Among the few international instruments agreed by governments about how
corporations should behave are the "OECD Guidelines
for Multinational Enterprises". The OECD, or Organisation
for Economic Co-operation and Development, is made up of
thirty states from the industrialised countries plus some
from the Central-Eastern European region. It has advisory
committees from the international trade union movement (the
Trade Union Advisory Committee, TUAC) as well as business
(the Business and Industry Advisory Committee, BIAC).
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Photo: February 12 action
at sailing event at the Melbourne Port in Australia
to support the workers at North Sails/Global Sports
Lanka in Sri Lanka. An OECD complaint was filed by
unions against the Austrian owners of the factory.
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The Guidelines, adopted in 1976 and revised in 2000, cover
a wide range of issues including human rights, labour relations,
the environment, consumer protection, disclosure of information,
anti-corruption, and taxation. On labour issues, ILO standards
underpin the Guidelines including respect for the right
to organise and bargain collectively. The Guidelines have
been endorsed by all thirty OECD members, plus a further
eight nonmember states.
The standards are voluntary - a company can choose whether
or not to abide by them. There are no punishments or sanctions
to penalize a company that violates them. However, each
endorsing government must set up a National Contact Point
(NCP) to oversee their implementation.
NCPs differ in structure from country to country, but are
often located in the trade or foreign ministry. They are
responsible for publicising the Guidelines and for dealing
with complaints against companies alleged to be in violation
of them. NCPs do not monitor whether or not companies are
following the Guidelines.
Once an NCP has received a complaint and has assessed it
is admissible, it acts as a mediator between the complainants
and the company in question to negotiate a resolution acceptable
to both parties.
If
the company is found to have violated the Guidelines, the
NCP should explain this to the company and offer recommendations
to remedy the problem. If the parties cannot agree upon
a resolution, the NCP is expected to publicise its findings.
Because of the central role they play, the effectiveness
of the NCPs is a crucial factor in determining the extent
to which the Guidelines make a positive difference to respect
for workers' rights.
"In reality some NCPs are pretty useless while others
play an active and positive role in making recommendations
and creating a forum for discussion between the parties
involved," noted Neil Kearney of the International
Textile Garment Leather Workers Federation (ITGLWF), which
has filed complaints with the OECD in a number of cases
involving rights violations at garment factories (including
the Global Sports Lanka and GP Garment cases in Sri Lanka
and the ChoiShin / Cimatextiles case in Guatemala). "This
can be just the opening that unions need in order to establish
a dialogue with the company concerned and to work to establish
industrial relations based on mutual understanding."
How to Use the Guidelines
How do unions and NGOs go about filing complaints against
companies for violations of the Guidelines, and how useful
is it for winning respect for workers' rights?
To get some answers the CCC spoke with Joseph Wilde, a
researcher at SOMO, the Centre for Research on Multinational
Corporations, in the Netherlands, which is also the secretariat
of OECD Watch, set up in 2003 to facilitate civil society
activities around the Guidelines. OECD Watch is a network
of 49 NGOs from 29 countries in Europe, the Americas, Australia,
Africa and Asia.
Q. How is a complaint filed under the OECD Guidelines?
A: A letter with the complaint should be sent to
the most relevant National Contact Point. If the problem
is taking place in a country that has endorsed the Guidelines,
the letter should be sent to the NCP in that country. If
it is taking place in a country that has not endorsed the
Guidelines, the letter should go to the NCP in the home
country of the company in question.
The OECD Guidelines do not specify what the complaint must
contain, but several NCPs have done so, and OECD Watch has
developed its own format for assessing whether a case is
feasible. There must be sound documentary evidence that
one or more of the Guidelines has been violated. Cases are
stronger if the company involved has signed a document saying
that it will abide by the Guidelines. For example, in the
Netherlands all companies that receive export credits or
investment insurance from the government must sign such
a document.
It does not cost anything to file a complaint. However,
taking the time and energy to gather the evidence, document
the case, and travel to meetings can be expensive.
Q. Some cases have been rejected by NCPs on the basis
that the complaints are not "within an investment nexus."
What does this mean?
A: The Guidelines are vague about how far down the
supply chain a company's responsibility goes. They state
that enterprises should "encourage, where practicable"
their business partners, including suppliers and sub-contractors,
to apply principles of corporate conduct compatible with
the Guidelines.
This ambiguity has allowed some NCPs (and almost all businesses)
to take a narrow view of supply chain responsibility. They
say that companies are only responsible for their own direct
activities and those of their suppliers in which they have
direct capital investment, i.e., an "investment nexus"
exists. This interpretation is dangerous because business
activities are increasingly being outsourced to contractors
and subcontractors.
Many NGOs and trade unions are insisting that companies
take responsibility for behaviour patterns throughout their
supply chains. After all, it is the terms and conditions
laid down in their contracts that determine much of what
goes on in their supplier factories.
Q. What other reasons have NCPs used to reject complaints?
A: Some NCPs use the fact that there are ongoing
legal proceedings in a host country to delay consideration
of a case or to reject it outright. This is widely seen
as another way that NCPs shirk their responsibility to promote
adherence to the Guidelines.
Q. Can complainants publicise the cases they take up?
A: Confidentiality has been one of the most contentious
issues concerning the complaint procedure with some NCPs.
The OECD's Procedural Guidance is clear that confidentiality
only applies after the NCP has made its initial assessment
of a case and the two parties have agreed to enter into
a dialogue. Results will normally be transparent.
BIAC has lobbied tirelessly to extend confidentiality to
all phases of the process. They have even objected to NGOs
publicising that a complaint has been filed.
This has been supported in practice by some NCPs who withhold
company names and details of the complaints they have received
in their annual reports, even for cases that have been concluded.
Confidentiality taken to such extremes makes the whole
process meaningless. Those NCPs who favour blanket confidentiality
claim that secrecy helps to resolve cases, but this is not
supported by the facts. In the experience of OECD Watch
members, any positive outcome is, at least partly, the result
of the publicity surrounding the filing of a complaint.
Q. Have companies been found to be in breach of the
guidelines? If so, what is their "punishment"
and has this had the desired effect?
A: NCPs say that their role is not to adjudicate,
but rather to act as a facilitator of dialogue between the
company(ies) and the complaining party(ies). In this way,
most cases are settled without the NCP having to declare
a breach.
There have been a handful of cases in which NCPs have issued
recommendations to guide and improve corporate behaviour.
An OECD Watch review of five years cites several. For example,
in a case taken by the UK-based NGO Rights and Accountability
in Development (RAID), the Anglo American mining company
agreed to a better deal for its Zambian workforce when it
left the country.
However, cases are more often left to drag on, directed
elsewhere, or other excuses found, as a TUAC analysis of
some fifty complaints taken up with NCPs also shows.
TUAC and OECD Watch are urging trade unions and NGOs in
each OECD member country to lobby for an NCP advisory board,
parliamentary scrutiny, multi-ministry involvement and,
above all, active promotion by their government of the Guidelines
to which they have signed up. Governments should come under
pressure to make sure that the Guidelines are respected
in their own public procurement and the awarding of public
subsidies. There are also new OECD guidelines for state-owned
enterprises.
As a result of its review, OECD Watch concluded:
"Five years on, there is no conclusive evidence that
the Guidelines have had a positive, comprehensive impact
on multinational enterprises. […] As a global mechanism
to improve the operations of multinationals, the Guidelines
are simply inadequate and deficient. Without the threat
of effective sanctions, there is little incentive for companies
to ensure their operations are in compliance with the Guidelines.
Therefore, OECD Watch believes that governments must establish
legally binding, international social and environmental
standards and corporate accountability frameworks"
(OECD Watch, "Five Years On: A Review of the OECD Guidelines
and National Contact Points").
For more information, see www.oecdwatch.org
and www.tuac.org
