Businesses are the engine of the economy. They contribute to economic and social development through job creation, development of skills and technology, and the provision of goods and services. At the same time, business activities can have adverse impacts on people, the environment and society. All business, regardless of their location, size, sector, operational context, ownership and structure, should act responsibly, and identify and manage risks of impacts linked to their operations, products or services, including in their supply chains and other business relationships. Governments should encourage responsible business behaviour through a smart mix of mandatory and voluntary measures, and support the creation of an enabling environment conducive to responsible business practices.
In order to promote the positive contribution that businesses can make to sustainable development and help prevent and address negative impacts, the International Labour Organization (ILO), the Organisation for Economic Co-operation and Development (OECD) and the United Nations (UN), have developed instruments that provide guidance on responsible business. These instruments establish that all companies have the responsibility to avoid and address adverse impacts with which they are involved, including in their supply chains, while making a positive contribution to the economic, environmental and social progress of the countries in which they operate. The implementation of international corporate responsibility standards have also become essential for business aiming to contribute to the Sustainable Development Goals (SDGs).
The three main instruments that have become the key reference points for responsible business, and which outline how companies can act responsibly are the ILO Tripartite Declaration of Principles concerning Multinational Enterprises and Social Policy (ILO MNE Declaration), the OECD Guidelines for Multinational Enterprises (OECD MNE Guidelines) and the UN Guiding Principles on Business and Human Rights (UN Guiding Principles). They are aligned with, and complement, each other.
The ILO Tripartite Declaration of Principles concerning Multinational Enterprises and Social Policy provides guidance to encourage the positive contributions companies can make to economic and social progress and to minimise and resolve difficulties in their operations. The principles addressed to business reflect good practice for all enterprises. The ILO MNE Declaration also provides policy guidance to governments as well as employers’ and workers’ organizations, which play central and distinctive roles in creating an enabling environment for responsible business.
Its recommendations on employment, training, conditions of work and life, and industrial relations are based on international labour standards, including the fundamental Conventions underpinning the 1998 ILO Declaration on Fundamental Principles and Rights at Work which addresses forced labour, child labour, non-discrimination and freedom of association and collective bargaining.
The Organisation for Economic Co-operation and Development (OECD) Guidelines for Multinational Enterprises are recommendations from governments to businesses on how to act responsibly. They cover all areas of business responsibility, including labour and human rights issues, environment, disclosure, bribery, consumer interests, science and technology, competition, and taxation. The Guidelines were adopted in 1976 and last updated in 2011 to include a chapter on human rights aligned with the UN Guiding Principles. The chapter on Employment and Industrial Relations is aligned with ILO labour standards. The Guidelines also include a unique non-judicial grievance mechanism: National Contact Points (NCPs).
The UN Guiding Principles on Business and Human Rights focus on avoiding and addressing adverse business-related human rights impact. They are founded on three pillars. The first one stipulates the State duty to protect against human rights abuses by third parties, including business enterprises, while the second one indicates the independent responsibility of business enterprises to respect human rights, which means that they should avoid infringing on the human rights of others and should address adverse human rights impacts with which they are involved. The third one deals the need for those harmed by business-related activities to have access to effective remedy.
These principles were unanimously endorsed in 2011 by the UN Human Rights Council. The instruments developed by the ILO, OECD and UN set the global expectations for responsible business conduct and are aligned and complement each other. Each organisation brings its own value-added to their implementation, based on its mandate and expertise.
International corporate responsibility standards set the expectation that all companies, regardless of their size, sector, operational context, ownership and structure– avoid and address the adverse impacts with which they are involved, and contribute to the sustainable development of the countries in which they operate. The instruments set out that impact of business activities is understood beyond the impact on the company itself and refers to the impact business activities may have on human rights, including labour rights, the environment and society, both positive and negative. The instruments establish a common understanding that enterprises can cause, contribute to, or be directly linked to adverse impacts through operations, products or services by business relationships, and they provide a framework for how enterprises should avoid and address them.
Businesses should undertake due diligence to identify, prevent and mitigate their actual and potential negative impacts and account for how those impacts are addressed. This process should involve meaningful consultation with potentially affected groups and other relevant stakeholders. With respect to labour rights, consultation with workers’ organisations is particularly important. By helping companies understand the impacts of their activities and by clarifying the expectations around due diligence, these international instruments guide companies on what they should do in order to know and show that they are behaving responsibly.
Responsible business covers not only impacts that a company may cause or contribute to through its own activities but also those impacts directly linked to an enterprise’s operations, products or services through its business relationships. This includes: business partners, entities in the value chain such as subsidiaries, suppliers, franchisees, licensees, joint ventures, investors, clients, contractors, customers, consultants, financial, legal and other advisers, and any other non-State or State entities.
As part of their duty to protect against business-related adverse impacts, States are expected to take appropriate steps to ensure, through judicial, administrative, legislative or other appropriate means, that when such abuses occur within their territory and/or jurisdiction those affected have access to effective remedy. In addition, where companies identify that they have caused or contributed to adverse impacts, they are expected to address them through providing remedy, and they should provide for or cooperate in this remediation through legitimate processes.