ENABLING RESPONSIBLE SUPPLY CHAINS OECD Guidelines for - - PowerPoint PPT Presentation

ENABLING RESPONSIBLE SUPPLY CHAINS

OECD Guidelines for Multinational Enterprises and Risk-based Due Diligence

November 2015 APBF Cristina Tebar Less

• Integrating RBC in investment policy:

providing enabling policy environment to ensure that investment contributes to sustainable development

• Guidelines for business setting out society’s

expectations of RBC and providing tools to business to meet these expectations (due diligence guidance)

• Monitor national contract points to support

implementation of business responsibility standards (ca 350 cases, 90 countries)

OECD focus on Responsible Business Conduct

• Government-backed international instrument for promoting

responsible business conduct

• Recommendations from governments to businesses
• perating in or from adhering countries
• Cover all major areas of business ethics – human rights

environment, labour, bribery, disclosure,

• Implementation- complaints mechanism to address

adverse business impacts

• Endorsed by business, trade unions and civil society
• rganizations
• Open to OECD and non-OECD countries

OECD Guidelines for Multinational Enterprises

 Business responsibility includes

• Avoid causing or contributing to adverse impacts

through their own activities , and addressing them

• Seek to prevent or mitigate adverse impacts

directly linked to their operations, products or services by a business relationship – including via supply chain  Recommended tool: risk-based due diligence as part of risk management system to identify, prevent and mitigate actual and potential risks

Responsibility throughout business relations

Managing risk through due diligence

• Rationale: Integrate risk-based due diligence in

company’s risk management system to identify, prevent and mitigate actual and potential risks (e.g., human rights, labour, environment, bribery)

• Methodology: multi-stakeholder approach; all

actors involved in developing the standard

• Promotion: make due diligence standard known
• Implementation: help companies apply due

diligence standards; advise on policies needed to provide enabling policies.

Key steps of due diligence

• Step 1 – Establish strong management systems: Policy, internal

capacity, supplier engagement, internal controls over supply chain

• Step 2 – Identify, assess and prioritise risks in the enterprise

supply chain: map supply chain, prioritize based on severity of harm (sector, counterparty, and site for high-risk issues)

• Step 3 – Manage risks in the supply chain: inform senior

management, fix internal systems, build leverage, use existing supply chain networks, workers reps, non-traditional partnerships, build capacity

• Step 4 – Verify supply chain due diligence: where relevance,

monitor, audit assurance, etc.

• Step 5 – Communicate and report on supply chain due

diligence: with due regard for commercial confidentiality and competitive concerns

OECD Due Diligence Guidance for Responsible Supply Chains

OECD Due Diligence Guidance for Responsible Mineral Supply Chains

Objective  To provide clear, practical guidance for companies to ensure they do not contribute to conflict or human rights abuses through their mineral and metal production and procurement practices Method and scope  5-step risk-based due diligence process, applies to all companies throughout the mineral supply chain that produce or potentially use minerals from conflict-affected or high-risk areas  Applicable to all minerals, on a global scope Role of stakeholders  Companies: Implement due diligence and the 5-step framework, possibly through industry associations or initiatives  Governments: Create the enabling environment for responsible mineral supply chains  Civil society: Monitor mining sector governance and company activities throughout the global mineral supply chain

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Objective Offer practical guidance for the extractive sector in line with the OECD MNE Guidelines on due diligence for stakeholder engagement. Approach

• Framework for managing risks

with regard to stakeholder engagement to ensure they play a role in avoiding and addressing adverse impacts.

• Recommendations at the site

level, and for management

• Specific guidance: engaging

with women, indigenous peoples, workers and artisanal miners.

Process

• Mandate by governments

Developed via Multi- stakeholder advisory group

• Public consultation
• Endorsement by

stakeholders, approval by governments in 2015

Due Diligence Guidance for Meaningful Stakeholder Engagement in the Extractives Sector

OECD Guidelines expect companies to engage with stakeholders to provide meaningful opportunities for their views to be taken into account in relation to planning and decision making for projects or other activities that may significantly impact local communities’.

Due Diligence Guidance for Meaningful Stakeholder Engagement in the Extractives Sector

• Long project life cycle
• Immobile production
• Significant investment and infrastructure
• Potentially significant social and environmental footprint

About 20% of all specific instances brought to the NCP mechanism involve the extractive sector.

Characteristics of the Extractives Sector:

Promoting responsible agricultural supply chains

A FAO-OECD guidance

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The FAO-OECD Guidance

• Help enterprises observe the OECD Guidelines and other

major responsibility standards (e.g. Principles for Responsible Investment in Agriculture and Food Systems)

• Developed through a multi-stakeholder advisory group

involving large agro-food industry, investors, governments, civil society

• Endorsed by stakeholders, approved by governments end

2015

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Due Diligence Guidance

• Principle-based due

diligence Guidance around 5-step framework

• Due Diligence Guidance

for salient risks in the sector

• Pilot in 2016

Responsible Supply Chains in the Textile & Garment Sector

Implementation Platform

• Small & Medium Sized

Enterprises (Research & Capacity Building)

• Effective monitoring &

mitigation methods (Research)

• Access to remedy

(Research) Outreach

• Training & engagement

with adherent and non- adhering import and export countries on due diligence in the textile and garment sector

Textile & Garment Sector Supply Chain

Aggravating factors

Fast fashion & low prices Short-term contracts Purchasing practices Business models Illegal sub- contracting Use of temporary workers, homeworkers, migrant workers Sumangli scheme Small holder farmers; Use of temporary workers Inflexible delivery dates Business models

Forced & bonded labour Child labour Occupational health & safety Excessive working hours Freedom of Association & Collective bargaining Wages Chemical use & water contamination

Example salient risks

Objective: Outline practical approaches and provide guidance for financial service providers to meet expectations of the OECD MNE Guidelines through their due diligence, across a range of financial services. Challenges: extensive and complex business relationships, rapidity of transactions, and operations which do not fit neatly into the model of suppliers and buyers in a supply chain Demand: Growing attention to responsible business conduct in the financial sector. Ca 10% of cases filed before NCPs concern the financial sector; since 2000, 36 cases have been filed, 19 of them since 2011 OECD PROJECT ON RESPONSIBLE BUSINESS CONDUCT IN THE FINANCIAL SECTOR

Responsible supply chains in legislation

• US and EU (forthcoming): mandatory

reporting on minerals sources from conflict

• UK: anti-slavery legislation
• France: mandatory due diligence for large

companies, mandatory reporting of investors’ carbon footprint

• EU: RBC in new Trade and Investment

Strategy, partnership agreements (e.g. Singapore)

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Outreach to ASIA

• Members of OECD: Japan and South

Korea

• Policy reviews and analysis of RBC

policies: Myanmar, Malaysia, Philippines, Cambodia, Lao, Vietnam

• PoW on RBC with China, conference on

responsible minerals supply chains Dec. 2015

• Conference on responsible supply chains

with India Nov 2015

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Contact: Cristina Tebar Less, Head of Responsible Business Conduct Unit (OECD Investment Division) Cristina.tebar-less@oecd.org OECD Website: http://mneguidelines.oecd.org http://mneguidelines.oecd.org/implement ation