Guidelines for multinational enterprises

The OECD Guidelines for Multinational Enterprises: Frequently Asked Questions


What are the Guidelines?

The Guidelines are recommendations addressed by governments to multinational enterprises operating in or from adhering countries (the 34 OECD countries plus 8 non-OECD countries: Argentina, Brazil, Egypt, Latvia, Lithuania, Morocco, Peru and Romania). They provide voluntary principles and standards for responsible business conduct, in a variety of areas including employment and industrial relations, human rights, environment, information disclosure, competition, taxation, and science and technology.


Although many business codes of conduct are now publicly available, the Guidelines are the only multilaterally endorsed and comprehensive code that governments are committed to promoting. The Guidelines' recommendations express the shared values of governments of countries that are the source of most of the world's direct investment flows and home to most multinational enterprises. They aim to promote the positive contributions multinationals can make to economic, environmental and social progress.


The Guidelines have several distinguishing features that helped them gain acceptance and continue to ensure they are supported. First, observance of the Guidelines is voluntary. Their non-binding nature, however, does not imply less commitment by Adhering Governments to encourage their observance. The active system under which the Guidelines are promoted and implemented attests to the importance Adhering countries give the Guidelines.


Also, the Guidelines' basic approach is balanced. The assumption is not that enterprises need to be "controlled" but that internationally agreed guidelines can help prevent misunderstandings and build an atmosphere of mutual confidence and predictability between business, labour and governments. A continuing, pragmatic approach has characterised the Guidelines process and helped make them work.

Although they are addressed to enterprises, the Guidelines need the support of the business community, labour representatives and non-governmental organisations in order to be effective. The countries adhering to the Guidelines will work with all of these actors and there is every reason to believe that constructive collaboration will develop that helps the business community define and achieve appropriate standards of conduct. In addition, the post-Review period is likely to be one of expanding adherence to the Declaration of which the Guidelines is an integral part. Several non-OECD members have already adhered to the Guidelines and others that are willing and able to meet the disciplines in the Declaration would be welcome too.


What is the role of the Guidelines relative to other OECD investment instruments?

The Guidelines are part of a package. They are one part of the OECD Declaration on International Investment and Multinational Enterprises, a broad political commitment adopted by the OECD Governments in 1976 to facilitate direct investment among OECD countries.


The Declaration on International Investment and Multinational Enterprises promotes a comprehensive, interlinked and balanced approach for governments' treatment of foreign direct investment and for enterprises' activities in Adhering countries. The OECD instruments on international investment and multinational enterprises are one of the main means by which the OECD assists Adhering countries in working towards a liberal regime for foreign direct investment, while at the same time ensuring MNEs operate in harmony with the countries where they are located.


The Declaration on International Investment and Multinational Enterprises comprises four instruments for international cooperation:

  • The Guidelines for Multinational Enterprises represent a non-binding code of conduct of corporate behaviour addressed to the multinational enterprises;
  • Under the National Treatment Instrument , Adhering countries commit themselves to treating foreign-controlled enterprises operating in their territories no less favourably than domestic enterprises in like situations;
  • An instrument on Conflicting Requirements calls on Adhering countries to avoid or minimise conflicting requirements imposed on multinational enterprises by governments of different countries;
  • An instrument on International Investment Incentives and Disincentives provides for efforts among Adhering countries to improve cooperation on measures affecting international direct investment.

How do the Guidelines fit with private initiatives to achieve appropriate of business conduct?

Multinational enterprises (MNEs) are widely accepted as an integral part of the international economy, as agents for beneficial flows of investment capital and managerial and technological know-how, as creators of high quality, well paid jobs, and as an important source of tax revenues. MNEs thus contribute in many ways to promoting progress toward sustainable development.


At the same time, public concerns remain about the social, economic and environmental impacts of their activities. The ability of MNEs to organise their operations beyond national boundaries gives rise to concerns about possible conflicts with national policies and about concentrations of economic and political power. These concerns may have been accentuated by the organisational complexity of some MNEs, which can make it difficult to follow and discern their activities.


Many MNEs have taken steps to respond to these public concerns and to help create an atmosphere of public confidence. They have improved the management controls and practices they use to achieve appropriate standards of business conduct in their day to day operations. Businesses are working with other actors -- especially with unions and non-governmental organisations -- to improve their policies and management and reporting practices in the economic, social and environmental fields. The Guidelines seek to reinforce and to complement these private efforts by providing a common frame of reference and by providing an institutional home for international efforts to encourage progress in these fields.


What is the institutional mechanism for implementing the Guidelines?

The institutional set-up for promoting and implementing the Guidelines is described in the OECD Council Decision and its Procedural Guidance . It consists of three main elements: the list of National Contact Points ; the OECD Investment Committee; and the advisory Committees to the OECD of business and labour federations, the Business and Industry Advisory Committee and the Trade Union Advisory Committee respectively.


For the first time, the 2000 Review extended consultations to other non-governmental organisations (NGOs). The OECD has also committed itself to periodically inviting BIAC, TUAC, and other NGOs to express their views on matters covered by the Guidelines in the future.


What are National Contact Points?

National Contact Points are government offices responsible for encouraging observance of the Guidelines in its national context and for ensuring that the Guidelines are well known and understood by the national business community and by other interested parties. The National Contact Point:

  • Handles enquiries about the Guidelines;
  • Discusses matters related to the Guidelines and assists in solving problems that may arise in this connection;
  • Gathers information on national experiences with the Guidelines and reports annually to the Committee.

Because of the central role it plays, the effectiveness of the National Contact Point is a crucial factor in determining how influential the Guidelines are in each national context. While it is recognised that governments should be accorded flexibility in the way they organise National Contact Points, it is nevertheless expected that all National Contact Points should function in a visible, accessible, transparent and accountable manner. These four criteria should guide National Contact Points in carrying out their activities. The recently concluded review has enhanced the accountability of National Contact Points by calling for annual reports of their activity, which will serve as a basis for exchanges of view on the functioning of the National Contact Points among the adhering governments.


The list of National Contact Points is updated regularly on this site.


What is the Investment Committee?

The OECD Investment Committee, comprising all OECD member countries and observers, is the OECD body responsible for overseeing the functioning of the Guidelines and it is expected to take steps to enhance their effectiveness. This responsibility applies not only to the Guidelines but to all the elements of the Declaration on International Investment and Multinational Enterprises. Regarding the Guidelines, its responsibilities include:

  • Responding to requests from adhering countries on specific or general aspects of the Guidelines;
  • Organising exchanges of views on matters relating to the Guidelines with social partners and non-members;
  • Issuing "clarifications" as necessary (see "Clarifications" below);
  • Reviewing the Guidelines and/or the procedural Decisions so as to ensure their relevance and effectiveness;
  • Reporting to the OECD Council on the Guidelines.

The non-binding nature of the Guidelines precludes the Committee from acting as a judicial or quasi-judicial body. Nor should the findings or statements made by a National Contact Point (other than interpretations of the Guidelines) be questioned through a referral to the Committee.


What role do business, labour and civil society representatives play?

As the Guidelines are addressed to enterprises, business, labour and civil society input is especially important. The Investment Committee regularly consults with the Business and Industry Advisory Committee (BIAC), the Trade Union Advisory Committee (TUAC) and OECD Watch, an international network of civil society organisations, on matters relating to the Guidelines and on other issues concerning international investment and multinational enterprises.


BIAC, TUAC and OECD Watch may request consultations with the National Contact Points on issues related to the Guidelines. They can also raise such issues directly with the Investment Committee. In addition, they are responsible for informing their member federations about developments in the Guidelines and for seeking their members' inputs in Guidelines implementation procedures. They may also participate in promotional activities organised by the National Contact Points or by the Committee on a national, regional or multilateral basis.


In addition, they actively participate in various other OECD activities on foreign direct investment, and comment on papers and studies on foreign direct investment, as well as participate in other OECD programmes of interest to them.


What part do non-governmental organisations play?

Non-governmental organisations (NGOs) were first involved in the Guidelines process on the occasion of the 2000 Review of the Guidelines. As provided in the Procedural Guidance of the Council Decision on the Guidelines, NGOs may request consultations with the National Contact Points on issues related to the Guidelines. They may also participate in promotional activities organised by the National Contact Points or by the Committee on a national, regional or multilateral basis.


How are the Guidelines implemented?

The OECD Council Decision and Procedural Guidance describe the various manners by which the governments of Adhering countries have agreed to promote the implementation of the Guidelines by enterprises operating in or from their territory.


How are information and promotion carried out?

Although the Investment Committee itself may organise promotional activities like symposiums, seminars or other conference, information and promotion of the Guidelines is essentially the role of National Contact Points. The National Contact Points' functions associated with information and promotion are fundamentally important to enhancing the profile of the Guidelines.


National Contact Points are required to make the Guidelines better known and available by appropriate means, including in national languages. Online information may be a cost-effective means of doing this. English and French language versions will be available from the OECD, and website links to the OECD Guidelines website are encouraged. As appropriate, National Contact Points will also provide prospective investors, both inward and outward, with information about the Guidelines. In their efforts to raise awareness of the Guidelines, National Contact Points will co-operate with a wide variety of organisations and individuals, including, as appropriate, the business community, employee organisations, other non-governmental organisations, and the interested public.


How are the Guidelines implemented in specific instances?

When issues arise concerning implementation of the Guidelines in relation to specific instances of business conduct, the National Contact Point is expected to help resolve them. Generally, issues are dealt with by the National Contact Point in whose country the issue has arisen, but further contacts at the bilateral level may be pursued between National Contact Points in adhering countries.


After making an initial assessment of whether the issues raised merit further examination, the National Contact Point will offer its good offices to help the parties involved to resolve the issues. Where no agreement can be reached on the issues raised, the National Contact Point will then issue a statement or make recommendations as appropriate.


Any person or organisation may approach a National Contact Point to enquire about a matter related to the Guidelines.

What are "clarifications"?

As the Guidelines are drafted in general terms, so as to apply in all adhering countries with their diversity of legal systems and practices, "clarifications" of the meaning of the Guidelines may be necessary in specific circumstances. The purpose of the clarification is to provide additional information about whether and how the Guidelines apply to a particular business situation. Although clarifications may arise in connection with the activities of a specific enterprise, they are not intended to assess the appropriateness of that enterprise's conduct.


The Guidelines clarification procedure works as follows. If a party is uncertain about the Guidelines' applicability in a particular context, that party should approach the National Contact Point. Enterprises, business and labour organisations and any other interested party may raise such issues. If an enterprise is directly concerned, then the National Contact Point should contact the enterprise to inform it that an issue related to the Guidelines has been raised. The National Contact Point, business and labour representatives and other interested parties then try to clarify the matter. It might be appropriate for the National Contact Point to contact other National Contact Points if the issue under consideration concerns more than one adhering country.


Whenever a National Contact Point gives its opinion as to the relevance of the Guidelines in specific instances, it keeps in mind the international character of the Guidelines and the need to avoid conflicting national interpretations. Where there is any doubt or where there are divergent views, the matter should be brought to the attention of the Investment Committee before the NCP gives a final answer. Final responsibility for clarifications lies with the Committee , but it relies on the National Contact Points to assume as much as possible of the task of ensuring that the meaning of the Guidelines is clear in each national context.


A request for clarification may be referred to the Committee by government authorities or by TUAC or BIAC. The Committee discusses the matter, and consults with BIAC and TUAC. If an enterprise is directly concerned, it also may express its view to the Committee orally or in writing or through BIAC. After these deliberations, the Committee may provide a clarification of how the Guidelines apply in a situation like the one in question. However, the Committee's examination of the need for, and eventual provision of a clarification concerns the application of the Guidelines to the issue raised. The clarification is not a judgement on the behaviour of an individual enterprise -- hence, clarifications that arise in connection with individual firms do not refer to them by name.


Download the clarifications .


What is the situation in non-adhering countries?

The 2000 Review of the Guidelines recommends observance of the Guidelines by enterprises wherever they operate, and not only in the OECD area. Hence, the Council Decision and Procedural Guidance also provide for implementation of the Guidelines in non-Adhering countries.


For instance, with regard to information and promotion, National Contact Points are expected to respond to enquiries from governments of non-Adhering countries.


In the case of specific instances arising in non-Adhering countries, the 2000 Review recognises that effective implementation of the Guidelines in such circumstances may be more difficult. Nonetheless, National Contact Points are encouraged to take steps in order to develop an understanding of the issues at stake, for instance through contacts with the management of the firm in the home country or with government officials in the non-Adhering country.


What was the importance of the 2000 Review of the Guidelines?

In undertaking the Review, the OECD responded to the need for a thorough consideration of the Guidelines so as to ensure their continued relevance and effectiveness in the rapidly changing global economy. New issues have gained prominence since the Guidelines were first issued in 1976 and the international consensus on appropriate business conduct is evolving rapidly, spurred in no small part by the efforts of multinational firms to define standards for themselves.


Public concerns about the impact of deepening globalisation on home and host societies meant that the 2000 Review was conducted in a context of growing interest and visibility. The Review benefited from consultations with the business community, labour representatives, non-governmental organisations and non-member governments. Postings of the draft text on the Internet and solicitation of public comment further increased the transparency and openness of the Review process. These sources all provided essential inputs to the development of the revised recommendations and procedures to enhance implementation.


While recognising the value of stability in the text and implementation procedures, the Investment Committee responded to the need for a thorough consideration of the Guidelines so as to ensure their continued relevance and effectiveness in light of the changing needs of the global economy. Many features of the Guidelines were maintained -- observance by firms is still voluntary; the institutional structure of the follow-up procedures is broadly unchanged; and the Guidelines remain an integral part of the OECD Declaration.


What changed in the text?

In comparison with earlier reviews (1979, a "mid-term review" in 1982, 1984 and 1991), the changes to the text are far-reaching and reinforce the core elements - economic, social and environmental-of the sustainable development agenda.


With the addition of recommendations relating to the elimination of child and forced labour, all internationally recognised fundamental principles and rights at work are now covered by the Guidelines.

The environment section now encourages enterprises to raise their environmental performance, through such measures as improved internal environmental management, stronger disclosure of environmental information, and better contingency planning for environmental impacts.


A recommendation on human rights has been introduced. New chapters on combating corruption and on consumer interests have also been added. The chapter on disclosure and transparency has been updated to reflect the OECD Principles on Corporate Governance and to recognise and encourage progress in enhancing firms' social and environmental accountability.


What changed regarding the implementation?

The revisions to the implementation procedures maintain the focus on the National Contact Points, as the key government institution responsible for furthering effective implementation of the Guidelines. The National Contact Points will continue to undertake promotional activities, handle enquiries on the Guidelines, and discuss matters covered by them, including implementation in specific instances. However, the Review provides more guidance to National Contact Points in fulfilling their role. The main revisions are:

  • The roles and responsibilities of the National Contact Points are sharpened and clarified via Procedural Guidance attached to the Council Decision on implementation procedures.
  • Annual meetings will be held to allow National Contact Points to share their experiences in promoting the Guidelines and to provide ways and means to encourage further observance of the Guidelines.
  • Each National Contact Point will submit an annual report of its activities to the Investment Committee.

The Review also clarified the Committee's broad oversight role. The Committee will continue to provide clarifications of the meaning of the Guidelines, as necessary, in specific instances and in response to requests or queries from Adhering Governments, BIAC or TUAC. It will serve as a forum for addressing all matters covered by the Guidelines and will oversee their implementation. The new Procedural Guidance attached to the Council Decision also provides guidance for exchanges of views on the activities of National Contact Points and for calling on experts to assist in any matter covered by the Guidelines.


Finally, with regard to non-adhering countries, the revised Guidelines make clear that the recommendations represent good practice wherever enterprises operate, not just within the OECD area. The Review recognises, however, that the particular circumstances of individual host countries need to be taken into account and that the implementation procedures need to be adapted to the greater difficulties that arise for National Contact Points when looking into matters covered by the Guidelines in non-adhering countries.


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