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Article

6 Jul 2022

Author:
OECD

OECD: The role of sustainability initiatives in mandatory due diligence - Note for policy makers

2022

Sustainability initiatives of different shapes and sizes will—and should—continue to play a role in advancing and scaling up sustainable business practices, and in shaping how companies respond to governments mandating more sustainable activities, investments and supply chains. Growing momentum around mandatory due diligence legislation on responsible business conduct (RBC), particularly in Europe, has brought to the fore debates about the potential role of initiatives in mandatory frameworks—including the extent to which they can inform implementation and enforcement and be used as ‘indicators of compliance’.

Policy makers can contribute by clarifying the ways in which different types of initiatives can support implementation and enforcement of mandatory due diligence, without undermining companies’ own due diligence responsibilities, creating de facto safe harbours from liability or promoting over-reliance. Governments can do this by setting clear expectations for initiatives, companies and enforcement authorities and, where appropriate, ensuring that companies and governments have robust processes in place to monitor and verify the credibility of initiatives that they use or rely on.

This background note focuses on the role of sustainability initiatives in mandatory due diligence legislation and discusses:

1. the current landscape of sustainability initiatives;

2. the importance of setting clear disclosure expectations for relevant initiatives in the context of mandatory frameworks;

3. the role that initiatives can play as a tool to support implementation and enforcement of legislation, and key limitations;

4. recommendations for developing a model to assess the credibility of individual initiatives, building on the OECD alignment assessment approach...