International Symposium

Following the June 2023 update of the OECD Guidelines for Multinational Enterprises on Responsible Business Conduct, the Institute of Developing Economies - Japan External Trade Organization (IDE-JETRO) organized an international symposium in July 2023. On this page, you can access videos of the keynote addresses and panel discussions delivered at the symposium.

Synopsis of the Symposium

Date and time: Thursday, 6 July 2023, 14:00-16:00 (Japan Standard Time)

Venue:
(In-person) Japan External Trade Organization Headquarters, International Exhibition Hall (Ark Mori Building, 5F, 12-32, Akasaka 1-chome, Minato-ku, Tokyo)
(Online) Zoom Webinar

Organizer: Institute of Developing Economies (IDE-JETRO)

Supported by: Research and Training Institute, Ministry of Justice, Japan

Explanation of symposium’s purpose

Miwa Yamada (Director-General, Inter-disciplinary Studies Center, IDE-JETRO)

　 Presentation and referencematerials

• IDE-JETRO has had various collaborations with OECD including creating the Japanese translation of the OECD Due Diligence Guidance for Responsible Business Conduct.
• The G7 Climate, Energy and Environment Ministers’ Communique and G7 Clean Energy Economy Action Plan referred to the UN Guiding Principles of Business and Human Rights (UNGP), the OECD Guidelines for Multinational Enterprises, and ILO Tripartite Declaration. Protection of environment and human rights go in tandem.
• The UNGP endorsed in 2011 has the state duty as the first pillar, corporate responsibility as the second and access to remedy as the third pillar. Marking 10 years from the endorsement, in 2021 the UN Working Group on Business and Human Rights presented a roadmap for the next ten years.
• OECD Due Diligence Guidance for Responsible Business Conduct is a practical tool for conducting due diligence. I would like to ask the audience to come back to this guidance to understand the steps and the whole purpose of the due diligence.
• The Japanese government launched “Japan’s National Action Plan on Business and Human Rights” in October 2020 and the “Guidelines on Respecting Human Rights in Responsible Supply Chains” in September 2022. The guidelines will be reviewed in reflection of subsequent developments of international standards.
• In 2023, The OECD Guidelines for Multinational Enterprises was updated and renamed as The OECD Guidelines for Multinational Enterprises on Responsible Business Conduct. The update includes areas such as lobbying activities, prohibition of reprisals, and meaningful stakeholder engagement.
• In this symposium I would like the panelists to discuss the following: What are the key changes and what do they mean for businesses and stakeholders? How should businesses implement human rights due diligence and environmental due diligence? What are the challenges and opportunities for Japanese businesses? What is meaningful stakeholder engagement? In what way should National Contact Points (NCPs) strengthen its function for implementation of the Guidelines? What kind of impacts will international standards have on the global south?

Keynote speech

Yoshiki Takeuchi (Deputy Secretary General, OECD)

• International trade and investment have been powerful drivers for economic growth and development in the past decades. Today, about 70% of international trade involves global value chains and raw materials, parts, components, and services often cross borders numerous times before reaching end users.
• However, these increasing global value chains mean higher risk exposure in case of disruptions, as we saw in the COVID-19 pandemic and Russia’s war of aggression against Ukraine. Also, the climate crisis and rapid digital transformation continue to change our societies and economies, further exposing systemic inequalities and vulnerability of our economies. So, the question is how we overcome these vulnerabilities.
• To secure the resilience of global supply chains, the Responsible Business Conduct (RBC) can help achieve reducing the risks of disruptions across value chains, as well as minimizing the environmental, social and governance impact of disruptions when they occur. RBC has been at the center of the OECD approach to ensure that business activities contribute to broader societal value creation.
• OECD member states and other states look at the OECD Guidelines when they prepare regulations and policies.
• The key changes in 2023 edition:
  • Provide recommendations for enterprises to align with internationally agreed upon goals on climate change and biodiversity and support them in meeting objectives of the Paris Agreement and SDGs.
  • Clarify due diligence expectations to ensure RBC in the development, financing, sale, and licensing of technology, including gathering and using data.
  • Include better protection for at-risk persons and groups.
  • Enhance National Contact Points (NCPs).
• There are not many Asian countries among the 50 countries adhering to the OECD Guidelines. The OECD would like to spread the values of RBC to other Asian countries, and I would like Japanese enterprises to talk about RBC when they work with Asian counterparts.

Keynote speech
“The 2023 Update of the OECD Guidelines for Multinational Enterprises on Responsible Business Conduct: What are the key changes and what do they mean for businesses and stakeholders?”

Allan Jorgensen (Head, Responsible Business Conduct Centre, OECD)

• The OECD Guidelines for Multinational Enterprises on Responsible Business Conduct cover a comprehensive set of issues that we normally associate with Responsible Business Conduct (RBC), sustainable business or ESG. Fifty-one governments adhere to the Guidelines, while the OECD has 38 members. Fifty-one adherences to the Guidelines comprise 2/3 of global trade and 80% of FDI.
• The concept of due diligence as well as the fundamental structure of the Guidelines have not changed in the update. We focused on the chapters where societal and planetary needs have dramatically changed since the previous update, such as environment, science, and technology.
• In the Chapters I and II of the 2023 update, the concept of “risk-based due diligence” and “meaningful consultation” are clarified further. Regarding “responsible engagement and disengagement,” the update emphasizes an improvement through engagement, while recognizing that many issues in challenging markets take time to be resolved. The Guidelines are also much clearer on what the scope of “business relationships” is, considering the recent development of DX, the climate crisis, supply chains, financing, etc. Increasing transparency in lobbying activities is also reflected in the update.
• The disclosure chapter (Chapter III) is more aligned with the “G20/OECD Principles of Corporate Governance” and includes a definition of materiality and sustainability. It also says that companies should have a credible process to disclose sustainability information.
• The environment chapter (Chapter VI) is updated, and it includes recommendations and what companies are encouraged to consider in their due diligence. The chapter also suggests how to make a transition plan to align with global temperature goals and net zero commitment.
• Chapter IX was fundamentally re-drafted to provide guidance to companies on how to conduct due diligence in science, technology, and innovation, including such areas as Artificial Intelligence.
• NCPs have three functions: promoting the Guidelines, supporting policy coherence, and providing a grievance mechanism. We do not have a functional equivalence between the NCPs yet. The Guidelines include the definition of functional equivalence and effectiveness of NCPs, and the mandatory periodic peer reviews.
• To promote and create an enabling environment for businesses to be responsible, the role of government is important in creating regulation and legislation that align with OECD Guidelines.

Panel discussion

Yamada: How do you evaluate the 2023 Update of the OECD Guidelines from private sector perspectives?

Kinoshita: It was a timely revision. The OECD Guidelines include the same points being discussed at the EU now. It is very hard to respond to the individual requirements of legislation, clients, and investors, therefore, it is valuable that the OECD Guidelines have shown a common guidance. Some good points in the update: (1) The Guidelines remain voluntary, and the six steps of DD have not changed. (2) The importance of policy coordination and the role of government is more clearly defined. It is important to have an enabling environment for DD, capacity building and a helpdesk. (3) The Guidelines clearly mention that they do not intend to “shift responsibility from the entity causing an adverse impact to the enterprise with which it has a business relationship” and recognizes that “there are practical limitations on the degree of leverage enterprises have or may be able to build to effect change in the behavior of entities with which they have business relationships.” Some points of concern: (1) The volume increased by 30%. This means an increase of technical words, expansion of scope, and complexity of content. (2) More DD in the environment, science and technology sector is required. Downstream DD is also a point of concern. Especially in the environment sector, how to identify those who are impacted, quantitatively measure that impact, and evaluate the responsibility remain unknown. 

Yamada: What kind of challenges will the update pose to Japanese companies? How do companies conduct human rights DD with due consideration to the environment? How should companies evolve to respond to both environmental and human rights requirements?

Takahashi: Environmental and human rights DD is more internationally recognized. In May 2021, a Dutch court ordered Royal Dutch Shell to reduce CO2 emission throughout its value chain and not only within their company. Environmental and human rights DD can create two opportunities for Japanese companies: first, Japanese companies tend to have a narrow understanding of human rights issues, limiting them to labor issues such as discrimination and harassment. This conception can be changed. Second, Japanese companies have already conducted a part of environmental DD through CSR procurement and environmental management. They may be able to build upon such existing efforts. On the other hand, Japanese companies have challenges such as (1) meaningful dialogue with stakeholders, (2) DD throughout value chains, (3) responding to grievances when human rights violation and/or environmental destruction happen.

Yamada: JICA revised the JICA Guidelines for Environmental and Social Considerations last year. Could you elaborate on this and how do you see the OECD update?

Kojima: JICA provides technical assistance to developing countries on environment, social and human rights issues and tries to avoid adverse effects in JICA projects. The latter is equivalent to environmental impact assessment. The “JICA Guidelines for Environmental and Social Considerations” was created in 2002. JICA Guidelines require us to categorize JICA projects and we discuss and build a consensus on the projects that have the biggest impact. We conduct monitoring from the project implementation phase. Every year about 300 projects are categorized and about 10 projects are classified as category A. We invite external experts to the committee and disclose verbatim minutes of the committee discussion. We take partner countries’ environment assessment systems into consideration and especially value opinions from those who may be impacted. Challenges include weak systems in partner countries, increased complexity of environmental impacts, an increase of projects by other agencies in the closer neighborhood, a wider range of affected people and unclear causal relationships.

Presentation material

Yamada: What is your take on the OECD update vis-à-vis UNGP? How do you assess the expansion of DD downstream, in terms of leverage?

Ramasastry: The UNGP is a chapter in the OECD Guidelines and this chapter could not be touched because the idea was to keep them the same. The updates in other chapters are just further clarifications. Three important points: (1) there are expectations around science and technology, (2) it covers full value chains, including downstream such as sale of products and services, (3) there are legal limits to what happens once you sell a product to somebody else. It is about initial sale and about what is foreseeable and not about opening unlimited liability.

Yamada: Some issues are raised by the private sector. Any comments? Also, any implications for other guidelines by public institutions like JICA?

Jorgensen: Development agencies and corporations can both use DD as a safeguard tool. In terms of the interface between RBC and development cooperation, SMEs and companies in developing countries can benefit from technical assistance in meeting requirements from investors. Regarding the concerns expressed, the guidelines set the standards and common practices for some companies but by no means for all companies. The update also emphasized the limitations that companies face both in terms of availability of data and technology. In the update we have clarified individual consumers are not considered as business relationships, so businesses are not responsible for what individual consumers might do with the products.

Yamada: How do you assess the importance and challenges in meaningful stakeholder engagement?

Kinoshita: Companies are concerned whether their DD is sufficient or not. This is where stakeholder engagement comes into play. To have “meaningful” engagement, the companies should involve rights holders and stakeholders who may be affected. However global businesses tend to face structural human rights issues where it is difficult for true stakeholders to be engaged. It is also difficult to build a trust where rights holders feel secure to speak up and companies see it as an opportunity for them to learn and improve. Facilitation by governments and other public institutions such as OECD is much expected.

Kojima: For JICA, stakeholders mean the Japanese government and their citizens and partner governments and their citizens. We put the priority on the people who are directly affected in partner countries. There is a wider range of people who want to speak up, so we would like to listen as much as possible.

Ramasastry: Meaningful engagement means respectfulness and inclusiveness, and not assuming and designing from a corporate standpoint but just willing to listen. For companies at the HQ level, it’s important to begin the trust building by having a good relationship with civil societies and academics in key markets and partner countries. When it comes to individual consultation, companies should not treat it as a corporate exercise but should try to sit and listen to the communities and workers. Refraining from reprisals means that companies should take responsibility to those who speak up about HR issues. Companies tend to think that HR defenders are enemies, but in fact they are partners. Companies should invite HR defenders to the table early on to have a dialogue. 

Yamada: How can the functionalities of NCPs be strengthened? What kind of benefit can rights holders and companies expect when they use NCPs? How do you increase the number of NCPs? Is it possible for NCPs to have legally binding penalties?

Jorgensen: NCPs are state-based non-judicial grievance mechanisms that also have mandates to promote RBC. The way to increase NCPs is to increase the number of states that adhere to the Guidelines. We are now addressing the different levels of functionality and effectiveness across 51 NCPs. It does not mean that NCPs should be identical. NCPs should have flexibility in how they structure themselves. For people to bring cases to the NCP there should be a trust that NCP has a transparent and predictable process; therefore, we have updated the rulebook for NCPs. NCPs are voluntary and cannot enforce any penalties. They use good offices to ideally create mediated outcomes. They also help the interpretation of the Guidelines in each country. The update of the Guidelines is a good opportunity for Japan to reform their NCP. The NCP in Japan is least active and least well-resourced among G7 countries.

Yamada: Can companies also benefit from NCPs?

Takahashi: Companies cannot equip themselves with sufficient grievance mechanisms. NCPs can help promote the dialogue between companies and rights holders. Reliable independent experts can be a mediator. I understand the Japanese government came to incorporate experts’ involvement in the NCP rules. The government should discuss its meaningful implementation with private sector.

Ramasastry: There is room for further improvement for the Japanese NCP. Civil societies feel comfortable with the NCPs if they perceive the NCP as independent. It is helpful to use independent experts either as an advisory group or as people who help make decisions or mediate disputes. Many NCPs are supervised by governments and the staff members are from the government bodies. Therefore, there is a perception from civil societies that the NCPs are favoring business or government. NCPs are meant to be accessed by people in many countries, but I could not access the Japanese NCP webpage. So that is one of the first things that should be addressed.

Yamada: How does RBC lead economic development and address human rights and environmental issues? How can policies make an enabling environment for companies to be responsible?

Jorgensen: We should not pretend that we have a level playing field. We should have international cooperation in this area.

Kinoshita: The role of public institutions is significant in reaching the areas that companies cannot reach, promoting dialogues between governments, improving the awareness and capacity of companies in developing countries, and promoting multi-stakeholder dialogues.

Takahashi: Companies are making progress at high speed, but environmental and human rights issues are coming up at higher speed. Government should play a role in remedy.

Kojima: We must do it right, otherwise it would be too late to correct if something happens. Making policies is challenging, but at the same time we must move quickly. We must take targeted measures so we can allocate resources where they are needed.

Ramasastry: Japan is an important country being a member of the OECD, G7, and APEC. Japan can have a significant influence in development cooperation and RBC. This can be the decade of capacity building for SMEs. If capacity building happens, it can be very transformational.

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