OECD due diligence guidance

Multinational businesses play an important role in advancing economic, environmental and social progress. However, their activities can also lead to adverse impacts on human rights, the environment, consumers and corporate governance.

Prevent and mitigate adverse impacts

Businesses that effectively implement the responsible business conduct standards set out in the OECD Guidelines for Multinational Enterprises on Responsible Business Conduct (OECD Guidelines) can better manage and minimise these risks. A core expectation of the OECD Guidelines is that enterprises conduct due diligence to identify, prevent and mitigate actual and potential adverse impacts arising from their own operations and business relationships.

Due diligence processes

The OECD Guidelines recommend that enterprises undertake due diligence through a range of interrelated processes across an enterprise’s business activities, the supply chain and wider value chain:

• identification of adverse impacts
• prevention and mitigation
• monitoring of implementation and results
• communication of how impacts are addressed

The OECD Due Diligence Guidance for Responsible Business Conduct (Due Diligence Guidance) offers practical, plain language advice to support businesses in applying due diligence processes, implementing the OECD Guidelines effectively and embedding responsible business conduct into their policies and practices. 

Adverse impacts

The Due Diligence Guidance can help enterprises identify, assess, address, prevent and mitigate adverse impacts related to:

• human rights
• the environment
• bribery and corruption
• consumer interests.

Characteristics of due diligence

The purpose of due diligence is to avoid causing or contributing to adverse impacts on people, the environment and society, and to prevent adverse impacts that are directly linked to an enterprise’s operations, products or services through its business relationships. 

Mitigate, prevent and remediate

When involvement in adverse impacts cannot be avoided, due diligence should enable enterprises to mitigate them, prevent their recurrence and, where relevant, remediate them.

Due diligence is risk-based. The measures an enterprise takes should be proportionate to the severity and likelihood of potential adverse impacts. When both likelihood and severity are high, due diligence should be more extensive. Due diligence should also be tailored to the specific nature of adverse impacts across responsible business conduct areas, such as human rights and the environment, and should take into account how different groups may be affected.

Ongoing, responsive and evolving

The due diligence process is not static but ongoing, responsive and evolving. It includes feedback loops to enable enterprises to learn from what works and what does not. Enterprises should aim to progressively improve their systems and processes to avoid and address adverse impacts. Through effective due diligence, an enterprise should be able to adjust its response as its risk profile changes over time.

Business benefits

Businesses that implement due diligence for responsible business conduct will be able to:

• build supply chain resilience
• manage uncertainty
• drive long‑term value.

Resources from the OECD

The OECD has also developed a range of issue and sector-specific due diligence tools and guidance to assist enterprises in implementing the OECD Guidelines in particular industries, and to prevent and mitigate types of potential adverse impacts that are associated with specific risks and business activities.

Tools