Photo: BankTrackBankTrack is engaged in the Advisory Group to the OECD Proactive Agenda Project for Responsible Business Conduct in the Financial Sector, through which we aim to encourage higher standards in the implementation of the OECD Guidelines for Multinational Enterprises, particularly in the field of human rights. In addition to this, BankTrack has engaged with National Contact Point complaints against financial institutions through giving advice to communities and civil society organisations, and in bringing a particular complaint alongside other organisations to the Dutch NCP against ANZ Bank in 2014. Our work on the OECD Guidelines and their relevance to the financial sector is ongoing.
The OECD Guidelines for Multinational Enterprises are recommendations from governments to multinational enterprises on responsible business conduct around the world. They define standards for socially and environmentally responsible corporate behaviour and establish a grievance mechanism procedure to address complaints between corporations and the communities or individuals negatively affected by corporate activities. The Guidelines are adhered to by 48 countries (all 36 OECD member states and 12 other adhering states).
The OECD and non-OECD adhering governments last updated the Guidelines in May 2011, introducing substantial new provisions in areas such as human rights, due diligence, and supply chain responsibility, and bringing the Guidelines substantially into line with the UN Guiding Principles on Business and Human Rights.
In 2020, the OECD Working Party on Responsible Business Conduct (WPRBC) initiated a stocktaking exercise to assess the OECD Guidelines, their implementation and the OECD’s work on Responsible Business Conduct. In June 2021, OECD Watch published "Get Fit: Closing gaps in the OECD Guidelines to make them fit for purpose" which explains why and how gaps in the OECD Guidelines for Multinational Enterprises should be closed to ensure they remain fit for purpose. As they stand, the OECD Guidelines are outdated and incomplete, missing major and pressing societal issues such as climate change, digitalization, tax avoidance, land rights, and security for human rights defenders.
The OECD Guidelines establish a unique complaint procedure ( or “Specific Instance Procedure”) in the form of National Contact Points (NCPs). Every government that adheres to the Guidelines is required to establish an NCP to promote the OECD Guidelines and handle complaints against companies that have allegedly failed to adhere to the Guidelines’ standards. For details, advice, and support in making use of the complaint procedure see the OECD Watch page on Filing OECD Guidelines complaints.
In addition to the Guidelines, the OECD published ‘Due Diligence Guidance for Responsible Business Conduct’ in May 2018. This provides practical support to multinational enterprises on the implementation of the OECD Guidelines. OECD Watch commended the Guidance as it settled certain critical issues and concepts around due diligence and it dispels many common misunderstandings. The OECD has also published a number of sector specific guidance which helps enterprises identify and address risks to people, the environment and society associated with business operations, products or services in particular sectors.
The OECD’s Proactive Agenda Project on Responsible Business Conduct (RBC) in the Finance Sector is a multi-stakeholder project which aims to elaborate practical and relevant approaches for the finance sector to implement the OECD Guidelines. BankTrack has served as an Advisory Group member of the project since its initiation in 2015. We expect the project to be influential in setting expectations for how the finance sector should approach managing the human rights and environmental impacts of its finance.
Phase one of the project delivered a guidance document on ‘Responsible business conduct for institutional investors’ in March 2017. Important things to note regarding this guidance are:
The second phase of the project delivered new guidance on ‘Due Diligence for Responsible Corporate Lending and Securities Underwriting’, in October 2019. Throughout this phase of the project, BankTrack provided comments on three draft documents, participated in regular Advisory Group calls, and gave its view of the guidance at an ‘Expert Working Session’ held by the OECD in September 2018. The guidance elaborates on the OECD Guidelines and represents an important step forward in encouraging responsible conduct by financial sector actors. Important things to note regarding this guidance are:
Phase three of the project, which focuses on RBC for project and asset based finance transactions, is currently underway. BankTrack will continue its role as an Advisory Group member.
