OECD Alignment Assessments of Industry and Multi-Stakeholder Programmes
Increasing regulatory pressure and investor and consumer demand have fed dramatic growth of a fragmented marketplace of certifications, frameworks and initiatives to address sustainability and environmental, social and governance (ESG) issues in global supply chains. OECD standards on responsible business conduct (RBC) - which are developed with stakeholders, including business, civil society and worker representatives, and backed by governments - are global best practice for identifying and addressing risks to people, planet and society. Supporting alignment of these initiatives with government-backed standards of RBC can help promote comparability, improve the quality of initiatives, reduce inefficiencies and costs and strengthen positive outcomes.
About OECD Alignment Assessments
OECD Alignment Assessments evaluate the alignment of industry or multi-stakeholder initiatives with the recommendations of OECD due diligence guidance. Alignment Assessments seek to determine:
In addition to evaluating alignment of these essential characteristics of due diligence and the due diligence framework, Alignment Assessments also evaluate collaboration within and between initiatives and the governance of each initiative.
About OECD due diligence guidance
OECD due diligence guidance frameworks are the negotiated and government-backed global benchmark for due diligence. The OECD Due Diligence Guidance for Responsible Business Conduct, which was launched in 2018, has been adopted by 50 governments and promotes a common global understanding on supply chain due diligence for responsible business conduct.
The Guidance details the specific steps of the due diligence process that have been agreed upon by policy makers, business - including investors - trade unions and civil society. The due diligence guidance builds on sector-specific OECD guidances that have been negotiated and adopted by governments in the minerals, extractives, agriculture, financial and garment & footwear sectors.
Why align with international standards developed by the OECD?
Due diligence is increasingly on the policy agenda. All international instruments on responsible business conduct – including the OECD Guidelines for Multinational Enterprises, the UN Guiding Principles on Business and Human Rights, and the ILO Tripartite Declaration of Principles Concerning Multinational Enterprises and Social Policy – recommend due diligence as the framework for companies to address adverse impacts in their operations and supply chains.
The growing number of regulatory as well as voluntary due diligence initiatives across sectors and geographies underscores the need for convergence or mutual recognition around expectations of practitioners. Regulatory frameworks with aligned and complementary expectations for practitioners, alignment assessments that allow for mutual recognition of approaches, and clear metrics for effectiveness can contribute to legal certainty, lower compliance and monitoring costs, and a level playing field for responsible business conduct.
The role of multi-stakeholder and industry initiatives
Industry programmes and multi-stakeholder initiatives can play an important role in helping companies carry out due diligence for responsible global value chains. The landscape of such initiatives across sectors is both vast and diverse in terms of their composition, focus and core activities.
DIVERSE LANDSCAPE OF INITIATIVES
Companies use industry or multi-stakeholder initiatives to:
Multi-stakeholder and industry initiatives can be important multipliers for due diligence as they play a role in evaluating and benchmarking the due diligence actions of companies. Governments also often rely on certification initiatives within the context of public procurement, government-backed certification, disclosure or due diligence legislation, market access or free trade agreements.
While such initiatives can be a multiplier for high quality due diligence and more broadly due diligence uptake, they can also contribute to the outsourcing of company responsibility and "tick-the-box" approaches when they are not aligned with international standards. A lack of harmonisation across initiatives has resulted in multiple and at times conflicting requirements on companies. Supporting the alignment of such initiatives with OECD due diligence guidance, therefore, would strengthen the role of such initiatives as multipliers for due diligence and in turn improve the effectiveness, and impact of company due diligence efforts. This will create a positive feedback loop to enhance the credibility and trust placed in initiatives, foster a better understanding of how companies and governments can use initiatives, and enable mutual recognition between initiatives where appropriate.