Update on the OECD Guidelines on Multinational Enterprises

The latest developments with the OECD Guidelines on Multinational Enterprises were the subject of a recent conference convened by the OECD at George Washington University Law School. The MNE Guidelines are important not least because at 40 years old, they mark one of the oldest corporate social responsibility (CSR) initiatives.

Overall, the conference provided good reasons to believe that the MNE Guidelines’ revision in 2011 has heightened their relative importance and role in the CSR field.

Among the important takeaways from the conference was the continued strengthening of the National Contact Point (NCP) systems.  Focusing particularly on the US and UK experience, speakers described how the processes have become more institutionalized. There is also evidence of greater willingness of companies and civil society groups to use NCP mechanisms. Notwithstanding some civil society criticisms of the willingness of UK authorities to open proceedings, it seems that both jurisdictions have seen greater recourse to mediation by companies and civil society actors.

The interaction of the UN Guiding Principles on Business and Human Rights with the MNE Guidelines appears to be an important factor in their strengthening. The influence of the UN Guiding Principles has been substantial in raising interest and awareness in the MNE Guidelines. Part of reason for this development was 2011 update, which incorporated the Guiding Principles’ “Protect, Respect, Remedy” framework interpreting the rights and duties of governments, corporations, and other stakeholders. In effect, this move has made the NCP system a conduit for actors to raise claims based on the Guiding Principles.

Partly as a result of the interaction of the UN Guiding Principles, new efforts are emerging to provide greater definition to legal standards for due diligence in this area. Neither the Guiding Principles nor MNE Guidelines have a clear duty of care.  In the absence of decisions by international courts or tribunals on the subjects, companies don’t have a clear standard to apply.  

At the same time, one panel described the tightening of national regulation on supply chain management. The development of laws such as the the UK Modern Slavery Act and US Trade Facilitation and Trade Enforcement Act, make it increasingly necessary for companies to exercise high levels of due diligence over their supply chain.

In this regard, one particularly interesting discussion concerned a new project developed by the OECD Secretariat in cooperation with the law firm Debevoise & Plimpton to analyze the standards of liability that could be applied to these matters. The focus seems to be on human rights law, which raises some questions about its general applicability given that MNE Guidelines cover everything from anti-corruption to labor law.

Despite focusing on supply chain management, there was no discussion of the series of handbooks developed by the OECD on supply chain management in specific sectors and issues including the extractive industry, minerals, textiles and garment, and agriculture. In an earlier blog, I discussed the recent OECD-FAO Guide on Responsible Agricultural Supply Chains. This publication reflects not only the MNE Guidelines but a broader set of instruments specific to the agricultural sector.

While the OECD-FAO Guide is helpful in applying principles from the MNE Guidelines to the agricultural sector, from my perspective, a gap in the MNE Guidelines is the failure to incorporate land and natural resource tenure issues. These issues lie at the heart of many business and human rights disputes. While the UN Guiding Principles have gained tremendous recognition in the field of responsible business conduct, the FAO Tenure Guideilnes have received relatively less attention.  The decision to revise the MNE Guidelines to reflect the UN Guiding Principles in 2011 occurred before the Tenure Guidelines’ were adopted in 2012, but it is nevertheless clear that land will need to be covered in MNE Guidelines’ next iteration.