Presentation by Allan Jørgensen, Head of the Centre for Responsible Business Conduct, OECD Directorate for Financial and Enterprise Affairs

1. What role for Responsible Business Conduct standards in getting to net-zero?
A framework for promoting credibility and integrity in business action on
climate
Allan JØRGENSEN – Head, Centre for Responsible Business Conduct
22 February 2023

2. 2
Reminder: what are OECD standards on Responsible Business Conduct?
Six-step due diligence framework across environmental, social and
governance impacts
Voluntary recommendations from governments to corporate actors incl.
financial institutions, which include a channel for remediation
Increasingly embedded in mandatory regulations and self-regulatory initiatives
• Disclosure expectations, trade bans or due diligence requirements
• Sustainable finance regulations (taxonomies, supervisory expectations for banks,
disclosure etc.)
• Market practices and industry standards (UN PRI, ESG ratings, GRI reporting
standards)

3. 3
Declaration on Promoting and Enabling Responsible Business Conduct in the Global Economy
WE ACKNOWLEDGE the need for RBC standards to guide and promote a common understanding of
the role of business in addressing the [climate] crises and support coherence and credibility of
related corporate initiatives, commitments, and transition plans consistent with internationally
agreed principles and targets and best available science.
WE CALL on the OECD, to facilitate inclusive cooperation on policy, regulation and initiatives, and
further develop due diligence practice on environmental matters, including initiatives to enhance the
credibility, comparability and tracking of financial sector and real economy net-zero transition
commitments.
WE RECOGNISE that the Guidelines are particularly well-placed to promote a holistic and
comprehensive approach to environmental management and climate action that also takes into
account social impacts.
Building on the momentum: the OECD Ministerial Declaration on RBC

4. The issue at stake: concerns over the credibility and integrity of net-zero commitments
Credibility of net-zero metrics:
• Consistency and availability of targets, metrics and methodologies
• Scope 3 coverage in data
Governance of net-zero commitments:
• Near-term and interim targets
• Integration metrics in business and capital allocation strategies
• Overreliance on offsetting
Unintended consequences:
• Just transition considerations (i.e., on human rights, labour rights,
biodiversity).
• De-risking: majority of ESG investments going to developed economies,
loss of leverage over divested assets, strong correlation between GDP and
sovereign ESG ratings.
METRICS
GOVERNANCE
UNINTENDED IMPACTS

5. RBC due diligence can inform corporate climate action
Combined risk-
based and supply
chain approaches
The combined value chain and risk-based approaches can help businesses better identify GHG
emission hotspots in their value chains et prioritise their decarbonisation efforts based on severity
(and likelihood) of climate risks and impacts.
Governance
and leverage
Integration into management systems, build leverage – through joint action, engagement,
responsible stewardship, incentives etc. and strengthen the credibility of climate commitments
Unintended
consequences
RBC due diligence is an engagement tool by design and address adverse impacts of divestment
strategies that can adversely impact development objectives and global equity
Holistic approach to
risk management
The holistic and inside-out approaches of RBC due diligence enable companies to have a
panoramic view at their adverse impacts on people and planet, consider responsible trade-offs
strategies and address transition risks to people – workers, communities, consumers
5
RBC is not a one-size-fit-all solution to the climate crisis but provide a framework to strengthen the
credibility and integrity of corporate climate action in a number of ways: