,
meetings, hearings or consultation proceedings. Meaningful stakeholder engagement
is characterised by two-way communication and depends on the good faith of theparticipants on both sides.6 It is also responsive and on-going, and includes in manycases engaging with relevant stakeholders before decisions have been made.
l Two-way
engagement means that the enterprise and stakeholders freely express		
opinions, share perspectives and listen to alternative viewpoints to reach a mutual
understanding. It also means that relevant stakeholders have the opportunity to help
design and carry out engagement activities themselves.
l Both
the enterprise and the stakeholder are expected to act in good faith in engagement
		activities. This means that the enterprise engages with the genuine intention tounderstand how relevant stakeholder interests are affected by its activities. It means thatthe enterprise is prepared to address adverse impacts it causes or contributes to and thatstakeholders honestly represent their interests, intentions and concerns.
l Responsiveengagement means that the enterprise seeks to inform its decision by		eliciting the views of those likely to be affected by the decision. It is important toengage potentially impacted stakeholders and rightsholders prior to taking any
decisions that may impact them.7 This involves the timely provision of all informationneeded by the potentially impacted stakeholders and rightsholders to be able to
make an informed decision as to how the decision of the enterprise could affecttheir interests. It also means there is follow-through on implementation of agreed

6. O
 ECD (2011), Commentary on General Policies, Para 25.
7. In some cases, this may be required, for example, when the right to information is part of the realisationof human rights.
OECD DUE DILIGENCE GUIDANCE FOR RESPONSIBLE BUSINESS CONDUCT49

QUESTIONS RELATED TO THE OVERVIEW OF DUE DILIGENCE FOR RESPONSIBLE BUSINESS CONDUCT

commitments, ensuring that adverse impacts to impacted and potentially impacted
stakeholders and rightsholders are addressed including through provision of remedies
when enterprises have caused or contributed to the impact(s).
l Ongoing
engagement means that stakeholder engagement activities continue
		throughout the lifecycle of an operation or activity and are not a one-off endeavour.
Meaningful stakeholder engagement is a key component of the due diligence process.
	However this Guidance is not intended to serve as a comprehensive overview of this issue. Many
resources exist to help enterprises carry out and deal with common challenges with respect tostakeholder engagement activities (e.g. OECD, 2015c).

Q10. When is stakeholder engagement important in the context of due diligence?
	Meaningful stakeholder engagement is important throughout the due diligence process.
Engaging with impacted and potentially impacted stakeholders and rightsholders may be especially relevant when an enterprise is:l identifying

actual or potential adverse impacts in the context of its own activities.
			l engaging
in assessment of business relationships with respect to real or potential			
adverse impacts.
l devising
prevention and mitigation responses to risks of adverse impacts caused or			contributed to by the enterprise.
l identifying forms of remedy for adverse impacts caused or contributed to by the			enterprise and when designing processes to enable remediation.
l tracking and communicating on how actual or potential identified human rights
			
impacts in the context of its own activities are being addressed.
Additionally, in some cases, stakeholder engagement or consultation is a right in and of itself.8

5FOR EXAMPLE, the right of workers to form or join trade unions and their right tobargain collectively are internationally-recognised human rights. For this reason, it isimportant to engage with trade unions or workers’ representatives when engaging
with workers on these issues. Moreover, industrial relations is a form of stakeholder
engagement.
	For certain types of adverse impacts which result in collective harms (such as corruption whichcollectively harms the populations of the jurisdiction in which it occurs or greenhouse gas emissions which contribute to collective, transboundary harms), broad engagement with impacted or
8. For example, the UN Declaration on the Rights of Indigenous Peoples provides that States consult andcooperate with indigenous peoples concerned in order to obtain their free, prior and informed consent(FPIC) in a number of situations, including the approval of projects affecting their land and territories orother resources (see Articles 19 and 32). The ILO Convention No. 169, which is legally binding for countries
that have ratified it, requires State Parties to consult with indigenous peoples with the objective of reaching
agreement or consent on proposed measures (see Article 6).
OECD DUE DILIGENCE GUIDANCE FOR RESPONSIBLE BUSINESS CONDUCT50QUESTIONS RELATED TO THE OVERVIEW OF DUE DILIGENCE FOR RESPONSIBLE BUSINESS CONDUCT

potentially impacted stakeholders and rightsholders may not be possible. In these cases, engagement with credible stakeholder representatives or proxy organisations (e.g. NGOs, representative
public bodies, etc.) may be useful.
	Beyond stakeholder engagement, enterprises may also wish to consult with experts on specificissues or contexts (e.g. academics, NGOs, local organisations) for advice when developing andimplementing due diligence activities.

Q11. How can an enterprise engage with potentially vulnerable stakeholders?
	Identifying and seeking to remove potential barriers to stakeholder engagement (e.g. language, culture, gender and power imbalances, divisions within the community etc.) is important to ensuring
it is effective.

5 FOR EXAMPLE, sharing information orally in a community where literacy is low.

	Additionally some individuals or groups may face heightened risks of vulnerability or marginalisation, for example due to social stigmatisation. Often the most vulnerable stakeholders will also
be the most significantly affected by an enterprise’s activities. For example, stakeholders such as
women, children, and socially marginalised communities may be affected more significantly byan enterprise activity, or in different ways, and may need additional attention in the context of
stakeholder engagement activities.
	Many resources exist on how to deal with potential barriers to engagement and engaging withspecific vulnerable stakeholder groups.9

E nterprises can collaborate at an industry or multi-industry level as well as with relevant stakeholders throughout the due diligence process, although they always remain responsible for
ensuring that their due diligence is effectively carried out.
usee Section I, Characteristics of Due Diligence, Box 2
Q12. How can enterprises collaborate in carrying out due diligence?
	Many of the due diligence recommendations in the Guidance may be carried out in collaboration
with others, such as other industry actors, in partnership with trade unions or through multistakeholder initiatives.

5FOR EXAMPLE, enterprises may partner with or enter directly into agreements withtrade unions in order to facilitate worker involvement in the design and implementationof due diligence processes, the implementation of standards on workers’ rights and theraising of grievances. Agreements with trade unions can take various forms and can bemade at the workplace, enterprise, sectoral or international level. They include collective
bargaining agreements, Global Framework Agreements, protocols and memorandaof understanding.

9. See, for example, OECD (2016c), Annexes B-D.
OECD DUE DILIGENCE GUIDANCE FOR RESPONSIBLE BUSINESS CONDUCT51QUESTIONS RELATED TO THE OVERVIEW OF DUE DILIGENCE FOR RESPONSIBLE BUSINESS CONDUCT	Collaboration can be beneficial in pooling knowledge on sector risks and solutions, increasing
leverage, to the extent feasible, with shared business relationships, and making due diligence
more efficient for all, for example through recognition of existing assessments of business relationships and through common reporting frameworks for business relationships. Cost sharing
and savings is often a benefit to sector collaboration. usee Annex Q18, Q27-Q28, Q37 and Box 5

BOX 3. G
 OOD GOVERNANCE FOR DUE DILIGENCE COLLABORATIVEINITIATIVES
The following list includes examples of good governance that may help an enterprisein determining whether the collaborative initiative that it is engaged with is credible.
The initiative:l h as established a functioning, accessible and effective grievance mechanism thatenables stakeholders to raise concerns relating to the activities of the initiative
itself, without fear of retribution*l h as a process for enabling stakeholder and expert consultation on the objectives
and activities of the initiative.
l h as an effective process for communicating details of actual or potential adverse
impacts to participating enterprises in a timely manner in order to support
enterprises in performing their own due diligence activities.
l h as a process for regular review, including monitoring and evaluating whether
the initiative itself is meeting its own aims and objectives, including, as necessary,
updating of its policies, activities and any guidance provided to participating
enterprises.
l has given consideration to where there could be actual or potential conflicts ofinterest between the management personnel of the initiative and companies,
and has established processes to manage potential conflicts of interest.
l p
 ublicly provides details of its own internal governance structure, staffing,
resources and oversight mechanisms.
l r eports on its evaluations of whether it is meeting its own aims and objectives inrelation to responsible sourcing practices.
l a llows for mutual recognition, subject to appropriate quality control, of other due
diligence initiatives.
*This refers to grievance mechanisms pertaining to the initiative’s activities and not to grievancemechanisms that initiatives may establish to facilitate the provision of remedy between impacted
stakeholders or rightsholders and the members of the initiative.

OECD DUE DILIGENCE GUIDANCE FOR RESPONSIBLE BUSINESS CONDUCT52QUESTIONS RELATED TO THE OVERVIEW OF DUE DILIGENCE FOR RESPONSIBLE BUSINESS CONDUCT	Participation in an initiative does not shift responsibility from the enterprise to the initiative foradverse impacts that it causes, contributes to or to which it is directly linked.
	Where an enterprise engages in collaboration in carrying out due diligence it should first assess
the quality of the initiative. This could include:
l Seekingthe views of relevant stakeholders about the credibility of the initiative.
		l Assessing
whether the initiative and its processes are credible, meaning whether they		align with the recommendations in this Guidance.
l Ensuringthat collaborative approaches are applied and tailored to the enterprise in the		ways necessary to constitute sufficiently robust due diligence.
l Beingactive participants in the collaboration.
		l Applying
good governance when the collaboration is carried out through a formal		
initiative. usee Box 3

Q13. Can collaboration pose risks under competition law?
	While in many cases enterprises can collaborate on due diligence without breaching competition
law, enterprises and the collaborative initiatives in which they are involved should take proactive
steps to understand competition law issues in their jurisdiction and avoid activities which can beseen as breach of competition law.

5 FOR EXAMPLE, enterprises and the collaborative initiatives in which they are involved

may:l Seek
the advice of competition authorities if they are in doubt as to whether a			particular course of conduct or co-operative activity may be viewed as contrary tocompetition law and therefore raise regulatory risks.
l Establishtransparency measures around collaborative initiatives to mitigate			competition concerns. Competition authorities could be more sceptical of initiatives
or agreements amongst competitors if conduct is completely private. Furthermore,transparency can help to bring to light potentially problematic issues and thus ensure
they are addressed quickly.
l Establishanti-trust compliance programmes. Advice on how to best design and enforce			compliance programmes is often provided by competition authorities in specificjurisdictions.

OECD DUE DILIGENCE GUIDANCE FOR RESPONSIBLE BUSINESS CONDUCT53QUESTIONS RELATED TO THE OVERVIEW OF DUE DILIGENCE FOR RESPONSIBLE BUSINESS CONDUCT	Each jurisdiction will have different rules with respect to competition law issues; however, there aresome guiding questions enterprises may consider when assessing concerns under competition
law with regard to their RBC initiatives.

5

FOR EXAMPLEl Doesthe collaboration or initiative involve an agreement between competitors?
			
l Can

the collaboration or initiative be viewed as a per se violation of competition law?
			(i.e. does it involve price fixing, bid rigging (collusive tenders), output restrictions, andmarket division (or sharing)?
l Doesthe collaboration or initiative have an anti-competitive effect (i.e. impacts on			consumer markets such as higher prices or limiting availability of goods/services),regardless of the fact that it does not seek to restrict competition?
l On balance, do the pro-competitive effects of the collaboration or initiative outweigh			the anti-competitive effects?
l Are

there public interest benefits produced by the collaborative or initiative that can			
be included in or override a balancing test? usee Capobianco, Gillard and Bijelic, 2015

OECD DUE DILIGENCE GUIDANCE FOR RESPONSIBLE BUSINESS CONDUCT54QUESTIONS RELATED TO
THE DUE DILIGENCE PROCESSOECD DUE DILIGENCE GUIDANCE FOR RESPONSIBLE BUSINESS CONDUCT55

A.1
EMBED RESPONSIBLE BUSINESS CONDUCTINTO POLICIES AND MANAGEMENT SYSTEMS evise, adopt and disseminate a combination of policies on RBC issues that articulate the enterD
prise’s commitments to the principles and standards contained in the OECD Guidelines for MNEs
and its plans for implementing due diligence, which will be relevant for the enterprise’s own
operations, its supply chain and other business relationships. usee Section II, 1.1
Q14. What goes into RBC policies? usee Section II, 1.1
	As noted in the Guidance, an enterprise’s RBC policies will include commitments on matters covered by the OECD Guidelines for MNEs and will address in more detail commitments with respect
to the enterprise’s most significant risks.
	It may also be useful for an enterprise to use RBC policies to explain how it prioritises in the context of its RBC due diligence (i.e. why some risks are considered more significant than others).
	RBC polices can also stipulate how an enterprise will implement its responsibilities – how it willapproach due diligence, stakeholder engagement, and remediation. In this regard it can also
outline the enterprise’s expectations in implementing its RBC policy with respect to workers(including its employees, temporary workers and others who perform work for it) and its business
relationships. usee Annex Q18
	The enterprise’s RBC polices may be tailored to local contexts or operations.
	For example, a subsidiary of a large MNE operating in a country with specific labour risks may adapt
the RBC policy of their parent to address these context-specific issues.

Q15. 	What expertise can be drawn upon in developing RBC policies? usee Section II, 1.1
	Strong model policies already exist for many sectors in the context of industry or multi-stakeholder initiatives. An enterprise may choose to adopt or build upon these, provided that they fulfil therecommendations under Section II, 1.1 of the Guidance and are appropriate to the enterprise’s
sector or geography.10
	Consultation with relevant stakeholders may be useful in developing RBC policy. This may be particularly relevant in contexts in which strong model policies do not already exist. Guidance from
employer organisations, industry associations, relevant NGOs, or multi-stakeholder initiatives canalso be helpful in developing policy approaches. usee Annex Q8-11
	Involving the relevant units of an enterprise in policy development can help in identifying realistic
and efficient approaches to implementation of a policy. usee Annex Q16

10. F or example, see OECD (2016a), “Model Supply Chain Policy for a Responsible Global Supply Chain of
Minerals from Conflict-Affected and High-Risk Areas”; see also OECD (2017a), “Model Enterprise Policy for
Responsible Agriculture Supply Chains”.
OECD DUE DILIGENCE GUIDANCE FOR RESPONSIBLE BUSINESS CONDUCT56

EMBED RESPONSIBLE BUSINESS CONDUCT INTO POLICIES AND MANAGEMENT SYSTEMSS eek to embed the enterprise’s policies on RBC issues into the enterprise’s oversight bodies.
Embed the enterprise’s policies on RBC issues into management systems so that they are
implemented as part of the regular business processes, taking into account the potential independence, autonomy and legal structure of these bodies that may be foreseen indomestic law and regulations. usee Section II, 1.2
Q16. 	Which teams or business units will be relevant to consider when developing
and aligning objectives with the enterprise’s RBC policies?
usee Section I, Characteristics of Due Diligence- The Essentials; Section II, 1.2
	What alignment across teams and business units will look like in practice will depend heavily on
an enterprise’s specific characteristics such as the nature of its activities, size, and the nature of
the specific risks it faces. Enterprises can consider which units of their business operations could
impact observance of its RBC policies to identify which must be considered in ensuring aligned
objectives.
These may include:lT hose making high-level decisions about the enterprise (e.g. boards and high-level			management).
lT hose in charge of compliance (e.g. legal, compliance, human resources, environment			departments, on the ground management).
lT hose making decisions about new business relationships (e.g. sourcing departments,
			
procurement departments, sales departments, investment fund managers.
usee Table 5lT hose in charge of development or oversight of products and operations linked to risk
			(e.g. product designers, operational and technical leads).
lT
 hose responsible for sales and marketing of products or services.
				These units may also be involved in actually carrying out steps of a due diligence approach (suchas developing RBC policies and implementing management systems or identifying or preventing
and mitigating impacts).
	Depending on an enterprise's structure it will also be important to ensure alignment across subsidiary bodies, franchises or local offices with core commitments and processes, although thesebodies may tailor their RBC policies to the local context. usee Annex Q14

OECD DUE DILIGENCE GUIDANCE FOR RESPONSIBLE BUSINESS CONDUCT
57

EMBED RESPONSIBLE BUSINESS CONDUCT INTO POLICIES AND MANAGEMENT SYSTEMSTABLE 5. E XAMPLE OF DEPARTMENTS AND FUNCTIONS POTENTIALLY RELEVANT
TO IMPLEMENTATION OF DUE DILIGENCE
DEPARTMENTS
AND/OR FUNCTIONSISSUES*

Sustainability, CSR,
Ethical sourcing

Potentially many/all of the issues under the OECD Guidelines for
MNEs as these departments/functions are often the lead/focal
point/coordinator on RBC issues

Environment
and/or sociall environmentl health and safetyl human rightsl o ther social issues where no other department / function

addresses
Human resourcesl employment and industrial relationsl occupational health and safetyl human rightsl recruitment

Worker representatives,trade union representativesl employment and industrial relationsl occupational health and safetyl human rights

Operations, productionle nvironmentlo ccupational health and safety
l human rightslc onsumer protection

Legall legal compliancel employment and industrial relations
l anti-bribery & corruption
l human rights
l consumer protection
l disclosure
l contracting with business relationships

Compliance,
ethics/integrity

l compliance more generally

Procurement,
supply chain,business relationships

l f ull range of OECD Guidelines for MNEs issues in the supply

l anti-bribery & corruption

chain, with business relationshipsls creening, contracting and monitoring supply chain/business

relationships for these issues

OECD DUE DILIGENCE GUIDANCE FOR RESPONSIBLE BUSINESS CONDUCT
58

EMBED RESPONSIBLE BUSINESS CONDUCT INTO POLICIES AND MANAGEMENT SYSTEMSTABLE 5. E XAMPLE OF DEPARTMENTS AND FUNCTIONS POTENTIALLY RELEVANT
TO IMPLEMENTATION OF DUE DILIGENCE
Sales and marketingl human rights
l consumer protection
l disclosure

Community development

l stakeholder engagement
l environmentl community health & safety
l human rights
l disclosure

External affairs, reportingl stakeholder engagementl disclosure

Risk Management

l potentially all issues

Audit

l potentially all issues

Senior Management

l potentially all issues

Board/Owners

l potentially all issues* Non-exhaustive list of issues under the OECD Guidelines for MNEs that may be particularly relevant to thedepartment / function to consider in carrying out their role in due diligence or contributing their expertise

Q17. 	What are the distinctions in the role of the board and management inensuring RBC is embedded? usee Section II, 1.2
	Boards will generally be involved in approving an enterprise’s RBC policies. They may also be
involved in taking decisions about a business strategy which may have implications for RBC.
Additionally, they may intervene in instances where the RBC policies are not being implemented
and request management to take action. It can be useful to appoint board member(s) with expertise on and responsibility for RBC issues. In this respect the G20/OECD Principles of Corporate
Governance recognised that an important responsibility of the board of public enterprises is
to oversee the risk management system and systems designed to ensure that the corporation
obeys applicable laws, including tax, competition, labour, environmental, equal opportunity, anticorruption, and health and safety laws (OECD, 2015a, Ch.VI). Management, on the other hand, will
be responsible for developing a strategy to ensure the RBC policy is implemented.
	While the role of boards and management is distinct, in practice high-level management
personnel may sit on enterprise boards and thus play a dual role.

OECD DUE DILIGENCE GUIDANCE FOR RESPONSIBLE BUSINESS CONDUCT59

EMBED RESPONSIBLE BUSINESS CONDUCT INTO POLICIES AND MANAGEMENT SYSTEMS

I ncorporate RBC expectations and policies into engagement with suppliers and other business
relationships. usee Section II, 1.3
Q18. 	How can RBC expectations be built into business relationships?
usee Section II, 1.3
	In addition to articulating expectations of business relationships in the enterprise’s RBC policies,
additional steps can be taken to ensure that RBC expectations are built into business relationships.

5 FOR EXAMPLE, as noted in the Guidance, expectations of new business relationships

can be communicated and agreed to through formal agreements or documentation(e.g. through supplier codes of conduct, joint venture contracts, side letters to investee
entities etc.). These agreements or documents may include:lE xpectations that business relationships meet the OECD Guidelines for MNEs and/or			
the Guidance or aligned standards.
lE xpectations about transparency, monitoring and reporting by the business			
relationships.
lS pecification about whether/how the business relationships are expected to			cascade requirements to their own business relationships through the supply chain
or value chain.
lG rounds for terminating the contract due to failure to meet expectations regarding			
the OECD Guidelines for MNEs.
	Departments in charge of making decisions on new business relationships may consider RBC
criteria before entering a new business relationship. This may be done through the applicationof pre-qualification processes, bidding criteria, or screening criteria which takes into accountRBC issues.
In many instances a business relationship (such as a supplier) will have many customers and may
provide services and products to more than one industry sector. With this in mind, in some instances it may be impractical or burdensome for an enterprise to impose its own expectations of its
suppliers/business relationships without considering existing or potentially conflicting expectations
placed on the business relationship by their other customers/relationships. Enterprises can address
this challenge by:la ligning with international and industry-wide standards with respect to supply chain			due diligence expectations.
lc
 ollaborating with other industry actors on common expectations of business			
relationships, including through common RBC policies and reporting frameworks.
usee Annex Q12le ngaging with business relationships on how to reduce conflicting requirements and			
streamline them across customers, and specifying additional initiatives, policies, or
programs for mutual recognition.

OECD DUE DILIGENCE GUIDANCE FOR RESPONSIBLE BUSINESS CONDUCT
60

A.2


IDENTIFY AND ASSESS ACTUAL AND POTENTIAL
ADVERSE IMPACTS ASSOCIATED WITH THE ENTERPRISE’SOPERATIONS, PRODUCTS OR SERVICES arry out a broad scoping exercise to identify all areas of the business, across its operations andC
relationships, including in its supply chains, where RBC risks are most likely to be present andmost significant. usee Section II, 2.1
Q19. What is meant by scoping and how broad should an enterprise’s scoping
exercise be? usee Section II, 2.1
	Scoping refers to an initial process of identification of general areas of significant risk acrossan enterprise’s own operations (e.g. activities and product lines) and its business relationships(including all stages of the supply chain or value chain). Scoping is intended to be broad and toserve as an initial exercise to enable prioritisation. Assessment (under Section II, 2.2), on the other
hand, refers to a more in-depth process that seeks to identify and evaluate prioritised risks related
to a specific business activity or relationship. usee Annex Q23-Q28
	How scoping is undertaken in practice, particularly with respect to scoping risks across business
relationships will vary according to the characteristics of an enterprise.

5 FOR EXAMPLE, an institutional investor may rely on market-research services and otherexternal resources (civil society reports, media etc.) to scope for risks in its investment
portfolio, whereas a retailer may map the structure of its supply chain and identify general areas of risk based on specific geographic, sectoral, product or enterprise factors.

	However, if it is brought to the enterprise’s attention (e.g. through reports, stakeholder engagement, grievance mechanism) that a product line or subcomponent is associated with particularrisks, it is important to consider the information alongside other information gathered during thescoping exercise.

BOX 4. W
 HERE DOES SUPPLY CHAIN MAPPING FIT INTO THE
SCOPING AND ASSESSMENT PROCESS?
During the scoping process, it will be important for enterprises to map their general
operations and the structure of their supply chains in order to identify higher-risk
activities, geographies, products or business relationships. As the enterprisehones-in on these higher-risk areas, it may then carry out a more detailed mappingof its actual individual business relationships in order to identify specific relationships for further assessment. (continued on next page)

OECD DUE DILIGENCE GUIDANCE FOR RESPONSIBLE BUSINESS CONDUCT61

IDENTIFY AND ASSESS ACTUAL AND POTENTIAL ADVERSE IMPACTS ASSOCIATED
WITH THE ENTERPRISE’S OPERATIONS, PRODUCTS OR SERVICES

BOX 4. W
 HERE DOES SUPPLY CHAIN MAPPING FIT INTO THE
SCOPING AND ASSESSMENT PROCESS?
For example, an automotive enterprise may identify during its scoping exercisethat its batteries are likely to hold more significant risks than its other components, based on known sector information. At this juncture, it is unlikely that theenterprise will have detailed information on specific sub-suppliers and countriesof origin to commence detailed assessment of its battery supply chain. Rather,
they would first seek to gather additional information on where its batteries are
actually being made, mapping the higher-risk stages of the supply chain for theseproducts, the likely countries of origin for the materials in the battery, and thequality and nature of any due diligence carried out by high-risk sub-suppliers. Only
then can the enterprise move on to prioritise individual business relationships
for in-depth assessment and action.
F or example, after looking across its product lines, an enterprise operating in
the footwear sector may identify its leather footwear as being associated withsignificant risks in light of labour and environmental risks linked to the tanning
process. The enterprise may then map specific business relationships (e.g. tanneries) linked to the production of its leather products in order to prioritise individual suppliers operating in higher-risk geographies for further assessment.

Q20. 	What is meant by sector, product, geographic, and enterprise-level risks?
usee Section II, 2.1
	Considering sector risks, product risks, geographic risk factors and enterprise-level risk factors
may be helpful in scoping risks in an enterprise’s own operations as well as its business relationships. These risk factors are determined by past impacts and emerging issues.
l Sector risks are risks that are prevalent within a sector globally as a result of the			characteristics of the sector, its activities, its products and production processes.
For example, the extractive sector is often associated with risks related to a large
environmental footprint and impacts on local communities. In the garment andfootwear sector, risks associated with respect for trade union rights, occupational
health and safety and low wages are prevalent, amongst others.11

11. See OECD(2017a) for more information on risks in the garment and footwear sector; see OECD (2016c) for
more information on risks linked to the extractives sector.
OECD DUE DILIGENCE GUIDANCE FOR RESPONSIBLE BUSINESS CONDUCT62

IDENTIFY AND ASSESS ACTUAL AND POTENTIAL ADVERSE IMPACTS ASSOCIATED
WITH THE ENTERPRISE’S OPERATIONS, PRODUCTS OR SERVICES			lP roduct risks are risks related to inputs or production processes used in thedevelopment or use of specific products. For example, garment products withbeading or embroidery hold a higher risk of informal employment and precarious
work and phones and computers may contain components that are at risk of being
mined from conflict areas.
lG eographic risks are conditions in a particular country which may make sector risks			more likely. Geographic risk factors can generally be classified as those related to theregulatory framework (e.g. alignment with international conventions), governance(e.g. strength of inspectorates, rule of law, level of corruption), socio-economic
context (e.g. poverty and education rates, vulnerability and discrimination of specificpopulations) and political context (e.g. presence of conflict).
lE
 nterprise-level risks are risks associated with a specific enterprise such as weak			governance, a poor history of conduct in relation to respecting human rights,
labour rights, anti-corruption standards, environmental standards, or a lack of culturearound RBC.

Q21. 	What are example sources of information for desk-based research?
usee Section II, 2.1
	Most sector and product risks as well as situations in particular countries are well known or easily
understood from information that is readily available. For instance, hazardous environmental andhealth effects of technical processes and products are generally sufficiently understood within sectors.
	Reports provided by international organisations, civil society organisations, NHRIs, government
agencies, trade unions, and employer and business associations may provide valuable information throughout the due diligence process, but particularly during the scoping phase. Media
articles may also provide an understanding of the local, regional, and national social and politicalsituation. usee Table 6 for a list of document-based resources	It is important for enterprises to evaluate the accuracy and credibility of resources that they rely
on for risk information. This is especially true for inherited sources, such as previous baseline
assessments and research done by a partner, acquired enterprise, or peer enterprise and othersecondary sources. This can be done through triangulating information to compare it with othersources, considering the nature and source of the information, considering the date of publicationand consulting with third parties such as civil society organisations on points of doubt. However,information presented in external reports does not need to be completely verified for an enterprise to use it as a starting point to dig further.

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IDENTIFY AND ASSESS ACTUAL AND POTENTIAL ADVERSE IMPACTS ASSOCIATED
WITH THE ENTERPRISE’S OPERATIONS, PRODUCTS OR SERVICESTABLE 6. E XAMPLE OF DEPARTMENTS AND FUNCTIONS POTENTIALLY RELEVANT
TO IMPLEMENTATION OF DUE DILIGENCE
Primary SourceslC ontracts, licenses, relevant regulation and legislation, enterprise

policy describing the legal and regulatory regime applicable to theproject or activity.
lB aseline studies/impact assessments commissioned by other parties,

or during earlier phases of the project.
lD ata produced by government bodies on employment, poverty

levels, health and education standards, wages, conditions of workand occupational health and safety, etc.
lC
 ensus data, data on income and poverty rates (this may beunreliable in some developing economy contexts).
lL and mapping and other information about the project or activity.
lK ey indicators collected through geographical information systems

maps and other sources.
lO ther existing materials or inherited information in the case of

acquisition (if obtainable).
lL ocal community grievances and demand records.

Secondary Sourcesl S
 tudies and indices by academics, NHRIs, government agencies andindustry bodies.
lS tudies and reports by inter-governmental organisations andmultilateral and bilateral development institutions.
lS
 tudies and indices developed by NGOs and sectoral, national andinternational trade union organisations.
l Information about community investment or development programs

related to other industry projects in the area or region.
lS
 tudies undertaken by communities, for example indigenous

peoples or their representative organisations, about key issues that
may be relevant to project development.
lA vailable reports prepared by other enterprises operating in the local

area or region.

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Q22. 	How might information deficits be addressed? usee Section II, 2.1 - 2.2
	Certain strategies can be useful in addressing deficits in information on risks linked to an enterprise’s own activities and its business relationships, taking into account relevant circumstancesand real limitations.

5 FOR EXAMPLElG rievance mechanisms and other monitoring platforms (e.g. national monitoring			
committees) can be established to alert enterprises to real or potential adverse
impacts they may not have identified themselves.
usee Annex Q54
l Informationor claims about actual or potential adverse impacts do not have to be			
completely verified in order to trigger further assessment.
lE nterprises can engage with key stakeholders and experts to better			understand sector, product or geographic risks, for example, through roundtables.

S tarting with the significant areas of risk identified above, carry out iterative and increasingly
in-depth assessments of prioritised operations, suppliers and other business relationships inorder to identify and assess specific actual and potential adverse RBC impacts. uSection II, 2.2
Q23. How can an enterprise assess risks of adverse impacts in its own activities?
usee Section II, 2.2
	In many cases, enterprises are already carrying out self-assessments or engaging in external audits
or inspections on key risks in their sector, and in some contexts, such assessments are regulated
under domestic law. For example, labour inspections, environmental inspections required forlicensing, environmental impact assessments, anti-corruption compliance management systems,
know-your-counterparty processes, financial audits, human rights impact assessments, andproduct-licensing processes are all examples of common risk assessments that an enterprise may
already be carrying out or co-operating with relevant authorities on. Companies may modify orcomplement existing assessments to reflect international standards and RBC recommendations.
	In addition to standard assessments that an enterprise may already employ, additional internal
assessments may be necessary to understand potential risks or actual adverse impacts withrespect to an enterprise’s own activities in order to ensure alignment with the RBC expectationsin the OECD Guidelines for MNEs.

5 	 FOR EXAMPLE, an enterprise may commission an external review of the implementationof its discrimination and sexual harassment policies.

5 FOR EXAMPLE, a subsidiary may conduct environmental impact assessments related
to its activities and share them with a parent company.

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Q24. 	How can an enterprise prioritise which of its own operations or business
relationships to assess first? usee Section II, 2.2
	For many enterprises, especially larger ones, it will not be possible to assess real or potential
adverse impacts across all operations and business relationships. Enterprises may prioritise operations or business relationships for assessment where the risk of adverse impacts is most significant
usee Section II, 2.4 and Annex, Q3 for more guidance on most significant impacts.
Some considerations in determining the above include:lT he operation or business relationship’s operations are in a country that holds
			higher-risk (e.g. presence of conflict, presence of vulnerable groups, weak rule oflaw, high rates of corruption, etc.).
lT
 he operation or business relationship involves an activity or production process			that is higher-risk (characterised by high employment of informal work, use ofhazardous chemicals, use of heavy machinery, etc.).
lR isks were identified in a previous assessment.
				Importantly, business relationships are categorised as “high-risk” and prioritised for further
assessment on the basis of their risk profile and not on the strength of their relationship with theenterprise.

5 	FOR EXAMPLE, an electronics enterprise may flag enterprises it sources from which

operate in the extraction of minerals in conflict-affected and high-risk regions as being“high-risk” despite the fact that the electronics enterprise does not have direct contractual relationships with these business relationships.

	At times, further prioritisation may be needed amongst high-risk business relationships. In thesecases, with a view of working towards assessing all existing high-risk business relationships, theenterprise may prioritise the assessment of high-risk business relationships that are most significant in terms of the percentage of product that the enterprise sources (or countries in terms of thepercentage of sourcing).

Q25. 	How can an enterprise carry out an assessment of business relationships
prioritised during its scoping exercise? usee Section II, 2.2
	During the scoping exercise, the enterprise identifies broad categories of risks linked to its business
relationships. Assessments are more detailed evaluations of prioritised risks which follow from ascoping exercise. Examples of forms of assessments include supplier self-assessments, on-site
inspections and audits, amongst others. The type of assessment that an enterprise employs will
be tailored to the nature of the risk.

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5 	

FOR EXAMPLElO
 n-site inspections may be appropriate to assess risks related to occupational health			and safety, product safety and environmental performance (amongst other risks).
lD
 ocument reviews may be appropriate when reviewing an enterprise’s compliance			with financial reporting standards.
lW orker interviews and focus group discussions may be appropriate when assessing
			labour and human rights risks, particularly in relation to those risks that are sensitive andgenerally undocumented. In recognition that workers may not feel comfortable sharing
honest responses with management, interviews and focus group discussions may need
to be carried out in some cases by trusted third parties.
lS takeholder engagement and consultations with relevant civil society organisations
			
may be appropriate when assessing negative impacts on local communities ofenterprise activities.

Q26. 	What can an assessment of business relationships cover and who should
conduct these assessments? usee Section II, 2.2
For most types of risks, an assessment will cover the following:lA ctual adverse impacts or risks of impacts caused or contributed to by the business			
relationship (e.g. unsafe handling of chemicals; payment of bribes to officials),
including those associated with forthcoming projects or future activities.
l The

capacity and willingness of the business relationship to carry out			due diligence.
lT he adequacy of due diligence carried out, including the measures that the enterprise			or its business relationship is implementing to prevent and mitigate adverse impacts(e.g. policy, compliance management systems, assessments of sub-suppliers, facility
upgrading, providing access to grievance mechanisms).
	It is useful that those carrying out assessments demonstrate the following competencies:l Expertiseon the relevant risks that the enterprise is assessing for (e.g. human rights,
			health and safety, corruption), including an understanding of the best methodology
for identifying actual and potential adverse impacts within the local context.
l Knowledge
of international and national standards related to the adverse impact.
			lC apability to conduct the assessment within the local context (e.g. language skills).
				It is not likely that one individual will have the above competencies across all risk areas andacross all contexts. In light of this challenge, assessments may be conducted by teams that have,together, all of the above competencies.

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Q27. When to assess business relationships? usee Section II, 2.2
Enterprises are encouraged to carry out assessments:lo f existing high-risk business relationships (i.e. business relationships that involve			
geographies, products or sectors, that have been identified as presenting highrisks of adverse impacts) that have not yet been assessed.
lp
 rior to forming new first-tier high-risk business relationships. usee Annex Q18
			lw hen the context is likely to have changed among high-risk business relationships.
				In some cases, risks of adverse impact are so prevalent in a particular region that assessing individual business relationships will not produce any new information. In this case, the enterprise
may choose to focus immediately on preventing and mitigating adverse impacts.

5 	FOR EXAMPLE, an enterprise may learn that sexual harassment is prevalent in an ex-

port processing zone (EPZ). Recognising how difficult it is to identify specific incidents
of sexual harassment, the enterprise may choose not to assess suppliers first but rather
to encourage suppliers to carry out activities to prevent sexual harassment (e.g. trainingof management).

	In some cases, existing credible assessments of business relationships may already exist. Whereavailable, enterprises are encouraged to review their findings and then focus efforts on preventing
or mitigating identified adverse impacts and monitoring progress.

Q28. 	How can enterprises assess business relationships with whom they do nothave contractual relationships? usee Section, 2.2
	There are various tools and approaches to assess high-risk business relationships when theenterprise does not have a contractual relationship to help overcome challenges of visibility andleverage.

5

FOR EXAMPLE, in order to improve visibility, enterprises may:l r equest their business relationships to disclose information necessary for the			enterprise to assess risks related to their suppliers and business relationships, suchas information related to sub-suppliers and sub-contractors, or country of origin.
Enterprises may create and use common reporting templates within a sector to
reduce undue burden on business relationships. usee Annex Q12l u se an existing traceability or chain of custody scheme12 to gain visibility of its
			business relationships further up the supply chain. This is most relevant for productoriented enterprises with physical supply chains.

12. Traceability is the process by which enterprises track materials and products through the supply chain.
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	Where possible, in order to assess business relationships further up the supply chain foradverse impacts, enterprises may:lu
 se existing credible assessments of business relationships further up the supply			
chain, such as assessments shared through a collaborative initiative or passed
down through cascading disclosure or flow down provisions13 on written agreements
or contracts.
l if no credible assessments exist, through information collected through cascading			
reporting, flow down provisions or traceability, shared business relationships withother industry actors can be identified to carry out or commission assessments ofcommon business relationships.
la ssess the due diligence process of business relationships operating at control points
			in its supply chain. usee Box 5

BOX 5. ENGAGEMENT WITH BUSINESS RELATIONSHIPS OPERATING AT CONTROLPOINTS IN THE SUPPLY CHAINEnterprises can identify control points (sometimes referred to as “choke points”) by taking into
consideration:
 lk
 ey points of transformation in the supply chain where traceability or chain of custodyinformation may be aggregated or lost.
l t he number of actors, for example where there are relatively few enterprises that process orhandle a majority of inputs that they pass further down into a supply chain.
l t he greatest point of leverage of enterprises towards the end of a supply chain.
lp oints where schemes and audit programmes already exist to leverage these systems andavoid duplication.
‘Control point enterprises’ will likely have greater visibility and/or leverage over their own suppliers
and business relationships further up the supply chain than enterprises closer towards consumers or
end-users. Conducting due diligence on control point enterprises to determine whether they are inturn conducting due diligence in line with this Guidance provides some comfort that risks of adverse
impact directly linked to suppliers have been identified, prevented and mitigated. Identification andengagement with control points may be carried out through: including requirements in contracts
with supplier and business relationships that control points be identified (on a confidential basis); andby asking suppliers/business relationships to source from the control point enterprises that meet the
expectations of this Guidance, by using confidential information-sharing systems on suppliers and/or
through industry wide schemes to disclose actors further up the supply chain.

13. C ascading disclosure refers to when an enterprise discloses information to immediate downstream
purchases, who then pass them down to their purchases; A flow down provision is a provision within ageneral contract that is incorporated into sub tier agreements.
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Assess the enterprise’s involvement with the actual or potential adverse impacts identified inorder to determine the appropriate responses. Specifically, assess whether the enterprise (a)caused (or would cause) the adverse impact; or (b) contributed (or would contribute) to theadverse impact; or whether (c) the adverse impact is (or would be) directly linked to its operations, products or services by a business relationship. usee Section II, 2.3
Q29. W hat is meant by adverse impacts that are "caused", "contributed to” by theenterprise or are "directly linked" to its operations, products or services by abusiness relationship? usee Section II, 2.3
 ause: An enterprise “causes” an adverse impact if the enterprise's activities14 on their own
C
are sufficient to result in the adverse impact.

5 	FOR EXAMPLE, if an enterprise discriminates against women or racial minorities in
its hiring practices or if an enterprise pays a bribe to a foreign public official.

 ontribute: An enterprise “contributes to” an impact if its activities, in combination with theCactivities of other entities cause the impact, or if the activities of the enterprise cause, facilitate or
incentivise another entity to cause an adverse impact. Contribution must be substantial, meaningthat it does not include minor or trivial contributions.
	The substantial nature of the contribution and understanding when the actions of the enterprise may have caused, facilitated or incentivised another entity to cause an adverse impact may
involve the consideration of multiple factors. The following factors can be taken into account:l t he extent to which an enterprise may encourage or motivate an adverse impact by			another entity, i.e. the degree to which the activity increased the risk of the impact
occurring.
l t he extent to which an enterprise could or should have known about the adverse			
impact or potential for adverse impact, i.e. the degree of foreseeability.
l t he degree to which any of enterprise’s activities actually mitigated the adverse			
impact or decreased the risk of the impact occurring.
	The mere existence of a business relationship or activities which create the general conditions inwhich it is possible for adverse impacts to occur does not necessarily represent a relationship ofcontribution. The activity in question should substantially increase the risk of adverse impact.

5 FOR EXAMPLE, consider a retailer that sets a very short lead time for delivery of productdespite knowing from similar products in the past that the production time is not feasible,
and restricting the use of pre-approved sub-contracting.
lT he action of setting a shorter than feasible lead time and restricting the use of sub			
contracting increased the risk of excessive overtime at the level of the manufacturer.

14.	OECD (2011), Chapter IV, Para 42. states that “‘Activities can include both actions and omissions.”
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IDENTIFY AND ASSESS ACTUAL AND POTENTIAL ADVERSE IMPACTS ASSOCIATED
WITH THE ENTERPRISE’S OPERATIONS, PRODUCTS OR SERVICES			lT
 he degree of foreseeability of the impact may be high because the retailer knewthat lead times for similar past products were not feasible and that short lead times
commonly result in excessive overtime in the sector.
l If
 no mitigating steps were taken to decrease the risk of the impact occurring, the			retailer may be contributing to excessive overtime at the level of the manufacturer.

5 FOR EXAMPLE, consider a private equity investor which invests in a steel plant.

The investor sits on the board of the steel plant and regularly interacts with its management. The investor votes against installing costly equipment which treats run-off fromthe plant. As a result of the lack of run-off treatment, the drinking water of a local community is polluted by the run-off.
l Encouraging
management of the project to avoid installing technology which may			prevent or mitigate environmental impacts on water sources increases the risk ofadverse impacts.
l The

degree of foreseeability may be high if it is commonly known among			environmental management professionals in the steel industry that water treatment
equipment is required to avoid pollution of drinking water.
l If the investor undertook due diligence and supported an alternative treatment plan			for the run off, the risk of pollution of the water supply and the foreseeability of that
impact would have been lower, moving the investor away from a relationship ofcontribution.
 irectly linked: “Linkage” is defined by the relationship between the adverse impact and theDenterprise’s products, services or operations through another entity (i.e. business relationship).
“Directly linked” is not defined by direct contractual relationships, for example “direct sourcing”.

5 FOR EXAMPLE, if an enterprise sources cobalt mined using child labour which is thenused in its products the enterprise can be directly linked to the adverse impact (i.e. childlabour). In this case, the enterprise did not cause or contribute to the adverse impact
itself, but nevertheless there still can be a direct link between the enterprise’s products
and the adverse impact through its business relationships with the entities involved inits sourcing of the cobalt (i.e. with the smelter, minerals trader, and mining enterpriseusing child labour).

	An enterprise’s relationship to adverse impact is not static. It may change, for example as situations evolve and depending upon the degree to which due diligence and steps taken to address
identified risks and impacts decrease the risk of the impacts occurring.
	Generally an enterprise is most likely to cause an adverse impact in the context of activities associated with its own operations and an enterprise is most likely to be directly linked to adverse impacts
that are caused by business relationships. Contribution can occur in the context of activity related toan enterprise’s own operations or through a business relationship.

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IDENTIFY AND ASSESS ACTUAL AND POTENTIAL ADVERSE IMPACTS ASSOCIATED
WITH THE ENTERPRISE’S OPERATIONS, PRODUCTS OR SERVICES	The above characterisations are not intended to override any legal liability issues. Domestic law may
have specific approaches or rules for determining relationship to impact for the purpose of informing
legal liability. For example, enterprises found to be guilty of criminal acts of bribery will likely beconsidered to have caused or contributed to the impact under domestic laws on anti-corruption.

Q30. 	Why does the way an enterprise is involved with adverse impacts matter?
usee Section II, 2.3
	The relationship of an enterprise to an adverse impact (i.e. whether it is caused or contributed
to by the enterprise or whether it is directly linked by a business relationship) is an importantconsideration as it determines how an enterprise should respond to an impact and whether there
is also a responsibility to provide or cooperate in remediation. usee Figure 2
FIGURE 2. Addressing adverse impacts

ADVERSE IMPACT

CAUSEDby the enterprise

REMEDYactual impact
CEASE
OR PREVENT
potential impact

CONTRIBUTED TO

by the enterprise

CEASE
OR PREVENT
contribution

DIRECTLY LINKED

to enterprise operations,products or services
by a business relationship

Use LEVERAGE
to mitigate any
remaining impacts
to the greatest
extent possible

Use LEVERAGE
to influence
the entity causing
the adverse impact
to prevent or
mitigate the impact

Note: More specific guidelines for addressing human rights adverse impacts are listed in OECD (2011),
Chapter IV.

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WITH THE ENTERPRISE’S OPERATIONS, PRODUCTS OR SERVICES

 rawing from the information obtained on actual and potential adverse impacts, where necD
essary, prioritise the most significant RBC risks and impacts for action, based on severity andlikelihood. Prioritisation will be relevant where it is not possible to address all potential andactual adverse impacts immediately. Once the most significant impacts are identified anddealt with, the enterprise should move on to address less significant impacts. usee Section II, 2.4
Q31. 	How can an enterprise prioritise its actions when seeking to prevent andmitigate adverse impacts across its activities and business relationships?
usee Section I, Characteristics of Due Diligence – Due diligence can involve prioritisation(risk-based); Section II, 2.4
	When prioritising actions for response, the significance of the actual or potential harm is the mostimportant factor.15 However, recognising that enterprises may be exposed to a variety of significant adverse impacts, the imminence of harm may be considered secondarily.

5 FOR EXAMPLE, if a factory is found to be at imminent risk of a fire due to dangerous

electrical systems, priority may be given to ensuring that the building is made safe andworkers are made aware of how to respond in the case of a fire before addressing a risk ofwater contamination which is potentially equally severe, but not expected to occur within
the next 5 years.

15. In the case of prioritising risks to human rights, the severity of a potential adverse impact should take precedence
over the likelihood.
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A.3
CEASE, PREVENT AND MITIGATE ADVERSE IMPACTS
S top activities that are causing or contributing to adverse impacts on RBC issues, based on
the enterprise’s assessment of its involvement with adverse impacts. Develop and implement
plans that are fit-for-purpose to prevent and mitigate potential (future) adverse impacts.
usee Section II, 3.1
Q32. 	What is the difference between preventing adverse impacts and mitigating
adverse impacts? usee Section II, 3.1
 revention refers to activities that are intended to avoid an adverse impact occurring in the firstPplace (e.g. which reduce the risk of an adverse impact occurring); whereas mitigation refers toactivities that reduce the impact when an adverse impact does occur. Prevention is the primary
goal of due diligence.

5

FOR EXAMPLElW ith respect to occupational health and safety the removal of the hazard is			
recognised as the best means to prevent injuries and ill health in the first instance.
l Installation of water treatment processes may mitigate water pollution impacts by			
decreasing the level of effluents in the water.

5 	 FOR EXAMPLE
			 l E ngaging in collective action in high-risk areas to train local entities on resistingsolicitation of bribes and improving local government capacity to monitor andenforce anti-bribery laws can help to prevent bribery in the future.
			 l C o-operating with criminal prosecutions on bribery and duly reporting officials
who solicited bribes can mitigate impact of bribery.

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CEASE, PREVENT AND MITIGATE ADVERSE IMPACTS

Q33. 	How should an enterprise prevent and mitigate actual or potential impacts it
may cause or contribute to? usee Section II, 3.1
	First and foremost, enterprises should cease any activities that are causing or contributing toactual adverse impacts.
	There are a number of measures that an enterprise may take to prevent or mitigate future adverse
impacts in its own operations.

5

FOR EXAMPLElA
 daptation/modification measures: At times adaption or modification of aspects of			an enterprise's operations, products or services may be necessary to preventing or
mitigating impacts, for example, rerouting an oil pipeline to avoid potential healthrisks to local communities, changing production processes to avoid the use of toxic
substances.
lF acility upgrading: Some impacts may only be prevented by investing in facility and			equipment improvements. Such investments may include: lighting, ventilation, accessto fire exits, new machinery, technology to control adverse impacts, etc.
lP olicies: The development of enterprise policies and accompanying protocols for			their implementation can be in of themselves a means of preventing impacts fromoccurring. For example, an enterprise policy to not discriminate in the hiring process
and accompanying processes can help prevent discrimination. usee Section II, 1.1-1.2
lT
 raining: Effective training of workers, employees and management can help			
to prevent adverse impacts from occurring. Training may cover a wide range ofissues such as, but not limited to, the enterprise’s policies and protocols, laws andobligations, safe handling of machinery, chemicals, etc., and awareness raising on
how to identify risks. usee Section II, 1.2(f); 1.3(d)lR ed-flag systems: This involves identifying red-flags, or indicators for risks, and			
developing procedures for the enterprise to follow if risks of causing or contributing toadverse impact are identified.
lA ddress systemic issues: Enterprises retain responsibility to address adverse impacts
			that they cause or contribute to, even when operating in contexts where systemic
issues are prevalent. While it is not the responsibility of enterprises to resolve systemic
issues at a societal level, enterprises may find that addressing such challenges may beeffective in preventing or mitigating adverse impacts. usee Box 6 for more information
on addressing systemic risks

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CEASE, PREVENT AND MITIGATE ADVERSE IMPACTS

BOX 6. ADDRESSING SYSTEMIC ISSUES
Systemic issues refer to problems or challenges that are prevalent within a context and are driven byroot causes outside of the enterprise’s immediate control, but that nonetheless increase the risk ofadverse impacts within the enterprise’s own operations or supply chain. Systemic risks may arise fromgovernance failures and the failure of governments to fulfil their duty to enforce the laws and protect
human rights. Example systemic issues include poor access to schools and high rates of poverty which
can increase the risk of child labour, extensive bribery and corruption within the government, systematic
discrimination of minority groups and the widespread harassment and abuse of women and girls withinsociety. Although enterprises are not responsible for the failure of governments, the decision to conduct
activities in contexts where systemic risks exist will increase the nature and extent of due diligence.
There are a number of ways that enterprises can seek to address risks linked to systemic issues.
For example, enterprises may:
 lC
 ollaborate across sectors – Systemic risks often touch many sectors within a given context.
Therefore, enterprises may choose to co-ordinate and collaborate across sectors to scale-up
effective prevention and mitigation measures. In this way, the problem is not merely pushedfrom one industry to another.* lE
 ngage government - Acknowledging that there are legal and practical limits, in contexts
in which the government is not fulfilling its duty to protect, enterprises may use theirleverage with government (local or national) to encourage the government to affect change,for example through better enforcement of laws and regulations, or facilitation of RBC.
Engagement may include a number of measures, such as open letters to the government,
engagement through multi-stakeholder initiatives, participation in dialogues, etc. Enterprises
may also engage with home governments to encourage them to advocate for RBC.
 l I dentify effective existing initiatives – For common sectoral risks, enterprises may be able todraw on recommended prevention and mitigation approaches developed by governments,
industry associations, multi-stakeholder initiatives, or peers in the sector. Identifying existing
initiatives and their objectives will help an enterprise understand how it can utilise existing
strategies to prevent and mitigate systemic risks. For example, an enterprise may be able torely on existing grievance mechanisms within the community.
Efforts to address systemic issues may take much time before tangible results are seen, however, thisshould not undermine or discourage action to try to respond to systemic issues. Nonetheless, enterprises operating in contexts with systemic issues driving adverse impacts in their own operations andsupply chain should be prepared to be transparent in their decision and rationale for remaining andconsider whether they are able to responsibly continue to operate in or source from such contexts
during the course of any of the above efforts. In many cases, increased efforts will be necessary tomonitor and prevent adverse impacts in their own operations or in their supply chains while seeking
to address more systemic issues at the same time.
* For example, in contexts in which child labour is a systemic risk, eliminating child labour from one sector may simplypush children into employment in another. Therefore, cross-sectoral approaches are encouraged.

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Based on the enterprise’s prioritisation, develop and implement plans to seek to prevent or mitigate actual or potential adverse impacts on RBC issues which are directly linked to the enterprise’s operations, products or services by business relationships. usee Section II, 3.2
Q34. 	How can an enterprise seek to prevent and mitigate actual or potential
impacts directly linked to its operations, products or services by a business
relationship? usee Section II, 3.2
	The expectation that enterprises seek to prevent or mitigate adverse impacts directly linked to theiroperations, products or services by a business relationship is not intended to shift responsibility fromthe entity causing or contributing to an adverse impact to the enterprise with which it has a business
relationship.16 The responsibility for the impact remains with the entity or entities that are causing orcontributing to the impacts.17 However, while the enterprise may not be able to address the impact
itself, it should seek to influence its business relationship to prevent or mitigate the adverse impacts.
usee Section I, Characteristics of Due Diligence -Due diligence does not shift responsibilities
	In this respect, actions that can be taken to seek to prevent and mitigate adverse impacts linked
to a business relationship include:lM odifying business operations or activities to prevent and mitigate adverse impacts
			linked to the enterprise’s business relationships. usee Annex Q35
lU sing leverage to affect change in the practices of the entity that is causing the			adverse impact(s) to the extent possible. usee Annex Q36-37
lS upporting business relationships in the prevention or mitigation of adverse impact(s).
			usee Annex Q38
lD isengaging from the business relationship. usee Annex Q39
			lA ddressing systemic issues. usee Box 6
			Q35. 	How can an enterprise modify its operations or activities to prevent andmitigate adverse impacts linked to its business relationships? usee Section II, 3.2
	Many of the management systems that an enterprise establishes under Section II, 1.1 of the
Guidance work to prevent and mitigate impacts in its supply chain by either decreasing the
likelihood of engaging with high-risk business relationships in the first place or by increasing
its leverage with new suppliers/ business relationships. These can include measures related tobuilding RBC expectations into business relationships such as establishing pre-qualification or
bidding criteria based on RBC standards.
	Additional measures that an enterprise may take to prevent and mitigate adverse impacts linked toits business relationships involve adaptation or modification of aspects of its operations, products
or services.

16. OECD (2011), Chapter II, Para. 12.
17. Id.
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77

CEASE, PREVENT AND MITIGATE ADVERSE IMPACTS

	For example, embedding due diligence considerations into the product design process throughconsidering potential RBC risks of a product alongside other features, such as feasibility, cost anddemand, and determining whether to take a product from design to development, can avoid
risks in the future.

Q36. How can an enterprise use its leverage? usee Section II, 3.2(c)-(e)	Leverage is considered to exist “where the enterprise has the ability to effect change in thewrongful practices of the entity that causes the harm.”18 What is an appropriate approach to using
leverage will depend on the impact in question, the degree of leverage an enterprise possesses withits business relationship, and other characteristics specific to the sector and/or nature of the business
relationship. Enterprises may also pursue a combination of approaches in applying leverage.

5 FOR EXAMPLE, using leverage may include as appropriate to the sector and the specificsituation:lE ngagement with the business relationship to urge them to prevent and/or mitigate			
impacts through letter-writing, emails, telephone calls or face-to-face meetings withthe business relationship at operational, senior management and/or board level toexpress views on RBC issues.
lB uilding expectations around RBC and due diligence specifically into commercial
			
contracts.
lL inking business incentives – such as the commitment to long-term contracts and			future orders – with performance on RBC.
lF
 or investors, attendance and speaking at Annual General Meetings to express views			on RBC matters and using voting rights to express views on RBC issues, requesting
information from and engaging with investee companies to obtain relevant
information and make expectations clear.
lE ngagement with regulators and policymakers on RBC issues for them to effect			change in the wrongful practices of the entity causing the harm.
lC ommunicating the possibility of disengagement if expectations around RBC are			
not respected (e.g. through contractual clauses, enterprise policies, meeting withmanagement of the business relationship).

	At times an enterprise may face limitations to using leverage or may not have leverage on its own.
usee Annex Q37

18. OECD (2011), Commentary on General Policies, Para 19.
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CEASE, PREVENT AND MITIGATE ADVERSE IMPACTS

Q37. How can a lack of leverage be addressed?
	Where an enterprise lacks leverage with its business relationships, it may seek to increase its leverage to the extent possible.

5 FOR EXAMPLE, the enterprise may:l Introduce RBC and due diligence expectations into commercial contracts.
			lE
 stablish commercial incentives linked to RBC criteria.
			lE stablish longer-term relationships with its suppliers or business relationships.
				Enterprises that do not have leverage with their business relationships may increase their leverageto the extent practicable by communicating common expectations and carrying-out activities incollaboration.
FOR EXAMPLE
lE nterprises sourcing from the same supplier may develop and share a common
			
set of RBC requirements of the supplier. Similarly, enterprises sourcing from thesame supplier may use their combined leverage to encourage the shared suppliers
to implement effective corrective action measures with due consideration forcompetition law. usee Annex Q13lE nterprises within a sector may work at a sector-wide or regional level to identify and			engage suppliers that operate at common control points in the sector supply chain.
lE nterprises may join geographic or issue-specific initiatives that seek to prevent and			
mitigate adverse impacts in the areas identified (e.g. country, commodity or sector
roundtables, multi-stakeholder initiatives and on-the-ground programmes).
lM inority investors may write a joint letter to an investee company signalling			
expectations on RBC and encouraging the company to prevent/mitigate impacts
as relevant.

5	The OECD Guidelines for MNEs also recognise that “there are practical limitations on the abilityof enterprises to effect change in the behaviour of their suppliers.”19 In addition, laws of corporate governance may in some cases limit an enterprise’s ability to control or influence behaviour,such as between shareholders and investee companies, boards and management and parent
enterprises and its subsidiaries and/or joint ventures. The degree of leverage an enterprise hasover the business relationship causing the adverse impact is useful in considering what it can doto persuade that entity to take action, however enterprises have a responsibility to carry out due
diligence and effectively exercise any leverage they may have.

19. OECD (2011), Commentary on General Policies, Para 21.
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CEASE, PREVENT AND MITIGATE ADVERSE IMPACTS

Q38. 	How can an enterprise support a business relationship in the prevention or
mitigation of adverse impacts? usee Section II, 3.2(b) and 3.2(g)	An enterprise may support its business relationships in implementing measures under Section II,
3.2 of the Guidance.

5 	 FOR EXAMPLE, an enterprise may:lP
 artner with suppliers/business relationships to develop and implement corrective			action plans that are time-bound and outcome-oriented.
lP rovide technical guidance to suppliers/business relationships – for example, in the			form of training, management systems upgrading, etc.
lF acilitate participation of suppliers/business relationships in broader sector-wide			
initiatives or regional initiatives to prevent impacts.
lF acilitate linkages of suppliers/business relationships with local service providers.
			lF acilitate access to financing for suppliers/business relationships to help implement			corrective action plans, for example, through direct financing, low-interest loans,guarantees of continued sourcing, and assistance in securing financing.

Q39. How can an enterprise approach disengagement? usee Section II, 3.2 (h)	As stated in the Guidance, disengagement from a business relationship may be appropriate as alast resort after failed attempts at preventing or mitigating severe impacts; when adverse impacts
are irremediable; where there is no reasonable prospect of change; or when severe adverse
impacts or risks are identified and the entity causing the impact does not take immediate action
to prevent or mitigate them. A real possibility of disengagement is necessary in many instances
for an enterprise’s leverage to be effective. In these situations enterprises should also consider
and address the potential adverse impacts of a decision to disengage. If an enterprise determinesthat disengagement is the most appropriate action, there are a range of actions that it may taketo ensure that its process for disengagement is responsible.

5

FOR EXAMPLE, the enterprise:lS hould comply with national laws, international labour standards and the terms of			collective bargaining agreements.
lM ay articulate escalation measures for disengagement upfront with the business			
relationship.
lM ay provide detailed information supporting the decision to disengage to			management and to the trade union, where one exists.
lW
 here feasible, it is important to provide sufficient notice of the disengagement to			the business relationship.20

20. In instances where severe adverse impacts have been identified or where the enterprise does not deem prevention
or mitigation of the adverse impact feasible, it may not be possible for the enterprise to provide sufficient notice toits business relationship.
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CEASE, PREVENT AND MITIGATE ADVERSE IMPACTS

	In some instances it may be not be possible or practicable for an enterprise to end a business
relationship.

5

FOR EXAMPLElW here the term of the business relationship is dictated by contract or practical			considerations (e.g. an investment in a pooled portfolio; where an investment
manager’s clients do not agree that divestment is appropriate, a fixed-term contract).
21lW here the supplier is a crucial business relationship (e.g. a rare earth mineral crucial			
to core product which is only available from a small group of suppliers operating in ahigh-risk context).
	In these cases it is recommended that enterprises report the situation internally, continue tomonitor the business relationship, for example, through maintaining a knowledge database, andrevisit their decision to continue the business relationship where circumstances change or as partof the enterprise’s long term strategy to systemically respond to all adverse impacts. It may also
be in the enterprise’s interest to explain the decision not to end the business relationship, how
this decision aligns with their policies and priorities, what actions are being taken to attempt toapply leverage to mitigate the impacts, and how the business relationship will continue to bemonitored in the future.

Q40. 	How can an enterprise seek to prevent and mitigate adverse impacts linked tobusiness relationships with whom it does not have a contractual relationship?
usee Section II, 3.2
	There are a number of ways in which an enterprise may seek to prevent and mitigate adverse
impacts linked to business relationships with whom it does not have a contractual relationship.

5 	FOR EXAMPLE, enterprises may:lR equest contractual business relationships to direct their activities towards business			
relationships that have been pre-qualified.
lD irect sourcing or other forms of business activities towards business relationships
			
operating at control-points in the supply chain that have credible due diligenceprocesses for their suppliers (in the context of supply chains). usee Box 5l Identify and work directly with high-risk business relationships with whom			
the enterprise does not have a contractual relationship to prevent and mitigate
impacts in a similar fashion to the activities described under Q34.

21. A relationship could be deemed as crucial if it provides a product or service that is essential to the enterprise’sbusiness, and for which no reasonable alternative source exists.
OECD DUE DILIGENCE GUIDANCE FOR RESPONSIBLE BUSINESS CONDUCT81

A.4
TRACK IMPLEMENTATION AND RESULTS
Track the implementation and effectiveness of the enterprise’s due diligence activities, i.e. its
measures to identify, prevent, mitigate and, where appropriate, support remediation of adverse
impacts, including with business relationships. In turn, use the lessons learned from tracking to
improve these processes in the future. usee Section II, 4.1
Q41. What information is tracked under due diligence? usee Section II, 4.1
	Tracking involves first and foremost assessing whether identified adverse impacts have been
responded to effectively. In addition to following up on responses to identified adverse impacts
enterprises may review their due diligence process, or relevant multi-stakeholder and industry
initiatives, more broadly to ensure that they are effective. This can occur periodically or be triggered when tracking activities reveal that significant adverse impacts are not being effectively
addressed.
	Establishing appropriate qualitative and quantitative indicators can be helpful to tracking.

5 	FOR EXAMPLE, relevant indicators may include:lP ercentage of impacted stakeholders engaged who feel adverse impacts have been			adequately addressed.
lP ercentage/number of agreed action points that have been implemented according			to planned timelines.
lP ercentage of impacted stakeholders who feel channels for raising grievances are			accessible, equitable and effective.
lR ate of recurring issues related to the identified adverse impact(s).
				Indicators may be context specific and vary according the objectives and actions associatedwith the enterprises due diligence process.

Q42. 	How can an enterprise track implementation and results? usee Section II, 4.1
	How an enterprise tracks its implementation and results, including whether impacts have beeneffectively addressed, will vary based on the context in which the enterprise operates, its size, andthe risks that it faces through its own activities and in its business relationships. In many cases,
an enterprise will need to look across a range of inputs, including assessment data, data fromgrievance mechanisms, and stakeholder feedback to get a full picture as to whether impacts arebeing addressed.

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TRACK IMPLEMENTATION AND RESULTS

5 FOR EXAMPLE, if an enterprise seeks to track how well it is addressing child labour linked

to its direct suppliers across a range of countries it may consider the following:lA t the site level, the enterprise may:								 - track progress of individual suppliers against corrective action plans foreliminating child labour.
					 - g ather feedback from workers, workers’ representatives and trade unions onwhether or not child labour is effectively being addressed at each site.
					 - t rack cases of child labour identified and how those cases were handled (i.e.
what remedy was provided).

lA
 t the global level, the enterprise may review assessment data, reported grievances,			and credible reports collected across all of its high-risk suppliers or higher-risk
geographies on an annual basis to review trends and progress against preventing andmitigating child labour.

	How often an enterprise tracks progress is likewise dependent upon the nature and severity of thereal or potential adverse impact the enterprise is tracking. For example, for more severe impacts
there is a greater urgency to determine that adverse impacts are being effectively addressed.
	In many cases, activities to track implementation and results can be integrated into relevant,existing internal monitoring and reporting processes.

Q43. 	Who is involved in tracking implementation and results within an enterprise?
usee Section II, 4.1
	Responsibility for tracking implementation and results may be assigned to a number of individuals across business units or offices within the enterprise, as relevant.

5 	

FOR EXAMPLElA sourcing office within an enterprise may have the primary responsibility for tracking
			the implementation of supplier assessments and corresponding corrective action
measures.
lA
 n enterprise’s buying department may hold the primary responsibility of tracking
			rates at which orders are placed late, changed, or cancelled – all practices which may
contribute to labour risks with their suppliers.
l Operationallevel staff may seek feedback from impacted stakeholders and			rightholders on whether the impacts have been addressed (e.g. through consulting
local communities, collecting feedback from people who attend meetings andforums, taking note of issues brought to remediation procedures).

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TRACK IMPLEMENTATION AND RESULTS

	Senior management oversight of an enterprise’s progress with respect to implementation andresults can provide a more complete picture of the enterprise’s progress across the organisation
as a whole.
	For example, systems that collect information at a local level (e.g. supplier assessment data), butthen are aggregated at a centralised department (e.g. headquarters or regional office) may help
to identify trends more widely and can be used as a basis for sharing lessons learned across theenterprise.

Q44. 	How can an enterprise respond to the results of its tracking?
usee Section II, 4.1 (e)-(f)	Tracking provides the enterprise with an understanding of whether the systems it has put into
place are effectively enabling the enterprise to avoid and address adverse impacts in its own
activities and in its supply chain or whether systems could be modified to be made more effective.

5 	

FOR EXAMPLEl If an enterprise’s supplier assessment does not reveal any fire safety risks and the			supplier then has a fire, the enterprise may respond by reviewing how it assesses fire
safety of its suppliers.
l If an enterprise implements internal training and other control measures against the			payment of bribes for licenses, and the enterprise learns through external reportingthat the payment of bribes for licenses persists, it may revise its internal controls tobetter prevent and mitigate future infractions.
	Where an enterprise’s due diligence processes or approach are not effective, an internal assessment to understand why may be useful. Consulting employees involved in the due diligenceprocesses and external relevant stakeholders in this process may be helpful. Establishing senioroversight of tracking also helps to ensure that lessons learned are taken into account and due
diligence systems can be continuously improved.

Q45. How to prioritise tracking activities? usee Section II, 4.1
	Prioritisation for tracking activities should align with prioritisation decisions made in the context
of prevention and mitigation. In other words, enterprises should prioritise tracking those adverse
impacts they assessed to be most significant and took action to prevent and mitigate. A broader
assessment of due diligence processes may be undertaken periodically or triggered when significant impacts are not being effectively addressed. usee Annex Q3 and Q31

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A.5
COMMUNICATE HOW IMPACTS ARE ADDRESSED

Communicate externally relevant information on due diligence policies, processes, activities
conducted to identify and address actual or potential adverse impacts, including the findings
and outcomes of those activities. usee Section II, 5.1
Q46. 	What are appropriate forms of communicating publicly and to impacted
stakeholders? usee Section II, 5.1
	As outlined in Section II, 5.1 of the Guidance there is flexibility in the form of public communication, provided that the information is easily accessible by the public. In addition, some jurisdictions or stock exchanges may have specific reporting requirements with respect to due diligence.
	Where an enterprise causes or contributes to human rights impacts it should communicate therelevant information to impacted or potentially impacted rightsholders in a timely, culturally sensitive and accessible manner. Accessibility of information means that it is not only physically accessible, but also understandable and disclosed at a time and in a format, language, and location thatwill best ensure those for whom it is intended will notice it and be able to use it effectively. This
information should be “sufficient to demonstrate the adequacy of an enterprise’s response to theparticular human rights impact involved” and “in turn not pose risks to affected stakeholders,personnel or to legitimate requirements of commercial confidentiality.”22
The form of communication should also be accessible to the intended audience.

5 	

FOR EXAMPLE, enterprises may choose to communicate through:l in-person meetings
			l online dialogues
			l consultation with impacted or potentially impacted rightsholders
			23
l formal public reports			l the sharing of audit or assessment findings with trade unions
			l through an appropriate intermediary				In identifying the appropriate form of communicating with stakeholders the following guiding
questions may be useful:lW ho is the audience?
			lH ow can the audience access information?
			lW hat barriers in accessibility might exist for certain marginalised or			vulnerable groups?
lW hat is the capacity of the audience (language, literacy, location, time, availability,			
technical competence)?

22. UN (2011), Principle 21, Commentary.
23. Id.
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COMMUNICATE HOW IMPACTS ARE ADDRESSED			lA
 re there privacy or safety issues?
lW hat have impacted or potentially impacted stakeholders and rightholders indicated			
they find important and useful in terms of information content and methodsof information sharing?
	Enterprises may also wish to communicate with impacted or potentially impacted stakeholders andrightsholders in case of significant adverse impacts cause or contributed to by business relationships.
	Appropriate forms of communication in these situations may include:lS haring labour, human rights, or environmental audit or assessment results with			
impacted or potentially impacted rightsholders, while respecting confidentiality
requirements.
lC
 ommunicating with impacted or potentially impacted rightsholders in collaboration
			with the relevant business relationship(s).
lC ommunicating with impacted or potentially impacted rightsholders through			a multi-stakeholder or industry initiative that may have closer contact with therightsholders.

Q47. 	When information is commercially sensitive, how can relevant information still
be communicated? usee Section II, 5.1
	Communication should be carried out with due regard for commercial confidentiality and othercompetitive or security concerns.

5

FOR EXAMPLElD omestic law may sometimes prevent certain disclosures, or outline areas of			protected commercial information.
lC ontracts between the enterprise and its business relationships may prevent certain			
information from being disclosed (e.g. the identity of clients).
lC
 ommercial confidentiality considerations may prevent certain disclosures (e.g. price			
information, supplier relationships)lW here there are potential risks to stakeholders or staff (including arising from the			disclosure of personal information) full disclosure may not be an option.

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COMMUNICATE HOW IMPACTS ARE ADDRESSED	However, in certain circumstances, disclosing information may be fundamental to the corporate
responsibility to respect human rights.

5

FOR EXAMPLEl Informing workers about their exposure to hazardous substances.
			lD isclosure of the results of product or environmental testing necessary			for the effective protection of the rights to life or health.
lD
 isclosure of information about hazardous substances necessary for the effective			provision of medical treatment in the aftermath of an industrial disaster.
	Certain approaches may be useful in communicating information to the extent possible while
respecting confidentiality concerns.

5 	

FOR EXAMPLE
l limiting access to sensitive information to those approved by the information
			provider.
l anonymising the source of information.
			lp
 roviding a valid explanation or justification, where possible, for why the information
			
has not been shared.
lu sing third parties or innovative technologies that allow disclosure of key information
			
while protecting commercially sensitive data, for example, to disclose certain
information in aggregate or without identifying specific business relationships.
ld elaying reporting until persons are no longer at risk, for example after a grievance or			risk has been addressed.
lp
 roviding assurance through other methods, such as inviting an independent third			party to review the enterprise’s due diligence processes and disclosing their findings
publicly or to a relevant collaborative initiative.

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A.6
PROVIDE FOR OR COOPERATE IN REMEDIATION
WHEN APPROPRIATE

Q48. 	What is the relationship of remediation to due diligence?
usee Section II, 6	The provision of a remedy is not a component of due diligence but a separate, critical process thatdue diligence should enable and support. Grievance and remediation processes interact with, andmay ultimately support due diligence by providing channels through which the enterprise canbecome aware of and respond to RBC impacts. Inputs and feedback from remediation processes
can help strengthen identification of real and potential adverse impacts by highlighting issues
that may not have received sufficient attention, and by providing inputs on how to effectively
respond to adverse impacts. However the following examples and explanations are not intended
to serve as a comprehensive overview of remedy.

When the enterprise identifies that it has caused or contributed to actual adverse impacts,
address such impacts by providing for or cooperating in their remediation. usee Section II, 6.1
Q49. 	What is meant by “remediation” and “remedy”? usee Section II, 6.1 and 6.2
	“Remediation” and “remedy” refer to both the processes of providing remedy for an adverse
impact and to the substantive outcomes (i.e. remedy) that can counteract, or “make good”, theadverse impact.

Q50. 	How can an enterprise identify appropriate forms of remedy? usee Section II, 6.1
	The type of remedy or combination of remedies that is appropriate will depend on the natureand extent of the adverse impact usee Section II, 6.1(b). Appropriate forms of remediation are
articulated under Section II 6.1(b) of the Guidance, however, the following may also be helpful indetermining appropriate forms of remedy:l Existing standards – In some cases domestic and international standards or laws exist
			
on what constitutes appropriate forms of remedy.
l Precedent – Where domestic and international standards do not exist, the enterprise			
may seek to be consistent with what was provided in similar cases.
l Stakeholder preferences – The perspective of those affected on what is appropriate			
remedy is important for human rights impacts.

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PROVIDE FOR OR COOPERATE IN REMEDIATION WHEN APPROPRIATE

When appropriate, provide for or cooperate with legitimate remediation mechanisms throughwhich impacted stakeholders and rightsholders can raise complaints and seek to have themaddressed with the enterprise. usee Section II, 6.2
Q51. 	What are “legitimate remediation mechanisms”? usee Section II, 6.2
	
Legitimate remediation mechanisms can include State-based or non-State-based process
through which grievances concerning enterprise-related adverse impacts can be raised andremedy can be sought.24

5 	

FOR EXAMPLEl L
 egal processes such as prosecution, litigation and arbitration are common examples			of state-based processes that enable remediation.
l N on-judicial state-based mechanisms such as specialist government bodies,			
consumer protection agencies, regulatory oversight bodies, environmental
protection agencies.
l T he National Contact Points to the OECD Guidelines for MNEs are a State-based non			
judicial mechanism through which issues can be raised about implementation of theOECD Guidelines for MNEs in specific instances. usee Box 8l O perational level grievance mechanisms where they meet the core criteria of			
legitimacy, accessibility, predictability, equitability, compatibility with the OECD
Guidelines for MNEs, transparency and being dialogue-based.
l G
 lobal Framework Agreements between companies and Global Trade Unions, multi			stakeholder grievance mechanisms, community grievance mechanisms, collective
bargaining agreements, and enterprise supply chain grievance mechanisms are all
examples of non-State-based processes that could enable remediation.

BOX 7. THE ROLE OF THE STATE TO ENSURE ACCESS TO EFFECTIVE REMEDY
As part of their duty to protect against enterprise-related human rights abuse, States
must take appropriate steps to ensure, through judicial administrative, legislative orother appropriate means, that when such abuses occur within their territory and jurisdiction, those affected have access to effective remedy. The OECD Guidelines for MNEs
are not meant to establish legal concepts around liability, including among enterprises.
Domestic courts will use their own concepts and tests in considering accountability forharm and appropriate remedy. However, if enterprises choose to operate in countries
where the State does not fulfil its Duty to Protect, this does not absolve the enterpriseof its responsibility to provide remedy where an enterprise has caused or contributed toan adverse impact.

24. OECD (2011) Chapter, IV, Para. 46.
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PROVIDE FOR OR COOPERATE IN REMEDIATION WHEN APPROPRIATE

BOX 8. NATIONAL CONTACT POINTS OF THE OECD GUIDELINES FOR MNEs
The OECD Guidelines for MNEs have a built-in non-judicial grievance mechanism throughthe National Contact Points (NCPs). NCPs are established by Adherents to the OECD
Investment Declaration. NCPs have the mandate of furthering the effectiveness of theOECD Guidelines for MNEs by: undertaking promotional activities, handling enquiries
and contributing to the resolution of issues that arise relating to the implementation of
the OECD Guidelines for MNEs in specific instances.* Any individual or organisation canbring a specific instance (case) against an enterprise to the NCP where the enterprise isoperating or based regarding the enterprise’s operations anywhere in the world. NCPs
facilitate access to consensual and non-adversarial procedures, such as conciliation or
mediation, to assist the parties in dealing with the issues. NCPs are required to issue
final statements upon concluding the specific instance processes. NCPs can also makerecommendations based on the circumstances of the specific instance.
*Specific instances is the term used in the Guidelines to describe practical issues that may arise with
the implementation of the Guidelines.

Q52. 	What does it mean to “cooperate with legitimate remediation mechanisms”?
usee Section II, 6.2
	If an enterprise may have caused or contributed to an adverse impact, the enterprise may engage
with any of the various systems under Section II, 6.2(a)-(c) of the Guidance to determine whether
it has caused or contributed to the adverse impact and to provide remedy in such cases.
	However, if an enterprise has not caused or contributed to an adverse impact, but is rather directly
linked to the impact, the enterprise may still take a role in remediation, despite not having an
expectation to provide for remedy itself. For example, the enterprise may use its leverage, to theextent practicable, with its business relationship to compel the business relationship to participate in processes to provide for remedy. Where relevant, the enterprise may provide information
which can facilitate investigations or dialogue.

Q53. 	In which circumstances are various processes to enable remediation
appropriate? usee Section II, 6.2
	The appropriate process to enable remediation will be dependent upon several factors including
legal obligations, stakeholder preferences, availability of mechanisms, the nature of the adverse
impact and where the adverse impact occurs (i.e. within the enterprise’s own operations or its
supply chain).

OECD DUE DILIGENCE GUIDANCE FOR RESPONSIBLE BUSINESS CONDUCT90PROVIDE FOR OR COOPERATE IN REMEDIATION WHEN APPROPRIATE

5 FOR EXAMPLEl In some cases, enterprises may have an obligation to participate in state-based
			
judicial grievance mechanisms or may be subject to criminal prosecution.
l W
 ithin an enterprise’s own operations, operational-level grievance mechanisms can			be an effective means of providing for such remediation when they meet the core
criteria of: legitimacy, accessibility, predictability, equitability, compatibility with
the OECD Guidelines for MNEs and transparency, and are based on dialogue andengagement with a view to seeking agreed solutions.25
l T he options available may be more limited in relation to complaints that may be			raised in an enterprise’s supply chain (i.e. rather than its own operations). Enterprises
may establish or participate in processes that are feasible and appropriate to theircircumstances, whether that involves establishing their own supply chain grievancemechanism, participating in a multi-stakeholder grievance mechanism or joining a
Global Framework Agreement.

Q54. 	What is the difference between an early warning system and a process toenable remediation? usee Section II, 6.2
	The objective of an early warning system is to identify risks (or actual impacts) related to an enterprise’s own activities or its business relationships.

5 	FOR EXAMPLE, an enterprise might establish a worker hotline to provide an

opportunity for workers to raise concerns about issues affecting their rights, such as
health and safety conditions.

	The objective of a process to enable remediation is to provide remedy to people who have been
harmed.

5	FOR EXAMPLE, a worker may raise a complaint against management for unfair firing.
The worker and the enterprise are brought together to determine an adequate remedy(e.g. reinstatement, compensation, etc.).
	A single system – such as a grievance mechanism – can operate as both an early warning systemand provide processes to enable remediation.

25. OECD (2011) Chapter, IV, Para. 46.
OECD DUE DILIGENCE GUIDANCE FOR RESPONSIBLE BUSINESS CONDUCT91

APPENDIXRECOMMENDATION OF THE COUNCIL ON THE OECD DUE DILIGENCEGUIDANCE FOR RESPONSIBLE BUSINESS CONDUCTAs adopted on 30 May 2018
THE COUNCIL,
HAVING REGARD to Article 5 b) of the Convention on the Organisation for Economic
Co-operation and Development of 14 December 1960;
HAVING REGARD to the Declaration on International Investment and Multinational
Enterprises [C(76)99/FINAL], the Decision of the Council on the OECD Guidelines for Multinational
Enterprises [C(2000)96/FINAL] (hereafter the “Decision on the Guidelines”), the Convention
on Combating Bribery of Foreign Public Officials in International Business Transactions, theRecommendation of the Council on Due Diligence Guidance for Responsible Supply Chains ofMinerals from Conflict-Affected and High-Risk Areas [C/MIN(2011)12/FINAL], the Recommendationof the Council on the Policy Framework for Investment [C(2015)56/REV1], the Recommendation of
the Council on the OECD-FAO Guidance for Responsible Agricultural Supply Chains [C(2016)83],
the Recommendation of the Council on the Due Diligence Guidance for Meaningful Stakeholder
Engagement in the Extractive Sector [C(2016)100] and the Recommendation of the Council on
the OECD Due Diligence Guidance for Responsible Supply Chains in the Garment and Footwear
Sector [C(2017)63];
CONSIDERING that OECD Ministers encouraged the OECD to develop a set of general due
diligence guidelines that can be applied to any sector [C/MIN(2017)9/FINAL];
RECALLING that the common aim of governments recommending the observance of the
Guidelines for Multinational Enterprises (hereafter the “Guidelines”) is to promote responsible
business conduct;
RECALLING FURTHER that the Decision on the Guidelines provides that the Investment
Committee shall, in co-operation with National Contact Points, pursue a proactive agenda in collaboration with stakeholders to promote the effective observance by enterprises of the principles
and standards contained in the Guidelines with respect to particular products, regions, sectors orindustries;
CONSIDERING the efforts of the international community to promote responsible businessconduct globally in order to strengthen and harmonise the implementation of standards forhuman rights, labour, the environment, and anti-corruption and to support a level playing field
for business that takes into account their impacts on society and the environment;

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APPENDIX

RECOGNISING that responsible business conduct across all sectors of the economy is criticalto sustainable development;
NOTING that the Guidelines recommend that enterprises carry out risk-based due diligenceto identify, prevent and mitigate actual and potential adverse impacts related to disclosure,human rights, employment and industrial relations, the environment, bribery and corruption, andconsumer interests in their own operations, supply chains and other business relationships;
RECOGNISING that governments, enterprises, trade unions, civil society organisations andinternational organisations can draw on their respective competences and roles to promote andsupport responsible business conduct, including in supply chains;
HAVING REGARD to the OECD Due Diligence Guidance for Responsible Business Conduct[C(2018)42/ADD1] (hereafter “the Guidance”), that may be modified as appropriate by theInvestment Committee, in particular as due diligence practices evolve and become more effective in avoiding and addressing adverse impacts on society and the environment;
HAVING REGARD to the United Nations’ Guiding Principles on Business and Human Rights
and the International Labour Organization’s Tripartite Declaration of Principles concerning
Multinational Enterprises and Social Policy which contain due diligence recommendations withwhich this Guidance seeks to align;
RECOGNISING the valuable collaboration between the OECD and relevant intergovernmental organisations in the development and future implementation of the Guidance;
NOTING that due diligence is ongoing and responsive, involves multiple processes andobjectives, should aim to prevent adverse impacts on society and the environment in the first
instance, and should be risk-based, appropriate to an enterprise’s circumstances, adapted to deal
with the limitations of working with business relationships, and informed by meaningful engagement with stakeholders;
On the proposal of the Investment Committee;
I.	RECOMMENDS that Members and non-Members adhering to this Recommendation(hereafter the “Adherents”) and, where relevant, their National Contact Points to the
Guidelines (hereafter the “NCPs”), actively promote the use of the Guidance by enterprises operating in or from their territories with the aim of ensuring that they observe
internationally agreed standards of responsible business in order to prevent the adverse
impacts of their activities and contribute to sustainable development;

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APPENDIX

II. 	RECOMMENDS, in particular, that Adherents take measures to actively supportand monitor the adoption of the due diligence framework set out in the Guidance
according to which the enterprises operating in or from their territories should:		

1. embed responsible business conduct into their policies and management systems;		

2. identify and assess actual and potential adverse impacts associated with theiroperations, products or services;		

3. cease, prevent and mitigate adverse impacts;		

4. track implementation and results;		

5. communicate how impacts are addressed; and		

6. provide for or cooperate in remediation when appropriate;

III. RECOMMENDS that Adherents and where relevant their NCPs, with the supportof the OECD Secretariat, ensure the widest possible dissemination of the Guidance
and its active use by enterprises, as well as promote the use of the Guidance as aresource for stakeholders such as industry associations, trade unions, civil society
organisations, multi-stakeholder initiatives, and sector-initiatives, and regularly reportto the Investment Committee on any monitoring, dissemination and implementation
activities;
IV. INVITES Adherents and the Secretary-General to disseminate this Recommendation;
V. 	INVITES non-Adherents to take due account of and adhere to the present
Recommendation;
VI. 	INSTRUCTS the Investment Committee to monitor the implementation of the
Recommendation and to report to Council no later than five years following its adoption and as appropriate thereafter.

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94

REFERENCES
Capobianco, Gillard and Bijelic (2015), “Competition law and responsible business conduct”,
Background Note for the 2015 Global Forum on Responsible Business Conduct, OECD, Paris,
https://mneguidelines.oecd.org/global-forum/2015GFRBC-Competition-background-note.pdf.
ILO (2017), ILO Tripartite Declaration of Principles concerning Multinational Enterprises and Social
Policy, 5th Edition, www.ilo.org/empent/areas/mne-declaration/lang--en/index.htm.
ILO (1998), ILO Declaration on Fundamental Principles and Rights at Work,
www.ilo.org/declaration/lang--en/index.htm.
ILO (1981), Occupational Safety and Health Convention, www.ilo.org/dyn/normlex/en/f?p=NOR
MLEXPUB:12100:0::NO::P12100_ILO_CODE:C155.
OECD (2017a), OECD Due Diligence Guidance for Responsible Supply Chains in the Garment andFootwear Sector, https://mneguidelines.oecd.org/responsible-supply-chains-textile-garmentsector.htm.
OECD (2017b), Responsible business conduct for institutional investors: Key considerations fordue diligence under the OECD Guidelines for Multinational Enterprises,
http://mneguidelines.oecd.org/rbc-financial-sector.htm.
OECD (2016a), OECD Due Diligence Guidance for Responsible Supply Chains of Minerals from
Conflict-Affected and High-Risk Areas, https://mneguidelines.oecd.org/mining.htm.
OECD (2016b), OECD-FAO Guidance for Responsible Agricultural Supply Chains,https://mneguidelines.oecd.org/rbc-agriculture-supply-chains.htm.
OECD (2016c), OECD Due Diligence Guidance for Meaningful Stakeholder Engagement in
the Extractive Sector, http://mneguidelines.oecd.org/stakeholder-engagement-extractiveindustries.htm.
OECD (2016d), Recommendation of the Council on Common Approaches for OfficiallySupported Export Credits and Environmental and Social Due Diligence,www.oecd.org/tad/xcred/environmental-social-due-diligence.htm.
OECD (2015a), G20/OECD Principles of Corporate Governance, OECD Publishing, Paris,
www.oecd.org/corporate/principles-corporate-governance.htm.
OECD (2015b), OECD Guidelines on Corporate Governance of State-Owned Enterprises,
2015 Edition, OECD Publishing, Paris. www.oecd.org/corporate/guidelines-corporategovernance-soes.htm.
OECD (2015c), Policy Framework for Investment 2015 Edition, OECD Publishing, Paris.
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OECD (2015d), OECD Recommendation of the Council on Public Procurement,
www.oecd.org/gov/public-procurement/recommendation/.
OECD (2011), OECD Guidelines for Multinational Enterprises,
https://mneguidelines.oecd.org/guidelines/.
OECD (2009), OECD Recommendation of the Council for Further Combating Bribery ofForeign Public Officials in International Business Transactions (2009),
www.oecd.org/daf/anti-bribery/oecdantibriberyrecommendation2009.htm.
UN (2011), UN Guiding Principles on Business and Human Rights,
https://business-humanrights.org/en/un-guiding-principles.

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96

OECD DUE DILIGENCE GUIDANCE FOR RESPONSIBLE BUSINESS CONDUCTOECD DUE DILIGENCE GUIDANCEFOR RESPONSIBLE BUSINESS CONDUCTThe OECD Guidelines for Multinational Enterprises acknowledge and encourage
the positive contributions that business can make to economic, environmental
and social progress, and also recognise that business activities can result inadverse impacts related to workers, human rights, the environment,
bribery, consumers and corporate governance.
This Guidance helps businesses to understand and implement
due diligence for responsible business conduct. It also seeks to promote a
common understanding on responsible business conduct
amongst governments and stakeholders.

https://mneguidelines.oecd.org/