Articles / OECDs Impact on Business and Supply Chains
The image shows OECD-memberships as of may, 2022 (Source: OECD.org). The following article is written by Transparency Gate.
OECDs Impact on Business and Supply Chains
The Organisation for Economic Co-operation and Development (OECD) is a forum currently consisting of 38 member countries with market-based economies to collaborate in developing strategies for sustainable economic growth.
In this article we’ll cover how and why OECD was formed, its goals, and impact on businesses and supply chains!
Features of OECDs impact Include:
- Historical impact
- International and intra-territorial scope
- Government backing
- Clearly recognized supply chain responsibility
- Covers a wide range of issues and business sectors
- Grievance mechanism in place for solving conflicts
Feel free to navigate the table of contents to find what you`re looking for.
Guide to our OECD-related Articles
The OECD has set guidelines for governments and multinational enterprises on conducting responsible business. These guidelines cover labor rights, human rights, decent working conditions, and environmental protection.
Navigate to our other articles to find out more about the guidelines and how the organisation work.
- OECD Guidelines for Multinational Enterprises
- OECD Responsible Business Conduct for Institutional Investors
- Online Platforms and Decent Working Conditions
- The Transparency Act in Norway
What is the OECD?
Simply put, OECD is a world-wide organisation that promotes policy work to it’s members on national and territorial basis in order to increase compliance, sustainability, transparency and openness in countries.
How does OECD impact Business?
With the aim of sustainable growth and better living standards for the civil society, all the members of the Organisation must follow the OECD Convension and Guidelines, which includes making policies to ensure that companies and corporations also comply with these standards.
Here are some key facts about the OECD.
The Key facts about OECD:
- The Organisation’s work is defined by the OECD Convension.
- Coordinates international collaboration on key global issues at national, regional and local levels.
- Member countries are represented by ambassadors at the OECD Council.
- Member countries engage with experts and use data to inform policy decisions.
- The Organization carry out country reviews to encourage better performances.
- The European Commission participates in OECDs work, but don’t have the right to vote.
- OECD-countries and Key Partners represent about 80% of world trade and investment.
- Since 2010, eight new countries have joined the OECD.
- Costa Rica has become the OECD’s 38th Member country.
Important Act for Businesses
Did you know that the newly enforced Norwegian Transparency Act imposes mandatory due diligence reporting on negative consequences for human rights and decent working conditions? All large Norwegian companies and organisations with connections to Norway-based business must comply.
You can learn more about The Transparency Act in Norway here.
This image of “the world in our hands” illustrates what the OECD is all about. Photography: Mikhail Nilov
History of the OECD
Initially, the Organisation for European Economic Co-operation (OEEC) was formed to administrate aid under the Marshall Plan for the reconstruction of Europe after World War 2. In 1960 the Organisation was reconstituted as the Organisation for Economic Co-operation and Development, to further broaden it’s objective-horizon and influence.
The OECD Convention was enforced on 30th of September, 1961.
The OECD Convension
The aims of the Organisation for Economic Co-operation and Development is defined in the Convension.
Article 1 states OECD’s aim the promotion of policies designed to achieve sustainable economic growth and employment, with goals of increasing the standard of living in member countries, while maintaining financial stability and contribute to development of the world economy.
You can read Article 1 and the entire OECD Convension here.
All OECD Member Countries as of 2022
When Costa Rica formally joined the OECD in May, 2021, there was 38 member countries in total. Here’s a list of all the OECD-member countries.
7 June 1971
29 September 1961
13 September 1961
10 April 1961
7 May 2010
28 April 2020
25 May 2021
21 December 1995
30 May 1961
9 December 2010
28 January 1969
7 August 1961
27 September 1961
27 September 1961
7 May 1996
5 June 1961
17 August 1961
7 September 2010
29 March 1962
28 April 1964
12 December 1996
1 July 2016
5 July 2018
7 December 1961
18 May 1994
13 November 1961
29 May 1973
4 July 1961
22 November 1996
4 August 1961
14 December 2000
21 July 2010
3 August 1961
28 September 1961
28 September 1961
2 August 1961
2 May 1961
12 April 1961
Didn’t find your country in the list? Don’t daspair, countries can apply for opening a formal accession discussion in the OECD Council, but it comes with some requirements.
OECD Accession Candidates (How to become a member)
It’s no simple formality to become a member of the OECD. There’s quiet a thorough application and review process. The OECD Council comprises of all the Members of the Organisation and decide on the opening of accession discussions.
The accession process start with either the initiative of the Council itself or by a written request from a country interested in membership. The review process often result in a series of recommendations for change to align the candidate country further to OECD standards and best practices.
Signing the Accession Agreement
The OECD accession process includes an assessment of the applicants policy framework to encourage reforms. Once the technical process has completed, the OECD Council makes a decision on formally inviting the candidate country to become a Member.
An Accession Agreement is signed and the candidate country takes the necessary domestic steps and deposits an instrument of accession to the OECD Convention with the depositary. On the date of deposit, the country formally becomes a Member of the OECD.
The most recent countries to become OECD-members were Colombia, in April 2020, and Costa Rica, in May 2021. More recently, accession discussions have started for Argentina, Brazil, Bulgaria, Croatia, Peru and Romania.
The OECD’s Grievance Mechanism
The OECD also has an international grievance mechanism for handling complaints between companies covered by OECD guidelines and people negatively affected by responsible business conduct. Although the guidelines aren’t legally binding to companies, they are binding on signatory governments. These are required to implement and observe the guidelines.
Non-OECD Member Countries Adhering to the MAD-system
The MAD-system (System for Mutual Acceptance of Chemical Safety Data), is a scientific test-system included in OECD Test Guidelines. It’s one of many ways non-members can align with OECD standards.
Studies done on chemicals and chemical products such as medicines, industrial chemicals and pesticides is high on the list and all countries implement compliance monitoring program to track adherance to the OECD standards.
Over EUR 309 million is saved every year by sharing test results across OECD.
Testing and sharing for data is in accordance with GLP so that data quality and integrity is preserved (OECD Principles of Good Laboratory Practice – GLP).
Non-OECD member countries in full adherents to MAD: Brazil, India, Malaysia, Singapore, South Africa and Thailand.
*Note: Full adherence for Argentina only applies to industrial chemicals, pesticides and biocides. All other products are outside the scope of Argentina’s national GLP compliance monitoring programme.
Frequently Asked Questions about the OECD (FAQ)
Here are some of the most frequently asked questions about the OECD.
What does OECD stand for?
– OECD’s short for Organization for Economic Co-operation and Development.
How many countries are in OECD?
– 38 countries are members of the OECD.
Whats OECDs slogan?
– Better policies for better lives.
How is the OECD funded?
– Member countries fund the OECD. Members don’t pay a set rate. Instead, their contributions are based on a formula that accounts for the relative size of each national economy.
What does it mean to be in the OECD?
– OECD mainly consists of governments that works together with common challenges. Members develop global standards, share experiences and identify best practices to promote better policies for better lives.
Which OECD country has the highest rate of poverty?
– According to OECD statistics, Mexico has the highest rate of poverty among OECD member countries (43.9%).
Which OECD country has the second highest rate of poverty?
– According to OECD statistics, Colombia has the second-highest rate (42.5%).
Which OECD country has the second highest rate of poverty?
– Costa Rica has the third highest rate of poverty among the OECD members (30%).
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Due Diligence Assessments & Reporting
According to Acticle 4 in the Transparency Act, all businesses with affiliation to Norwegian based companies shall carry out and promote due diligence assessments according to the OECD guidelines for multinational companies. Once a year companies must report their work with these due diligence assessments publicly.
The Transparency Act also require Norwegian based companies to respond to requests from the public where they must share requested information within 3 weeks notice.
Many companies have allready started their due diligence work and published some information about this on their respective websites.
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