OECD Alignment Assessments of Industry and Multi-Stakeholder Programmes

OECD Alignment Assessments

OECD Alignment Assessments evaluate the alignment of an industry, government or multi-stakeholder initiative with the recommendations of OECD due diligence guidance, using the OECD’s alignment assessment tools and methodology. 

An initiative’s standards, implementation and overall credibility are assessed against detailed criteria of due diligence using an assessment tool. Each criterion is linked to discrete recommendations from specific OECD due diligence guidance. Initiatives are evaluated as being fully, partially or not aligned against each due diligence criterion, contributing towards an overarching alignment score.

The OECD alignment assessments constitute three ‘core’ parts:

• The Standards Assessment
• The Implementation Assessment
• The Credibility Assessment (previously known as the ‘Governance Assessment’)

OECD alignment assessments are based on:

• desktop review of written policies, standards, tools and methodology documents;
• shadow assessments (passive observation of audits and assessments);
• extensive interviews with internal and external stakeholders; and
• consultation with external experts.

Alignment assessments focus on the adequacy of the initiative’s standards and monitoring, oversight and implementation activities. They do not draw conclusions about the adequacy of the due diligence carried out by individual companies that participate in the initiative under assessment.

Alignment assessment of industry programmes with the OECD minerals guidance

Alignment assessment of industry initiatives for due diligence in the garment and footwear sector

Terms and Conditions governing OECD Alignment Assessments

OECD due diligence guidance

OECD due diligence guidance recommendations are the negotiated and government-backed global benchmark for responsible business conduct (RBC) due diligence. The OECD Due Diligence Guidance for Responsible Business Conduct, which was launched in 2018, is adopted by 49 governments and promotes a common global understanding of RBC due diligence.

It 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. This due diligence guidance builds on existing sector-specific guidances that have been negotiated and adopted by governments in the minerals, extractives, agriculture, financial and garment and footwear sectors.

Why align with international standards?

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 global supply chains.

The growing number of regulatory as well as voluntary due diligence initiatives across sectors and geographies underscores the need for convergence around shared expectations for companies and supply chain actors. Regulatory frameworks which include complementary requirements that are aligned with international standards, alignment assessments of initiatives which help to scale up common approaches and best practices, and clear metrics for effectiveness can all contribute to legal certainty, lower costs and contribute to a level playing field for responsible business conduct.

Well-designed, transparent and credible industry programmes, government and multi-stakeholder initiatives (“sustainability initiatives”)  can play an important role in supporting companies’ due diligence at different points in the process. However, the landscape of initiatives across sectors and geographies is both vast and diverse in terms of their composition, focus and core activities.

Many initiatives also now play a role in evaluating and benchmarking the due diligence activities of individual companies and their business partners. This diversity can be a strength as initiatives focus their resources and expertise. But a lack of harmonisation across initiatives has resulted in multiple and at times conflicting requirements on companies, as well as confusion about what initiatives do and what role they should and should not play in due diligence. While initiatives can be a multiplier for good quality due diligence, they can also lead to over-reliance by companies if they are not well designed and used appropriately by companies. Companies have ultimate responsibility for their own due diligence and are expected to play an important role in each step.

Industry, government or multi-stakeholder initiatives can help companies to:

• Pool knowledge about supply chains including sector and geographic risks (e.g. risk mapping and expert engagement)
• Increase leverage across the supply chain or in specific geographies, through collaborative approaches (e.g. joint trainings or audits and collaborative engagement with suppliers)
• Evaluate the due diligence practices of business partners (e.g. through site-level stakeholder engagement and assessments)
• Share costs and savings as a benefit to sector collaboration which can be particularly useful for small and medium-sized enterprises
• Scale effective measures (including for example training, reporting frameworks or complaints handling mechanisms)
• Collaborative initiatives can also help to share and save costs, avoid duplicative efforts and address audit and assessment fatigue. These elements can be particularly useful for small and medium-sized enterprises.

For more on the role of sustainability initiatives in mandatory due diligence, see our recent Background Note, also available on the OECD’s Due Diligence Policy Hub.

Companies may carry out RBC due diligence in accordance with OECD standards without using or participating in initiatives. Where they do opt to use or participate in an initiative—however well designed or credible—companies should not outsource their own responsibilities by over-relying on the initiative. Instead, companies should have robust, risk-based systems in place to:

• Understand the scope, activities and limitations of individual initiatives, including their geographic, sector, risk and supply chain scope
• Gather, review, validate and address gaps in data
• Respond to and cross-check the information they receive from the initiative, adapt it to their own supply chains and most significant risks, and build on it as part of their due diligence.
• Respond to red flags or problems that arise.

Companies are therefore expected to carry out risk-based checks of the reliability and quality of information that they receive from third parties, and also layer on their own due diligence in accordance with the OECD’s due diligence framework. This can involve, for example, establishing systems to identify red flags associated with the initiative or its members, or layering on other supplier assessment or risk monitoring and mapping tools, such as stakeholder engagement.