Ethical Performance
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OECD acts to address criticism of its guidelines

July 2008

The OECD is examining ways to extend the reach of its guidelines for multinationals into China.

Forty countries - among them 10 non-OECD countries - have now established National Contact Points to assess alleged breaches of the OECD Guidelines for Multinational Enterprises and other applications are being examined. But China is not among them, which makes it hard for western NCPs to follow up complaints there.

'For the guidelines to work to their full potential, you ideally need a contact point both in the country where a multinational is based and in the country where the alleged specific instance has occurred', Marie-France Houde, the OECD economist in charge of the guidelines, told EP.

At a conference organized by the OECD and the International Labour Organisation, the two bodies agreed to promote jointly their guidelines to multinationals in China and other countries. All countries, including non-OECD ones, can sign up to the guidelines provided they adhere to the OECD Declaration on International Investment and Multinational Enterprises, which commits governments to treat foreign multinationals in the same way as national companies. However, China and several other emerging economies have not yet signed, and so cannot have a formal NCP. Last month the OECD organized a seminar on responsible business conduct in China with the participation of Chinese officials to promote closer association on the guidelines, said Houde.

The move is part of the OECD's wider efforts to strengthen the network of NCPs, which civil society has criticized for lacking bite. At their annual meeting in June, NCPs agreed to focus their discussions over the coming year on best practice examples of complaint procedures and on due diligence by companies. The UK and Dutch NCPs recently revised their procedures, and Argentina, Brazil, Canada, Chile, Japan and Turkey are either making or considering procedural improvements. Japan plans an NCP advisory group with civil society representation.

Latest figures indicate that NCPs are now agreeing to investigate more of the cases brought to them by civil society groups, with the proportion by June 2008 standing at 72 per cent compared with 68 per cent the same time last year. In all, 75 of 181 cases have been concluded since 2000.

At last month's annual NCP meeting in Paris, John Ruggie, who is special representative of the UN secretary-general for business and human rights, suggested the guidelines were in need of an update. He noted 'the omission altogether of some critical areas such as business impacts on communities, including indigenous peoples'.

The investment committee that oversees the guidelines is to review the text in 2010.

Patricia Feeney, executive director of RAID, a non-profit body that monitors the guidelines and has been a vocal critic, told EP: 'The bar has been raised for the laggard NCPs and there have been important changes in structures and procedures.'

Organisation of Economic Co-operation & Development | Global | Government role

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