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OECD Alignment Assessments of Industry and Multi-Stakeholder Programmes

 

 

 

Alignment of multi-stakeholder or industry initiatives with OECD due diligence guidance

OECD Alignment Assessments

OECD Alignment Assessments evaluate the alignment of an industry, government or multi-stakeholder initiative with the recommendations of OECD due diligence guidance, using the OECD’s alignment assessment tools and methodology. 

 

An initiative’s standards, implementation and overall credibility are assessed against detailed criteria of due diligence using an assessment tool. Each criterion is linked to discrete recommendations from specific OECD due diligence guidance. Initiatives are evaluated as being fully, partially or not aligned against each due diligence criterion, contributing towards an overarching alignment score.

 

The OECD alignment assessments constitute three ‘core’ parts:

  • The Standards Assessment
  • The Implementation Assessment
  • The Credibility Assessment (previously known as the ‘Governance Assessment’)

OECD alignment assessments are based on:

  • desktop review of written policies, standards, tools and methodology documents;
  • shadow assessments (passive observation of audits and assessments);
  • extensive interviews with internal and external stakeholders; and
  • consultation with external experts.

 

Alignment assessments focus on the adequacy of the initiative’s standards and monitoring, oversight and implementation activities. They do not draw conclusions about the adequacy of the due diligence carried out by individual companies that participate in the initiative under assessment.

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OECD due diligence guidance

OECD due diligence guidance recommendations are the negotiated and government-backed global benchmark for responsible business conduct (RBC) due diligence. The OECD Due Diligence Guidance for Responsible Business Conduct, which was launched in 2018, is adopted by 49 governments and promotes a common global understanding of RBC due diligence.

It details the specific steps of the due diligence process that have been agreed upon by policy makers, business – including investors - trade unions and civil society. This due diligence guidance builds on existing sector-specific guidances that have been negotiated and adopted by governments in the minerals, extractives, agriculture, financial and garment and footwear sectors.

Alignment assessment process

Alignment Assessments follow a process that starts with a detailed scoping of the initiative and its activities. Desktop reviews, interviews and shadow assessments (essentially following assessors or auditors of the initiatives during their work) then form the basis of data collection and analysis. Based on its review, the OECD develops a findings report, which is shared with the initiative and an informal advisory group prior to publication.

 

Why align with international standards?

Due diligence is increasingly on the policy agenda. All international instruments on responsible business conduct – including the OECD Guidelines for Multinational Enterprises, the UN Guiding Principles on Business and Human Rights, and the ILO Tripartite Declaration of Principles Concerning Multinational Enterprises and Social Policy – recommend due diligence as the framework for companies to address adverse impacts in their operations and global supply chains.

The growing number of regulatory as well as voluntary due diligence initiatives across sectors and geographies underscores the need for convergence around shared expectations for companies and supply chain actors. Regulatory frameworks which include complementary requirements that are aligned with international standards, alignment assessments of initiatives which help to scale up common approaches and best practices, and clear metrics for effectiveness can all contribute to legal certainty, lower costs and contribute to a level playing field for responsible business conduct.

Well-designed, transparent and credible industry programmes, government and multi-stakeholder initiatives (“sustainability initiatives”)  can play an important role in supporting companies’ due diligence at different points in the process. However, the landscape of initiatives across sectors and geographies is both vast and diverse in terms of their composition, focus and core activities.

Many initiatives also now play a role in evaluating and benchmarking the due diligence activities of individual companies and their business partners. This diversity can be a strength as initiatives focus their resources and expertise. But a lack of harmonisation across initiatives has resulted in multiple and at times conflicting requirements on companies, as well as confusion about what initiatives do and what role they should and should not play in due diligence. While initiatives can be a multiplier for good quality due diligence, they can also lead to over-reliance by companies if they are not well designed and used appropriately by companies. Companies have ultimate responsibility for their own due diligence and are expected to play an important role in each step.

Industry, government or multi-stakeholder initiatives can help companies to:

  • Pool knowledge about supply chains including sector and geographic risks (e.g. risk mapping and expert engagement)
  • Increase leverage across the supply chain or in specific geographies, through collaborative approaches (e.g. joint trainings or audits and collaborative engagement with suppliers)
  • Evaluate the due diligence practices of business partners (e.g. through site-level stakeholder engagement and assessments)
  • Share costs and savings as a benefit to sector collaboration which can be particularly useful for small and medium-sized enterprises
  • Scale effective measures (including for example training, reporting frameworks or complaints handling mechanisms)
  • Collaborative initiatives can also help to share and save costs, avoid duplicative efforts and address audit and assessment fatigue. These elements can be particularly useful for small and medium-sized enterprises.

For more on the role of sustainability initiatives in mandatory due diligence, see our recent Background Note, also available on the OECD’s Due Diligence Policy Hub.

 

How companies can use initiatives appropriately?

Companies may carry out RBC due diligence in accordance with OECD standards without using or participating in initiatives. Where they do opt to use or participate in an initiative—however well designed or credible—companies should not outsource their own responsibilities by over-relying on the initiative. Instead, companies should have robust, risk-based systems in place to:

  • Understand the scope, activities and limitations of individual initiatives, including their geographic, sector, risk and supply chain scope
  • Gather, review, validate and address gaps in data
  • Respond to and cross-check the information they receive from the initiative, adapt it to their own supply chains and most significant risks, and build on it as part of their due diligence.
  • Respond to red flags or problems that arise.

Companies are therefore expected to carry out risk-based checks of the reliability and quality of information that they receive from third parties, and also layer on their own due diligence in accordance with the OECD’s due diligence framework. This can involve, for example, establishing systems to identify red flags associated with the initiative or its members, or layering on other supplier assessment or risk monitoring and mapping tools, such as stakeholder engagement.

 

DID YOU KNOW?

The OECD Alignment Assessment methodology has been enshrined into EU law through the EU Delegated Act on the recognition of industry schemes.

This Act is part of the EU Regulation on Responsible Mineral Supply Chains (Regulation (EU) 2017/821) which is based on the OECD Minerals Due Diligence Guidance. Importantly, the EU Delegated Act creates an ongoing implementation role for the OECD Secretariat connected to the assessment and ultimately recognition of industry schemes.

CONTACT

Emily NORTON

Policy analyst

OECD Centre for Responsible Business Conduct

emily.norton@oecd.org

Third-party assessments of initiatives

Third parties may use the OECD’s alignment assessment methodology and assessment tools to evaluate initiatives against OECD due diligence guidance and credibility criteria. Where independent assessments are undertaken, however, the OECD strongly encourages initiatives to publish:

  • detailed assessment reports, including detailed findings, analysis and ratings and information on the assessment methodology (such as sampling methodologies, number of interviews conducted, and information on the types of stakeholders consulted);
  • completed assessment tools, including detailed criteria-by-criteria analysis, ratings and a list of evidence.

While the OECD encourages maximum transparency in all alignment assessments, including those undertaken and overseen by the OECD, transparency is particularly important for independent assessments to increase confidence and trust in the assessment process and findings. Note that the use of the OECD’s assessment Tool(s) and completion of an alignment assessment, whether by the OECD or an independent third party, does not imply any endorsement by or affiliation with the OECD. See Terms and Conditions below.

Terms and conditions for using OECD Alignment Assessment Tools and undergoing OECD Alignment Assessments

Use of the Alignment Assessment Tool(s) and/or completion of an OECD alignment assessment by the OECD does not imply any endorsement by or affiliation with the OECD. Initiatives using the Alignment Assessment Tool(s) shall not, and shall use all reasonable endeavours to ensure that their employees,  contractors,  and affiliates, including participating, assessed or member enterprises  (together, ‘Associated Entities’), do not: (1) make false, misleading or inaccurate claims or representations about the results of an assessment or their relationship with the OECD, either in public or private; and (2) claim any affiliation with, or endorsement by, the OECD, either in public or private.

If the initiative or any Associated Entity wishes to use the OECD name, acronym, logo or other identifying symbols in promotional material, both public and private, it must obtain our written agreement on how it will be used. It shall send its request to RBC@oecd.org. If permission is granted, it is only granted for the specific usage referred to in OECD’s reply. Each new use requires a new request. If requested by the OECD, the initiative shall, and shall use all reasonable endeavours to ensure that all Associated Entities shall, immediately cease the use of the OECD’s name, acronym, logo or other identifying symbols. The OECD shall not be required to provide justification for such a request. The OECD reserves the right to take any action it deems necessary against initiatives or Associated Entities that breach these terms. In particular, non-compliance may result in the exclusion of the initiative or Associated Entity from future OECD projects and/or it being barred from using any future tools developed by the OECD. At the OECD’s discretion, it may also be excluded from OECD-hosted multi-stakeholder platforms and/or be denied a platform at OECD-hosted public events. 

Links

 

Alignment assessment of industry programmes with the OECD minerals guidance

 

Alignment assessment of industry initiatives for due diligence in the garment and footwear sector

 

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