U.S. Department of State|
Bureau of Economic and Business Affairs
OECD Guidelines for Multinational Enterprises
Released by the Organization for Economic Development (OECD)
Paris, France, June 27, 2000
The following Guidelines for Multinational Enterprises were adopted by the governments of the 29 Member
countries of the OECD and Argentina, Brazil, Chile, and the Slovak Republic at the OECD Ministerial Meeting
on 27 June 2000.
released by the Organization for Economic Development (OECD), in Paris, France, July 4, 2000
I. Concepts and Principles
II. General policies
IV. Employment and Industrial Relations
VI. Combating Bribery
VII. Consumer Interests
VIII. Science and Technology
Council Decision on Implementation of the Guidelines
The OECD Guidelines for Multinational Enterprises (the Guidelines) are recommendations
addressed by governments to multinational enterprises. They provide voluntary principles
and standards for responsible business conduct consistent with applicable laws. The
Guidelines aim to ensure that the operations of these enterprises are in harmony with
government policies, to strengthen the basis of mutual confidence between enterprises and
the societies in which they operate, to help improve the foreign investment climate and to
enhance the contribution to sustainable development made by multinational enterprises. The
Guidelines are part of the OECD Declaration on International Investment and Multinational
Enterprises the other elements of which relate to national treatment, conflicting
requirements on enterprises, and international investment incentives and disincentives.
International business has experienced far-reaching structural change and the
Guidelines themselves have evolved to reflect these changes. With the rise of service and
knowledge-intensive industries, service and technology enterprises have entered the
international marketplace. Large enterprises still account for a major share of
international investment, and there is a trend toward large-scale international mergers.
At the same time, foreign investment by small- and medium-sized enterprises has also
increased and these enterprises now play a significant role on the international scene.
Multinational enterprises, like their domestic counterparts, have evolved to encompass a
broader range of business arrangements and organisational forms. Strategic alliances and
closer relations with suppliers and contractors tend to blur the boundaries of the
The rapid evolution in the structure of multinational enterprises is also reflected in
their operations in the developing world, where foreign direct investment has grown
rapidly. In developing countries, multinational enterprises have diversified beyond
primary production and extractive industries into manufacturing, assembly, domestic market
development and services.
The activities of multinational enterprises, through international trade and
investment, have strengthened and deepened the ties that join OECD economies to each other
and to the rest of the world. These activities bring substantial benefits to home and host
countries. These benefits accrue when multinational enterprises supply the products and
services that consumers want to buy at competitive prices and when they provide fair
returns to suppliers of capital. Their trade and investment activities contribute to the
efficient use of capital, technology and human and natural resources. They facilitate the
transfer of technology among the regions of the world and the development of technologies
that reflect local conditions. Through both formal training and on-the-job learning
enterprises also promote the development of human capital in host countries.
The nature, scope and speed of economic changes have presented new strategic challenges
for enterprises and their stakeholders. Multinational enterprises have the opportunity to
implement best practice policies for sustainable development that seek to ensure coherence
between social, economic and environmental objectives. The ability of multinational
enterprises to promote sustainable development is greatly enhanced when trade and
investment are conducted in a context of open, competitive and appropriately regulated
Many multinational enterprises have demonstrated that respect for high standards of
business conduct can enhance growth. Todays competitive forces are intense and
multinational enterprises face a variety of legal, social and regulatory settings. In this
context, some enterprises may be tempted to neglect appropriate standards and principles
of conduct in an attempt to gain undue competitive advantage. Such practices by the few
may call into question the reputation of the many and may give rise to public concerns.
Many enterprises have responded to these public concerns by developing internal
programmes, guidance and management systems that underpin their commitment to good
corporate citizenship, good practices and good business and employee conduct. Some of them
have called upon consulting, auditing and certification services, contributing to the
accumulation of expertise in these areas. These efforts have also promoted social dialogue
on what constitutes good business conduct. The Guidelines clarify the shared expectations
for business conduct of the governments adhering to them and provide a point of reference
for enterprises. Thus, the Guidelines both complement and reinforce private efforts to
define and implement responsible business conduct.
Governments are co-operating with each other and with other actors to strengthen the
international legal and policy framework in which business is conducted. The post-war
period has seen the development of this framework, starting with the adoption in 1948 of
the Universal Declaration of Human Rights. Recent instruments include the ILO Declaration
on Fundamental Principles and Rights at Work, the Rio Declaration on Environment and
Development and Agenda 21 and the Copenhagen Declaration for Social Development.
The OECD has also been contributing to the international policy framework. Recent
developments include the adoption of the Convention on Combating Bribery of Foreign Public
Officials in International Business Transactions and of the OECD Principles of Corporate
Governance, the OECD Guidelines for Consumer Protection in the Context of Electronic
Commerce, and ongoing work on the OECD Guidelines on Transfer Pricing for Multinational
Enterprises and Tax Administrations.
The common aim of the governments adhering to the Guidelines is to encourage the
positive contributions that multinational enterprises can make to economic, environmental
and social progress and to minimise the difficulties to which their various operations may
give rise. In working towards this goal, governments find themselves in partnership with
the many businesses, trade unions and other non-governmental organisations that are
working in their own ways toward the same end. Governments can help by providing effective
domestic policy frameworks that include stable macroeconomic policy, non-discriminatory
treatment of firms, appropriate regulation and prudential supervision, an impartial system
of courts and law enforcement and efficient and honest public administration. Governments
can also help by maintaining and promoting appropriate standards and policies in support
of sustainable development and by engaging in ongoing reforms to ensure that public sector
activity is efficient and effective. Governments adhering to the Guidelines are committed
to continual improvement of both domestic and international policies with a view to
improving the welfare and living standards of all people.
I. Concepts and Principles
The Guidelines are recommendations jointly addressed by governments to multinational
enterprises. They provide principles and standards of good practice consistent with
applicable laws. Observance of the Guidelines by enterprises is voluntary and not legally
Since the operations of multinational enterprises extend throughout the world,
international co-operation in this field should extend to all countries. Governments
adhering to the Guidelines encourage the enterprises operating on their territories to
observe the Guidelines wherever they operate, while taking into account the particular
circumstances of each host country.
A precise definition of multinational enterprises is not required for the purposes of
the Guidelines. These usually comprise companies or other entities established in more
than one country and so linked that they may co-ordinate their operations in various ways.
While one or more of these entities may be able to exercise a significant influence over
the activities of others, their degree of autonomy within the enterprise may vary widely
from one multinational enterprise to another. Ownership may be private, state or mixed.
The Guidelines are addressed to all the entities within the multinational enterprise
(parent companies and/or local entities). According to the actual distribution of
responsibilities among them, the different entities are expected to co-operate and to
assist one another to facilitate observance of the Guidelines.
The Guidelines are not aimed at introducing differences of treatment between
multinational and domestic enterprises; they reflect good practice for all. Accordingly,
multinational and domestic enterprises are subject to the same expectations in respect of
their conduct wherever the Guidelines are relevant to both.
Governments wish to encourage the widest possible observance of the Guidelines. While
it is acknowledged that small- and medium-sized enterprises may not have the same
capacities as larger enterprises, governments adhering to the Guidelines nevertheless
encourage them to observe the Guidelines recommendations to the fullest extent possible.
Governments adhering to the Guidelines should not use them for protectionist purposes
nor use them in a way that calls into question the comparative advantage of any country
where multinational enterprises invest.
Governments have the right to prescribe the conditions under which multinational
enterprises operate within their jurisdictions, subject to international law. The entities
of a multinational enterprise located in various countries are subject to the laws
applicable in these countries. When multinational enterprises are subject to conflicting
requirements by adhering countries, the governments concerned will co-operate in good
faith with a view to resolving problems that may arise.
Governments adhering to the Guidelines set them forth with the understanding that they
will fulfil their responsibilities to treat enterprises equitably and in accordance with
international law and with their contractual obligations.
The use of appropriate international dispute settlement mechanisms, including
arbitration, is encouraged as a means of facilitating the resolution of legal problems
arising between enterprises and host country governments.
Governments adhering to the Guidelines will promote them and encourage their use. They
will establish National Contact Points that promote the Guidelines and act as a forum for
discussion of all matters relating to the Guidelines. The adhering Governments will also
participate in appropriate review and consultation procedures to address issues concerning
interpretation of the Guidelines in a changing world.
II. General Policies
Enterprises should take fully into account established policies in the countries in
which they operate, and consider the views of other stakeholders. In this regard,
- Contribute to economic, social and environmental progress with a view to achieving
- Respect the human rights of those affected by their activities consistent with the host
governments international obligations and commitments.
- Encourage local capacity building through close co-operation with the local community,
including business interests, as well as developing the enterprises activities in
domestic and foreign markets, consistent with the need for sound commercial practice.
- Encourage human capital formation, in particular by creating employment opportunities
and facilitating training opportunities for employees.
- Refrain from seeking or accepting exemptions not contemplated in the statutory or
regulatory framework related to environmental, health, safety, labour, taxation, financial
incentives, or other issues.
- Support and uphold good corporate governance principles and develop and apply good
corporate governance practices.
- Develop and apply effective self-regulatory practices and management systems that foster
a relationship of confidence and mutual trust between enterprises and the societies in
which they operate.
- Promote employee awareness of, and compliance with, company policies through appropriate
dissemination of these policies, including through training programmes.
- Refrain from discriminatory or disciplinary action against employees who make bona fide
reports to management or, as appropriate, to the competent public authorities, on
practices that contravene the law, the Guidelines or the enterprises policies.
- Encourage, where practicable, business partners, including suppliers and
sub-contractors, to apply principles of corporate conduct compatible with the Guidelines.
- Abstain from any improper involvement in local political activities.
Enterprises should ensure that timely, regular, reliable and relevant information is
disclosed regarding their activities, structure, financial situation and performance. This
information should be disclosed for the enterprise as a whole and, where appropriate,
along business lines or geographic areas. Disclosure policies of enterprises should be
tailored to the nature, size and location of the enterprise, with due regard taken of
costs, business confidentiality and other competitive concerns.
Enterprises should apply high quality standards for disclosure, accounting, and audit.
Enterprises are also encouraged to apply high quality standards for non-financial
information including environmental and social reporting where they exist. The standards
or policies under which both financial and non-financial information are compiled and
published should be reported.
Enterprises should disclose basic information showing their name, location, and
structure, the name, address and telephone number of the parent enterprise and its main
affiliates, its percentage ownership, direct and indirect in these affiliates, including
shareholdings between them.
Enterprises should also disclose material information on:
- The financial and operating results of the company;
- Company objectives;
- Major share ownership and voting rights;
- Members of the board and key executives, and their remuneration;
- Material foreseeable risk factors;
- Material issues regarding employees and other stakeholders;
- Governance structures and policies.
Enterprises are encouraged to communicate additional information that could include:
- Value statements or statements of business conduct intended for public disclosure
including information on the social, ethical and environmental policies of the enterprise
and other codes of conduct to which the company subscribes. In addition, the date of
adoption, the countries and entities to which such statements apply and its performance in
relation to these statements may be communicated;
- Information on systems for managing risks and complying with laws, and on statements or
codes of business conduct;
- Information on relationships with employees and other stakeholders.
IV. Employment and Industrial Relations
Enterprises should, within the framework of applicable law, regulations and prevailing
labour relations and employment practices:
- a) Respect the right of their employees to be represented by trade unions and other bona
fide representatives of employees, and engage in constructive negotiations, either
individually or through employers' associations, with such representatives with a view to
reaching agreements on employment conditions;
b) Contribute to the effective abolition of child labour;
c) Contribute to the elimination of all forms of forced or compulsory labour;
d) Not discriminate against their employees with respect to employment or occupation on
such grounds as race, colour, sex, religion, political opinion, national extraction or
social origin, unless selectivity concerning employee characteristics furthers established
governmental policies which specifically promote greater equality of employment
opportunity or relates to the inherent requirements of a job.
- a) Provide facilities to employee representatives as may be necessary to assist in the
development of effective collective agreements;
b) Provide information to employee representatives which is needed for meaningful
negotiations on conditions of employment;
c) Promote consultation and co-operation between employers and employees and their
representatives on matters of mutual concern.
- Provide information to employees and their representatives which enables them to obtain
a true and fair view of the performance of the entity or, where appropriate, the
enterprise as a whole.
- a) Observe standards of employment and industrial relations not less favourable than
those observed by comparable employers in the host country;
b) Take adequate steps to ensure occupational health and safety in their operations.
- In their operations, to the greatest extent practicable, employ local personnel and
provide training with a view to improving skill levels, in co-operation with employee
representatives and, where appropriate, relevant governmental authorities.
- In considering changes in their operations which would have major effects upon the
livelihood of their employees, in particular in the case of the closure of an entity
involving collective lay-offs or dismissals, provide reasonable notice of such changes to
representatives of their employees, and, where appropriate, to the relevant governmental
authorities, and co-operate with the employee representatives and appropriate governmental
authorities so as to mitigate to the maximum extent practicable adverse effects. In light
of the specific circumstances of each case, it would be appropriate if management were
able to give such notice prior to the final decision being taken. Other means may also be
employed to provide meaningful co-operation to mitigate the effects of such decisions.
- In the context of bona fide negotiations with representatives of employees on conditions
of employment, or while employees are exercising a right to organise, not threaten to
transfer the whole or part of an operating unit from the country concerned nor transfer
employees from the enterprises' component entities in other countries in order to
influence unfairly those negotiations or to hinder the exercise of a right to organise.
- Enable authorised representatives of their employees to negotiate on collective
bargaining or labour-management relations issues and allow the parties to consult on
matters of mutual concern with representatives of management who are authorised to take
decisions on these matters.
Enterprises should, within the framework of laws, regulations and administrative
practices in the countries in which they operate, and in consideration of relevant
international agreements, principles, objectives, and standards, take due account of the
need to protect the environment, public health and safety, and generally to conduct their
activities in a manner contributing to the wider goal of sustainable development. In
particular, enterprises should:
- Establish and maintain a system of environmental management appropriate to the
- collection and evaluation of adequate and timely information regarding the
environmental, health, and safety impacts of their activities;
- establishment of measurable objectives and, where appropriate, targets for improved
environmental performance, including periodically reviewing the continuing relevance of
these objectives; and
- regular monitoring and verification of progress toward environmental, health, and safety
objectives or targets.
- Taking into account concerns about cost, business confidentiality, and the protection of
intellectual property rights:
- provide the public and employees with adequate and timely information on the potential
environment, health and safety impacts of the activities of the enterprise, which could
include reporting on progress in improving environmental performance; and
- engage in adequate and timely communication and consultation with the communities
directly affected by the environmental, health and safety policies of the enterprise and
by their implementation.
- Assess, and address in decision-making, the foreseeable environmental, health, and
safety-related impacts associated with the processes, goods and services of the enterprise
over their full life cycle. Where these proposed activities may have significant
environmental, health, or safety impacts, and where they are subject to a decision of a
competent authority, prepare an appropriate environmental impact assessment.
- Consistent with the scientific and technical understanding of the risks, where there are
threats of serious damage to the environment, taking also into account human health and
safety, not use the lack of full scientific certainty as a reason for postponing
cost-effective measures to prevent or minimise such damage.
- Maintain contingency plans for preventing, mitigating, and controlling serious
environmental and health damage from their operations, including accidents and
emergencies; and mechanisms for immediate reporting to the competent authorities.
- Continually seek to improve corporate environmental performance, by encouraging, where
appropriate, such activities as:
- Adoption of technologies and operating procedures in all parts of the enterprise that
reflect standards concerning environmental performance in the best performing part of the
- Development and provision of products or services that have no undue environmental
impacts; are safe in their intended use; are efficient in their consumption of energy and
natural resources; can be reused, recycled, or disposed of safely;
- Promoting higher levels of awareness among customers of the environmental implications
of using the products and services of the enterprise; and
- Research on ways of improving the environmental performance of the enterprise over the
- Provide adequate education and training to employees in environmental health and safety
matters, including the handling of hazardous materials and the prevention of environmental
accidents, as well as more general environmental management areas, such as environmental
impact assessment procedures, public relations, and environmental technologies.
- Contribute to the development of environmentally meaningful and economically efficient
public policy, for example, by means of partnerships or initiatives that will enhance
environmental awareness and protection.
VI. Combating Bribery
Enterprises should not, directly or indirectly, offer, promise, give, or demand a bribe
or other undue advantage to obtain or retain business or other improper advantage. Nor
should enterprises be solicited or expected to render a bribe or other undue advantage. In
particular, enterprises should:
- Not offer, nor give in to demands, to pay public officials or the employees of business
partners any portion of a contract payment. They should not use subcontracts, purchase
orders or consulting agreements as means of channelling payments to public officials, to
employees of business partners or to their relatives or business associates.
- Ensure that remuneration of agents is appropriate and for legitimate services only.
Where relevant, a list of agents employed in connection with transactions with public
bodies and state-owned enterprises should be kept and made available to competent
- Enhance the transparency of their activities in the fight against bribery and extortion.
Measures could include making public commitments against bribery and extortion and
disclosing the management systems the company has adopted in order to honour these
commitments. The enterprise should also foster openness and dialogue with the public so as
to promote its awareness of and co-operation with the fight against bribery and extortion.
- Promote employee awareness of and compliance with company policies against bribery and
extortion through appropriate dissemination of these policies and through training
programmes and disciplinary procedures.
- Adopt management control systems that discourage bribery and corrupt practices, and
adopt financial and tax accounting and auditing practices that prevent the establishment
of "off the books" or secret accounts or the creation of documents which do not
properly and fairly record the transactions to which they relate.
- Not make illegal contributions to candidates for public office or to political parties
or to other political organisations. Contributions should fully comply with public
disclosure requirements and should be reported to senior management.
VII. Consumer Interests
When dealing with consumers, enterprises should act in accordance with fair business,
marketing and advertising practices and should take all reasonable steps to ensure the
safety and quality of the goods or services they provide. In particular, they should:
- Ensure that the goods or services they provide meet all agreed or legally required
standards for consumer health and safety, including health warnings and product safety and
- As appropriate to the goods or services, provide accurate and clear information
regarding their content, safe use, maintenance, storage, and disposal sufficient to enable
consumers to make informed decisions;
- Provide transparent and effective procedures that address consumer complaints and
contribute to fair and timely resolution of consumer disputes without undue cost or
- Not make representations or omissions, nor engage in any other practices, that are
deceptive, misleading, fraudulent, or unfair;
- Respect consumer privacy and provide protection for personal data;
- Co-operate fully and in a transparent manner with public authorities in the prevention
or removal of serious threats to public health and safety deriving from the consumption or
use of their products.
VIII. Science and Technology
- Endeavour to ensure that their activities are compatible with the science and technology
(S&T) policies and plans of the countries in which they operate and as appropriate
contribute to the development of local and national innovative capacity.
- Adopt, where practicable in the course of their business activities, practices that
permit the transfer and rapid diffusion of technologies and know-how, with due regard to
the protection of intellectual property rights.
- When appropriate, perform science and technology development work in host countries to
address local market needs, as well as employ host country personnel in an S&T
capacity and encourage their training, taking into account commercial needs.
- When granting licenses for the use of intellectual property rights or when otherwise
transferring technology, do so on reasonable terms and conditions and in a manner that
contributes to the long term development prospects of the host country.
- Where relevant to commercial objectives, develop ties with local universities, public
research institutions, and participate in co-operative research projects with local
industry or industry associations.
Enterprises should, within the framework of applicable laws and regulations, conduct
their activities in a competitive manner. In particular, enterprises should:
- Refrain from entering into or carrying out anti-competitive agreements among
a) To fix prices;
b) To make rigged bids (collusive tenders);
c) To establish output restrictions or quotas; or
d) To share or divide markets by allocating customers, suppliers, territories or lines
- Conduct all of their activities in a manner consistent with all applicable competition
laws, taking into account the applicability of the competition laws of jurisdictions whose
economies would be likely to be harmed by anti-competitive activity on their part.
- Co-operate with the competition authorities of such jurisdictions by, among other things
and subject to applicable law and appropriate safeguards, providing as prompt and complete
responses as practicable to requests for information.
- Promote employee awareness of the importance of compliance with all applicable
competition laws and policies.
It is important that enterprises contribute to the public finances of host countries by
making timely payment of their tax liabilities. In particular, enterprises should comply
with the tax laws and regulations in all countries in which they operate and should exert
every effort to act in accordance with both the letter and spirit of those laws and
regulations. This would include such measures as providing to the relevant authorities the
information necessary for the correct determination of taxes to be assessed in connection
with their operations and conforming transfer pricing practices to the arms length
[end of document]
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