The supply chain: a key link for better governance

Financial, Fiscal and Enterprise Affairs Directorate (DAF)

Click for larger image.

One of the OECD’s main roles is to bring stakeholders together to discuss key global challenges. A gathering that exemplifies this are the roundtables held to discuss progress on implementation of the OECD Guidelines for Multinational Enterprises. The most recent one was held over the summer.* 

Globalisation has given rise to a kind of economic “culture shock” and international business is one of the principal sufferers. Tens of thousands of companies are trying to conduct business in a global mosaic of legal, regulatory, business and social environments. Operating in all of these environments and responding to their diverse expectations of corporate behaviour is a formidable challenge, in particular as public (and market) pressure becomes more intense.

Many companies have taken positive steps by introducing corporate codes, embracing multilateral principles and so on, yet, according to participants at a recent roundtable on the OECD Guidelines for Multinational Enterprises there is much more to do.

Take a recent study of the results of audits of 300 supplier establishments operating in poorer countries that was financed and published by a group of leading French retailers. In the view of Neil Kearney of International Textile, Garment and Leather Workers’ Federation “the details make grim reading” – children under 13 hard at work, non-compliance with minimum wage laws, working weeks of “86 hours or more”, “inadequate” occupational health and safety conditions, “endemic” abuse of workers’ rights, including suppliers using physical force to prevent workers from exercising their right to organise. Other documents highlighted obstacles to organising labour unions and the presence of children in the supply chains of major agrifood companies. These are probably exceptional cases and most good corporations would not tolerate them, but where they exist, all would agree they must be taken seriously.

The OECD roundtable’s theme was supply chain management. It showed the advantages and difficulties of multistakeholder cooperation. For while all participants, whether government, business, labour or civil society groups, clearly cared about the problem, they had different views on how best to tackle it. Business generally argues that the key lies in better supply chain management to alleviate poverty and improve respect of human rights, others see tighter regulation and surveillance as the only way to achieve progress. Deborah White of Proctor and Gamble said the business community was committed to finding answers, and while André Driessen from the Confederation of Netherlands Industries and Employers underscored the business sector’s willingness to co-operate with unions, NGOs and governments to search for solutions, Stephen Canner of the US Council for International Business noted that governments have to act too as “there are limits to what companies can and cannot do”. Others countered that while governments clearly had an important job to do, lack of government responsibility “is not an excuse for lack of corporate responsibility”.

Can domestic law help? Yes, but it is not enough. Some countries like China, as Serena Lillywhite from Brotherhood of Saint Laurence, an NGO that inherited a small business, noted, set certain labour standards and rules that matched those of many OECD countries, but their enforcement was lacking. International declarations on labour and human rights, and standards and principles such as those from the OECD help to fill that vacuum, as do corporate codes of conduct and other private standards issued by labour unions and NGOs.

Business representatives stressed their view that corporate responsibility in the supply chain could not extend to “taking on” other companies’ problems – in particular, their legal or regulatory responsibilities. Companies exist as discrete units for reasons of economic efficiency and legal accountability, they said. In any case, it is not economically or logistically feasible for all enterprises to monitor and audit all their suppliers.

This position sparked a reaction. Carol Pier of Human Rights Watch argued that when companies fail to use their influence over their suppliers’ regarding respect of labour rights, these companies are complicit in those human rights violations. Ineke Zeldenrust of the Clean Clothes Campaign was pragmatic in stressing responsible supply chain management and the need to “break it down … and look at how it (supply chain management) can be operationalised.”

Monitoring the guidelines 

Roundtables like this one on MNE supply chains are held annually at the OECD in conjunction with meetings of the National Contact Points (NCPs). These have been set up in 37 countries to monitor the implementation and efficacy of the MNE Guidelines and to promote awareness of them. Promoting the guidelines is important, since standards and principles, however eloquent or tough to negotiate they may be, are quite powerless unless as many people as possible know about them. The MNE Guidelines are now quite well known by business, unions and civil society in some countries and are featured on many websites. But as reports from the NCPs show, they are hardly known at all in other countries.

Yet, if the MNE Guidelines succeed in winning the confidence of business, trade unions and NGOs, they could become one of the most important global initiatives for global corporate responsibility there is, bolstering such instruments as the UN Global Compact. The OECD, as home to most of the world’s multinationals, can and must win that confidence.

The NCPs have already begun to bring material on specific cases for investigation, of which there are now over 20. These involve consideration by adhering governments of issues that go to the core of the debate on globalisation, whether it be behaviour of French companies (there were two) in Burma, a Canadian company’s “resettlement” problems in the Zambian copper belt, occupational health and safety and accident indemnities for Indonesian and Philippine sailors working for OECD based maritime transport companies, a Korean-run production site in Guatemala or even a UK retailer’s behaviour elsewhere in the OECD.

No one has a monopoly on the answers, but it is only by knowing and understanding the problems face on, and working together to deal with them that corporate responsibility will improve. After all, whether the goal be sustainable development, poverty reduction, equitable rights or just plain decent ethics, better business behaviour is in everyone’s interest.


The OECD Guidelines for Multinational Enterprises can be consulted at Detailed accounts of the proceedings of this roundtable are available on request at or at

* Views expressed by participants at the roundtable are not necessarily shared by the OECD or its member governments.

©OECD Observer No. 234, October 2002

Economic data

GDP growth: +0.6% Q1 2019 year-on-year
Consumer price inflation: 2.3% May 2019 annual
Trade: +0.4% exp, -1.2% imp, Q1 2019
Unemployment: 5.2% July 2019
Last update: 8 July 2019

OECD Observer Newsletter

Stay up-to-date with the latest news from the OECD by signing up for our e-newsletter :

Twitter feed

Subscribe now

<b>Subscribe now!</b>

To order your own paper editions,email

Online edition
Previous editions

Don't miss

  • MCM logo
  • The following communiqué and Chair’s statement were issued at the close of the OECD Council Meeting at Ministerial level, this year presided by the Slovak Republic.
  • Food production will suffer some of the most immediate and brutal effects of climate change, with some regions of the world suffering far more than others. Only through unhindered global trade can we ensure that high-quality, nutritious food reaches those who need it most, Angel Gurría, Secretary-General of the OECD, and José Graziano da Silva, Director-General of the United Nations Food and Agriculture Organization, write in their latest Project Syndicate article. Read the article here.
  • Globalisation will continue and get stronger, and how to harness it is the great challenge, says OECD Secretary-General Gurría on Bloomberg TV. Watch the interview here.
  • OECD Secretary-General Angel Gurría with UN Secretary-General António Guterres at the 73rd Session of the UN General Assembly, in New York City.
  • The new OECD Observer Crossword, with Myles Mellor. Try it online!
  • Listen to the "Robots are coming for our jobs" episode of The Guardian's "Chips with Everything podcast", in which The Guardian’s economics editor, Larry Elliott, and Jeremy Wyatt, a professor of robotics and artificial intelligence at the University of Birmingham, and Jordan Erica Webber, freelance journalist, discuss the findings of the new OECD report "Automation, skills use and training". Listen here.
  • Do we really know the difference between right and wrong? Alison Taylor of BSR and Susan Hawley of Corruption Watch tell us why it matters to play by the rules. Watch the recording of our Facebook live interview here.
  • Has public decision-making been hijacked by a privileged few? Watch the recording of our Facebook live interview with Stav Shaffir, MK (Zionist Union) Chair of the Knesset Committee on Transparency here.
  • Can a nudge help us make more ethical decisions? Watch the recording of our Facebook live interview with Saugatto Datta, managing director at ideas42 here.
  • The fight against tax evasion is gaining further momentum as Barbados, Côte d’Ivoire, Jamaica, Malaysia, Panama and Tunisia signed the BEPS Multilateral Convention on 24 January, bringing the total number of signatories to 78. The Convention strengthens existing tax treaties and reduces opportunities for tax avoidance by multinational enterprises.
  • Globalisation’s many benefits have been unequally shared, and public policy has struggled to keep up with a rapidly-shifting world. The OECD is working alongside governments and international organisations to help improve and harness the gains while tackling the root causes of inequality, and ensuring a level playing field globally. Please watch.
  • Checking out the job situation with the OECD scoreboard of labour market performances: do you want to know how your country compares with neighbours and competitors on income levels or employment?
  • Trade is an important point of focus in today’s international economy. This video presents facts and statistics from OECD’s most recent publications on this topic.
  • The OECD Gender Initiative examines existing barriers to gender equality in education, employment, and entrepreneurship. The gender portal monitors the progress made by governments to promote gender equality in both OECD and non-OECD countries and provides good practices based on analytical tools and reliable data.
  • Interested in a career in Paris at the OECD? The OECD is a major international organisation, with a mission to build better policies for better lives. With our hub based in one of the world's global cities and offices across continents, find out more at .
  • Visit the OECD Gender Data Portal. Selected indicators shedding light on gender inequalities in education, employment and entrepreneurship.

Most Popular Articles

OECD Insights Blog

NOTE: All signed articles in the OECD Observer express the opinions of the authors
and do not necessarily represent the official views of OECD member countries.

All rights reserved. OECD 2019