how the OECD’s fine principles are getting bogged down in detailSeptember 2004
Procedures in the UK for handling complaints brought against companies for allegedly breaching OECD guidelines on responsible corporate behaviour do not appear to be working to the satisfaction of any of the parties.
In the next few weeks, the UK government will restate its commitment to one of the key elements within the international framework of voluntary initiatives that seek to promote responsible business behaviour. It will do so in a letter, signed by at least one government minister, to all FTSE 100 companies, reminding them of their responsibilities under the Organization for Economic Co-operation and Development guidelines for multinational enterprises.
But how effective are the guidelines at informing corporate behaviour in the UK context?
Drawn up in the 1970s, the guidelines amount to a code of conduct for multinational enterprises that has been collectively endorsed by governments. They provide, in the words of the OECD, ‘voluntary principles and standards for responsible business conduct consistent with applicable laws’ in areas such as corruption, the environment, labour standards, human rights and protection for whistleblowers.
Following a review that took place four years ago, the 38 countries involved each agreed to set up a National Contact Point (NCP) to act as a mediation service for handling complaints made against companies alleged to be in breach of the guidelines. NCPs should be ‘visible, accessible, accountable and transparent’, the OECD says.
Internationally, the record to date is patchy. There were 64 specific instances of alleged non-observance by companies filed with NCPs by June 2003, but only two outcomes were made public through NCP press releases in that year, according to the OECD. This is the most recent publicly available data (EP6, issue 3, p12).
NGOs and companies alike are in principle generally supportive of the guidelines. But both complain the procedures underpinning them are weak. On the NGO side, OECD Watch, an international group committed to testing the guidelines, says there is ‘increasing use of procedural devices by some NCPs to disallow complaints’ and a ‘lack of clarity’ about how many have been acted upon. It also says that while on average NCPs take ten months to conclude an investigation, some, such as the one in the UK, take more than twice as long. A key concern is that ‘some NCPs are simply disallowing complaints that relate to supply chain issues from even being considered’, on the grounds that a firm cannot be called to account for activities over which it has no direct control.
Companies complain that existing procedures can make it hard to clear their good name. When the UN Expert Panel on the Illegal Exploitation of Natural Resources and other Forms of Wealth in the Democratic Republic of the Congo alleged in October 2002 that De Beers was in breach of the guidelines, it did not contact the mining company to discuss the allegations before publishing its report, and later refused to give De Beers details of the basis of its charges. The panel then disbanded, leading to the absurd situation of the company itself asking the NCP to take up the case. In May 2004, the Department of Trade and Industry, which is the UK NCP, concluded that the allegation, which the company says related to three of its clients, was ‘unsubstantiated’ and had harsh words for the UN panel.
Rights and Accountability in Development, a member of OECD Watch, describes the process as a ‘procedural quagmire’.
The sole DTI official working as the UK’s NCP told EP: ‘I have a degree of sympathy with the view that the process is slow, but this is mitigated by the observation that the problem is in the speed of resolution. I cannot lean on the NGOs to go faster.’
‘I have eight specific instances on my plate at the moment’, he added. ‘One has been decided, two withdrawn, and three are awaiting a response from the complainant. The others are not technically specific instances, because there is no complainant – the UN Expert Panel no longer exists. However, I hope to resolve at least one of these within the next month.’ Resources for the NCP, he said, were ‘not an issue’. He had on occasion drawn on the expertise of other departments and had sought guidance from the OECD Investment Committee.
De Beers said: ‘The process was extremely frustrating. We think highly of the guidelines, but the problem is implementation and the political will is lacking.’
One problem is that under the present system, an NCP cannot make a statement when it chooses to, but has to wait until this is requested or agreed by one or both parties, so cases drag on.
The responsibilities of companies for activities in their supply chains also need clarifying, the official added.
A further problem is that the initial allegation is made in the glare of publicity, but subsequent dialogue is confidential. By the time the NCP makes a statement, the reputational damage may have been done. The general impression is that in the UK no one is particularly happy with the process.
NGOs and unions are now stepping up their efforts to use the guidelines to call companies to account. Trade unionists recently produced a guide for activists and in October, OECD Watch, with funding from the European Commission, will hold an international training seminar on the guidelines for NGOs.
Ironically, a mechanism intended to improve dialogue between civil society and business is in danger of becoming another battleground.
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