promoting responsible business conduct: the oecd guidelines for multinational enterprises and...
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PROMOTING RESPONSIBLE
BUSINESS CONDUCT
OECD Guidelines for Multinational Enterprises
and National Contact Points
June 2016Tihana Bule, Economist and Policy AnalystKathryn Dovey, Manager, NCP Coordination
OECD and global standard setting
Scope and importance of responsible business conduct
Responsible business conduct at the OECD
OECD Guidelines for Multinational Enterprises
Implementing the Guidelines
National Contact Points
THE OECD: GLOBAL STANDARD SETTING
• Global policy network for standard setting and peer learning
• Established in 1961
• 34 governments
• 250 committees
• 40 000 senior government officials
• 2 500 secretariat staff
• Systemic business, trade union and NGOs engagement
The OECD
Covering a wide range of policy areas
• Policy commitment to an open and transparent investment environment – OECD Guidelines for Multinational Enterprises
– National Treatment, Conflicting Requirements, and International Investment Incentives and Disincentives
• Open to non-OECD members, currently 46 adherent governments from all regions of the world– 34 OECD members
– 12 non-OECD members
• OECD Investment Committee – Working Party on Responsible Business Conduct only body of its kind in the
world
– Regular consultations with stakeholders
OECD Declaration on International Investment and Multinational Enterprises
Adherents to the OECD Declaration
Argentina (1997)Australia (1976)Austria (1976)Belgium (1976)Brazil (1997)Canada (1976)Chile (1997)Colombia (2011)Costa Rica (2013)Czech Republic (1995)Denmark (1976)Egypt (2007)Estonia (2001)Finland (1976)France (1976)Germany (1976)Greece (1976)Hungary (1994)Iceland (1976)Ireland (1976)Israel (2002)Italy (1976)Japan (1976)Jordan (2013)
Korea (1996)Latvia (2004) Lithuania (2001)Luxembourg (1976)Mexico (1994)Morocco (2009)Netherlands (1976)New Zealand (1976)Norway (1976) Peru (2008)Poland (1996)Portugal (1976)Romania (2005)Slovak Republic (2000)Slovenia (2002)Spain (1976)Sweden (1976) Switzerland (1976)Tunisia (2012)Turkey (1981)United Kingdom (1976)United States (1976)Ukraine (2016)European Union (observer)
ADHERING COUNTRIES SHAREOF GLOBAL FDI FLOWS
2010-2015
ADHERING COUNTRIES SHAREOF GLOBAL FDI STOCK
2014
SCOPE AND IMPORTANCE OF RESPONSIBLE BUSINESS CONDUCT
• Goes beyond philanthropy
• Focuses on addressing environmental and social impacts of business operations
• Part of core business and risk management, including in the supply chain and business relationships
• Important for all businesses
RBC – Focus on Impact
ensuring a positive contribution to overall developmentResponsible Business Conduct avoiding and addressing negative impacts
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• Convergence and coherence since 2011
• Recognition in the Sustainable Development Goals and Paris Agreement
• Integration in numerous international, regional and domestic commitments: – G7 leaders statement
– UNSC Resolutions
– Trade agreements and bilateral investment treaties
– Market access provisions
– EU CSR Strategy and new directives
– National strategies: UK Modern Slavery Act, French legislative developments, U.S. regulations/National Action Plan, Dutch agreement on textiles, Chinese guidelines
• Increasing integration in development finance, by investors, stock exchanges, banks, pension funds, sovereign wealth funds, export credit agencies
Global attention to RBC
RESPONSIBLE BUSINESS CONDUCTAT THE OECD
RBC at the OECD
• OECD Guidelines for Multinational Enterprises– Clear role for home governments
– Accountability
– Sector Guidances
• RBC in the Policy Framework for Investment and other policy areas– Development policy and co-operation;
corporate governance; competition; taxation; finance
• Outreach and dialogue
Multi-stakeholder approach
Improving the business environment
Protecting public interest and stakeholder rights
Overcoming country risk perceptions
Social licence to operate and risk management
Compliance/ respecting stakeholder rights
Competitiveness and market access
Ensuring accountability/ respect of rights
Framework to resolve issues proactively and constructively
Shared understanding of responsibilities
Government Businesses Civil Society
THE OECD GUIDELINES FOR MULTINATIONAL ENTERPRISES
• Most comprehensive government-backed international instrument for promoting responsible business conduct
• Recommendations from governments to businesses operating in or from adhering countries
• Purpose: to ensure business operations are in harmony with government policies; strengthen the basis of mutual confidence with the society; help improve foreign investment climate; enhance contribution to sustainable development
• Unique implementation mechanism
• Endorsed by business, trade unions and civil society organizations
OECD Guidelines for Multinational Enterprises
Concepts and Principles
General Policies
Disclosure
Human Rights
Employment and Industrial Relations
Environment
Combating Bribery, Bribe Solicitation and Extortion
Consumer Interests
Science and Technology
Competition
Taxation
Scope of the Guidelines
IMPLEMENTING THE GUIDELINES
Implementing the Guidelines: Shared Responsibility
Implement the Guidelines and encourage their use by businesses (domestic and foreign)
Provide a policy environment that supports and promotes responsible business conduct
Set up National Contact Points for the Guidelines
Maximise positive impacts, minimise adverse impacts
Carry out due diligence to identify, prevent and mitigate actual and potential adverse
impacts
Cover not only impacts related to own operations; but also in the
supply chain and business relationships
Responsibilities of Governments
Responsibilities of Businesses
• One of the main global non-judicial mechanisms and a significant contribution to improving access to remedy in case RBC principles and standards are not observed
• Mandate: – Help resolve practical issues through dialogue and
consensus – Promote RBC and actively engage with stakeholders – Identify areas where additional guidance for
businesses might be needed (i.e. sectors, regions, etc.)– Report on activities
Implementing the Guidelines: National Contact Points
Implementing the Guidelines: Guidance for Business
OECD Due Diligence Guidance for Responsible Mineral Supply Chains (2011)
OECD Due Diligence Guidance for Meaningful Stakeholder Engagement in the Extractive Sector
OECD-FAO Guidance for Responsible Agricultural Supply Chains
OECD Due Diligence Guidance for Responsible Supply Chains in the Garment & Footwear Sector (forthcoming)
Responsible Business Conduct in the Financial Sector (forthcoming)
Objective
The aim of the guidance is to offer practical guidance for the extractive sector in line with the OECD MNE Guidelines on due diligence for stakeholder engagement.
Content
• Process oriented recommendations for management and on the ground stakeholder facing staff.
• Framework to evaluate and monitor performance.
• Specific guidance for engaging with women, indigenous peoples, workers and artisanal miners.
Approach
• Risk-based framework
• Stakeholder engagement as a
core component of due
diligence
• Government-backed, broadly
supported
Due Diligence Guidance for Meaningful Stakeholder Engagement in Extractives
Framework
1) Ensure strong understanding of the local and operating context
2) Ensure that stakeholders and their interlocutors are appropriately identified and prioritised
3) Establish the necessary support system for meaningful stakeholder engagement
4) Design appropriate and effective stakeholder engagement activities and processes
5) Ensure follow-through
6) Monitor and evaluate stakeholder engagement activities and respond to identified shortcomings
• Unifies and help enterprises observe the OECD Guidelines and other major agriculture standards
• Recognition of financial enterprises as part of the value chain
• Developed through a multi-stakeholder advisory group
• Two main sections:– What - A model enterprise
policy
– How - A five-step framework for risk-based due diligence
Building Responsible Agricultural Supply Chains
What: Model Enterprise Policy
• Establish and maintain, in co-ordination with responsible government agencies and third parties as appropriate, an environmental and social management system appropriate to the nature and scale of operations
• Prevent, minimise and remedy pollution and negative impacts on air, land, soil, water, forests and biodiversity, and reduce greenhouse gas emissions
• Ensure the sustainable use of natural resources and increase the efficiency of resource use and energy
• Hold good-faith, effective and meaningful consultations with communities before initiating operations
• Ensure decent wages, benefits and working conditions, that are at least adequate to satisfy the basic needs of workers and their families
Some examples
How: Framework for Due Diligence
• Identify, assess, mitigate, prevent and address actual and potential adverse impacts
Step 1• Establish strong company management systems
Step 2• Identify, assess and prioritise risks in the supply chain
Step 3• Design and implement a strategy to respond to identified risks
Step 4• Verify supply chain due diligence
Step 5• Report on supply chain due diligence
Production Aggregation Processing Distribution
On-farm enterprises
Agricultural production and near-farm basic processing
Downstream enterprises
Aggregation, processing, distribution and marketing of agri-food products
Financial enterprisesCorporate and institutional investors less directly involved than above but provide them with capital
Cross-cutting enterprises
Tenure rights
Animal welfare
Animal welfare
Human rights Food security & nutrition
Laborrights
Health Governance
Environmental protection & sustainable useof resources
Technology & innovation
CROSS-CUTTINGRISKS
STAGES
SPECIFICRISKS
ENTER-PRISES
NATIONAL CONTACT POINTS
• A unique implementation and grievance mechanism for the Guidelines
• All governments adhering to the OECD Investment Declaration must set up a National Contact Point (NCP)
What are National Contact Points?
Main responsibilities of NCPs
The NCP mandate:
• Promote RBC
• Help resolve “specific instances” through dialogue, mediation and consensus
In addition:
• Engage with stakeholders
• Identify areas where additional guidance for companies is needed (i.e. sectors, regions, etc.)
• Report annually to OECD
NCP Structure
Structure of NCPs - 2015
Single Ministry
Single Ministry plus otherMinistries
Two or more Ministries
Tripartite
Quadripartite
Independent
19advisory
6oversight
Examples of NCP institutional arrangements
Brazil 11 ministries Plus: Central Bank, Human Rights Secretariat, Lead: Ministry of Finance
Canada 8 government departments Lead: Foreign Affairs, Trade and Development
Chile Foreign Affairs
Denmark Independent
France Several ministries Plus: Trade unions, Employer association Lead: Treasury
United Kingdom Department for Business, Innovation & SkillsSteering Board:2 additional government departments 4 independent members
United States Foreign Affairs Stakeholder Advisory Board:business, labour, academia, environmental, and human rights groups.
NCP Structure
• Different structures are possible
• The structure of the NCP should enable it to:
– handle the breadth of issues covered by the Guidelines
– operate impartially and with accountability
– develop and maintain relationships with stakeholders
NCP Structure
NCP leadership should be such that it retains the confidence of
social partners and other stakeholders, and fosters the
public profile of theGuidelines.
“Adhering countries shall make available human and financial resources to their National Contact Points so that they can
effectively fulfil their responsibilities, taking into account internal budget priorities and practices.”
Human and Financial Resources
VISIBILITY
Ensure that the NCP and the
availability of its services are known to the wider public and take an active role in promoting the Guidelines.
- Host seminars and events- Communicate (e.g. online; in national language)- Raise awareness and make the Guidelines better known and available
ACCESSIBILITY
Facilitate access to NCP services
- Define and publish procedures for dealing with specific instances - Be clear about the requirements and on indicative timeframes and processes
TRANSPARENCY
Be transparent in all activities, taking
into account the need for
confidentiality in offering good
offices.
- Publish reports on NCP functioning and its activities - Proactively share information - Respond to requests for information and be reachable
ACCOUNTABILITY
Be accountable, with the goal to
retain confidence of stakeholders and foster the
public profile of the Guidelines.
- Report to national authorities and to the OECD- Attend NCP meetings- Participate in peer exercises - Work with stakeholders
Core criteria for NCPs
Promotion
:3.Respond to enquiries about the Guidelines from:
a) other National Contact Points;b) the business community, worker organisations, other nongovernmental organisations and the public; andc) governments of non-adhering countries.
Promotion
Adhering countries shall set up NCPs to further the effectiveness of the Guidelines by undertaking promotional activities…
:1. Make the Guidelines known and available by appropriate means, including through on-line information, and in national languages. Prospective investors (inward and outward) should be informed about the Guidelines, as appropriate.
:
2. Raise awareness of the Guidelines and their implementation procedures, including through co-operation, as appropriate, with the business community, worker organisations, other non-governmental organisations, and the interested public.
Promotion
Promotional plans
Website Translations
Leading eventsParticipating in events
Annual information meetingsIncluding NCP in national policies
Promotion
What is CSR/RBC/ESG?What about UN Global
Compact, ISO, UN GPs etcWhat is the OECD?
What is an NCP?What is a specific instance?
General policies Disclosure Human Rights
Labour
Environment
Bribery
Consumer interests
Science and technology Taxation
Due diligence in practice Sector projects/guidance
Specific instances - process
Specific instances – source
NGO
Trade Union
Individual
MultistakeholderConsortium
Local Community
Company
Government
Calls for improvements
Strengthen the functioning and performance of National Contact Points (NCPs)
NCP Action Plan
2015: OECD Ministerial
Council Meeting2015: G7 Leaders Declaration
2016-2018Action plan
Peer reviews/
Capacity buildingPeer learning Building tools
SPECIFIC INSTANCES
Over 360 specific instances, in over 100 countries and territories
No significant increase in number of specific instances
Specific instances at a glance
0
5
10
15
20
25
30
35
40
45
2000 2001 2002 2003 2004 2005 2006 2007 2008 2009 2010 2011 2012 2013 2014 2015
Human rights chapter is the fastest growing theme (4% of specific instances from 2000-2010 to 54% from 2011)
Specific instances at a glance
0%
10%
20%
30%
40%
50%
60%
70%
80%
90%
2001-2010
2011-2015
• Of all specific instances accepted for further examination between 2011-2015:
– approximately half resulted in an agreement between the parties
– approximately 36% resulted in an internal policy change by the company in question
Specific instances at a glance
A non-acceptance rate of between 30-40% has been relatively stable since 2000.
Specific instances at a glance
Non-acceptance of specific instances ( in percentage)
0%
10%
20%
30%
40%
50%
60%
70%
80%
90%
100%
2001 2002 2003 2004 2005 2006 2007 2008 2009 2010 2011 2012 2013 2014
EXAMPLE CASES
• NCP: United Kingdom - complaint received in October 2013
• Company: SOCO International PLC
• Submitter: WWF International
• Main issues: Environment, general policies, human rights related to oil exploration
Virunga National Park in the DRC
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SOCO agreed to refrain from any exploratory of other drilling activities within Virunga park as long as UNESCO and DRC government view such activities as incompatible with the Park’s World Heritage Status
• NCP: Netherlands – complaint received in June 2014
• Company: Rabobank (through BumitamaAgri Ltd)
• Submitter: Friends of the Earth Netherlands
• Major issues: Due diligence, including on human rights
Palm oil in Indonesia
51
Palm oil in Indonesia - Timeline
52
June 2014 Complaint received by the NCP
August 2014 Separate meetings with each stakeholder
September 2014 Initial assessment and joint meeting
December 2014 Publication of the initial assessment
January-June 2015 Meetings with stakeholders
January 2016 Publication of the final communiqué
End of 2017 Evaluation of the progress made based on the agreed terms of reference
Palm oil in Indonesia - Conclusions
53
It was agreed that:
– A critical view of the sustainability of palm oil production was necessary
– Rabobank maintains a dialogue with external stakeholders on the basis of concrete evidence of non-observance by its clients
– Rabobank modifies its approach to handling complaints
• NCP: Norway – complaint received in May 2009
• Company: Cermaq ASA and its subsidiaries Mainstream Canada and Mainstream Chile
• Submitter: Friends of the Earth Norway and the Forum for Environment and Development
• Main issues: Indigenous peoples rights, employment and labour practices, environmental impacts
Salmon farming in Canada and Chile
54
Joint statement with commitments by all parties
• NCP: United Kingdom - complaint received in 2008
• Company: Vedanta Resources
• Submitter: Survival International
• Main issues: Lack of consultation with indigenous peoples, human rights, environment
Mining in India
55
Company refused to participate in mediation and rejected all allegations against it. NCP found that the company had not taken adequate steps to respect the rights of those impacted and found the Guidelines had not been observed.
• NCP: United Kingdom - complaint received in 2014
• Company: Formula One Group
• Submitter: Americans for Democracy and Human Rights in Bahrain
• Main issues: Risk of human rights impacts due to hosting in Bahrain
Formula One in Bahrain
56
The mediated agreement facilitated by the UK NCP included the first public commitment by Formula One to respect human rights in all operations and develop a human rights due diligence policy.
