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

 

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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