by Timo Elshof

CSR due diligence  

Since the launch of the OECD Guidelines for multinational enterprises and the introduction of the UN Guiding Principles (UNGPs), companies have been struggling with the translation of these guidelines into their governance policy, management tools and business practices. As legislation surrounding these themes grows, so does the need to find ways to address them. Both at a national and European level, more and more laws are being passed that require a substantial effort in the areas of due diligence and/or supply chain responsibility.

Due diligence is the process by means of which organisations identify, prevent and mitigate actual and potentially negative repercussions and are held accountable for their approach to these repercussions. Due diligence considers issues such as human rights, employment conditions, environmental impact and corruption, among other things. Different risks and repercussions are applicable in every country and to every product.

Unfortunately, the sheer number of reports, guidelines and initiatives often makes things more complex rather than easier. Having worked with and within companies, we realise that translating the OECD guidelines and the UNGPs into more familiar terminology is essential. We have therefore decided to integrate elements from the OECD and UNGPs with the concepts of Enterprise Risk Management. On the basis of four easy-to-follow steps, we summarise the complexities in a so-called ‘risk register’, involve both internal and external stakeholders and validate the resulting outcomes.

This approach ensures understanding and recognition across the different departments and provides a platform to establish a mandate for a course of action. ”Leverage” is a crucial concept for determining courses of action. Depending on the severity of the impact, the position in the chain, and the complexity of the particular context, either immediate control can be exercised or solutions in the form of incentives may be sought.