Guest Contribution Hanni Rosenbaum, BIAC: OECD Due Diligence Guidance on Responsible Supply Chains

Hanni Rosenbaum © BIAC

What does due diligence in international supply chains mean in practice? The OECD is working on guidance to improve clarity for business. But the increasing complexity of supply chains means that companies’ influence has limitations.

The OECD Guidelines for Multinational Enterprises are one of the most important and comprehensive instruments dealing with responsible management in international markets. The fact that governments have agreed to promote them gives them a special status. Every adhering country has a National Contact Point to monitor commitments and progress. The National Contact Point also receives complaints from trade unions and NGOs against companies they believe are not observing the Guidelines in their foreign investments.

Responsibility for the supply chain

The OECD Guidelines, which were revised in 2011, also include recommendations to multinational enterprises with regard to supply chain management. But the Guidelines do not go into detail about how exactly due diligence should be implemented in practice. The OECD is therefore currently working on new guidance.

Draft needs revision

Business underlines that the recommendations should not go further than the OECD Guidelines. It must also be taken into account that companies’ influence is often limited in practice, especially for small and medium-sized enterprises. It is important for business that the new guidance is designed to provide a practical assistance for companies – and not an interpretation of the Guidelines to assist the National Contact Point in handling complaints. BIAC therefore calls for an extensive revision of the first draft and will continue to actively participate in the process.

BIAC is the Paris-based Business and Industry Advisory Committee to the OECD of which BDI is a member. Hanni Rosenbaum is Senior Director of Policy and Strategic Planning at BIAC.