The European Union promotes Responsible Business Conduct (RBC) for more resilient and responsible supply chains

Challenge

Global Value Chains (GVCs) have been a strong catalyst for socio-economic development over the past 30 years. However, the increased adverse social and environmental impacts of GVCs have fuelled debate on the benefits of international trade and globalisation. These concerns have been heightened by the COVID-19 crisis and Russia’s invasion of Ukraine, where the ability of GVCs to ensure the secure supply of essential products and generate benefits for all has come under the spotlight. These considerations have led to growing calls to embed Responsible Business Conduct (RBC), including risk-based due diligence, at the core of business operations. RBC requires businesses to avoid and address negative impacts of their activities, including in their value chains, while contributing to sustainable development in the countries where they operate. Promoting RBC principles and standards through trade and investment policies can prove useful in supporting more resilient, sustainable and responsible GVCs.

Approach

The European Union (EU), in partnership with the International Labour Organisation (ILO), the United Nations Office of the High Commissioner for Human Rights (OHCHR) and the Organisation for Economic Co-operation and Development (OECD), has implemented programmes in two key regions – Asia and Latin America and the Caribbean – to help create enabling policy environments for RBC, boost businesses’ capacity to observe RBC principles and standards, and raise awareness of the importance of RBC among stakeholders. The EU benefits from the partner organisations’ extensive expertise on risk-based due diligence and economic policies, to carry out the following activities:

• delivering policy analysis and advice for governments on RBC and policy areas through which RBC can be leveraged (e.g., trade and investment policies, public procurement and state-owned enterprises)

• building businesses’ capacity to conduct risk-based due diligence through guidance and training in priority sectors

• strengthening National Contact Points for RBC to facilitate access to remedy.

The regional programmes are an integral part of the EU “Trade for All” strategy and of the EU 15-Point Action Plan that seeks to improve the enforcement of the Trade and Sustainable Development (TSD) chapters of trade agreements.

Results

Key outcomes of the regional programmes include:

• Enhanced coherence of government policies that promote RBC in 6 Asian countries and 9 Latin American and Caribbean countries. Under the programmes, the OECD has undertaken a number of RBC and Investment Policy Reviews. These examine legislation and policies in selected policy areas covered by the OECD Guidelines for Multinational Enterprises, while also analysing other policy areas through which RBC can be leveraged (i.e. trade and investment, public procurement, governance of state-owned enterprises, etc.). Practical recommendations have resulted in the progressive inclusion of RBC considerations in policy areas that shape business conduct. Notably, 12 out of the 15 countries in the programmes are developing or implementing policies to promote respect for human rights in business, notably through National Action Plans or national frameworks or policies on RBC.

• Raised awareness on the importance of conducting risk-based due diligence for businesses engaged in international trade, in both importing and exporting. For example, 179 companies and trade organisations in Latin America, 80 small and medium-sized enterprises (SMEs) in Viet Nam and 510 participants of the OECD e-learning Academy on RBC, received training and capacity building on RBC principles and standards, as well as due diligence.

• Increased leverage of National Contact Points for RBC to facilitate access to remedy. For example, in Latin America, the programme helped raise awareness on the importance of National Contact Points as a channel for remediation when adverse environmental or social impacts occur. All National Contact Points are now drafting and implementing roadmaps to improve their functioning.