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One of the three mechanisms of calling multinational companies to account, outside the courts, has come under criticism.
The OECD Guidelines for Multinational Enterprises have drawn fire from OECD Watch, the network of 47 non-governmental bodies whose remit includes testing their effectiveness.
NGO faultfinding is nothing new. But this sally comes at a sensitive time. The UN has just brought in a complaints procedure to deal with allegations of corporate breaches of its Global Compact principles, and the UN Norms on the Responsibilities of Transnational Corporations are out to review following representations from business groups.
OECD Watch claims that since 2000, when OECD members strengthened the role of the national contact points (NCPs) that consider cases of alleged non-observance, there is 'no evidence that the guidelines have helped to reduce the number of conflicts between local communities, civil society and foreign investors'. It says, 'As a global mechanism the guidelines ... are inadequate and deficient.'
The charge is that many NCPs take the companies' side, fail to share information and investigate allegations fully, wash their hands of cases on the grounds that the company under scrutiny is not directly responsible, cite ongoing legal proceedings to justify inaction, and produce weak decisions. Of the 45 complaints submitted by NGOs, only eight have been concluded, OECD Watch says. Six of the 20 relating to multinationals' supply chain responsibilities have been closed or rejected outright.
The Department of Trade and Industry official responsible for the UK's NCP told EP: 'The nature of NCP recommendations is taken from the text of the guidelines, whose purpose is encouraging better corporate behaviour and facilitating constructive dialogue. Adherence to the guidelines is voluntary and confidentiality is an issue.' The DTI is currently consulting on the guidelines.
Kathryn Gordon, OECD senior economist in charge of the guidelines, said: 'There have been 106 specific instances of alleged non-observance, and 72 of these have been taken up. That's a pretty good record, though it's fair to say some NCPs have been more effective than others. For that reason, we intend to examine business ethics mediation processes in existence elsewhere and hope to pass on what we have learned to NCPs.'
'There's an expectation on the part of trade unions and NGOs that this is a quasi-legal procedure. It isn't - NCPs are mandated to provide conciliation and mediation services. They are not there to assign blame. The guidelines have increased transparency and strengthened the transparency-enhancing roles of embassy networks and national overseas development programmes, which is changing the way governments, institutions and companies think about these issues.'
The OECD Guidelines for Multinational Enterprises have drawn fire from OECD Watch, the network of 47 non-governmental bodies whose remit includes testing their effectiveness.
NGO faultfinding is nothing new. But this sally comes at a sensitive time. The UN has just brought in a complaints procedure to deal with allegations of corporate breaches of its Global Compact principles, and the UN Norms on the Responsibilities of Transnational Corporations are out to review following representations from business groups.
OECD Watch claims that since 2000, when OECD members strengthened the role of the national contact points (NCPs) that consider cases of alleged non-observance, there is 'no evidence that the guidelines have helped to reduce the number of conflicts between local communities, civil society and foreign investors'. It says, 'As a global mechanism the guidelines ... are inadequate and deficient.'
The charge is that many NCPs take the companies' side, fail to share information and investigate allegations fully, wash their hands of cases on the grounds that the company under scrutiny is not directly responsible, cite ongoing legal proceedings to justify inaction, and produce weak decisions. Of the 45 complaints submitted by NGOs, only eight have been concluded, OECD Watch says. Six of the 20 relating to multinationals' supply chain responsibilities have been closed or rejected outright.
The Department of Trade and Industry official responsible for the UK's NCP told EP: 'The nature of NCP recommendations is taken from the text of the guidelines, whose purpose is encouraging better corporate behaviour and facilitating constructive dialogue. Adherence to the guidelines is voluntary and confidentiality is an issue.' The DTI is currently consulting on the guidelines.
Kathryn Gordon, OECD senior economist in charge of the guidelines, said: 'There have been 106 specific instances of alleged non-observance, and 72 of these have been taken up. That's a pretty good record, though it's fair to say some NCPs have been more effective than others. For that reason, we intend to examine business ethics mediation processes in existence elsewhere and hope to pass on what we have learned to NCPs.'
'There's an expectation on the part of trade unions and NGOs that this is a quasi-legal procedure. It isn't - NCPs are mandated to provide conciliation and mediation services. They are not there to assign blame. The guidelines have increased transparency and strengthened the transparency-enhancing roles of embassy networks and national overseas development programmes, which is changing the way governments, institutions and companies think about these issues.'
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