Ethical Performance
inside intelligence for responsible business


OECD cases revealed

January 2005

The Organization for Economic Co-operation and Development has for the first time publicly listed ‘specific instances’ of alleged non-compliance with its guidelines for multinational enterprises.

The guidelines are one of the key planks in the framework of international voluntary initiatives that seek to promote responsible business behaviour. Used by SRI investors in their assessments of companies, they amount to a code of conduct for large companies that has been collectively endorsed by governments, trade unions and civil society, covering labour standards, corruption, the environment and human rights.

Details of 78 instances of large companies allegedly failing to observe the guidelines are listed in an annexe to the report of the annual meeting of National Contact Points, which have been set up by governments in 38 countries to handle complaints.

Most of the complaints have come from pressure groups and trade unions, and relate to labour management practices within multinational subsidiaries and supply chains. Only two relate directly to OECD guidelines on environmental protection.

Eighteen of the 78 have yet to be concluded to the satisfaction of an NCP. ‘The consultations showed that the trade unions and non-governmental organizations still have concerns about specific implementation issues and, more generally, about the credibility of the instrument,’ the document notes. NCPs also ‘need to renew their efforts ... to reassure all partners’ that they will ‘deal meaningfully’ with the ethical concerns raised.

The report says ‘divergences in information disclosure practices persist’ among the 38 NCPs, and that the question of an individual company’s liability for the activities of a subsidiary or supplier – the so-called investment nexus – ‘still poses problems for trade unions and NGOs’ (see EP6, issue 4, p9).

OECD Watch, the main pressure group monitoring NCPs, which has long criticized them for inaction, has created an online database of specific instances raised by NGOs.

Since the NCP meeting, two further complaints have been registered. One is against German chemical group Bayer over alleged use of child labour by its subcontractors in India. The other relates to French energy company EDF for allegedly failing to consult local people on plans for the Nam Theun 2 dam project in Laos.

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