oecd responsible business conduct for institutional investors

A promising trend has been the inclusion of RBC provisions in a recent wave of new investment strategies and laws. Additionally, alignment with international practice can also be useful for integrating the sector further in the global markets. SEC was an early champion of sustainability, notably connecting the topics of corporate governance, environmental, social and governance (ESG) factors, sustainability, and anti-corruption, in the Sustainability Development Roadmap which was adopted as part of the SEC Strategic Plan 2013-2015. As ASEAN integrates further, negative impacts in Thailands neighbouring countries, including for example negative spill-over effects from climate change and environmental degradation, will also have an impact on Thailand itself. Following the international attention focused on labour issues and migrant workers in the fishing and seafood industry in Thailand, the government introduced major reforms in the legal framework for labour and migrant workers. Or consider purchasing the publication. This document, as well as any data and map included herein, are without prejudice tothe status of or sovereignty over any territory, to the delimitation of international frontiers and boundaries and to the name of any territory, city or area. Five are listed on the Stock Exchange of Thailand. Thai regulators may wish to assess and analyse to what degree the current framework allows for long-termism. A 2019 report by the UN Office of the High Commissioner for Human Rights and the Heinrich Boell Foundation surveyed human rights risks and opportunities in the energy, transport and water sectors at the macro-, meso- and project levels and published the results in a joint report entitled The Other Infrastructure Gap: Sustainability: Human Rights and Environmental Dimensions. Thailand has also promoted RBC in other ways. The SEC is also considering how to promote climate-related issues through the disclosure of carbon emissions information as part of the One Report on a comply or explain basis. Find out more about Responsible Business Conduct (RBC) and human rights The ILO recommends mandating monthly meetings between officials, unions, civil society to accelerate and focus enforcement actions. Governments should consider in their recovery policies that many companies might not commit of their own accord to an RBC approach in their response to COVID-19, either because of a lack of incentive, capacity, resources or knowledge. Furthermore, efforts are not consistent across sectors and there is still a need for significant awareness raising in certain sectors. It also envisions an implementation plan and indicators for monitoring and evaluation. The Government should consider promoting the implementation of the 2018 OECD Due Diligence Guidance for Responsible Business Conduct in this regard. Many businesses also find that responsible business is good business, beyond ensuring respect for human rights and compliance with relevant laws and regulations. Promoting and enabling RBC as part of overall COVID-19 policy responses will be essential for ensuring coherence between their government recovery policies and their expectations of how businesses should contribute in this regard. Another finding from the OECD review is that stock markets are increasingly integrated. One of the main recommendations of the report was that those implementing and financing large infrastructure projects carry out explicit due diligence on human rights (see UN OHCHR-hbs, 2019). Thailands ambitions to be a regional leader could be particularly impactful in the context of integrating RBC considerations in the various regional trade and investment agreements and initiatives. For more information, see the new OECD project on RBC and public procurement http://www.oecd.org/governance/public-procurement/procurement-and-rbc/. This is of particular relevance to Thailand in the context of efforts to promote Thailand 4.0 and higher value-added industries. Responsible Business Conduct for Institutional Investors and Due Diligence for Responsible Corporate Lending and Securities Underwriting 40 5. Understanding, addressing, and avoiding risks material to business operations in a more comprehensive way that is, beyond financial risks can often lead to a competitive advantage. These expectations are in line with the OECD Guidelines for Multinational Enterprises (which apply to all entities within the enterprise in all sectors, whether of private, state or mixed ownership) as well as the UN Guiding Principles, which apply to all states and all enterprises. This includes efforts at the provincial level. Additionally, the policy guidance for SOEs should be aligned with the 2015 OECD Guidelines on Corporate Governance of State-Owned Enterprises and the specific expectation that SOEs establish and implement due diligence according to international standards should be made clear. Moreover, many financial institutions do not have any meaningful strategy in place for responding to significant environmental and social risks. Morgan Stanley (2018), Sustainable Signals, www.morganstanley.com/assets/pdfs/sustainable-signals-asset-owners-2018-survey.pdf. More investment does not automatically lead to productivity growth, more competitive local firms or a more inclusive workforce. The Paris Agreement on climate change also underlines the critical role of business in tackling climate change, including through reducing greenhouse gas emissions and improving environmental performance. Nevertheless, concerns have been raised by civil society throughout the years about the lack of specific environmental and social protection provisions in the text of the agreement as well as the lack of comprehensive impact assessments.9 For example, the agreement is not expected to include dedicated chapters on labour and the environment. Promoting and enabling responsible business conduct (RBC) is of central interest to policy-makers wishing to attract and keep quality investment and ensure that business activity contributes to broader value creation and sustainable development (see also Chapter 4). Surface water quality outside the OECD is expected to deteriorate in the coming decades, through nutrient flows from agriculture and poor wastewater treatment. 8. This can help promote RBC among Thai banks and foreign banks operating in Thailand; although it would be advisable to also consider swift implementation. Access to this content in this format requires a current subscription or a prior purchase. OECD (2018),OECD Due Diligence Guidance for Responsible Supply Chains in the Garment and Footwear Sector, OECD Publishing, Paris,https://doi.org/10.1787/9789264290587-en. Impacts of climate change need to be considered as a matter of priority. THE ROLE OF OECD INSTRUMENTS ON RESPONSIBLE BUSINESS CONDUCT IN PROGRESSING ENVIRONMENTAL OBJECTIVES Please cite this publication as: OECD . Additionally, as CLMV countries grow, their need for infrastructure investments increases a market opportunity that Thai firms have actively ventured in to. Risk aversion in the financial markets due to COVID-19 has reached levels not seen since the global financial crisis. Finally, Thailand could consider strengthening non-judicial grievance mechanisms and providing alternative forms of conflict resolution that could be considered in a staggered context. UN experts have recommended that Thailand decriminalise defamation and revise its civil and criminal laws as well as prosecution processes to prevent misuse of defamation legislation by companies (UN OHCHR, 2018b). Thai overseas investment is a topic in the Thai NAP. Ethical investment products or strategies that are dictated by certain ethical or moral considerations. Considering how alignment of existing initiatives with global market standards such as the UN Guiding Principles and the OECD Guidelines, could be useful. This is a significant achievement to promote RBC in Thailand and among Thai enterprises operating domestically and abroad. Conclusion 46 OECD (2019e), FDI Qualities Indicators: Measuring the sustainable development impacts of investment, https://www.oecd.org/fr/investissement/fdi-qualities-indicators.htm. The conference focused specifically on RBC due diligence and featured high-level business representatives and government officials. They also limit the opportunities to address persistent RBC challenges that defy a solution by one single actor. The research showed that large infrastructure projects have been associated with serious and sometimes irreparable harm to people and the environment. Ensuring that ratings agencies and reporting frameworks be explicit about whether they are focused on (only) ESG issues which create a financial risk for the company or actual ESG performance (and whether they report information related to these issues separately) will be critical for brining clarity to the market. congenital malformation and reduced fertility) from fabrication jobs, while noting that, although chemicals are suspected as causal agents, knowledge about the likely contributions from specific exposures is still limited. The OECD Guidelines for Multinational Enterprises on Responsible Business Conduct are recommendations addressed by governments to multinational enterprises. Furthermore, the SEC Investment Governance Code 2017 developed for institutional investors explicitly promotes responsible and sustainable investment and investing in companies with good ESG practices (SEC, 2017b; for more information on the history of SECs efforts see SEC, 2019b). One particular element that could be useful is cross-sector and cross-thematic learning. tobacco). 3 FOREWORD This paper, Responsible Business Conduct for Institutional Investors: Key Considerations for Due Diligence under the OECD Guidelines for Multinational Enterprises The Government Pension Fund (GPF) been at the forefront of aligning its practices with international RBC practices (see Economist, 2019). Not only would this set an example for other enterprises, it would also increase disclosure and transparency, and could help address some concerns in priority sectors such as infrastructure. OECD research has found that this is partially because investment governance regulatory frameworks and risk-based controls generally do not explicitly refer to ESG factors. This includes procurement and activities of state-owned enterprises. An RBC lens can help them to make more balanced decisions, while ensuring that they avoid creating further risks to people, planet and society or contribute to further destabilising supply chains down the line. It is important to note that the acceptance of the case at this stage means that the UK NCP will offer mediation/conciliation and does not indicate any determination of the case. 5), which underlines co-operation efforts to ensure that SOEs observe internationally recognised standards of corporate governance (EU, 2016a). RBC principles and standards set out an expectation that all businesses regardless of their legal status, size, ownership structure or sector avoid and address negative consequences of their operations, while contributing to sustainable development where they operate. Integrating practices like due diligence for environmental and social risks, improving processes related to stakeholder engagement, and promoting disclosure and transparency, could go a long way in mitigating risks. The NHRCT has also played a key role when it comes to overseas investments and activities of other enterprises. UN Guiding Principle 4 stipulates that states should take additional steps to protect against human rights abuses by business enterprises that are owned or controlled by the State, or that receive substantial support and services from State agencies such as export credit agencies and official investment insurance or guarantee agencies, including, where appropriate, by requiring human rights due diligence (UN, 2011). The research shows that the major functions of such treaty language are, in the order of prevalence: (i) to establish the context and purpose of the treaty and set forth basic RBC principles through preamble language; (ii) to preserve policy space to enact public policies dealing with responsible business conduct concerns; and (iii) to avoid lowering standards, in particular relaxing environmental and labour standards for the purpose of attracting investment. Business associations can play a significant role in this regard by disseminating the guidance and tools and ensuring training opportunities for their members. Australia, Japan, Korea, and New Zealand are adherents to the OECD Guidelines for Multinational Enterprises. Notably, it can also contribute to disaster preparedness and resilience overall, which is especially useful considering the risks of disruptions by climate change. For example, the garment and footwear sector has struggled with addressing persistent issues with wages and labour issues. The term corporate social responsibility (CSR) has historically been used to describe business interactions with society. Businesses have a responsibility to prevent and address negative impacts of their actions on the environment. The efforts by the Thai government to set RBC policy direction through the NAP, including specific actions and indicators of success are commendable, but the real test will be in implementation. Thailands significant efforts to prevent human trafficking have resulted in an increase in its rank in 2018 to Tier 2 from Tier 2 Watchlist in the US State Department Trafficking in Persons Report (see US State Department, 2019). The OECD and GPF are working together to align GPFs strategies and policies with 2017 OECD Responsible Business Conduct for Institutional Investors, which sets out key considerations for institutional investors in carrying out due diligence to identify and respond to environmental and social risks within their portfolios.

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