Thursday, June 18, 2015

Building Remedial Structures for Managing Social Norm Obligations of Multinational Enterprises Through OECD National Contact Points--Slow Going and Missing the Point?

(Pix © Larry Catá Backer 2015)
It has been well known that the OECD's social norm Guidelines for Multinational Enterprises (2011) has been long on principles and short on remedies.  Though the OECD has been tinkering with the procedural elements of the Guidelines for years, producing a recent set of changes designed to make maintaining an action (denominated "specific instances") easier, and despite the promise of the device for building a quasi jurisprudence for MNE conduct (see, e.g., here), OECD National Contact Points--"whose main role is to further the effectiveness of the Guidelines by undertaking promotional activities, handling enquiries, and contributing to the resolution of issues that arise from the alleged non-observance of the guidelines in specific instances"--have yet to realize their promise (see, e.g., here).

The extent of this gap between promise and reality, especially in the context of fostering a coherent and sustained application of the Guidelines through specific instance actions, was recently highlighted in a report published by Human Rights Watch: Caitlin Daniel, Joseph Wilde-Ramsing, Kris Genovese, Virginia Sandjojo, Remedy Remains Rare: An analysis of 15 years of NCP cases and their contribution to improve access to remedy for victims of corporate misconduct (OECD Watch,, June 2015; ISBN 978-94-6207-062-2).

The Report is worth reading, not merely because of its findings, but also because of its warning.  Though the Report may overstate the weaknesses of the current system (it is possible to use the current system today both to generate media coverage and to aid in local litigation efforts, see, e.g., here) it is also true that the inability to construct a coherent multilateral institution for grievance s and the development of a coherent set of glosses on the application of the Guidelines through NCP opinions has substantially weakened but the Guidelines and its influence in shaping MNE conduct. And, as the Report suggests, this weakness can only aid the position of those who would abandon second pillar and autonomous mechanisms for framing standards of MNE conduct in favor of the current movement toward a treaty (for my criticism, see here, and here). 
The executive summary with links to the report, and the Conclusion (pp. 50-51, footnotes omitted) follows:

New OECD Watch research report and analysis: "Remedy Remains Rare: An analysis of 15 years of NCP cases and their contribution to improve access to remedy for victims of corporate misconduct"Executive Summary:

National Contact Points (NCPs) were established to promote adherence to the OECD Guidelines for Multinational Enterprises (the Guidelines). In 2000, these state-based offices began accepting complaints from people harmed by companies’ non-compliance with the Guidelines. With this new role, NCPs acquired the potential to serve as a much-needed forum for accessing remedy for corporate abuses.

Now, 15 years on, we look back on NCP performance in handling these complaints. The evidence shows that there are very few examples of complaints leading to beneficial results that provided some measure of remedy, and most of these encompass only forward-looking corporate policy changes. These policy changes – if genuinely implemented – bring with them a potential for prevention of future harms related to a company’s activities, However, the overwhelming majority of complaints have failed to bring an end to corporate misconduct or provide remedy for past or on-going abuses, leaving complainants in the same or worse position as they were in before they filed their complaint.

These findings, based on a quantitative and qualitative analysis of 250 complaints filed by communities, individuals and NGOs, have critical implications for the NCP system. Positive outcomes of complaint handling are one of the most salient indicators of an NCP’s success in contributing to Guidelines implementation, yet the conclusions of this report indicate that, in most cases, NCPs are not achieving their central objective, which is to “further the effectiveness of the Guidelines.”

OECD Watch’s analysis of the first 15 years of NCP performance reveals weaknesses throughout the NCP system. These weaknesses must be addressed before NCPs can be considered an effective network for promoting adherence to the Guidelines or for addressing harm caused by corporate misconduct. Issues NCPs must address include practical and procedural barriers that prevent potential complainants from filing a complaint; a perceived lack of independence and impartiality of some NCPs; policies that prioritise confidentiality over transparency; frequent nonconformity with procedural timelines; and outcomes that are incompatible with the Guidelines. Many of these issues could be addressed systematically through changes to the Procedural Guidance that promote more effective handling of complaints. This report highlights the most critical changes needed to strengthen NCPs and provides concrete recommendations to policymakers at the OECD and in adhering countries.

By any standard, 15 years is enough time to test the effectiveness and impact of the NCP system. The 2011 update to the Guidelines delivered important changes to their scope and content, but did not include changes to ensure the effective functioning of NCPs nor their ability to facilitate access to remedy. NCPs have the potential to serve as a valuable tool in promoting responsible business conduct and ensuring access to remedy, but they are currently not meeting that potential. Adhering governments, together with the OECD and NCPs themselves, must move immediately to improve the NCP system to ensure access to remedy for the victims of corporate misconduct and maintain the relevance of the NCP system in a shifting policy landscape.

Concrete recommendations to policymakers, NCPs and the OECD, plus the full report available at: 


Conclusion (pp. 50-51, footnotes omitted):

If you were an indigenous or community leader defending the rights of your community in the face of a large-scale extractives project and seeking to stop the violation and obtain reparation for the damage that has already occurred, where would you turn? Would you go to an NCP seeking that outcome? The conclusions of this report would counsel against it. Although the last 15 years have shown incremental progress in the performance of some NCPs and best practices have slowly begun to emerge, NCPs are overwhelmingly failing to produce measurable outcomes through the complaint process. Cases resulting in remedy for past or on-going harms are even rarer. Without generating positive outcomes that address past corporate misconduct and change corporate behaviour, NCPs cannot succeed in their mission to promote corporate adherence to the Guidelines.

Yet, as the only grievance mechanism for an international, government endorsed standard for responsible business conduct, the NCP system has the potential to be a powerful tool to affect real change in corporate behaviour and provide remedy for those who are harmed by corporate misconduct. To realize their full potential, the Procedural Guidance that directs the policies and operations of NCPs must be revised. The field of corporate accountability has come a long way since 2000, when NCPs first began serving as a grievance mechanism for people affected by corporate misconduct, but the Procedural Guidance has hardly changed. A revision to the directives that guide NCPs is necessary to distil the practices and policies that have proven most successful, spark significant change across NCP offices, and create a long sought-after level playing field across all adhering countries.

The findings and recommendations contained in the present report highlight the changes to the Procedural Guidance that will make the most significant contribution to improving access to remedy for corporate misconduct. NCPs must alter their approach to initial assessments to ensure that potential complainants can access the complaint process as a forum to address legitimate concerns and obtain remedy. They must act with impartiality at all times and avoid actions that create an impression of bias when handling complaints. The need for transparency must be paramount, with confidentiality provisions limited to those with a specific rationale. NCPs must strive to handle complaints in a timely manner, adhering to set timelines to ensure predictability. Finally, NCPs must use all tools available to them to increase their effectiveness and produce outcomes that are compatible with the Guidelines and ultimately serve to remedy harms from corporate misconduct.

While a Procedural Guidance review is necessary to set the standard for handling complaints, more can and should be done to ensure NCPs are effectively implementing the current standard. The recent practice of conducting peer reviews can serve an important role in promoting excellence and equivalent case treatment among NCPs on an on-going basis. However, to have any noticeable impact on the behaviour of NCPs, peer reviews must be developed into a consistent, mandatory requirement for all NCPs. Each NCP should undergo a peer review every 5 years as is the practice in other OECD departments such as the Development Assistance Committee (DAC) and the Anti-Corruption Division.

The widespread support for a binding treaty on business and human rights is evidence that the current system is not working. Those harmed by corporate misconduct cannot rely on the Guidelines and the NCP system for remedy. If the NCP system is to remain relevant in the shifting landscape of corporate accountability, a system-wide change is needed to achieve a more standardised and effective treatment of complaints, with an ultimate focus on providing a forum for remedy for corporate misconduct.

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