Consultation response regarding the targeted update of the OECD Guidelines for Multinational Enterprises

NCP Denmark welcomes the OECD’s invitation to provide comments on the consultation draft of potential updates of the OECD Guidelines for Multinational Enterprises and their implementation procedures. To this end, NCP Denmark is pleased to respond with general remarks and text-specific comments on the draft. 

General Comments

NCP Denmark generally welcomes the suggested changes in the targeted update. The increased emphasis on the due diligence obligation, the importance of meaningful stakeholder engagement, and the strengthening of the NCPs, as well as the explicit recognition that enterprises can adversely impact issues related to climate and technology are especially welcomed.

The updates to the framing of international trade are moreover welcomed, including the removing of outdated terms, such as “developing countries/world”. In this case, NCP Denmark notes that chapter II (para. b2) and chapter VI (commentary 79), still use “developing countries”, which should be updated. Moreover, it is noted that challenges associated with conducting business responsibly are relevant in all countries, regardless of their geographic location in the global North and South.

The elaboration on business relationships is welcomed, including the clarification in chapter II, commentary 22, that business relationships go beyond contractual relationships. NCP Denmark encourages this targeted update to explicitly clarify that the Guidelines apply to the full value chain, i.e., both upstream and downstream relationships and impacts, as well as to underscore that all types and sizes of enterprises are covered by the Guidelines, not just enterprises with activities in more than one country. In this regard, NCP Denmark also encourages the recognition that the Guidelines apply to public or semi-public entities as well as organizations acting as economic actors.  This should also be reflected in the title of the Guidelines, which could for example be changed to the “OECD Guidelines for Responsible Business Conduct”.

NCP Denmark notes and encourages the recognition of the chapters as being interrelated and not separate in silos. Hence, it could be stressed even more that enterprises must consider e.g., human rights impacts of environmental impacts and vice versa.

Chapter I: Concepts and Principle

NCP Denmark supports the edits made in paragraph 2 to clarify that enterprises should honor the principles and standards of the OECD Guidelines to the fullest extent, also in countries where domestic laws set lower expectations.

The addition to paragraph 4, underscoring that the OECD Guidelines allow for a broad and flexible approach in identifying which entities may be considered multinational enterprises is welcomed. However, in order to ensure the widest interpretation and applicability of the OECD Guidelines as possible, it is suggested to delete “a significant amount of” from the suggested addition “companies and other entities conducting a significant amount of business in more than one country” in paragraph 4. While efforts to increase clarity are appreciated, NCP Denmark generally asks the OECD to avoid using limitative language that could encourage interpretations to the lowest common denominator.

Chapter II: General Policies 

While NCP Denmark supports the addition to paragraph A.9, A.10 and commentary 14 that enterprises should refrain from applying pressure (or reprisals) against actors who monitor or report on business practices, the word “undue” should be deleted. Using “undue” in this sentence could indicate that pressure sometimes can be “due”. In paragraph 14, NCP Denmark welcomes the examples of reprisals and pressure.

NCP Denmark welcomes the new paragraph A.14, that enterprises should provide for or cooperate through legitimate processes in remediation where an enterprise has caused or contributed to adverse impacts. The addition to commentary 16 that an enterprise’s relationship to adverse impacts may change over time is supported, and the addition to commentary 24 on leverage, including examples.

The change in paragraph B.2 from “responsible supply chain management” to “responsible business conduct” is celebrated as it highlights that these obligations extend beyond the supply chain. The elaboration of the due diligence process as outlined in the OECD Due Diligence Guidance for Responsible Business Conduct in commentary 15 is appreciated, and so is the recognition in the new commentary 18. However, to ensure full alignment with the UNGPs, NCP Denmark recommends that the OECD Guidelines explicitly states that severity should be judged by the scale, scope and irremediable character of an impact.

NCP Denmark appreciates the explanation of meaningful stakeholder engagement as a key component of the due diligence process in paragraph A.16 and commentary 28. The OECD is encouraged to ensure full alignment with the definitions and distinctions between relevant and impacted stakeholders and rights holders as outlined in the OECD Due Diligence Guidance for Responsible Business Conduct to avoid confusion. It is recommended to also encourage enterprises to inform and educate stakeholders about (potential) impacts and their implications to ensure that stakeholders possess the knowledge needed to engage meaningfully in any process.

The elaboration of responsible disengagement in commentary 25 is welcomed.

Chapter III: Disclosure 

The addition to paragraph 3, underscoring the importance of communicating on RBC-information as part of the due diligence obligation, including the elaboration of what this includes, is welcomed. However, in paragraph 3.c NCP Denmark suggests adding a nuance to the point about prioritization to ensure that prioritization should only happen when necessary, not as a rule. Therefore, the sentence should read as follow: “the enterprise’s identified areas of significant impacts or risks, the adverse impacts or risks identified, prioritized, if necessary, and assessed, as well as the prioritization criteria.”

While the proposed text in commentary 35 is welcomed, it is important to highlight that due diligence should be the foundation for effectively identifying and communicating relevant RBC information rather than solely “a useful means”.  

Chapter IV: Human Rights

NCP Denmark welcomes the addition to commentary 40 that enterprises should take additional steps to assess and address adverse impacts on individuals who may be at heightened risk due to their membership in marginalized or vulnerable groups or populations, including Indigenous Peoples. This paragraph should be expanded to also state that enterprises are expected to take additional steps to enable meaningful consultation of such groups, as they may face particular barriers to participation. In this respect, references to the principle of free, prior, and informed consent should be explicitly made.

In commentary 42, NCP Denmark recommends adding a sentence encouraging enterprises to consider ways to enhance leverage in cases where existing leverage is not sufficient. This will align with the additions made to chapter II, commentary 24.

As noted in the general comments with regard to avoiding silos, it is recommended to explicitly clarify that enterprises should consider how adverse impacts arising under other chapters of the OECD Guidelines may impact human rights.

Chapter V: Employment and Industrial Relations

NCP Denmark supports the use of the term “workers” as opposed to “employees” to signify that this chapter also applies to workers in e.g., the gig and platform economy. The inclusion of persons with disabilities as well as age in paragraph 1.a as grounds for discrimination is moreover supported.

The updated references to relevant instruments are welcomed, including the references made to the 2022 update of the ILO Declaration on Fundamental Principles and Rights at Work to include “a safe and healthy working environment”. The elaboration related to forced and compulsory labour in commentary 53, including references to ILO-indicators, is moreover appreciated.

NCP Denmark welcomes the additions in this chapter regarding just transition and sustainable development. The inclusion of Indigenous Peoples in the listing of vulnerable groups that enterprises should ensure equal opportunities to with regard to training is moreover welcomed.

Chapter VI: Environment

NCP Denmark warmly welcomes the explicit clarification that enterprises should carry out risk-based due diligence related to adverse environmental, health and safety impacts. In this regard, the unexhaustive list of examples, including climate change, biodiversity loss, deforestation and animal welfare is appreciated. The formulation regarding “health and safety impacts” should, however, be edited to entail adequate references to (all relevant) human rights.

The new commentary 60 is supported to recognize that governments, business, and consumers are jointly responsible for achieving environmental objectives, and that the OECD Guidelines set out expectations on how enterprises should manage actual and potential adverse environmental, health and safety impacts. In this regard, the references made to relevant instruments, frameworks, agreements and conventions is supported, and the new COP15 agreement on biodiversity should be included. However, since these references have not been formulated in a manner, which could keep the text ‘ever-green’, NCP Denmark notes that some of the referenced agreements (e.g., the 2030 Agenda for Sustainable Development and the Paris Agreement) will expire in 2030, and that the OECD Guidelines consequently will need to be updated again by this time.

The recognition in commentary 63 that adverse environmental impacts can be closely interlinked with other matters covered by the OECD Guidelines, including the reference to just transition, is supported. In extension of the comments made to chapter II regarding meaningful stakeholder engagement, NCP Denmark recommends that chapter VI explicitly states that impact assessments and consultations with stakeholders must ensure that links between environmental issues and human rights are well understood, communicated, and managed. For instance, impacts on ecosystems and biodiversity can affect the rights to water, food, adequate standards of living, as well as cultural rights.

Chapter VII: Combatting Bribery, Bribe Solicitation and Extortion 

NCP Denmark welcomes the updated title of chapter VII to include corruption. Moreover, NCP Denmark would welcome more guidance on how to handle potential conflicts of interest in this chapter.

Chapter VIII: Consumer Interests 

To keep the OECD Guidelines relevant and fit for purpose, it is recommended to explicitly state that this chapter covers “end users” as well as “consumers”, since end users are not always consumers in the traditional sense.

The additions to paragraph 2 are welcomed as they provide guidance to enterprises on how to ensure that disclosure of information is accessible. The inclusion of issues, such as privacy, dispute resolution and redress options are moreover supported.

NCP Denmark supports the addition of “social” in commentary 85 to signify the growing consumer interest in social impacts.

Chapter IX: Science, Technology and Innovation 

NCP Denmark supports the explicit recognition that the development, licensing, sale, trade and use of technology can lead to adverse impacts, and thus the new obligation that enterprises should carry out due diligence with regard to the issues covered by this chapter is welcomed. In this regard, it must be clear that all enterprises – both those developing and using tech – should carry out due diligence to identify and address actual and potential adverse impacts. The elaboration of undertaking due diligence with regard to downstream impacts in commentary 100 is welcomed.

In paragraph 2, the addition of protection of confidentiality obligations and privacy, personal data protection and non-discrimination principles is welcomed. In extension hereof, commentary 98 must elaborate on the diverse adverse social and human rights impacts that can result from irresponsible use of data, which go beyond “data theft and privacy impacts” (e.g., bias and discrimination). While the specific emphasis on the need to consider the rights and interests of children and youth in commentary 102 is welcomed, NCP Denmark requests that other rightsholder groups, which may be particularly challenged in benefitting from technological developments or may be at risk of being negatively impacted by technology, are also mentioned.

Generally, NCP Denmark calls for an elaboration on risks related to downstream use. While NCP Denmark recognizes the intention of the new paragraph 7 to encourage enterprises to promote freedom of expression, NCP Denmark recommends that this paragraph also acknowledges the inherent risks related to freedom of expression. Such risks include hate-speech, harassment, and discrimination.

Chapter X: Competition 

The framing of the new addition to commentary 95 as well as the new commentary 100 could be misinterpreted to discourage enterprises from participating in collaborative initiatives related to RBC or due diligence. Since many RBC-related issues are sector-wide, they cannot be addressed by an individual enterprise but will require joint efforts. Hence, these commentaries should be framed in a way that does not imply competition as a barrier to collaborative efforts, but rather encourages collaboration on RBC and due diligence within the boundaries of applicable competition laws and regulations.

Chapter XI: Taxation

NCP Denmark recommends that paragraph 1 and commentary 102 more explicitly call on enterprises to avoid using e.g., shell companies or structuring transactions in ways that are inconsistent with the underlying economic consequences of the transaction.

Paragraph 2 and commentary 104 should – in line with the principles of double materiality – explicitly encourage enterprises to take risks to rightsholders into consideration in their tax risk management strategies and systems, rather than focusing solely on risks to the enterprise itself.

Implementation Procedures 

NCP Denmark supports the clarifications of the expectations to NCPs in order to reach the objective of functional equivalence. The explicit mentioning of sufficient resources of NCPs, access to expertise on RBC, and emphasis on meaningful relations with stakeholders are welcomed. NCP Denmark also welcomes the Inv. Committee’s mandate to determine that an NCP has not been operating in a way consistent with the Procedures.

While NCP Denmark appreciates the flexibility that the Guidelines provide in terms of institutional arrangements, the example that an NCP can consist of a single government official seems to contradict the new obligation to ensure sufficient resources. NCP Denmark suggests that the mentioned example is removed in order to only reflect what can reasonably be expected to fulfil the expectations on adequate resources. To promote impartial and equitable NCPs, NCP Denmark also suggests that the Guidelines should prescribe inclusion of independent experts or stakeholder representatives in e.g., oversight or advisory bodies where such stakeholders or competencies are not a permanent presence in the NCP. In addition, NCP Denmark recommends that the OECD Guidelines encourages that NCPs are established as independent institutions in order to enhance impartiality in resolution of specific instances and to enhance confidence of stakeholders.

NCP Denmark welcomes the mentioning of NCP’s assistance in issuing recommendations in specific instances as well as the new text on follow-up procedures. NCP Denmark also supports the explicit mentioning of NCPs possibility to issue determinations in 4(c).

NCP Denmark appreciates the additional commentary 47 and 48 on Transparency and Confidentiality including the text reflecting situations where there is a need to redact sensitive information.

NCP Denmark welcomes the WPRBC and the Secretariat’s authority to consider requests from NCPs for assistance and interpretation of the Guidelines.

Based on experiences in the Danish NCP, it is recommended that the OECD Guidelines adds language that encourages NCPs to offer guidance and potentially other forms of assistance during the handling of specific instances e.g. translation services.