In the first decade of this century, governments of the Organisation for Economic Cooperation and Development (OECD) have been unable to protect workers, communities and the environment from harm caused by multinational corporations, concludes a new report from OECD Watch, released today. [1]
The report “10 Years On” assesses the effectiveness of the OECD Guidelines [2] for Multinational Enterprises, and reveals that lack of political will, lack of sanctioning powers and lack of coherent implementation have significantly diminished the potential value of the instrument. The recently initiated revision of the Guidelines is a make or break opportunity to help stop corporate abuses, particularly in developing countries. If no drastic improvements are achieved, civil society will be forced to look elsewhere to resolve the key problems facing affected peoples and the natural environment. To address this gap, the European Commission should take steps to allow victims of corporate abuse by European companies access to a fair trial in a European court.
Paul de Clerck of Friends of the Earth Europe said: “The OECD guidelines do not provide a good remedy system for victims of corporate abuse by European companies. The EU should take its responsibility and ensure that victims can get a fair trial in a European court and that companies’ headquarters can be held liable for the negative impacts of their operations”.
OECD Watch has monitored the implementation and effectiveness of the OECD Guidelines over the past ten years and made an analysis of cases filed by NGOs against corporations alleging violations of the OECD Guidelines. A total of 96 cases have been filed by NGOs, from the first case in 2001 through to June 2010, of which only five have resulted in improvements. In those cases where a complaint was filed, National Contact Points (NCPs) [3] rarely contributed to resolving specific conflicts, with most NCPs failing to promote the Guidelines or impress upon companies the importance of adherence. When issues are raised with governments, most NCPs will not investigate the validity of the claims.
Joseph Wilde-Ramsing (OECD Watch) said: “Only 5 of the 96 cases filed by NGOs have resulted in real improvements in corporate behaviour. In another 10 cases, National Contact Points have made useful recommendations to improve business conduct, but these have ultimately not materialised in concrete improvements. The remaining 84% of cases have failed to make any significant contribution to resolving the conflict.”
The most common types of alleged violations include environmental damages and human rights abuses in developing countries. Such violations often occur within the supply and value chains of major multinational corporations. Ten years of NGO experience with the Guidelines indicate that they are inadequate as a global mechanism to improve the operations of multinationals. “Without the threat of effective sanctions, there is little incentive for companies to ensure they are in compliance with the Guidelines” underlines Tricia Feeney (RAID), one of the authors of the report.
Civil society organisations across the world will continue to press for better global standards and the establishment of an effective remedy to deal with the negative impacts of business operations.
The task ahead for the OECD and adhering governments is clear: If the OECD Guidelines are to be considered a credible, legitimate and enforceable standard to resolve corporate abuses and promote responsible business behaviour in the 21st century, then radical reforms are necessary. If the review fails to address the shortcomings outlined in the OECD Watch report, it will further erode the influence and effectiveness of the OECD Guidelines.
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Notes:
[1] 10 Years On report: http://oecdwatch.org/publications-en/Publication_3550Most remarkable cases on the map: www.oecdwatch.org
[2] OECD Guidelines – The OECD Guidelines for Multinational Enterprises are a set of voluntary principals and standards backed by governments to which multinational enterprises operating in or from OECD countries are expected to adhere. In 2000 the OECD Guidelines were revised and procedures were established allowing NGOs to file complaints about corporate misconduct. In June 2010, a revision process to update the OECD Guidelines has started. [3] National Contact Points – National Contact Points (NCPs) are government offices established to promote multinational companies’ adherence to the OECD Guidelines. NCPs are responsible for handling complaints about companies.***
OECD Watch is an international network of more than 80 NGOs from 45 countries set up to facilitate NGO activities around the OECD Guidelines and the work of the Investment Committee. The Investment Committee is a division of the OECD working on international investment, multinational enterprises and the OECD Guidelines.
