Discussion Event "Digitalisation and Global Responsibility" on 11 June 2018
Blockchain, the Internet of Things or Big Data are considered as "game changers" for more transparency and flexibility in the supply chain. According to the speakers, digital technologies could make a significant contribution to identify risks in upstream supply chains.
Transparency becomes a key element in the supply chain
"Not only localising products, but being able to trace them along the entire supply chain is becoming a key element in supply chain management," emphasised Christian Friesl, Head of Education and Society of the Federation of Austrian Industries. Ensuring real supply chain transparency is finally possible through the help of digital technologies.
Transparency, sustainability, environmental protection and combating corruption will also be considered in the 2018 External Trade Strategy, which is currently developed, stated Bernadette Marianne Gierlinger, Director General for External Trade Policy and European Integration in the Federal Ministry for Digital and Economic Affairs. Specific attention is given to the opportunities being brought in by digitalisation. Director General Gierlinger also referred to the new
OECD Due Diligence Guidance for Responsible Business Conduct, which provides practical support to companies across all industries on due diligence along the entire supply chain.
Increased supplier visibility through digital technologies
"Sustainability problems usually do not arise with direct suppliers, but in the upstream supply chain," said Martin Schleper, Sustainable Operations Management at the University of Sussex. In supply chain due diligence and risk identification, companies usually have to rely on information provided from their first tier suppliers. Especially for small and medium-sized enterprises it is often not possible to receive information from upstream suppliers due to low purchasing volumes. Digital technologies such as blockchain, as well as social media and big data can increase the visibility of suppliers and help to better identify risks in the supply chain", said Schleper.
Digital technologies being tested
Many companies are currently testing whether digital technologies can be used to verify that their supply chains are free from forced labour, human trafficking or corruption, explained Tara Norton, Managing Director of the international consultancy BSR. Projects include a joint venture between the Danish transport and logistics company Maersk and IBM, the 'bean-to-cup' blockchain initiative from the coffee company Starbucks with select coffee farmers in Costa Rica, Colombia and Rwanda or a project by the consumer goods company Unilever and the British supermarket Sainsbury's with tea farmers in Malawi.
Unlocking the Potential of Digitalisation
Achieving sustainability targets would not be possible without digitalisation, said Manfred Schekulin, Head of Export and Investment Policy and Chairman of the OECD Investment Committee, in the discussion with Tara Norton, BSR, Martin Schleper, University of Sussex, and Michaela Kegel, Compliance and Sustainability Services at KPMG. Digitalisation could help to work through standards such as the OECD Guidelines in a structured manner, to harmonise the large number of codes of conduct, or to predict short-term political or labour law risks using algorithms, said Michaela Kegel. However, decision-making and trust in the accuracy of information cannot be replaced by digital applications, the panelists agreed.
Picture 1: Director General Bernadette Marianne Gierlinger/Head of the Directorate General for External Trade Policy and European Integration in the BMDW, Christian Friesl/Head of Education and Society in the IV © BMDW
Picture 2: Director General Bernadette Marianne Gierlinger/BMDW welcomes the participants of the discussion event © BMDW
Picture 3: Director General Bernadette Marianne Gierlinger/BMDW and the participants of the discussion event © BMDW
Picture 4: On panel (from left to right): Manfred Schekulin/BMDW, Tara Norton/BSR, Martin Schleper/University of Sussex, Michaela Kegel/KPMG © BMDW
Picture 5: Panelists Discussion (from left to right): Manfred Schekulin/BMDW, Martin Schleper/University of Sussex, Director General Bernadette Marianne Gierlinger/BMDW, Tara Norton/BSR, Christian Friesl/IV, Iris Hammerschmid/Head of the Austrian National Association, Michaela Kegel/KPMG © BMDW
The first expert talk on
due diligence was held on 24 April 2017. The second expert talk on the topic
of the complaint
procedure took place on 30 May 2017. The Austrian NCP hosted its annual
discussion forum in cooperation with the Federation of Austrian Industries on 2 October 2017.
The Austrian NCP also issued brochures and newsletters on recent developments in the fields of responsible business conduct and the OECD Guidelines. Moreover, the Austrian NCP is currently undergoing a peer review process. The on-site visit by the OECD peer review team took place on December 14 and 15, 2017. The OECD peer review report is expected to be published on the OECD website and on the website of the Austrian NCP in the end of 2018/beginning of 2019.
Past Events organised by the Austrian NCP:
Expert Talk "Managing responsibility in international business – responsible business conduct between theory and practice" on 2 October 2017
The Austrian National Contact Point for the OECD Guidelines together with the Federation of Austrian Industries invited decision-makers and experts from business, public administration and civil society to a high quality discussion event.
The event was focused on how companies could transfer CSR-frameworks, reporting standards and management systems into a stringent sustainability strategy.
Opening remarks by Christian Friesl and Bernadette Gierlinger
Christian Friesl, head of the division of Education and Society at the Federation of Austrian Industries, pointed out that issues of societal relevance are gaining importance in trade and investment policies. The OECD Guidelines are one of the cornerstones for corporate responsibility management, that help to address rising expectations, for example for greater transparency along the entire global value and supply chains.
To Bernadette Marianne Gierlinger, head of the Directorate General for Foreign Trade Policy and European Integration at the Federal Ministry of Science, Research and Economy, sustainability is a tool for increasing the competitiveness of small economies like Austria on the global market. Without the import of raw materials and intermediate goods the Austrian export economy would not be sustainable. Therefore, almost every company is part of a global value chain. The OECD Guidelines ,together with the ILO Core Labour Standards and the UN Global Compact, form the world's most important international standard for responsible business conduct. Thus, they provide valuable orientation and contribute to providing a more level playing field.
Picture 1: Bernadette Marianne Gierlinger, Vice-Minister for Foreign Economic Policy and European Integration at the Federal Ministry of Science, Research and Economy and Christian Friesl/Head of Directorate Education and Society/Austrian Federation of Industries © BMWFW
Building up sustainability management
Tabea Siebertz from the German Council for Sustainable Development emphasised that reporting standards like the Global Reporting Initiative or the German Sustainability Code (Deutscher Nachhaltigkeitskodex) can be helpful tools for building up sustainability management within a company.
"The trend is towards reporting requirements in managing risks along the supply chain'', explained Matthias Leisinger of the international consultancy twentyfifty. As an example, he named the British Modern Slavery Act, which obliges larger companies carrying out business in the UK to publish a public statement that sets out steps to prevent slavery in any part of their supply chains. A proactive sustainability management in the supply chain also leads to a better understanding of the company's own supply chain, and to the identification of improvement and savings potential as well as improving product quality.
Raise awareness for the entire value chain
In the subsequent panel discussion Tabea Siebertz, Matthias Leisinger, Manfred Schekulin, Director for Export and Investment Policy at the Federal Ministry of Science, Research and Economy and chairman of the OECD Investment Committee, Christine Paschoalique, Sustainability Officer at Wienerberger, the world's largest producer of bricks, and Sylvia Tuin from the National Contact Point of the Netherlands spoke about challenges and different approaches in implementing sustainability strategies. Christine Paschoalique confirmed: "It was a long learning process for the entire company to make every unit aware that the entire value chain must be taken into account when considering sustainability issues.'' According to Manfred Schekulin, governments can support businesses in this area by clearly communicating the expectations coming from international and societal developments and by spreading sector-specific guidances.
Picture 2: Matthias Leisinger/twentyfifty Consulting, Tabea Siebertz/German Council for Sustainable Development, Christine Vieira Paschoalique/Sustainability Officer/Wienerberger, Sylvia Tuin/NCP Netherlands, Victoria Grabenwöger/Interpreter © BMWFW
Picture 3: Iris Hammerschmid/Head of the Austrian NCP, Tabea Siebertz/German Council for Sustainable Development, Bernadette Marianne Gierlinger/Vice-Minister for Foreign Economic Policy and European Integration at the Federal Ministry of Science, Research and Economy, Sylvia Tuin/NCP Netherlands © BMWFW
Picture 4: Iris Hammerschmid/Head of the Austrian NCP, Christine Vieira Paschoalique/Sustainablility Officer/Wienerberger © BMWFW
Iris Hammerschmid, head of the Austrian NCP, emphasized the role of the NCP as a mediation platform. The aim is to reach agreements on complex issues and to create a constructive and productive future.
Expert Talk "Dialogue with Strong Impact": The Complaint Procedure within the Framework of the OECD Guidelines, 30 May 2017
On 30 May 2017 the Austrian NCP held an expert talk on the complaint procedure (specific instance procedure) of the OECD Guidelines. The complaint procedure serves as a valuable alternative to judicial proceedings in the case of alleged breaches of the OECD Guidelines. As pointed out by Iris Hammerschmid from the Austrian NCP, the complaint procedure does not aim at imposing sanctions for alleged violations in the past, but rather focuses on fostering an open and constructive dialogue between the parties to develop a sustainable solution within the meaning of the OECD Guidelines.
Alex Kunze from the Swiss NCP and Senior CSR-Advisor at the Swiss State Secretary of Economy explained the procedural steps of a complaint by using two case examples. In case a complaint goes to mediation, a written mediation agreement is signed by the parties. This agreement is binding and creates the framework for confidential and open discussions between the parties. In particular, exchange of information between parties plays an important role for reaching a consensual solution.
According to Alex Kunze, one of the most significant challenges is the question of when to conclude a procedure. Due to the complexity of most cases and the long geographic distances to the place where the alleged breach of the OECD Guidelines took place, it is often not possible to close the procedure within twelve months from receipt of the complaint as foreseen by the OECD Guidelines. Yet, the longer the procedure takes, the higher the expectations become. The issuance of follow-up statements six months after the closing of the procedure by the parties, which is now standard practice for procedures before the Swiss NCP, is a key factor for accelerating the closing of a procedure.
Kirstine Drew of the Trade Union Advisory Committee at the OECD (TUAC) highlighted the strengths of the OECD Guidelines, such as the wide spectrum of the thematic areas, the support by the various governments, the complaint mechanism as a neutral dialogue platform for companies, trade unions and NGOs. These advantages comprise the main reasons for the commitment of the trade union movement to the OECD Guidelines. The follow-up process constitutes an essential step for further dialogue and significantly strengthens the trust of trade unions and NGOs in the effectiveness of the complaint mechanism. Despite these strengths, the awareness of the OECD Guidelines is still low. Kristine Drew finally urged the NCPs and social partners to join forces to increase the visibility and application of the OECD Guidelines.
Picture 1: Alex Kunze, Swiss National Contact Point © ICEP
Picture 2: Participants of Expert Talk © ICEP
Picture 3: Kirstine Drew, TUAC © ICEP
Expert Talk "Managing Global Responsibility: Due Diligence according to the OECD Guidelines for Multinational Enterprises", 24 April 2017
The implementation of the EU directive on disclosure of non-financial and diversity information by certain large undertakings and groups, constitutes one of the reasons why sustainability management is gaining importance for many companies. In Austria, the Sustainability and Diversity Improvement Act (Nachhaltigkeits- und Diversitätsverbesserungsgesetz), which entered into force in December 2016, applies to large corporations (and their subsidiaries) that are public interest entities and employ more than 500 employees. Suppliers are often bound by codes of conduct and purchasing guidelines. The management of sustainability risks presents major challenges for companies in the face of complex, global value chains.
The OECD Guidelines for Multinational Enterprises recommend that companies carry out risk-based due diligence to identify potential risks posed to employees, consumers, human rights, the environment and corruption. On 24 April 2017, the Austrian NCP and Advantage Austria of the Austrian Federal Economic Chamber, invited experts to discuss global responsibility as well as the due diligence provisions of the OECD Guidelines and their application.
After the welcoming remarks by Iris Hammerschmid from the Austrian NCP and Michael Zimmermann, International Project Network Advantage Austria, Austrian Federal Economic Chamber, Tyler Gillard (Head of Sector Projects, OECD Responsible Business Conduct Unit) presented the due diligence provisions of the OECD Guidelines and the sector Guidances. Beatrix Praeceptor (Chief Procurement Officer at the Mondi Group) explained the challenges of integrating sustainability aspects into the supply chain.
Tyler Gillard stressed that the systematic prioritization of products and countries should always be the beginning of due diligence. If the priorities are set in a transparent and understandable way and companies are actively addressing difficulties, they will not be accused of not fulfilling their due diligence obligations when risks occur in a non-prioritized country. Sustainability risks can always occur and a total risk exclusion is not possible. The aim is to establish and continually improve a reasonable due diligence process that adequately takes into account the company size, industry and intensity of the supply chain relationships.
This view was shared by Beatrix Praeceptor, "Risk assessment is indispensable and has to be part of a group-wide supplier relationship management concept." The supplier ratings include a set of sustainability criteria to determine the overall risk posed to the environment, employees or the local communities. High-risk suppliers are subject to an in-depth assessment, including audits. Mondi also offers training and is committed to build long-term partnerships with local companies.
Following the presentations, the 30 participants brought the different aspects of due diligence into a practical context by working on three different case studies. The participants identified concrete sustainability risks as well as potential breaches of the OECD Guidelines and the consequences in the case of non-compliance. Tyler Gillard presented the results, highlighting once again that the exclusion from the supply chain should be the last resort. A constant exchange between companies and suppliers and the offer of support are much more effective in identifying risks along the supply chain and achieving long-term improvements.
Picture 1: Participants of the Expert-Talk © ICEP
Discussion Event "40 years OECD Guidelines for Multinational Enterprises", 24 October 2016
On the occasion of the 40th anniversary of the OECD Guidelines for Multinational Enterprises, the Austrian NCP invited Austrian companies, other stakeholder and interested parties from civil society to a discussion event on a reality check of the OECD Guidelines.
The event was co-hosted by the Federation of Austrian Industries and was opened by Christian Friesl, Director of Education and Society at the Federation of Austrian Industries, and Bernadette Marianne Gierlinger, Vice-Minister for Foreign Economic Policy and European Integration at the Federal Ministry of Science, Research and Economy. Christian Friesl highlighted the increasing importance of the OECD Guidelines and their contribution to the creation of a global level playing field. Bernadette Marianne Gierlinger emphasized the importance of sustainability for the future of Austria's standing as a business location. The OECD Guidelines represent the most comprehensive instrument for promoting responsible business conduct. They also constitute an important tool for promoting the Sustainable Development Goals.
In the following discussion, the panelists included Roel Nieuwenkamp (Chairman of the OECD Working Party for Responsible Business Conduct), Denise Laufer, (Member of BIAC - Business and Industry Advisory Committee to the OECD), Kirstine Drew (Member of TUAC - Trade Union Advisory Committee to the OECD), Manfred Schekulin (Head of export and investment policy at the Federal Ministry of Science, Research and Economy and Chair of the OECD Investment Committee) and Hannes Roither (Palfinger AG - crane manufacturer).
Roel Nieuwenkamp highlighted the role of the National Contact Points (NCPs) - established by all 46 participating states - as the heart of the OECD Guidelines. By mentioning concrete cases, Nieuwenkamp explained the strength of the NCPs in constructively resolving conflicts between civil society and companies." It is not about good or bad companies," Nieuwenkamp emphasized, "due to the complexity of supply chains, mistakes are inevitable." Denise Laufer pointed out that there has to be a clear understanding of the possibilities, but also of the limits of influence companies can have on the behaviour of third parties. Hannes Roither asked for more practical guidance for companies on how to act. Kirstine Drew highlighted the challenge to ensure the efficiency and effectiveness of NCPs, which do not function properly in all participating states. "In order to safeguard the integrity of the NCP system and to build on successes already achieved, the problem-solving capacities of the NCPs should be strengthened," Manfred Schekulin explained. Roel Nieuwenkamp finally pointed out that the efficiency of the NCP system is always a question of the political commitment. It needs the political commitment and trust of all involved actors to work together.
Picture 1: Bernadette Marianne Gierlinger, Vice-Minister for Foreign Economic Policy and European Integration at the Federal Ministry of Science, Research and Economy © ICEP
Picture 2: Vice-Minister Bernadette Marianne Gierlinger welcomes the participants © ICEP
Picture 3: Roel Nieuwenkamp, Chair of the OECD Working Party on Responsible Business Conduct © ICEP
Picture 4: Panel dicussion © ICEP
Expert talk "Due Diligence in international business", 28 June 2016
On June 28, 2016 an expert talk on the topic "Due Diligence in the international business" followed. The participants discussed approaches and instruments of integration of CSR risk-management systems in enterprises. The panelists included Beate Sternig of the Austrian National Contact Point, Thamar Zijlstra of the Dutch Standardisation Institute NEN and Wolfgang Kraus, Senior Associate at the Oil and Gas Industry Association for Environmental and Social Issues (IPIECA).
Beate Sternig referred in her introduction to the increasing international interconnectedness of the Austrian economy and the subsequent increasing range of responsibilities of Austrian enterprises. A key principle of the OECD Guidelines for Multinational Enterprises is due diligence – the implementation of due diligence processes in order to identify, prevent and mitigate adverse impacts of business activities.
Thamar Zijlstra and Wolfgang Kraus referred in their keynotes to the practical implementation of due diligence processes within a company. Thamar Zijlstra presented by means of the Dutch Code of Practice NPR 9036 a process-oriented support. The Code of Practice was developed in 2015 upon request of the Economic and Social Council of the Netherlands (SER) by the Dutch Standardisation Institute NEN together with a work group composed of companies, interest groups and advisors – among them Human Rights@Work, the Employee Association FNV and the Company Network CSR Netherlands. The key of the Code of Practice presents a comparison of elements of the generic risk management framework (ISO HLS) with the steps of the due diligence process of the UN Guiding Principles on Business and Human Rights and the OECD Guidelines. Furthermore, it provides instructions for the integration of due diligence in company processes.
Wolfgang Kraus pointed out the implementation of CSR risk-management systems for internationally operating companies by means of concrete examples from entrepreneurial practice. The starting point here is often an imminent or already existing loss. Companies which analyse and prioritise their responsibilities already in advance of new business transactions and take risk-preventing measures, do not only carry out active risk management and act responsibly, but also save costs and avoid losses of reputation, as pointed out by Mr. Kraus.
Afterwards, topic-related tools were discussed on which companies can rely on in the strategic implementation. The Guidance from the Danish Institute for Human Rights on the evaluation of human right risks and impacts as well as the OECD Guidances were mentioned as practice-relevant examples. Based on these approaches, it is furthermore significant to obtain on-site expertise and to integrate local contact groups, Wolfgang Kraus concluded.
Picture 1: Participants of the Expert talk
Expert talk "Responsibility in global Supply Chains", 6 April 2016
More than 40 purchase and CSR managers as well as interested parties from business, government and civil society gathered on April 6, 2016 during an expert talk in the Federal Ministry of Science, Research and Economy, which was jointly organised by the Austrian National Contact Point and the Federal Association for Material Management, Purchasing and Logistics in Austria. Beate Sternig from the Austrian National Contact Point discussed with Liz Napier from the National Contact Point of the United Kingdom (UK) and Silke Sorger, Head of Purchasing Infineon Technologies Austria AG about the responsibility of companies in global supply chains by means of concrete case studies and experiences.
In her introduction Beate Sternig pointed out that the OECD Guidelines create a common framework for responsible business conduct in global competition. Using three cases from the UK National Contact Point, Liz Napier explained how mediation proceedings are carried out in practice. The aim was to support the parties in elaborating an acceptable solution for all participants. Liz Napier described transparency and mutual trust as the most significant prerequisites for an agreement. In the event that the parties initiate mediation proceedings, this positive catalyst can bring about changes.
Silke Sorger described how Infineon integrates sustainability criteria into the supply chain. They are part of the purchase conditions and are based on internationally recognised guidelines such as the UN Global Compact and the fundamental principles of the International Labour Organisation (ILO). Suppliers are obliged to fill in a questionnaire, which forms the basis for further steps such as improvement processes or audits.
Vividly discussed was the question whether agreements are respected in reality. According to Silke Sorger's experience, inquiries about sustainability criteria are a clear signal to and motivation for suppliers to comply with the respective requirements. International guidelines such as the OECD Guidelines form a basis for a mutual understanding of responsible business conduct.
Picture 1: Beate Sternig, Head of the Austrian NCP, © Mihai M. Mitrea
Picture 2: Participants of the expert talk, © Mihai M. Mitrea
Austrian NCP for the OECD Guidelines for Multinational Enterprises
Federal Ministry for Digital and Economic Affairs
Telephone: +43(0)1 711 00/805240 or 805050
Fax: +43 1 71100 - 8045050