Ethical Performance
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OECD guidelines ‘must get tougher back-up’

July 2009

Governments should get tougher with companies that breach the OECD guidelines for multinational enterprises, a UK inquiry has been told.

Parliamentarians at the first two sessions of the joint committee on human rights inquiry into business and human rights heard witnesses demand more robust government responses to companies that fail to apply the guidelines.

The guidelines outline voluntary standards for responsible business conduct in such matters as industrial relations, human rights, the environment and bribery.

John Ruggie, United Nations special representative on business and human rights, told the committee of MPs and peers that governments were doing too little to support National Contact Points (NCPs), which investigate possible OECD guideline breaches.

‘There are some fairly obvious steps that governments could take that they really have not,’ he said. ‘For instance, an NCP can currently deliver a finding against a company and that company can come back the next morning to apply for support from an export credit agency and there is nothing to prevent their getting support.

‘At a minimum there ought to be a probationary period before they can come back to the public trough having had the NCP deliver a finding against them.’

At the second session Richard Meeran, a lawyer at the UK legal firm Leigh Day, which specializes in human rights cases, supported Ruggie but said he would go further by allowing NCPs to name and shame non-compliant companies to investment institutions.

‘Being able to report non-compliant companies to export credit guarantee departments would be one important additional tool, as would reporting non-compliant companies to banks and funders,’ he said.

Inquiry member Virendra Sharma, a Labour MP, reported that some of those giving initial written evidence before the oral hearings had suggested ‘a new system of monitoring and penalties’ for companies found by the UK NCP to breach the guidelines, ‘perhaps through removal of government subsidies or export levies’.

However, he said written evidence from the Confederation of British Industry had argued that such penalties ‘might change the nature of the guidelines’ and would create a system of binding standards ‘through the back door’.

Owen Tudor, head of the Trades Union Congress’s European Union and international relations department, told the inquiry: ‘I am not particularly worried about what door you use if you are raising standards. I would simply say that it would undoubtedly change the ways in which companies address potential breaches of the OECD guidelines.’

Tudor added: ‘We need to go further, in terms of the decisions that the national contact points reach, to make sure that companies take more notice of what they are required to do under the guidelines.’   

At present NCPs have power only to make statements and give advice. Companies decide whether to take that advice.

The UK inquiry will take evidence throughout this month and will report in the autumn.

United Nations | UK & NI Ireland | Human rights

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