John F. Sherman, III, Senior Fellow at the Mossavar-Rahmani Center for Business and Government at the John F. Kennedy School of Government at Harvard UniverstityBy John F. Sherman, III
Following up on posts by Prof. John Ruggie, UN Special Representative on Business and Human Rights, by Jeff Kaplan, and by Prof. Andy Spalding, readers of this blog should be aware of an important new development announced last week in Paris by the Organization for Economic Co-operation and Development (OECD), which strengthens the link between compliance, ethics, and human rights.
On May 25, ministers from all of the OECD countries—which have the world’s most developed economies–and from other countries, agreed to commit their countries to a revised set of Guidelines promoting tougher standards of corporate behavior, including human rights. The Guidelines are a comprehensive, non-binding code of conduct that OECD member countries and others have agreed to promote in their business sectors.
In her welcoming remarks at the 50th Anniversary of the OECD Guidelines, U.S. Secretary of State Hillary Clinton observed that
[F]or over 35 years, these guidelines have occupied a unique space within the world of corporate social responsibility. They are the only ones formally endorsed by governments, 42 at last count. And they do bring together labor, civil society, and business to create the broadest possible consensus behind them. This is truly the work of a global policy network in action.
This year’s updated guidelines include an important new chapter on human rights, drawing on the work of UN Special Representative John Ruggie. These guidelines help companies ensure their dealings with third parties do not cause or contribute to human rights violations.
Previously, the Guidelines had specific chapters on disclosure, employment and labor, environment, anticorruption, consumer interests, science and technology, competition and taxation. Following extensive consultation, the OECD has now added a new chapter on human rights that expressly draws upon the UN “Protect, Respect and Remedy” Framework and that aligns with the Guiding Principles for its Implementation, as Prof. Ruggie described in his post on the FCPA Blog on April 25.
The new chapter urges companies to conduct human rights due diligence, which “entails assessing actual and potential human rights impacts, integrating and acting upon the findings, tracking responses as well as communicating how impacts are addressed. Human rights due diligence can be included within broader enterprise risk management systems provided that it goes beyond simply identifying and managing material risks to the enterprise itself to include the risks to rights-holders. It is an on-going exercise, recognising that human rights risks may change over time as the enterprise’s operations and operating context evolve.”
The OECD has also endorsed a risk based due diligence approach towards the other subjects of the Guidelines, to enable companies to avoid adverse impacts on their stakeholders.
The OECD’s recent action is further proof that today’s corporate compliance and ethics officer must become familiar with the emerging worldwide focus on business and human rights. And to do so, he or she must understand the central role of UN Protect, Respect, and Remedy framework in addressing the many important issues that companies now face.
John F. Sherman, III is a Senior Fellow at the Mossavar-Rahmani Center for Business and Government at the John F. Kennedy School of Government at Harvard University and a consultant to multinational companies on human rights. Since 2008, he has worked on the UN mandate team of Prof. John Ruggie, the Special Representative of the Secretary General of the United Nations. He’s a member of the UN Global Compact Human Rights Working Group, an Executive Fellow at the Center for Business Ethics at Bentley University, and from 2008-2010, was co-chair of the Corporate Social Responsibility Committee of the International Bar Association. He can be reached at [email protected].
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