Climate change is the defining challenge of our time, requiring urgent, ambitious action from all global actors. Institutional investors in particular will play a vital role in enabling a transition to net zero by enabling the provision of financing toward products, services and technologies necessary for the transition and aligning their investments with temperature goals of the 2015 Paris Agreement.
In this context, this tool on Managing Climate Risks and Impacts through Due Diligence for Responsible Business Conduct (RBC) (the tool) aims to explain how the RBC due diligence framework can be applied by institutional investors to address adverse climate impacts associated with their investee companies, as understood under the OECD Guidelines for Multinational Enterprises on Responsible Business Conduct.
The tool also provides an initial overview of how the RBC due diligence framework relates to and can draw on other frameworks and tools for assessing, managing or disclosing climate-related impacts associated with their investments. In this respect, Annex A of this tool provides an overview of how the RBC due diligence framework compares with leading initiatives and disclosure frameworks used by investors with respect to climate impacts (e.g. the Task Force on Climate Related Financial Disclosures).
This tool does not intend to create new standards of conduct but rather to outline measures and practical actions investors can take to carry out RBC due diligence with respect to climate risks and impacts. The tool also discusses the potential value to investors in carrying out RBC due diligence in connection with other sustainability objectives (i.e. biodiversity and social).
This tool was produced by Barbara Bijelic and Benjamin Michel from the Centre for Responsible Business Conduct of the OECD’s Directorate for Financial and Enterprise Affairs and by Géraldine Ang from the Finance, Investment and Global Relations division of the OECD’s Environment Directorate. The report was developed under the direction of Allan Jorgensen, Head of the OECD Centre for Responsible Business Conduct. It benefited from valuable insights from Raphaël Jachnik and Jolien Noels (Environment Directorate). Communications support was provided by Thorfinnur Ómarsson and Zara Kuruneri.
The tool has been developed through close consultation with a multi-stakeholder advisory group of representatives from the financial sector, industry leaders, government, civil society, trade unions international organisations and other experts. This paper was approved by the OECD Working Party on Responsible Business Conduct in July 2023 and by the OECD Investment Committee and the OECD Environmental Policy Committee in September 2023.
This tool is part of the work the OECD undertakes to clarify expectations of responsible business conduct due diligence in the context of enterprises operating in the financial sector. The OECD has also developed tailored guidance to help enterprises carry out due diligence in other sectors, specifically: extractives, and particularly minerals from conflict affected and high-risk areas; garment and footwear; and agriculture.