The OECD wants companies to take responsibility for the entire production chain. Photo: USAID Pakistan


The OECD demands that multinational companies take responsibility for sustainable development

The OECD has developed special guidelines for multinational companies to make companies take responsibility for their entire supply chain. Multinational companies must both work preventively and take responsibility for the consequences the business may have in low- and middle-income countries.

Getting companies to take responsibility for their actions in low- and middle-income countries is not easy. This is what Frankje Boele, policy analyst at the OECD in Paris, works with on a daily basis. Boele has also worked at the International Labor Organization, ILO, so she has extensive experience in labor law issues. For a long time, Corporate Social Responsibility (CSR) has been a trendy concept that companies throw themselves at, but according to Boele, it is often an ineffective strategy that has more to do with PR than with actual change.

- CSR means that companies can build a school in a low- or middle-income country to get goodwill, despite the negative effects the company has contributed to have nothing to do with education. Responsible Business Conduct (RBC), are strategies for both doing good and doing no harm, says Boele.

The RBC guidelines are central to the OECD's own guidelines for multinational companies. Their goal is to both advocate positive development, ie "do good", and prevent the negative effects that multinational companies can contribute to - "do no harm". Today, 48 states have signed the guidelines, the OECD's 35 members and another 13 states. This means that almost all multinational companies can be held accountable according to the guidelines, as they are usually based in one of the 48 countries. Many countries have also enshrined the guidelines in their national laws, making them binding.

According to the guidelines, companies must take responsibility for their entire supply chain, not just for the end product. This means that the company is also responsible for ensuring that a subcontractor to a subcontractor does not use child labor, oppose trade unions or in any other way violate international laws and regulations.

Using many subcontractors has long been a way for multinational companies to avoid responsibility for how a product is produced. Sometimes hundreds or even thousands of suppliers may be involved in manufacturing a single product, such as a computer. Because the supply chain is so difficult to follow, it can be almost impossible for consumers to find out if a product is ethically produced. With the RBC guidelines, the OECD wants to demand responsibility from companies at all stages of production. They also demand that companies work preventively, not just act when problems arise. One example is cobalt production in the Congo, where child labor is widely used.

- By helping the Congolese government to give more children the opportunity to go to school, the number of children working is reduced. This is good for companies in the long run, as it makes their production more efficient and less risky. It also contributes to companies getting a better reputation, says Frankje Boele.

The OECD has long focused mainly on economic cooperation, but the department for sustainable business has grown rapidly in recent years, according to Boele:

- Five years ago, we were just a couple of people working on these issues at the OECD, now we are over 20 people in the department. This shows that these issues are given higher priority.

The countries of the world are committed to achieving the global sustainability goals by 2030, also known as Agenda 2030. Boele believes in the RBC guidelines' ability to get multinational companies to actively work with sustainable development. If she's right, companies can.

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