Promoting Responsible Business Conduct through Trade and Investment in the Middle East, North Africa and Türkiye

Annex A. What is responsible business conduct?

The concept of RBC, which is aligned with related notions (see Box A A.1) has a two‑fold objective. On the one hand, it encourages all enterprises – regardless of their legal status, size, ownership or sector – to make a positive contribution to economic, environmental and social progress in the countries in which they operate with a view to enhancing business contribution to sustainable development outcomes. On the other, it entails that enterprises avoid and address adverse impacts on people, the planet and society caused or contributed to by their own activities and/or seek to prevent and mitigate adverse impacts directly linked to their operations, products, or services by a business relationship. As these impacts can cover a range of substantive areas, the scope of RBC is broad and crosscutting. Risk-based due diligence is central to identifying, preventing, and mitigating actual and potential adverse impacts, and accounting how these impacts are addressed, and is thus a key element of RBC.

With growing demands for better management and integration of environmental and social considerations in supply chains, RBC has become increasingly relevant for the global agenda. It is key to ensuring a resilient, sustainable, and inclusive global economy. By operating responsibly, in line with international RBC principles and standards, businesses can operationalise the SDGs and ensure that they are not undermining them, either through their own operations or through their business relationships. This is particularly critical in today’s interconnected markets, where supply chains can span multiple jurisdictions and business cultures (OECD, 2023[101]). RBC can also contribute to maximising the private sector’s contribution to the SDGs and mobilising the resources necessary for financing the implementation of the 2030 Agenda (OECD, 2016[116]).

Box A A.1. Responsible business conduct, corporate social responsibility, and business and human rights: How are these concepts related?

Many businesses, governments and stakeholders are familiar with the term corporate social responsibility (CSR), which has historically been used to describe business interactions with society.

Over the last years, CSR has increasingly been used alongside responsible business conduct (RBC) and business and human rights (BHR), with some using the terms interchangeably (e.g. the European Union). All of these concepts reflect the expectation that businesses should consider the impact of their operations, supply chains, and business relationships on people, the planet, and society as part of their core business considerations and not as an add-on. This includes the need to avoid and address adverse environmental and social impacts.

A key characteristic of CSR, RBC and BHR is that they refer to corporate conduct beyond simply complying with domestic law and call on business to contribute positively to sustainable development while managing risks and impacts that may result from their activities. These concepts should not be understood to be equivalent to philanthropy.

Source: ILO/OECD/OHCHR (n.d.[117]), Responsible Business – Key Messages from International Instruments, https://www.oecd.org/content/dam/oecd/en/topics/policy-sub-issues/global-engagement-on-responsible-business-conduct/Brochure-responsible-business-key-messages-from-international-instruments-ENG.pdf

OECD instruments on responsible business conduct

To promote the adoption of responsible business practices by enterprises, as well as the development of enabling environments that drive, promote and support such practices by governments, the OECD has developed a series of instruments addressed both to businesses and policymakers.

The OECD Guidelines for Multinational Enterprises on Responsible Business Conduct and the National Contact Points for Responsible Business Conduct

The main instrument aimed at promoting the adoption of RBC practices by businesses developed by the OECD is the MNE Guidelines. These are recommendations jointly addressed by governments to businesses on how to act responsibly. They cover all key areas of potential business responsibility, including disclosure, human rights, employment and industrial relations, environment, bribery and other forms of corruption, consumer interests, science, technology and innovation, competition, and taxation.

The MNE Guidelines were first adopted in 1976 and last updated in 2023 to ensure that they remain fit for purpose in light of societal challenges and the evolving context for international business. The 2023 update reflects a decade of experience since the last review in 2011 and seeks to respond to urgent social, environmental and technological priorities facing societies and businesses, including climate change. To date, 52 countries (of which 38 OECD Members and 14 additional economies) – including Egypt, Jordan, Morocco, Tunisia and Türkiye – have adhered to the OECD Declaration on International Investment and MNEs [OECD/LEGAL/0144] that contains the MNE Guidelines, thereby committing to implement them and encourage their use by enterprises operating in or from their territories.

Adherents to the MNE Guidelines have the legal obligation to set up a NCP to further their effectiveness. NCPs have two main responsibilities. On the one hand, they promote the awareness and uptake of the MNE Guidelines, including by responding to enquiries to make them known among relevant stakeholders and across government entities. On the other hand, they contribute to the resolution of issues that arise in relation to the implementation of the MNE Guidelines in cases called “specific instances”, serving as a non-judicial grievance mechanism. In addition, NCPs may also provide support to efforts by their government to develop, implement and foster coherence of policies to promote RBC.

Up to now, the 52 existing NCPs have organised and participated in over 3 000 events with governments, businesses and other stakeholders and have dealt with more than 700 specific instances arising in over 110 countries, thereby playing a critical role in ensuring that the MNE Guidelines are implemented globally by businesses. They have also taken measures to support policy coherence across government for the promotion of RBC (OECD, 2025[118]; 2023, p. 17[101]).

The OECD Due Diligence Guidance

The MNE Guidelines recommend that enterprises carry out due diligence to identify, prevent and mitigate actual and potential adverse impacts on people, the planet and society, and to account for how those impacts are addressed. Based on this, the OECD has developed a range of instruments providing guidance on due diligence, with the aim of helping companies operating in different sectors understand and address RBC risks.

The general OECD Due Diligence Guidance for RBC (the OECD Due Diligence Guidance for RBC) [OECD/LEGAL/0443] aims to promote a common understanding among governments and stakeholders of risk-based due diligence for RBC. The Guidance defines a six‑step process for due diligence (see Box A A.2), which is relevant for all types of enterprises operating in all countries and sectors of the economy. As such, it also serves to implement the due diligence recommendations contained in the other two main international instruments on RBC: the UNGPs and the ILO Tripartite Declaration of Principles Concerning Multinational Enterprises and Social Policy.

Box A A.2. The due diligence process and supporting measures

The OECD Due Diligence Guidance for Responsible Business Conduct (RBC) establishes a six‑step process to conduct due diligence that can be used by any enterprise to understand and implement the due diligence recommendation of the MNE Guidelines, irrespective of the location or sector of its operations.

This process consists of the following six steps:

• Step 1: embedding RBC into the enterprise’s policies and management systems

• Step 2: undertaking due diligence by identifying actual or potential adverse impacts on RBC issues

• Step 3: ceasing, preventing or mitigating such impacts

• Step 4: tracking implementation and results

• Step 5: communicating how impacts are addressed

• Step 6: enabling remediation when appropriate

Figure A A.1. The six‑step due diligence process

Source: OECD (2018[119]), OECD Due Diligence Guidance for Responsible Business Conduct, https://doi.org/10.1787/15f5f4b3-en.

Within this general framework, the nature and extent of due diligence depend on the circumstances of a particular situation. Therefore, the measures taken by enterprises to conduct due diligence should be risk-based, commensurate with the severity and likelihood of adverse impacts, and appropriate and proportionate to the enterprises’ circumstances and context.

Source: OECD (2018[119]), OECD Due Diligence Guidance for Responsible Business Conduct, https://doi.org/10.1787/15f5f4b3-en.

In addition to the general OECD Due Diligence Guidance for RBC, the OECD has developed sector-specific Due Diligence Guidance for the minerals, extractives, agriculture, garment and footwear, and financial sectors. This Guidance helps enterprises identify and address risks to people, the planet, and society that can be associated with business operations, products, or services in these specific sectors (see Box A A.3).

Box A A.3. OECD Sector-Specific Due Diligence Guidance

The OECD has developed Due Diligence Guidance for four specific sectors, all of which have been embedded into Recommendations of the OECD Council:

• OECD Due Diligence Guidance for Responsible Supply Chains of Minerals from Conflict Affected and High-Risk Areas

• OECD Due Diligence Guidance for Meaningful Stakeholder Engagement in the Extractive Sector

• OECD-FAO Guidance for Responsible Agricultural Supply Chains

• OECD Due Diligence Guidance for Responsible Supply Chains in the Garment and Footwear Sector.

These Recommendations of the OECD Council encourage adhering governments and their NCPs to actively promote the use and observance of the sector-specific Guidance by enterprises operating in and from their territories, take measures to support the adoption of risk-based due diligence frameworks for responsible supply chains, and ensure their widest possible dissemination (including among relevant government entities) as well as their use as resources by stakeholders.

As part of its work on RBC in the financial sector, the OECD has also developed guidance on RBC for Institutional Investors; Due Diligence for Responsible Corporate Lending and Securities Underwriting; and RBC Due Diligence for Project and Asset Finance Transactions.

Sources: OECD (2016[120]), OECD Due Diligence Guidance for Responsible Supply Chains of Minerals from Conflict-Affected and High-Risk Areas, https://doi.org/10.1787/9789264252479-en; (2017[121]), OECD Due Diligence Guidance for Meaningful Stakeholder Engagement in the Extractive Sector https://doi.org/10.1787/9789264252462-en; OECD/FAO (2016[120]), OECD-FAO Guidance for Responsible Agricultural Supply Chains, https://doi.org/10.1787/9789264252479-en; OECD (2018[122]) Due Diligence Guidance for Responsible Supply Chains in the Garment and Footwear Sector, https://doi.org/10.1787/9789264290587-en; OECD (2017[123]), Responsible Business Conduct for Institutional Investors: Key Considerations for Due Diligence under the OECD Guidelines for Multinational Enterprises, https://doi.org/10.1787/8b9e240a-en; (2019[124]), Due Diligence for Responsible Corporate Lending and Securities Underwriting, https://doi.org/10.1787/71fd2895-en; (2022[125]), Responsible business conduct due diligence for project and asset finance transactions, https://doi.org/10.1787/952805e9-en.

The OECD Recommendation on the Role of Government in Promoting Responsible Business Conduct

Building on the MNE Guidelines and other instruments and tools that include policy guidance on RBC in related areas (such as trade and investment, but also public procurement and state‑owned enterprises), the OECD developed a new instrument to support governments in the creation of enabling environments for RBC: the OECD Recommendation on the Role of Government in Promoting RBC [OECD/LEGAL/0486].

This Recommendation, which was adopted in December 2022, contains a unique and comprehensive set of principles and policy recommendations intended to assist governments – as well as other public authorities and relevant stakeholders – in their efforts to design and implement policies that enable and promote RBC. It brings together guidance on the development and implementation of coherent government policies for RBC from existing OECD standards on RBC or related policy areas. The Recommendation gathers 21 guiding principles structured around six key axes (see Figure A A.2).

Figure A A.2. The axes of the OECD Recommendation on the Role of Government in Promoting RBC

Source: OECD Recommendation of the Council on the Role of Government in Promoting Responsible Business Conduct [OECD/LEGAL/0486].

Out of these six key axes, one pertains to the policies and measures that governments can develop and adopt to encourage RBC across relevant policy areas – among which trade and investment. The OECD Recommendation on the Role of Government in Promoting RBC provides in this regard that governments should promote RBC through their trade and investment policies, as well as their bilateral and multilateral agreements. It specifies that this should include the expectation that businesses under the scope of these policies and agreements implement RBC standards. The Recommendation also includes several additional specific guiding principles relevant for trade and investment.

Other OECD instruments on trade and investment relevant to responsible business conduct

In addition to the instruments specifically designed to promote and enable responsible business practices, the OECD has also developed trade and investment instruments that include recommendations relevant to responsible business conduct.

Table A A.1. OECD legal instruments on trade and investment relevant to responsible business conduct

The OECD Declaration on International Investment and Multinational Enterprises [OECD/LEGAL/0144], 1976	The OECD Declaration on International Investment and Multinational Enterprises [OECD/LEGAL/0144] was adopted by the OECD Council in 1976 and revised in 2023 to update its language and better reflect changes in international investment policymaking. The MNE Guidelines form Annex 1 to the Declaration. The Declaration recognises that RBC furthers the contribution of investment to sustainable development, and that RBC standards play an important role in creating a level playing field across global markets. It provides that adherents should promote and enable RBC across relevant policy areas, including trade and investment policies.
The OECD Recommendation of the Council on the Policy Framework for Investment [OECD/LEGAL/0412], 2006	The OECD Recommendation of the Council on the Policy Framework for Investment [OECD/LEGAL/0412] (PFI) was adopted by the OECD Council in 2006 to guide governments on how to create an enabling environment for all types of investment and enhance the development benefits of investment to society. The Framework was updated in 2015 to support the implementation of the sustainable development goals. It was the first OECD instrument to encourage governments to create an enabling environment for RBC. To this end, the PFI includes a dedicated chapter on policies for enabling RBC, which has been a reference for the design and implementation of policy frameworks supporting RBC, as well as for co‑ordinating government efforts in this area. It emphasises that RBC is essential to a sound investment climate, noting that environments lacking responsible business standards risk being avoided by international investors and customers. The PFI identifies several ways in which governments can enable RBC. These include establishing and enforcing adequate legal frameworks; clearly communicating expectations on RBC and providing guidance with respect to specific practices and enabling enterprises to meet those expectations; co‑operating with stakeholders, across government entities, as well as with other governments to create synergies and build coherence on RBC; promoting best practices on RBC; and exemplifying RBC in the context of the government’s role as an economic actor.
The OECD Recommendation on Common Approaches for Officially Supported Export Credits and Environmental and Social Due Diligence [OECD/LEGAL/0393], 2012	The OECD Recommendation on Common Approaches for Officially Supported Export Credits and Environmental and Social Due Diligence [OECD/LEGAL/0393] (the “Common Approaches”) was adopted by the OECD Council in 2012 and revised in 2 016 and in 2 024. It sets out a common framework for undertaking environmental and social due diligence to identify, consider and address the potential environmental and social impacts and risks relating to applications for officially supported export credits. The Common Approaches aim, among other objectives, to promote coherence between adherents’ policies on official export supported credit, their international environmental, climate change, social and human rights policies, thereby contributing towards sustainable development, as well as to develop common procedures and processes relating to the environmental and social review of officially supported export credits. To achieve this, adherents are required, inter alia, to promote awareness of the MNE Guidelines among parties involved in export credit applications. Likewise, when undertaking the environmental and social review of projects, adherents should, where appropriate, consider any NCP statements and reports on specific instances. The Common Approaches further calls on adherents to consider the issue of human rights, notably by reviewing how project-related human rights impacts are addressed and ensuring policy coherence with the MNE Guidelines.
The OECD Recommendation on Bribery and Officially Supported Export Credits [OECD/LEGAL/0447], 2019	The OECD Recommendation on Bribery and Officially Supported Export Credits [OECD/LEGAL/0447], adopted by the OECD Council in 2019, outlines measures that export credit agencies might take to deter bribery in international business transactions benefiting from official export credit support. The Recommendation calls on adherents to promote RBC among parties involved in applications for official export credit support. It also encourages exporters and other relevant parties to implement appropriate management control systems to prevent and detect bribery. Adherents are expected to screen and undertake due diligence on all applications for export credit support, including enhanced due diligence where there are increased risks or suspicions of bribery.
The OECD Recommendation on Foreign Direct Investment Qualities for Sustainable Development and FDI Qualities Policy Toolkit [OECD/LEGAL/0476], 2022	The OECD Recommendation on Foreign Direct Investment Qualities for Sustainable Development [OECD/LEGAL/0476], adopted by the OECD Council in 2022, aims to support governments in maximising the contribution of foreign direct investment (FDI) to sustainable development. The Recommendation encourages adherents to take steps to ensure that their policy, legal and regulatory frameworks support the positive impacts of investment on sustainable development. This includes fostering an investment climate based on the promotion of RBC and aligning international investment and trade agreements with sustainable investment objectives. Adherents should also facilitate and promote investment for sustainable development by promoting RBC and due diligence and improving the links between investment promotion and facilitation and sustainable development objectives. To support the implementation of the Recommendation, as well as complement the PFI, the OECD developed an FDI Qualities Policy Toolkit, which is designed to help governments prioritise policies and reforms to strengthen FDI’s contribution to areas relevant to sustainable development.