Watch list: Ongoing grievances regarding corporate conduct under the OECD Guidelines for Multinational Enterprises

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

2015 is the 15th anniversary of the National Contact Point (NCP) system and it is sure to be an exciting one. Many NCP are working to improve their structures and strengthen their capacity in order to provide added value in addressing challenging problems in RBC both through mediation and proactive prevention. The NCP system represents the most advanced non-judicial human rights and business grievance mechanism and as such it gets a lot of attention. As capacity of NCPs is strengthened and awareness of the OECD Guidelines continues to grow high profile cases are being mediated at the level of NCPs.

I would like to highlight for you a few of the most interesting ongoing cases to follow over the coming months.

Human rights impacts in international sporting events:

In May of 2014 the Americans for Democracy and Human Rights in Bahrain (ADHRB), a civil society organisation based in the United States, filed a complaint against the companies involved in the organisation of the Formula One Grand Prix in Bahrain. The complaint alleges that holding the event in Bahrain is at odds with Bahrain’s human rights record and that the event has contributed to human rights abuses associated with use of force of security against protestors against the event. The UK found that further examination was merited on issues relating to the Formula One’s due diligence management systems, human rights policy and communications with stakeholders and business partners. Currently the NCP is organizing mediated dialogue around these issues.

Depending on how this case is resolved, it could have important impacts on how expectations regarding RBC are defined in the context of sporting events. This may have important spill over effects for the FIFA games scheduled to take place in Qatar in 2022 which have already undergone serious scrutiny by labour and civil society organisations based on documented human rights impacts that have occurred due to preparation for the games.

Anti-union behaviour under the OECD Guidelines for Multinational Enterprises (OECD MNE Guidelines):

This April the United Auto Workers (UAW) and IndustriALL Global Union federation asked for mediation from the US NCP regarding alleged anti-union behaviour of the automotive company Nissan within its plants in Mississippi and Tennessee. The complaint specifies that alleged violations are based on the OECD MNE Guidelines rather than domestic labour law. Specifically the complaint alleges intimidation and aggressive tactics of management, interference with employees’ trade union rights, and failure to respect international standards on freedom of association.

In this instance, the NCP procedure is providing a platform for employees of the plant to hold their employer to account to international standards.   The case is currently under consideration and its conclusions could have important implications regarding RBC and relations with unions.

Investor responsibility in preventing and mitigating adverse impacts:

Friends of the Earth Europe and Friends of the Earth Milieudefensie, an environmental network, have filed a complaint against Rabobank, a Dutch bank, for failing to conduct due diligence in relation to loans provided to Bumitama Agri Group (BGA), an Indonesian producer of palm oil. The complaint alleges adverse environmental impacts including deforestation at an illegal palm oil plantation managed by Bumitama. Rabobank has provided around 47 million euros in loans to the company and the complaint calls for Rabobank to terminate its relationship with Bumitama, or freeze credit lines until issues identified in the complaint are resolved. Bumitama has since terminated its relationship with the plantation in question and mediation of the case is currently on-going.

In a similar case, in 2014 a complaint was filed against the Australia New Zealand Banking Group (ANZ) with regards to their investments in Phnom Penh Sugar Co. Ltd (PPS), a plantation and sugar refinery based in Cambodia. The complaint alleges forced evictions and land seizures impacting 681 families to make way for PPS. In addition, arbitrary arrest, the use of intimidation against local communities, and use of child labour and unsafe working conditions resulting in several deaths are alleged in relation to the operations of the plant.

While ANZ claims to have ended business relationships with PSS in 2014, the complaints request that they divest any profits earned from the investment as their financing of PPS contributed to the aforementioned infringements. Furthermore the complaints are requesting the ANZ develop a corporate level human rights policy and due diligence procedure to avoid similar situations in the future. An initial assessment of the case is anticipated later this year.

These cases are reflective of increased complaints targeting financial institutions based on their direct link to impacts through a business relationship.   Ongoing OECD work focused on responsible business conduct in the financial sector will be valuable in providing banks and other financial institutions with guidance on how to avoid such impacts in the future.

Meaningful stakeholder engagement and responsible business conduct:

The Brazilian NCP through the Brazilian Ministry of Environment is currently handling a case of alleged human rights impacts of a subsidiary of the Canadian Gold company Kinross Gold. The complaint was brought by the local residents association of the city of Paracatu, alleging that the release of arsenic and other toxic substances by Kinross’ open-pit gold mining activity is causing chronic poisoning among the population of Paracatu in addition to structural damage among the community’s residences and isolation of rural populations.

The Norwegian NCP is currently considering a complaint against Statkraft, a Norwegian state owned electricity company, alleging a lack of meaningful stakeholder engagement in the planning and development of a 360 turbine wind farm which will be located on the traditional lands of the Saami Jijnjevaerie reindeer-herding collective. The construction of the wind farm will block important reindeer migration and herding areas harming the group’s ability to practice reindeer husbandry, a core element of their economic and cultural existence. Unfortunately the groups have failed to reach an agreement through mediated dialogue and the Norweigan NCP will release a final assessment of the case shortly.

Findings of these cases may have important implications for how a company should engage with stakeholders and well as prevent, mitigate and account for adverse impacts in has contributed to. An OECD User Guide on Stakeholder Engagement in Extractive Industries will be released later this year and will hopefully be applied to prevent or mitigate similar situations in the future.

Human rights impacts and security contracting:

Several complaints have been filed against G4S a UK security contractor alleging human rights violations of in connection to its business operations.

In September of last year the Human Rights Law Centre and RAID, two human rights advocacy non-profit groups, brought a complaint against G4S for alleged human rights violations with regard to the treatment of asylum seekers held at an asylum processing centre off the coast of Papua New Guinea they were contracted to operate. The complaint alleges that G4S did not maintain a minimum standard of care, and that detainees were subject to threats, aggression, physical and sexual assault by G4S staff. An outbreak of violence in which G4S staff is said to have been involved in February of 2014 led to the death of one detainee and injury of 69 other individuals at the facility. This complaint is currently undergoing review by the UK NCP.

Additionally a final assessment is anticipated to be issued in the coming months on a complaint brought to the UK NCP with regard to provision and maintenance of equipment to military checkpoints in Israel linked to human rights impacts by G4S subsidiaries. In its initial assessment the UK NCP found a lack of substantiation that equipment provided by G4S had been used to commit human rights abuses and that they had conducted human rights due diligence, however it accepted to review G4S’ due diligence processes with regard to contracted business relationships.

As security contracting represents a high-risk field for human rights impacts, a heightened level of due diligence should be applied throughout operations and business relationships.

Environmental and social impacts of large infrastructure works:

The Austrian NCP is currently considering a case filed alleging that Andritz, an Austrian engineering company is contributing to the adverse impacts that will be caused by the construction of large hydropower dam in Laos.  Andritz has been contracted to supply 300 million USD worth of key operating technology to the development of the Xayaburi dam. The dam is anticipated to have serious environmental impacts, including the extinction of the Mekong giant catfish, as well as to adversely affect fishing communities which currently rely on impacted waterways for their livelihoods. The complainant is asking Andritz to undertake impact assessment, work towards preventing and mitigating those impacts and contribute towards remedy for effected populations. The NCP released an initial assessment of the case and accepted it for further review on May of this year.

The above snapshot of ongoing cases of interest reveals that NCPs are handling issues with high stakes and dealing with complex claims with regard to human rights, labor and the environment. It also provides insights into how expectations of responsible business conduct have evolved. The bulk of NCP cases these days involve mediation with companies that are contributing or linked to adverse impacts through business relationships, rather than in which they are alleged to be wrongdoers themselves. This demonstrates the importance of due diligence processes that extend throughout supply chains and business networks.

 

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