How to Build an Evidence Base for Policies on Corporate Responsibility

This blog was originally published on 26 January 2018 by the Institute for Human Rights and Business

By Roel Nieuwenkamp, Chair, OECD Working Party on Responsible Business Conduct

Last December I was asked to speak to the European Parliament to discuss trends in policies on responsible business conduct. I presented the state of play of the various soft law (not legally binding) instruments that exist on human rights and responsible business conduct, including the system of National Contact Points (NCPs) that functions as a complaints mechanism on corporate responsibility.

I also discussed the growing trend in this area that is seeing governments increasingly take steps to ‘harden’ these existing standards. For example, by attaching consequences to NCP statements – such as the withdrawal of trade advocacy support to companies in Canada, and recently also in Germany.

This shift is also highlighted in legislative developments. Notably, the game-changing new French Duty of Vigilance Law mandating due diligence on human rights and other issues such as environmental impacts.

In addition, there are now human rights reporting requirements in the California Transparency in Supply Chains Act and subsequent UK Modern Slavery Act. Similar efforts are under way in Switzerland and Australia.

There is a split between the believers in the effectiveness of international non-binding guidelines, and the non-believers who feel mandatory approaches are necessary.

All of this entails a split between the believers and the non-believers.

Believers in what? Believers in the effectiveness of international non-binding guidelines, which establish standards of behaviour combined with an expectation of effective implementation and self-regulation by business. Non-believers, on the other hand, feel mandatory approaches are necessary to effectively ensure responsible business conduct by all companies targeted.

From soft to hard law – a leap of faith?

To jump from ‘soft’ to ‘hard’ approaches in this field now requires a leap of faith.

The underlying assumption is that voluntary implementation of responsible business standards, such as the OECD Guidelines for Multinational Enterprises and the UN Guiding Principles on Business and Human Rights, does not work well enough on its own to achieve widespread adherence by businesses. That regulation is needed to ensure implementation.

But do we really know that mandating or regulating such standards is truly more effective? The answer is we do not.

Businesses tend to oppose any binding regulation, contending for example that they already have responsible supply chains. This is illustrated by the recent Economist Intelligence Unit’s ‘No more Excuses’ study in which only 2% of business executives responded that their supply chains were not responsible. Why the need for new law, these voices ask, when companies already implement supply chain due diligence?

Supporters of regulation contend that if companies are really compliant as they say, giving these standards legal force would not hurt them.

In contrast, civil society – by and large the ‘non-believers’ – tends to think the opposite. That businesses are often complacent and not sufficiently implementing adequate due diligence as set out in existing international standards. Supporters of regulation contend that if companies are really compliant as they say, giving these standards legal force would not hurt them.

Who is right? To be frank: we have no clue.

Questions for evidence-based policy making

All legislative developments and other initiatives – whether on human rights due diligence, child labour due diligence, modern slavery, a potential binding international treaty on business and human rights – have one thing in common: a lack of evidence-based policy making.

All legislative developments and other initiatives have one thing in common: a lack of evidence-based policy making.

Essential questions should be answered before considering the development of new binding regulations or a treaty.

A key question of course is:

  • Are existing international standards achieving their desired impact?

Related questions include:

  • How many businesses worldwide are expected to implement the OECD’s due diligence standards?
  • How many businesses are aware of these standards?
  • How many businesses have committed to international standards in their own operations and as part of their supply chains?
  • And finally, how many businesses are effectively implementing these standards?

We have no answers to these simple questions – absolutely nothing.

The Corporate Human Rights Benchmark gives only a tiny glimpse of some of the answers. Except for some anecdotal evidence, no comprehensive aggregate data exists to assess the current state of play – let alone information on the impact of implementation of international standards on the ground (or the lack thereof).

In other words, policy-wise, we are driving blindfolded.

Removing the blindfold

The OECD Guidelines for Responsible Business Conduct represent the ‘firm government expectation of business behaviour’, and incorporate a legally binding commitment for governments to promote these Guidelines.

Governments can only manage this commitment well if they start measuring their effectiveness.

Before taking further regulatory steps, governments would be wise to start monitoring the awareness and uptake of their existing responsible business standards. Knowing the facts would go a long way in assessing actual needs and benefits and building consensus for policies and regulations in this field.

Governments would be wise to start monitoring the awareness and uptake of their existing responsible business standards.

The German National Action Plan on Business and Human Rights, released in December 2016, presents an intriguing compromise. Why?

Because it states that if more than 50% of all German-based companies with over 500 employees have not taken credible action to integrate human rights due diligence in their operations by 2020, the Government will examine further steps, including legislative measures. A noteworthy bridge between believers and non-believers, resulting in a commitment to start building an evidence base for policy.

Other governments should follow Germany’s lead.

A reasonable approach could be to start monitoring due diligence in general on a high level and to carry out in-depth assessments in high risk sectors, for which many OECD due diligence guidance instruments already exist. This means, for example, monitoring the uptake of due diligence standards in the minerals and garment sector supply chains.

Taking this route would remove policy makers’ blindfolds on the effectiveness of corporate responsibility and business & human rights standards worldwide.

Knowing the facts would go a long way in assessing actual needs and benefits and building consensus for policies and regulations.

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Addressing the imbalance between investment protection and people protection: Making globalisation work for all

Roel Nieuwenkamp, Chair of the OECD Working Party on Responsible Business Conduct (@nieuwenkamp_csr).

This article was original published on OECD Insights on 14 March 2017.

We are facing a backlash against globalisation. This has gone hand in hand with a push back against investment treaties and trade agreements: just watch the election campaigns and the downfall of TTIP and TPP negotiations.

Nowadays, at the OECD many policymakers talk about “Making globalisation work for all”. If we really want to achieve this, policymakers have to take another critical look at the following.

A number of people have argued that investment policy today is marked by an imbalance between investor rights and investor responsibilities. I would frame it slightly differently.

We have developed investment protection of foreign investment because of states with failing policies and inadequate legal systems to safeguard investor rights. In regions where courts are dysfunctional, corrupt, politically biased or incompetent, foreign investors want extraterritorial protection. Fair point.

A related issue is that some people are victims of foreign economic activities. They also lack protection and remedy because of the exact same reasons: failing policies and weak legal systems. However, they do not have access to extraterritorial protection of their rights. So there is a fundamental asymmetry between investment protection and people protection. There is hard protection of investments and soft protection of people. Why do we protect investments with hard law and protect people with soft law? We have no credible answers.

This imbalance is fuelling two trends: a declining support for investment protection, which even undermines trade policy in general and free trade agreements in particular, and on the other hand societal and political pressures towards mandatory legislation on responsible business conduct, such as the recent due diligence law in France and the modern slavery act in the UK. It has also led to discussions in the UN on a binding treaty on business and human rights.

This topic will not disappear from the agenda. The imbalance will haunt policymakers for decades.

There should be at least two responses in my view: first, strengthening access to remedy for people, for example by strengthening the National Contact Points for responsible business conduct under the OECD Guidelines, and second, making investment protection more responsible. The inclusion of aspirational provisions on corporate social responsibility and cooperation in this field will not do the trick. It will only lead to accusations of “greenwashing” investment treaties.

Are there feasible options? Yes there are. We have seen recent precedents to make investment protection more responsible. Not all of them are easy or without controversy, but worth exploring.

One option is to exclude sectors that are considered as not responsible. There is a precedent for this approach: the TPP exemption of tobacco products from protection. This is controversial and the question remains whether this the way forward: will the coal sector be excluded in the future too?

A second option could include a provision ensuring that only those investors that comply with the OECD Guidelines for Multinational Enterprises are assured protection under such a treaty. This would be very complex from a procedural point of view, but not impossible.

A third option, which is more easily conceivable, is to exclude protection for investments that are linked to corruption and egregious human rights violations. This would be nothing more than “codifying” the “clean hands doctrine” that is already accepted by several arbitration tribunals. In the cases Metal-Tech Ltd v the Republic of Uzbekistan and World Duty Free Company Limited v The Republic of Kenya (2006) the tribunal excluded jurisdiction because of corruption related to the investment.[1]

A fourth feasible option worth exploring is to include a provision that specifies that material breaches of the OECD Guidelines – for example severe human rights violations  –  are taken into account by a tribunal when deciding on the merits of a claim or on potential damages awarded.

Of course these ideas are controversial and complex. It takes investment policymakers and treaty negotiators out of their comfort zone. As a former investment negotiator myself it even makes me uneasy, but we have to explore these options further. This is not impossible: precedents are available. Doing so requires political will and action is urgent. Why? Because we must respond to the backlash against investment and trade policy and make globalisation work for all.

Useful links

OECD Conference on investment treaties: The quest for balance between investor protection and governments’ right to regulate 14 March 2016, Paris

The growing pains of investment treaties OECD Secretary-General Angel Gurría on Insights

 

[1] Metal-Tech Ltd v Republic of Uzbekistan (2013): http://www.italaw.com/sites/default/files/case-documents/italaw3012.pdf  para110 iii ‘clean hands doctrine’165 &166; 236,237; 243; 372; World Duty Free Company Limited v The Republic of Kenya (2006): http://www.italaw.com/documents/WDFv.KenyaAward.pdf

 

 

Impatient governments push corporate supply chain due diligence

By Roel Nieuwenkamp, Chair of the OECD Working Party on Responsible Business Conduct. This article was originally published on oecdonthelevel on 24 November 2017.

At the OECD’s Global Forum earlier this year, I was asked to talk about the state of play on the uptake of supply chain due diligence. To back up my talk with some killer stats, I turned to the recently published Corporate Human Rights Benchmark. This is the best available overview on human rights due diligence that also includes labour rights and, for example, standards concerning child and forced labour.

As often happens, I found good news and bad news. The good news is that a small group of companies, including BHP Billiton, Marks & Spencer Group, Rio Tinto, Nestlé, Adidas and Unilever, is taking a leadership role. They deserve praise for their efforts, despite the many challenges. The bad news is that only three companies scored more than 60% for their due diligence efforts, with the average score being 28.7%. If this were a school test, it would be classed as a ‘big fat fail’. The failure is even fatter when it comes to embedding respect for human rights in due diligence, with an average score of only 16%.

These disappointing findings are complemented by the recent Economist Intelligence Unit’s ‘No more Excuses’ study which reveals ‘a worrying degree of complacency’ within companies. Four out of five business executives responding to the Economist survey agreed or strongly agreed that their company’s supply chain was responsible, with just 2% disagreeing. The vast majority of respondents stated that their firms’ responsible supply chain standards were compliant with, or even more stringent than, government regulations and industry standards (94% and 97%, respectively). The physically closer a firm to its suppliers, the more likely respondents were to believe that its supply chains were responsible. However, the study shows that a sizeable proportion of businesses have actually allowed supply chain responsibility to slide as a priority in the past five years.

The study also reveals just how few companies are paying attention to key issues such as child labour (only 22%), climate change and carbon footprints (only 23%), and gender equality (only 28%). These results are a cause for concern, both with respect to the severity of these issues and their relevance to Asia where a majority of the companies surveyed are based. According to UNICEF estimates, for example, 150 million children are engaged in child labour globally. While the highest levels are in Africa, child labour is also a significant in emerging Asian economies. In addition, given that some of the most prominent exposés of child labour concern mining, it is disappointing to see that only 20% of companies in the raw materials sector address this issue, the worst-performing industrial group.

Governments are getting impatient

While some governments have been complacent in promoting the OECD Guidelines for Multinational Enterprises and the UN Guiding Principles on Business and Human Rights, a number of governments are getting more and more impatient.

France took the lead in 2016 by adopting a Due Diligence Law. The EU has adopted a mandatory non-financial disclosure directive that includes reporting on due diligence. Germany’s compromise in its National Action Plan was to state that if more than 50% of all German-based companies with over 500 employees have not taken credible action to integrate human rights due diligence in their operations by 2020, the government will examine further steps, including legislative measures. Some advanced economy regulators are also extending the applicability of their due diligence regulations globally. The US Conflict Minerals Rule (Dodd-Frank Act, Section 1502) and the UK Modern Slavery Act have created a worldwide ripple effect.

The fragmented transition to hard law

The legislative toolbox is much bigger now than it was prior to 2011 when supply chain responsibility was defined for the first time in the revision of the OECD Guidelines. The central concept of supply chain due diligence is a process which can be regulated, whether it is on process, substance or simply reporting.

A very fragmented transition is underway from soft law to hard law in the field of corporate supply chain responsibility at different speeds and different tracks. It is led mainly by OECD countries, and most heavily impacts enterprises in European countries. This creates at times a chaotic and constantly changing regulatory system for multinationals.

Due-Diligence-Transition-Hard-LawThis transition is following different tracks. Some regulations focus on thematic issues, such as the UK Modern Slavery Act, the Supply Chains Act in California (slavery and human trafficking) or the proposed due diligence law on child labour in the Netherlands. Some initiatives have a sector-specific focus, such as the proposal by the EU parliament to adopt a binding regulation for due diligence in the garment sector. Others target a combination of theme and subject, such as the rules on conflict minerals. Other laws, such as the French Due Diligence Law, are much wider in scope, cover all areas of responsible business conduct and apply to all sectors. The pending Swiss referendum on due diligence looks set to follow a similar broad approach.

Hybrid multi-stakeholder sectoral responsible business agreements provide an innovative way to avoid the eternal dichotomy between voluntary and binding. Germany, Finland and the Netherlands have already signed agreements of this nature and the Swiss government is working on a similar approach with the commodities industry.

While not mandatory, these hybrid sectoral approaches may produce superior corporate responsibility results as many of the mandatory approaches lead to box ticking exercises and ‘empty’ reports. The hybrid sectoral agreements and approaches acknowledge that many supply chain challenges cannot be solved by individual companies on their own, and they are generally geared towards working together to produce real impact.

To conclude, businesses would be wise to dramatically increase their efforts on supply chain due diligence to ensure that society and governments do not get even more impatient. And, in these efforts, it is important that all parties involved – government, business and civil society – stick to the global standards of the OECD and the UN on due diligence. Don’t reinvent the wheel, but reinforce the wheel!

Links and further reading

Corporate Human Rights Benchmark
Economist Intelligence Unit (2017), No more excuses: Responsible supply chains in a globalised world
European Commission, EU Directive 2014/95/EU on disclosure of non-financial and diversity information by certain large undertakings and groups
France, Proposition de loi no. 924 relative au devoir de vigilance des sociétés mères et des entreprises donneuses d’ordre
Germany, National Action Plan on Business and Human Rights
OECD Guidelines for Multinational Enterprises
OECD sectoral due diligence guidance
OECD report on National action plans on business and human rights to enable policy coherence for responsible business conduct
UN Guiding Principles on Business and Human Rights

Outcomes from OECD National Contact Point cases: More remedy than you may think!

By Roel Nieuwenkamp, Chair of the OECD Working Party on Responsible Business Conduct. This article was originally published on WGBizHRs on 10 November 2017.

The successful outcomes of the Heineken, Kinross and Statkraft cases have recently demonstrated that the National Contact Point system for the OECD Guidelines on Responsible Business Conduct can be effective for providing access to remedy in the business and human rights domain. However, management of expectations is needed with respect to a couple of issues.

But first of all, many people have asked me why the OECD countries are much more upbeat about the effectiveness of this state based non-judicial grievance mechanism (terrible jargon for a complaints mechanism) than civil society? Why does OECD Watch, a consortium of NGOs, claim that remedy remains rare in the NCP system, while the OECD Annual Report shows quite positive results?

For example, the 2016 Annual Report on the OECD Guidelines for Multinational Enterprises finds that in 2016 agreement was reached in 60% of all concluded specific instances where mediation occurred. Between 2011 and 2016, approximately half of all cases (47%) which were accepted for further examination by NCPs resulted in some form of agreement between the parties. That is of course good news. Additionally, in some cases which did not result in mediated agreements, recommendations were issued that were followed up on by the companies involved.

The Report by OECD Watch of June 2015 that coined the phrase ‘remedy remains rare’ in relation to the NCP system conveyed, in my perspective, an overly negative impression about the overall success of this system since 2011.

I would nevertheless agree that ‘compensation remains rare’ with respect to outcomes of cases handled by the NCP. That is a legitimate conclusion. It is good to stress that NCPs are a non-judicial grievance mechanism that have their limitations and can never be a substitute for a well-functioning rule of law. NCPs cannot mandate or enforce compensation, they are not a court nor arbitrator, but a problem-solving mechanism. In addition, NCPs often face extraterritorial issues where there is a non-functioning government involved that should have implemented its state duty to protect human rights. So what can NCPs do to encourage compensation? Two things, first they could facilitate mediated agreements which include agreements around compensation. Second, they could recommend compensation if supported by the OECD Guidelines (if there is a situation of an enterprise contributing to or causing the impact at issue).

OECD Watch makes some very valid points within their report that bear paying close attention to. For example, there needs to be more attention to follow-up after a mediation process is concluded to ensure agreements are actually implemented. NCPs should handle cases in an impartial and equitable way, including when deciding whether to accept them. For example, in some cases NCPs have applied an overly high threshold for accepting cases. Already during the revision of the OECD Guidelines in 2011 governments concluded that in assessing whether a case is sufficiently substantiated the measure should be reasonable plausibility, not full proof. And of course there is still a lot of work to be done to ensure a level-playing field among all NCPs. At present, two NCPs do not even exist and 12 do not have published procedures and 11 did not actively promote the OECD Guidelines in 2016. That is why the OECD Ministers this year decided to have all NCPs peer reviewed before 2023. This is a major opportunity for civil society and business to provide input to strengthen this unique business & human rights grievance mechanism.

There are a few differences in approaches with respect to how OECD Watch and the OECD look at outcomes in cases. For example, the OECD tracks cases which result in some form of agreement between the parties while the OECD Watch Report focuses in particular on remedy ‘on the ground’. However, the commentary to principle 25 of the UNGPs states: “The remedies provided by the grievance mechanisms discussed in this section may take a range of substantive forms the aim of which, generally speaking, will be to counteract or make good any human rights harms that have occurred. Remedy may include apologies, restitution, rehabilitation, financial or non-financial compensation and punitive sanctions (whether criminal or administrative, such as fines), as well as the prevention of harm through, for example, injunctions or guarantees of non-repetition.”

Many mediated agreements through the OECD National Contact Points focus for example on improved human rights due diligence or implementing a human rights policy. This is obviously aimed at preventing negative human rights impacts in the future.

The OECD Watch Report also includes cases within the scope of its analysis where ‘remedy on the ground’ was not received, even those cases where remedy on the ground was not requested, but instead a change of enterprise policy or other management change was being sought by submitters. Additionally, in some cases remedy on the ground is not appropriate according to the UN Guiding Principles and therefore the OECD Guidelines. If a company is not causing or contributing to a negative impact itself, but is directly linked to it through a business relationship it is not expected to provide compensation itself or on the ground remedy with respect to the impacts, but to use its leverage to push the company that causes the impact to change its behaviour or to provide remedy.

In its analysis and statistics with respect to outcomes OECD Watch also includes cases which have not been accepted for further examination by NCPs. However many cases filed with NCPs are dismissed for valid reasons, such as a lack of reasonable substantiation, parallel legal proceedings (related to forum shopping) and because they concern issues outside of the scope of the OECD Guidelines. OECD analyses success rates with respect to cases accepted by the NCPs and excludes those not accepted for further examination.

Lastly the OECD Watch Report looks only at cases filed by NGOs, whereas the OECD looks at all cases reported to it by the NCPs. Historically cases filed by trade unions with NCPs tend to be more successful than cases by NGOs. In such cases, remedy can for example concern a restoration of dialogue between social partners or the recognition of a trade union. This is at times less complex than complicated value chain business relationships with regard to human rights violations.

My conclusion on the effectiveness of NCPs as a non-judicial grievance mechanism on business & human rights is that the glass is half full, but we must take active steps to fill it to the brim. Functioning NCPs which currently have strong track records with respect to outcomes in cases can serve as mentors to those lagging behind. Furthermore all NCPs can look to recent successes for lessons learned to ensure that remedy in the context of cases handled by NCPs is routine, rather than rare.

Ever heard of SDG washing? The urgency of SDG Due Diligence

By Roel Nieuwenkamp, Chair of the OECD Working Party on Responsible Business Conduct. This article was originally published on Development Matters blog on 25 September 2017.


September 25, 2017 marks World SDG Action Day.


SDG-dayA couple of months ago during the OECD’s Global Forum on Responsible Business Conduct,1 I heard a new term: SDG washing. After green washing and blue washing – using a UN logo to signpost sustainability without doing much – the term SDG washing points to businesses that use the Sustainable Development Goals to market their positive contribution to some SDGs while ignoring their negative impact on others. For example, a car company may market their electric cars as saving the climate (SDG 13↑). Yet, the cobalt in their batteries may be mined by five-year old kids in Congo (SDG 8 ↓).

It is clear that the world will never reach the SDGs without businesses. While businesses can make positive contributions, such as creating jobs, finding innovative solutions for climate challenges or contributing to human capital development, they can also cause or contribute to negative impacts, such as exploiting labour in supply chains, damaging the environment or engaging in corrupt practices. Businesses should pay due attention to ensure that they avoid undermining the SDGs by causing or contributing to negative impacts.

 

Civil society organisations have asserted that business responsibility for respecting human rights is too often viewed only as a matter of compliance and risk management… [which] underestimates the hugely positive development impacts that will be achieved through improved treatment of the millions of workers and communities affected by business activities around the world.”2 Indeed, I have seen companies use the following excuse: We may have forced labour in our supply chain, but we have a great scholarship programme for girls. That is a no go. People have criticised companies for cherry picking — basically profiling certain positive effects on a particular SDG and ignoring any negative impacts. Companies cannot compensate for doing harm on one SDG by doing well on another SDG. How, then, should companies proceed?

On the one hand, risk-based due diligence processes grounded in the UN Guiding Principles for Business and Human Rights and the OECD Guidelines for Multinational Enterprises can help define expectations. Companies should prioritise their efforts on where their negative impacts on the SDGs are most severe.

On the other hand, profiling positive contributions to certain SDGs is fine and good, and where business can make a lot of money. In other words, in doing well by doing good, business can deliver significant value to the SDGs. The Business and Sustainable Development Commission report Better Business, Better World stated: “Achieving the Global Goals opens up US$12 trillion of market opportunities in the four economic systems examined by the Commission. These are food and agriculture, cities, energy and materials, and health and well-being. They represent around 60% of the real economy and are critical to delivering the Global Goals. To capture these opportunities in full, businesses need to pursue social and environmental sustainability as avidly as they pursue market share and shareholder value. If a critical mass of companies joins us in doing this now, together we will become an unstoppable force. If they don’t, the costs and uncertainty of unsustainable development could swell until there is no viable world in which to do business.”

Ultimately, companies should do their due diligence on all SDGs to avoid undermining these goals. This is the essential baseline. Just think about what not having child labour in the supply chains would mean for the SDGs. A focus on managing the negative impacts on the SDGs is most urgent. This approach, taken together with the focus and positive impacts on certain SDGs, is a recipe for businesses to maximise their contribution to the SDGs.


1.See also: Contributing to the Sustainable Development Goals through responsible business conduct, 2017 Global Forum on Responsible Business Conduct, Session Note.

2. Excerpt from an open letter to UN Secretary-General António Guterres and UN Private Sector Forum 2017 Participants by Business & Human Rights Resource Centre, the Danish Institute for Human Rights, the Institute for Human Rights and Business, the International Corporate Accountability Roundtable, Oxfam International, and Shift

 

Beer, conflict and compensation: Heineken-Congo agreement

By Roel Nieuwenkamp, Chair of the OECD Working Party on Responsible Business Conduct (@nieuwenkamp_csr). This article was originally published on OECD Insights on 15 September 2017.

Heineken’s agreement with Congolese workers sets excellent example of dispute settlement on responsible business conduct.

Doing business in conflict areas is challenging for everyone, whether you are talking about mining or even brewing beer. In 2015 a group of 168 former workers of Heineken’s subsidiary Bralima in the Democratic Republic of Congo submitted a complaint to the Dutch National Contact Point (NCP), a grievance mechanism set up under the OECD Guidelines for Multinational Enterprises, about the company’s conduct during the civil war in that country (1999-2003). The complaint concerned allegations of Bralima unjustly dismissing its workers and co-operating with the rebel movement in RCD-Goma, and the negative consequences this had for the firm’s workers and their families.

The complaint was successfully resolved recently. Details of the agreement between Heineken and the former Congolese workers, facilitated by the Dutch NCP, are confidential, but the overall outcome is public. All parties describe it as satisfactory and civil society even hailed it as “historic”.

This is good news. Heineken, their former workers and the Dutch NCP deserve praise for solving this highly complex corporate responsibility issue. Why?

One key reason lies in the fact that monetary compensation was awarded, according to reports. Although there have been many different sorts of remedy through the NCP system, monetary compensation has been rare.

Still, it is important to manage expectations. For a start, NCPs are a non-judicial grievance mechanism, meaning that the NCPs cannot legally enforce remedy. However, the NCP process can facilitate remedy, including compensation, as part of a mediation or conciliation process. NCPs can also recommend remedy, including financial compensation, in their final statements. The Heineken agreement illustrates that NCP processes are not exclusively forward-looking, but can also function retroactively.

Another reason why this is a historic agreement is that it shows that longstanding issues such as the Heineken case, that took place 15 years ago, can still be solved by an NCP process today. NCPs are known to get a lot of complex cases that often have already been in courts for years. This case demonstrates that even human rights issues that go back many years can still be solved if the conditions are in place.

The case is also a landmark because it shows that NCPs, when properly organised, can deal with human and labour rights issues in conflict areas. Indeed, Heineken has committed to improving its policy and practices on doing business in volatile and conflict-affected countries. Other companies should now follow Heineken’s example.

Make no mistake: a critical factor in this case was that Heineken and the complainants engaged fully and responsibly with the process. In many cases, using this problem-solving approach is more effective in addressing corporate responsibility issues than legalistic ones. Another reason for success was that the NCP was positioned to handle the case professionally. As the NCP is an adequately resourced, independent responsible business authority, which made it possible to be accessible and equitable towards all parties in a remote area ravaged by civil war. The mediation could rely on government support too, as it was facilitated by Dutch embassies in France and Uganda.

In short, several lessons on different levels can be drawn from the resolution of this business and human rights case. Above all, it should inspire other governments and NCPs, and businesses too. It shows that with the right mind-set, companies can successfully turn human rights issues into opportunities for improving corporate responsibility.

See also:

OECD Guidelines for Multinational Enterprises

Olivier van Beemen (2017), En RDC, une poignée d’ouvriers fait plier le géant Heineken, Le Monde

Olivier van Beemen (2017), Heineken betaalt Congolezen na klacht mensenrechtenschending, NRC

Living up to expectations on Responsible Business Conduct

By Roel Nieuwenkamp, Chair of the OECD Working Party on Responsible Business Conduct

The OECD Guidelines for Multinational Enterprises (OECD Guidelines) and the National Contact Points (NCPs) through which NGOs, unions and communities can submit complaints about corporate behaviour, are often mentioned in the context of the backlash against globalisation and the call for responsible supply chains. They have been considered as a concrete and unique instrument on corporate responsibility to deal with the downsides of globalisation by creating an international level playing field for inclusive and sustainable trade and investment. In this regard, the network of 48 NCPs play an important role to promote responsible business conduct but also as a globally active mechanism to deal with cases of alleged non-observance of the Guidelines. Recently, a number of noteworthy developments have taken place inside and outside the OECD that have created a new momentum on responsible business conduct worldwide, confirming the prominence of the OECD Guidelines and its in-built implementation mechanism, the NCPs.

First of all, on 7-8 June OECD Ministers met in Paris to discuss “Making Globalisation Work: Better Lives for All”. The resulting Ministerial Statement which guides the work of the OECD in the next year, places great emphasis on responsible business conduct as a concrete tool to promote good globalisation. Ministers recognised the OECD Guidelines as the leading international instrument for this purpose. Ministers encouraged the OECD to develop a general due diligence guidance for responsible business conduct to provide practical support to companies on the implementation of the OECD Guidelines. They also committed to “fully functioning and adequately resourced NCPs, and to undertake a peer learning, capacity building exercise or a peer review by 2021, with the aim of having all countries peer reviewed by 2023.” In two years, at the occasion of its Ministerial meeting in 2019, Ministers expect a report on progress made on these commitments. Equally, peer pressure in the OECD Council and the OECD Working Group on Responsible Business Conduct has also increased to ensure that all governments implement the obligations they committed to when adhering to the OECD Guidelines.

On 17 May, the OECD Council decided to incorporate the OECD Due Diligence for Responsible Supply Chains in the Garment and Footwear Sector in an OECD Council Recommendation. While companies themselves are the audience of OECD due diligence guidance, the Recommendation represents a common position by the 47 Government Adherents to the OECD Guidelines expressing their commitment and political will to promote the use and implementation of the due diligence guidance, including through their NCPs. There are now four OECD Council Recommendations on sector-specific due diligence guidance.*

The reach of the Guidelines was further enlarged on 20 June, when Kazakhstan became the 48th Adherent. As such, Kazakhstan has committed to promoting and enabling responsible business conduct and to establish a NCP to function as a problem-solving mechanism to deal with possible adverse impacts of corporate behaviour.

However, beyond the OECD itself, the commitment to responsible business conduct also featured high on the G20 agenda in Germany this year. “In order to achieve sustainable and inclusive supply chains”, the G20 leaders on 7-8 July vowed, “to fostering the implementation of labour, social and environmental standards and human rights”. The G20 recognised the important role of the OECD Guidelines, to promote responsible business conduct, as well as the NCPs as a non-judicial grievance mechanism for access to remedy. The call echoed the Ministerial Declaration by the G20 Labour and Employment Ministers of 18-19 May, which re-affirmed commitments to the OECD Guidelines, the responsibility of business to exercise due diligence, and strengthen and increase the visibility of NCPs.

The impetus provided by the G20 and recent developments in the OECD have further strengthened the position of the OECD Guidelines as a concrete instrument to promote responsible supply chains globally. This heightened recognition comes with expectations. The network of NCPs has a key role to play to realise the full potential of its reach.

*                  The Recommendation of the Council on Due Diligence Guidance for Responsible Supply Chains of Minerals from Conflict-Affected and High-Risk Areas, Recommendation of the Council on the OECD-FAO Guidance on Responsible Agricultural Supply Chains, and Recommendation of the Council on the Due Diligence Guidance for Meaningful Stakeholder Engagement in the Extractive Sector. For the full text of the Recommendations please consult the OECD legal instruments database.