Responsible Business Conduct – What’s Up?
We were honored to have Prof. Dr. Roel Nieuwenkamp, the Chair of the OECD Working Party on Responsible Business Conduct, as the guest speaker at our Compliance After Work event last week. Prof. Nieuwenkamp gave a thought-provoking speech on the current trends in responsible business conduct and we wanted share with you some key takeaways.
First, it is worth mentioning that responsible business conduct (or corporate responsibility) is nothing new. For example, the guidelines for multinational corporations developed by OECD member states are celebrating their 40th anniversary this year. Despite, or perhaps because, of this midlife crisis, this field is witnessing a few fundamental changes:
- Today, investors require companies to “behave in a responsible manner” which correlate with both the reputation and the value of the company. This is a big game changer, as investors have the strongest influence on corporate dynamics. For example, the OECD database already includes a few cases in which, after investor encouragement, the company agreed to proceed to mediation governed by OECD national contact points.
- Responsible business conduct has traditionally been regulated as and framed together with various soft law mechanisms like, for example, the OECD guidelines for multinational corporations mentioned above. Many countries have changed their approach and imposed binding – even across borders – legislation in this field. For example, the UK has introduced the Modern Slavery Act in 2015 and the EU non-financial reporting directive is on the way.
- Supply chain management is the third core issue in the field of responsible business conduct. Today, companies need to know their supply chain and business partner due diligence is an everyday activity for companies. When it comes to complex supply chains, Nieuwenkamp recommends that companies identify the most salient risks and focus on mitigating or preventing those risks.
It is easy to see signs of these main trends, as presented by Prof. Nieuwenkamp. Responsible business conduct has also become our daily life at Castrén & Snellman through discussions in relation to financing arrangements, M&A deals and conducting business partner due diligence. For our part, we continue this discussion with our next seminar in September which will include inspiring examples of best practices in implementing responsible business conduct principles.
OECD guidelines for multinational corporations
- 46 adhering countries
- Comprehensive, government-backed, global corporate responsibility instrument
- Binding legal obligation to set up National Contact Point
- Topics covered:
- Human Rights
- Employment and Industrial Relations
- Bribery, bribe solicitations, extortion
- Consumer interests
- Science and technology