The Russian Invasion of Ukraine and Business: Responsibility, Complicity and the Responsibility to Respect Human Rights Under the UN Guiding Principles for Business and Human Rights

 

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The invasion of the Ukraine by Russia presents more than a critical challenge for public law and the continued viability of the post 1945 state system; the invasion also presents substantial challenges for companies whose production chains  and other economic activities  occur in, through, or with either state or in the zones of conflict (broadly defined). Especially important in this context is the risk of complicity for many companies in violations not just of domestic law (sanctions regimes etc.) but also of core human rights responsibilities.    

These brief reflections consider very preliminarily, the responsibilities of business (whether undertaken by private or state entities) to respect human rights in the conduct of their economic activities under the framework of the UN Guiding Principles for Business and Human Rights (2011), and the OECD's Guidelines for Multinational Enterprises (Chp. IV--human rights).  More specifically, the focus is on the risk of complicity in the human rights violations of others (principally states but also other actors (insurgents, agents,  That, in turn, can be understood to involve three distinct areas of human rights risks: (1) conflict zone risks; (2) states that may be directly or indirectly involved in the commission of human rights wrongs or in support of states committing these wrongs; and (3) states, other organizations, and people who suffer human rights harms.  

The bottom line: it is likely that any enterprise that engages in economic activity in and through Russia (the invading state) as well as those states that have supported or are in any way supporting the Russian effort must both conduct quite rigorous human rights due diligence to determine whether at any point in their global production chains their activity contributes directly or indirectly to the Russian invasion efforts (complicity) and then to make a determination respecting how to prevent, mitigate, or remedy the human rights harms caused by  their complicity in facilitating Russian state (or private)  human rights harms. The forms of prevention, mitigation and remedial strategies may depend on the circumstances but may extend the entire length of global production chains and may in some cases require abandonment of an economic relationship and remediation of harm. In any case, depending on the circumstances , complicity that remains unresolved ought to open the enterprise and its officials to both civil and criminal liability. 

Companies that may have contributed to Russian or insurgent tech or to the development of materials used in the invasion--from chemical weapons, to trucks and tires, to the clothing used to uniform personal may all face complicity responsibilities. Tech companies that provide the phones,software and virtual spaces through which military aggression may be advanced and other crimes facilitated may also face substantial risk. This is especially the case where the victim of aggression has put the company on notice (see, Ukraine asks Apple to stop product sales and block App Store access in Russia; see also here, and here). Companies that provide or facilitate the trade in wheat from let's say Russia to the People's Republic of China and thereby provide Russia with the financial capability for ongoing adverse human rights violence may also face significant exposure for complicity. These are consequences that may produce not just business risk and the operation of so-called soft law frameworks, but may also produce legal risk throughout the company production chain.  NGOs,, states and other actors, as well as other representatives of peoples and governments adversely affected will likely begin quickly to interpose civil,criminal and soft law proceedings against companies on this basis.  The framework of the UNGPs may well provide the companies basis for such action. States must also carefully assess their compliance with the strict duty to defend human rights and their own exposure; complicity related claims may not only be limited to private economic actors but extend to others.  Bilateral investment and other treaty relationships may be the doorway through which these implications maybe undertaken.  

How does this work?

Complicity appears only once in the UNGPs, in the Commentary to UNGP ¶17 (Human Rights Due Diligence). 

Article 17 sets out the framework for human rights due diligence. That standard, in turn, is grounded on the core objectives of prevention, mitigation and remediation realized through a process of impacts assessment, action on findings, tracking responses, and communicating results.The scope of objectives and process is determined under a "cause or contribute" standard (¶17(a) tied to a causation standard ("directly linked to operations" standard).  It is understood that these are contextually based assessments that may change over time and that thus may require a dynamic approach.  

The Commentary to Principle 17 advances two principle points relating complicity to the core of human rights due diligence duties.  The first is that questions of complicity are approached under a "contributes to, or is seen as contributing to" standard. Thus actual realization of the fruits of complicity is not the triggering factor but perception itself is seen as contributing to adverse human rights impacts.  The second touches on the definition of complicity for purposes of the UNGP.  The Commentary adopts a very broad definition of complicity. That broad definition is divided into two parts. The first includes non-legal complicity. The definition of the non-legal standard of complicity is built on a "perception" standard" "business enterprises may be perceived as being “complicit” in the acts of another party where, for example, they are seen to benefit from an abuse committed by that party" (¶17 Commentary; emphasis added)). Legal complicity is based loosely on an "aiding and abetting" standard (" knowingly providing practical assistance or encouragement that has a substantial effect on the commission of a crime" Ibid.). 

Nonetheless, complicity as a fundamental component of the corporate responsibility to respect human rights is also  connected to the principle of prevention-mitigation-remediation in UNGP ¶ 13 (What responsibility to respect human rights requires of business). 

Principle 13 elaborates the "cause or contributes" and the "directly linked" standards then embedded in Principle 17. Critical to the former standard is the understanding that causing or contributing  occurs through their own activities RATHER THAN BY such activity.  Critical for the elaboration of the later standard is that the direct link is to corporate operations, products and services but not to the human rights harm caused (" directly linked to their operations, products or services by their business relationships, even if they have not contributed to those impacts " UNGP ¶ 13). The Commentary to Principle 13 clarifies these points.  First involvement in activities with adverse human rights impacts  is not limited to corporate activity but also  include those which occur "as a result of their business relationships with other parties" (UNGP ¶13 Commentary, with a cross reference to ¶19). "Activities" are broadly conceived to include actions and omissions. Business relationships (central to the directly linked standard) include " relationships with business partners, entities in its value chain, and any other non-State or State entity directly linked to its business operations, products or services "(Ibid.). 

It is important here to recall, as well, the debate about "spheres of influence" and complicity that were considered by the SRSG John Ruggie and treated in condensed form in  his 2008 Report, Clarifying the Concepts of “Sphere of influence” and “Complicity” (A/HRC/8/16). The Report considers in detail the then emerging legal standards in domestic and international law, as well as the broader standard emerging in the social sphere and in non-binding international standards.  Of particular interest may be the discussion around the complicity standards extracted from Principle 2 of the Global Compact, distinguishing between direct, beneficial, and silent complicity (Clarifying the Concepts , ¶58).  The SRSG's summing up in ¶70 of the Report: 

What constitutes complicity in both legal and non-legal terms is not uniform, nor is it static. Despite this messy reality, the evidence to date lends itself to several conclusions. First, knowingly providing a substantial contribution to human rights abuses could result in a company being held accountable in both legal and non-legal settings. Second, being seen to benefit from abuse may attract the attention of social actors even if it does not lead to legal liability. Third, and similarly, mere presence in contexts where abuses are taking place may attract attention from other social actors but is unlikely, by itself, to lead to legal liability. In short, both operating in contexts where abuses occur and the appearance of benefiting from such abuses should serve as red flags for companies to ensure that they exercise due diligence, adapted for the specific context of their operations.

To this point, then, one can understand the scope of the complicity standard as including activities that may arise directly from business relationships but that may manifest indirectly, and that includes conduct that may be perceived as aiding and abetting in the commission of acts with adverse human rights impacts.  That is, complicity includes effects that may be attributed to business relationships that may be perceived  that provides practical assistance or encouragement that has a substantial effect on the commission of a crime or otherwise a substantial human rights wrong. The consequences of this "jittery" nature of complicity, of course, will produce different consequences within domestic and international law systems, in markets, and through soft law systems, and the private law systems of global production.  At the same time it requires greater and more deeply embedded systems of diligence on the part of those great engines of global production whose access to great resources must be balanced against their responsibility to respect human rights. But the SRSG's fundamental point is consistent throughout: complicity ought to have its reckoning, and the complicit ought to own up to the breach of their responsibility to respect human rights.

Complicity is further contextualized in UNGP ¶ 19 (internalizing the prevention-mitigation principle in enterprise operations); and UNGP ¶ 22 (remediation); UNGP ¶ 23 (context);and UNCP ¶ 24 (prevent-mitigate-remedy and prioritization of addressing human rights impacts).

UNGP ¶ 19 adds substantial context to the cause or contribute standard in its elaboration of the prevention and mitigation objectives of human rights due diligence as the applied expression of the corporate responsibility to respect human rights.  

The key relevant provisions here relate to the "effective integration" principle (responsibility for addressing impact assigned to the appropriate level and function; ¶ 19 (a)) and the "appropriate action" principle (as a function of placement in the chain of causation  and extent of leverage in addressing impacts; ¶19(b)). Principle 19,then, addresses the question of what is to be done, after application of the Principle13stabadrdsto the operations of an enterprise through its implementation of Principle 17's human rights due diligence duty. 

Principle 19's Commentary adds context to the "what is to be done" analysis required under ¶19. Three are of significance in applying that calculus.  The first recognizes an "impossibility" standard": the responsibility of business respect for business recognized human rights to the extent possible  where full compliance is impossible, subject to a further duty to demonstrate efforts, and thus also to demonstrate the causes for impossibility ("Where the domestic context renders it impossible to meet this responsibility fully, business enterprises are expected to respect the principles of internationally recognized human rights to the greatest extent possible in the circumstances, and to be able to demonstrate their efforts in this regard " UNGP ¶19 Commentary).  The second recognizes a "systemic compliance" standard grounded on assessment of legal liability under domestic and international law ("Business enterprises should treat this risk as a legal compliance issue, given the expanding web of potential corporate legal liability arising from extraterritorial civil claims, and from the incorporation of the provisions of the Rome Statute of the International Criminal Court" Ibid.). The third recognizes a "no exacerbation and consultation" standard (" draw on not only expertise and cross-functional consultation within the enterprise, but also to consult externally with credible, independent experts, including from Governments, civil society, national human rights institutions and relevant multi-stakeholder initiatives" Ibid.).  Together, these suggest the need to maximize compliance, demonstrate impediments to compliance, mindful of legal risk (requiring sensitivity to all domestic law  that may be applicable as well as international criminal law) balanced against a duty to avoid exacerbation of adverse human rights impacts supported by transparent consultation with key external actors. . These standard are fully applicable to the context of complicity related adverse impacts but made more complex because of the additional step of connecting the actions of others (especially states) to the economic contribution that may have indirectly but significantly facilitated a state's breach of its own duty to protect human rights. ,

UNGP ¶ 22 then speaks to remediation (and the elaboration of the "cause or contributed " and "directly linked" standards) as an addition to the applicable standards for prevention and standards under Principle 19).  

The "cause or contribute" standard applies irrespective of the foreseeability of the adverse impact.  While Principle 19 speaks to ex ante planning, Principle 22 focuses on responsibility after the harm has occurred or while it is occurring. The key insight for complicity is set out in the Commentary and relates to a common element of complicity--the situation where the enterprise causes or contributes  by its business relationships and actions but does not control the consequences or impact itself. "Where adverse impacts have occurred that the business enterprise has not caused or contributed to, but which are directly linked to its operations, products or services by a business relationship, the responsibility to respect human rights does not require that the enterprise itself provide for remediation, though it may take a role in doing so." (UNGP¶22 Commentary).

UNGP ¶¶ 23 and 24 then adds  the practical considerations of the application of the standards and expectations built into the human rights due diligence systems.  These are particularly relevant in the context of complicity where the human rights harms are caused or directed by or for a state actor by the state, other states, or other actors who serve as state. 

UNGP 23 provides the "balancing" standard for complying with an entity's responsibility to respect human rights. It must first seek to comply with both domestic law and international standard where ever they operate. In cases of conflict between the two they must  seek ways to honor the principles but comply with domestic law.  Where that honoring impulse becomes impossible or is compromised then it must assess the risk of causing or contributing to adverse human rights impacts  as a legal compliance issue.  The Commentary refines this balancing standard and its consequences especially for the residual remedial obligation that is never waived but may be postponed for a reckoning at an appropriate time and before an appropriate tribunal. With respect to compliance the Commentary makes clear that this is subject to the same standard as under Principle 19's impossibility standard. Legal compliance standards point to the possibility of civil actions anywhere throughout a production chain by those impacted by the complicity related harms or by states or the ICC. Lastly Principle 19's "no exacerbation" standard is also applied here. 

UNGP 24 then suggests the way that assessment of response must be ordered, and sets forth the "no waivability" standard for remedial obligations irrespective of the application of any "impossibility" standard.  In other words, though compliance may be impossible, and an assessment reasonably made that continued engagement in actions of complicity may be warranted by the application of the "no exacerbation" principle, any harm caused thereby will still be subject to the unwaivable responsibility to remediate--if not now then later.This principle is bound up in the requirement  of seeking to prevent and mitigate the most severe harm first (an "irremediability first" standard). The Commentary provides " if prioritization is necessary business enterprises should begin with those human rights impacts that would be most severe, recognizing that a delayed response may affect remediability." (¶ 24 Commentary).

The application of these principles and their process and liability structures are further refined in the context of conflict zones (Report of the Working Group on the issue of human rights and transnational corporations and other business enterprises; Business, human rights and conflict-affected regions:
towards heightened action ¶ 11 (2020); Corporate Social Responsibility in Weak Governance Zones (risk and complicity)). Application will depend on context.  Andhere the processes and principles of the UNGP will apply differently in (1) conflict zone risks; (2) states that may be directly or indirectly involved in the commission of human rights wrongs or in support of states committing these wrongs; and (3) states, other organizations, and people who suffer human rights harms.  Lastly, The OECD Guidelines for Multinational Enterprises then add two things.  First they effectively incorporate the UNGPs in Chapter IV of the Guidelines.  And then by this incorporation open the availability of engagement through the National Contact Point Specific Instance process.

It is already clear that many enterprises across the world, but certainly those  whose home states are OECD members ought to be assessing their complicity risks at this moment. Whatever the realities of economic activities before 22 February 2022 (or earlier depending on when the start of Russian aggression may be calculated), after that date business activity in many sectors now have a significant task to apply the principles and balancing responsibilities of the UNGP, and as well to begin to set aside resources to meet their remedial obligation to Ukraine and the Ukrainian people applied strictly through  the law and the norms of the UNGP. More importantly, states that impede the processes for the effort to indicate rights, including by reducing access to and the effectiveness of the National Contact Point processes of the OECD Guidelines for Multinational Enterprises may themselves be understood to be complicit and in any case they may open themselves to consideration of their own failure to meet their duty to protect human rights.    

The Text of the relevant provisions follow:

 

UNGP 17 : Human Rights DueDiligence

•In order to identify, prevent, mitigate and account for how they address their adverse human rights impacts, business enterprises should carry out human rights due diligence. The process should include assessing actual and potential human rights impacts, integrating and acting upon the findings, tracking responses, and communicating how impacts are addressed. Human rights due diligence:
    •(a) Should cover adverse human rights impacts that the business enterprise may cause or contribute to through its own activities, or which may be directly linked to its operations, products or services by its business relationships;
    •(b) Will vary in complexity with the size of the business enterprise, the risk of severe human rights impacts, and the nature and context of its operations;
    •(c) Should be ongoing, recognizing that the human rights risks may change over time as the business enterprise’s operations and operating context evolve. 

•Commentary
•* * *
    • Questions of complicity may arise when a business enterprise contributes to, or is seen as contributing to, adverse human rights impacts caused by other parties. Complicity has both non-legal and legal meanings. As a non-legal matter, business enterprises may be perceived as being “complicit” in the acts of another party where, for example, they are seen to benefit from an abuse committed by that party.
    •As a legal matter, most national jurisdictions prohibit complicity in the commission of a crime, and a number allow for criminal liability of business enterprises in such cases. Typically, civil actions can also be based on an enterprise’s alleged contribution to a harm, although these may not be framed in human rights terms. The weight of international criminal law jurisprudence indicates that the relevant standard for aiding and abetting is knowingly providing practical assistance or encouragement that has a substantial effect on the commission of a crime

UNGP 13 Foundational Principles

•The responsibility to respect human rights requires that business
enterprises:
    •(a) Avoid causing or contributing to adverse human rights impacts through their own activities, and address such impacts when they occur;
    •(b) Seek to prevent or mitigate adverse human rights impacts that are directly linked to their operations, products or services by their business relationships, even if they have not contributed to those impacts.

•Commentary
    •Business enterprises may be involved with adverse human rights impacts either
through their own activities or as a result of their business relationships with other parties. Guiding Principle 19 elaborates further on the implications for how business enterprises should address these situations. For the purpose of these Guiding Principles a business enterprise’s “activities” are understood to include both actions and omissions; and its “business relationships” are understood to include relationships with business partners, entities in its value chain, and any other non-State or State entity directly linked to its business operations, products or services

UNGP19 Prevent and Mitigate

•In order to prevent and mitigate adverse human rights impacts, business enterprises should integrate the findings from their impact assessments across relevant internal functions and processes, and take appropriate action.
    •(a) Effective integration requires that: (i) Responsibility for addressing such impacts is assigned to the appropriate level and function within the business enterprise; (ii) Internal decision-making, budget allocations and oversight processes enable effective responses to such impacts.
    •(b) Appropriate action will vary according to: (i) Whether the business enterprise causes or contributes to an adverse impact, or whether it is involved solely because the impact is directly linked to its operations, products or services by a business relationship; (ii) The extent of its leverage in addressing the adverse impact. 

•Commentary
•* * *
    •Where a business enterprise has not contributed to an adverse human rights impact, but that impact is nevertheless directly linked to its operations, products or services by its business relationship with another entity, the situation is more complex. Among the factors that will enter into the determination of the appropriate action in such situations are the enterprise’s leverage over the entity concerned, how crucial the relationship is to the enterprise, the severity of the abuse, and whether terminating the relationship with the entity itself would have adverse human rights consequences.
    •The more complex the situation and its implications for human rights, the stronger is the case for the enterprise to draw on independent expert advice in deciding how to respond.
    •If the business enterprise has leverage to prevent or mitigate the adverse impact, it should exercise it. And if it lacks leverage there may be ways for the enterprise to increase it. Leverage may be increased by, for example, offering capacity-building or other incentives to the related entity, or collaborating with other actors.
    •There are situations in which the enterprise lacks the leverage to prevent or mitigate adverse impacts and is unable to increase its leverage. Here, the enterprise should consider ending the relationship, taking into account credible assessments of potential adverse human rights impacts of doing so.
    •Where the relationship is “crucial” to the enterprise, ending it raises further challenges. A relationship could be deemed as crucial if it provides a product or service that is essential to the enterprise’s business, and for which no reasonable alternative source exists.

UNGP 22 Remediation

•Where business enterprises identify that they have caused or
contributed to adverse impacts, they should provide for or cooperate in their remediation through legitimate processes.

•Commentary
    •Even with the best policies and practices, a business enterprise may cause or contribute to an adverse human rights impact that it has not foreseen or been able to prevent. . .
    •Where adverse impacts have occurred that the business enterprise has not caused or contributed to, but which are directly linked to its operations, products or services by a business relationship, the responsibility to respect human rights does not require that the enterprise itself provide for remediation, though it may take a role in doing so.

UNGP23 Compliance hierarchies

•In all contexts, business enterprises should: (a) Comply with all applicable laws and respect internationally recognized human rights, wherever they operate; (b) Seek ways to honour the principles of internationally recognized human rights when faced with conflicting requirements; (c) Treat the risk of causing or contributing to gross human rights abuses as a legal compliance issue wherever they operate.


•Commentary
    •Where the domestic context renders it impossible to meet this responsibility fully, business enterprises are expected to respect the principles of internationally recognized human rights to the greatest extent possible in the circumstances, and to be able to demonstrate their efforts in this regard.
    •Some operating environments, such as conflict-affected areas, may increase the risks of enterprises being complicit in gross human rights abuses committed by other actors (security forces, for example). Business enterprises should treat this risk as a legal compliance issue, given the expanding web of potential corporate legal liability arising from extraterritorial civil claims, and from the incorporation of the provisions of the Rome Statute of the International Criminal Court in jurisdictions that provide for corporate criminal responsibility. . .
    •In complex contexts such as these, business enterprises should ensure that they do not exacerbate the situation. In assessing how best to respond, they will often be well advised to draw on not only expertise and cross-functional consultation within the enterprise, but also to consult externally with credible, independent experts, including from Governments, civil society, national human rights institutions and relevant multi-stakeholder initiatives.

UNGP 24 Prioritization and Unwaivability

•Where it is necessary to prioritize actions to address actual and potential adverse human rights impacts, business enterprises should first seek to prevent and mitigate those that are most severe or where delayed response would make them irremediable.

•Commentary
    While business enterprises should address all their adverse human rights impacts, it may not always be possible to address them simultaneously. In the absence of specific legal guidance, if prioritization is necessary business enterprises should begin with those human rights impacts that would be most severe, recognizing that a delayed response may affect remediability. Severity is not an absolute concept in this context, but is relative to the other human rights impacts the business enterprise has identified.

________

OECD Guidelines for Multinational Enterprises

IV. Human Rights

States have the duty to protect human rights. Enterprises should, within the framework of internationally recognised human rights, the international human rights obligations of the countries in which they operate as well as relevant domestic laws and regulations:

1. Respect human rights, which means they should avoid infringing on the human rights of others and should address adverse human rights impacts with which they are involved.

2. Within the context of their own activities, avoid causing or contributing to adverse human rights impacts and address such impacts when they occur.

3. Seek ways to prevent or mitigate adverse human rights impacts that are directly linked to their business operations, products or services by a business relationship, even if they do not contribute to those impacts.

4. Have a policy commitment to respect human rights.

5. Carry out human rights due diligence as appropriate to their size, the nature and context of operations and the severity of the risks of adverse human rights impacts.

6. Provide for or co-operate through legitimate processes in the remediation of adverse human rights impacts where they identify that they have caused or contributed to these impacts.

Commentary on Human Rights

36. This chapter opens with a chapeau that sets out the framework for the specific recommendations concerning enterprises’ respect for human rights. It draws upon the United Nations Framework for Business and Human Rights ‘Protect, Respect and Remedy’ and is in line with the Guiding Principles for its Implementation.

37. The chapeau and the first paragraph recognise that States have the duty to protect human rights, and that enterprises, regardless of their size,

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sector, operational context, ownership and structure, should respect human rights wherever they operate. Respect for human rights is the global standard of expected conduct for enterprises independently of States’ abilities and/or willingness to fulfil their human rights obligations, and does not diminish those obligations.

A State’ s failure either to enforce relevant domestic laws, or to implement international human rights obligations or the fact that it may act contrary to such laws or international obligations does not diminish the expectation that enterprises respect human rights. In countries where domestic laws and regulations conflict with internationally recognised human rights, enterprises should seek ways to honour them to the fullest extent which does not place them in violation of domestic law, consistent with paragraph 2 of the Chapter on Concepts and Principles.

In all cases and irrespective of the country or specific context of enterprises’ operations, reference should be made at a minimum to the internationally recognised human rights expressed in the International Bill of Human Rights, consisting of the Universal Declaration of Human Rights and the main instruments through which it has been codified: the International Covenant on Civil and Political Rights and the International Covenant on Economic, Social and Cultural Rights, and to the principles concerning fundamental rights set out in the 1998 International Labour Organisation Declaration on Fundamental Principles and Rights at Work.

Enterprises can have an impact on virtually the entire spectrum of internationally recognised human rights. In practice, some human rights may be at greater risk than others in particular industries or contexts, and therefore will be the focus of heightened attention. However, situations may change, so all rights should be the subject of periodic review. Depending on circumstances, enterprises may need to consider additional standards. For instance, enterprises should respect the human rights of individuals belonging to specific groups or populations that require particular attention, where they may have adverse human rights impacts on them. In this connection, United Nations instruments have elaborated further on the rights of indigenous peoples; persons belonging to national or ethnic, religious and linguistic minorities;women; children; persons with disabilities; and migrant workers and their families. Moreover, in situations of armed conflict enterprises should respect the standards of international humanitarian law, which can help enterprises avoid the risks of causing or contributing to adverse impacts when operating in such difficult environments.

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I. OECD GUIDELINES FOR MULTINATIONAL ENTERPRISES

41. In paragraph 1, addressing actual and potential adverse human rights impacts consists of taking adequate measures for their identification, prevention, where possible, and mitigation of potential human rights impacts, remediation of actual impacts, and accounting for how the adverse human rights impacts are addressed. The term ‘infringing’ refers to adverse impacts that an enterprise may have on the human rights of individuals.

42. Paragraph 2 recommends that enterprises avoid causing or contributing to adverse human rights impacts through their own activities and address such impacts when they occur. ‘Activities’ can include both actions and omissions. Where an enterprise causes or may cause an adverse human rights impact, it should take the necessary steps to cease or prevent the impact. Where an enterprise contributes or may contribute to such an impact, it should take the necessary steps to cease or prevent its contribution and use its leverage to mitigate any remaining impact to the greatest extent possible. Leverage is considered to exist where the enterprise has the ability to effect change in the practices of an entity that cause adverse human rights impacts.

43. Paragraph 3 addresses more complex situations where an enterprise has not contributed to an adverse human rights impact, but that impact is nevertheless directly linked to its operations, products or services by its business relationship with another entity. Paragraph 3 is not intended to shift responsibility from the entity causing an adverse human rights impact to the enterprise with which it has a business relationship. Meeting the expectation in paragraph 3 would entail an enterprise, acting alone or in co-operation with other entities, as appropriate, to use its leverage to influence the entity causing the adverse human rights impact to prevent or mitigate that impact. ‘Business relationships’ include relationships with business partners, entities in its supply chain, and any other non-State or State entity directly linked to its business operations, products or services. Among the factors that will enter into the determination of the appropriate action in such situations are the enterprise’ s leverage over the entity concerned, how crucial the relationship is to the enterprise, the severity of the impact, and whether terminating the relationship with the entity itself would have adverse human rights impacts.

44. Paragraph 4 recommends that enterprises express their commitment to respect human rights through a statement of policy that: (i) is approved at the most senior level of the enterprise; (ii) is informed by relevant internal and/or external expertise; (iii) stipulates the enterprise’s human rights expectations of personnel, business partners and other parties directly linked to its operations, products or services; (iv) is publicly

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available and communicated internally and externally to all personnel, business partners and other relevant parties; (v) is reflected in operational policies and procedures necessary to embed it throughout the enterprise.

Paragraph 5 recommends that enterprises carry out human rights due diligence. The process entails assessing actual and potential human rights impacts, integrating and acting upon the findings, tracking responses as well as communicating how impacts are addressed. Human rights due diligence can be included within broader enterprise risk management systems provided that it goes beyond simply identifying and managing material risks to the enterprise itself to include the risks to rights-holders. It is an on-going exercise, recognising that human rights risks may change over time as the enterprise’s operations and operating context evolve. Complementary guidance on due diligence, including in relation to supply chains, and appropriate responses to risks arising in supply chains are provided under paragraphs A.10 to A.12 of the Chapter on General Policies and their Commentaries.

When enterprises identify through their human rights due diligence process or other means that they have caused or contributed to an adverse impact, the Guidelines recommend that enterprises have processes in place to enable remediation. Some situations require co- operation with judicial or State-based non-judicial mechanisms. In others, operational-level grievance mechanisms for those potentially impacted by enterprises’ activities can be an effective means of providing for such processes when they meet the core criteria of: legitimacy, accessibility, predictability, equitability, compatibility with the Guidelines and transparency, and are based on dialogue and engagement with a view to seeking agreed solutions. Such mechanisms can be administered by an enterprise alone or in collaboration with other stakeholders and can be a source of continuous learning. Operational- level grievance mechanisms should not be used to undermine the role of trade unions in addressing labour-related disputes, nor should such mechanisms preclude access to judicial or non-judicial grievance mechanisms, including the National Contact Points under the Guidelines.

I. National Contact Points

The role of National Contact Points (NCPs) is to further the effectiveness of the Guidelines. NCPs will operate in accordance with core criteria of visibility, accessibility, transparency and accountability to further the objective of functional equivalence.

A. Institutional Arrangements

Consistent with the objective of functional equivalence and furthering the effectiveness of the Guidelines, adhering countries have flexibility in organising their NCPs, seeking the active support of social partners, including the business community, worker organisations, other non- governmental organisations, and other interested parties.

Accordingly, the National Contact Points:

1. Will be composed and organised such that they provide an effective basis for dealing with the broad range of issues covered by the Guidelines and enable the NCP to operate in an impartial manner while maintaining an adequate level of accountability to the adhering government.

2. Can use different forms of organisation to meet this objective. An NCP can consist of senior representatives from one or more Ministries, may be a senior government official or a government office headed by a senior official, be an interagency group, or one that contains independent experts. Representatives of the business community, worker organisations and other non-governmental organisations may also be included.

3. Will develop and maintain relations with representatives of the business community, worker organisations and other interested parties that are able to contribute to the effective functioning of the Guidelines.

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B. Information and Promotion

The National Contact Point will:

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.

3. Respond to enquiries about the Guidelines from:

   1. a)  other National Contact Points;

   2. b)  the business community, worker organisations, other non- governmental organisations and the public; and

   3. c)  governments of non-adhering countries.

C. Implementation in Specific Instances

The National Contact Point will contribute to the resolution of issues that arise relating to implementation of the Guidelines in specific instances in a manner that is impartial, predictable, equitable and compatible with the principles and standards of the Guidelines. The NCP will offer a forum for discussion and assist the business community, worker organisations, other non-governmental organisations, and other interested parties concerned to deal with the issues raised in an efficient and timely manner and in accordance with applicable law. In providing this assistance, the NCP will:

1.Make an initial assessment of whether the issues raised merit further examination and respond to the parties involved.

2. Where the issues raised merit further examination, offer good offices to help the parties involved to resolve the issues. For this purpose, the NCP will consult with these parties and where relevant:

a) seek advice from relevant authorities, and/or representatives of the business community, worker organisations, other non- governmental organisations, and relevant experts;

b) consult the NCP in the other country or countries concerned;
 

c) seek the guidance of the Committee if it has doubt about theinterpretation of the Guidelines in particular circumstances;
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d) offer, and with the agreement of the parties involved, facilitate access to consensual and non-adversarial means, such as conciliation or mediation, to assist the parties in dealing with the issues.

3. At the conclusion of the procedures and after consultation with the parties involved, make the results of the procedures publicly available, taking into account the need to protect sensitive business and other stakeholder information, by issuing:

1. a)  a statement when the NCP decides that the issues raised do not merit further consideration. The statement should at a minimum describe the issues raised and the reasons for the NCP’s decision;

2. b)  a report when the parties have reached agreement on the issues raised. The report should at a minimum describe the issues raised, the procedures the NCP initiated in assisting the parties and when agreement was reached. Information on the content of the agreement will only be included insofar as the parties involved agree thereto;

3. c)  a statement when no agreement is reached or when a party is unwilling to participate in the procedures. This statement should at a minimum describe the issues raised, the reasons why the NCP decided that the issues raised merit further examination and the procedures the NCP initiated in assisting the parties. The NCP will make recommendations on the implementation of the Guidelines as appropriate, which should be included in the statement. Where appropriate, the statement could also include the reasons that agreement could not be reached.

The NCP will notify the results of its specific instance procedures to the Committee in a timely manner.

4. In order to facilitate resolution of the issues raised, take appropriate steps to protect sensitive business and other information and the interests of other stakeholders involved in the specific instance. While the procedures under paragraph 2 are underway, confidentiality of the proceedings will be maintained. At the conclusion of the procedures, if the parties involved have not agreed on a resolution of the issues raised, they are free to communicate about and discuss these issues. However, information and views provided during the proceedings by another party involved will remain confidential, unless that other party agrees to their disclosure or this would be contrary to the provisions of national law.

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5. If issues arise in non-adhering countries, take steps to develop an understanding of the issues involved, and follow these procedures where relevant and practicable.

D. Reporting

1. Each NCP will report annually to the Committee.

2. Reports should contain information on the nature and results of the activities of the NCP, including implementation activities in specific instances.

II. Investment Committee

1. The Committee will consider requests from NCPs for assistance in carrying out their activities, including in the event of doubt about the interpretation of the Guidelines in particular circumstances.

2. The Committee will, with a view to enhancing the effectiveness of the Guidelines and to fostering the functional equivalence of NCPs:

1. a)  consider the reports of NCPs;

2. b)  consider a substantiated submission by an adhering country, an advisory body or OECD Watch on whether an NCP is fulfilling its responsibilities with regard to its handling of specific instances;

3. c)  consider issuing a clarification where an adhering country, an advisory body or OECD Watch makes a substantiated submission on whether an NCP has correctly interpreted the Guidelines in specific instances;

4. d)  make recommendations, as necessary, to improve the functioning of NCPs and the effective implementation of the Guidelines;

5. e)  co-operate with international partners;

6. f)  engage with interested non-adhering countries on matters covered

   by the Guidelines and their implementation.

3. The Committee may seek and consider advice from experts on any matters covered by the Guidelines. For this purpose, the Committee will decide on suitable procedures.

4. The Committee will discharge its responsibilities in an efficient and timely manner.

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5. In discharging its responsibilities, the Committee will be assisted by the OECD Secretariat, which, under the overall guidance of the Investment Committee, and subject to the Organisation’s Programme of Work and Budget, will:

a) serve as a central point of information for NCPs that have questions on the promotion and implementation of the Guidelines;

b) collect and make publicly available relevant information on recent trends and emerging practices with regard to the promotional activities of NCPs and the implementation of the Guidelines in specific instances. The Secretariat will develop unified reporting formats to support the establishment and maintenance of an up-to-date database on specific instances and conduct regular analysis of these specific instances;

c) facilitate peer learning activities, including voluntary peer evaluations, as well as capacity building and training, in particular for NCPs of new adhering countries, on the implementation procedures of the Guidelines such as promotion and the facilitation of conciliation and mediation;

d) facilitate co-operation between NCPs where appropriate; and

e) promote the Guidelines in relevant international forums and meetings and provide support to NCPs and the Committee in their efforts to raise awareness of the Guidelines among non-adhering countries.

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Commentary on the Implementation Procedures of the OECD Guidelines for Multinational Enterprises

1. The Council Decision represents the commitment of adhering countries to further the implementation of the recommendations contained in the text of the Guidelines. Procedural guidance for both NCPs and the Investment Committee is attached to the Council Decision.

2. The Council Decision sets out key adhering country responsibilities for the Guidelines with respect to NCPs, summarised as follows:

   • Setting up NCPs (which will take account of the procedural guidance attached to the Decision), and informing interested parties of the availability of Guidelines-related facilities.

   • Making available necessary human and financial resources.

   • Enabling NCPs in different countries to co-operate with each

     other as necessary.

   • Enabling NCPs to meet regularly and report to the Committee.

3. The Council Decision also establishes the Committee’s responsibilities for the Guidelines, including:

   • Organising exchanges of views on matters relating to the Guidelines.

   • Issuing clarifications as necessary.

   • Holding exchanges of views on the activities of NCPs.

   • Reporting to the OECD Council on the Guidelines.

4. The Investment Committee is the OECD body responsible for overseeing the functioning of the Guidelines. This responsibility applies not only to the Guidelines, but to all elements of the Declaration (National Treatment Instrument, and the instruments on International Investment Incentives and Disincentives, and Conflicting Requirements). The Committee seeks to ensure that each element in the Declaration is respected and understood, and that they all complement and operate in harmony with each other.

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5. Reflecting the increasing relevance of responsible business conduct to countries outside the OECD, the Decision provides for engagement and co-operation with non-adhering countries on matters covered by the Guidelines. This provision allows the Committee to arrange special meetings with interested non-adhering countries to promote understanding of the standards and principles contained in the Guidelines and of their implementation procedures. Subject to relevant OECD procedures, the Committee may also associate them with special activities or projects on responsible business conduct, including by inviting them to its meetings and to the Corporate Responsibility Roundtables.

6. In its pursuit of a proactive agenda, the Committee will co-operate with NCPs and seek opportunities to collaborate with the advisory bodies, OECD Watch, and other international partners. Further guidance for NCPs in this respect is provided in paragraph 18.

I. Commentary on the Procedural Guidance for NCPs

7. National Contact Points have an important role in enhancing the profile and effectiveness of the Guidelines. While it is enterprises that are responsible for observing the Guidelines in their day-to-day behaviour, governments can contribute to improving the effectiveness of the implementation procedures. To this end, they have agreed that better guidance for the conduct and activities of NCPs is warranted, including through regular meetings and Committee oversight.

8. Many of the functions in the Procedural Guidance of the Decision are not new, but reflect experience and recommendations developed over the years. By making them explicit the expected functioning of the implementation mechanisms of the Guidelines is made more transparent. All functions are now outlined in four parts of the Procedural Guidance pertaining to NCPs: institutional arrangements, information and promotion, implementation in specific instances, and reporting.

9. These four parts are preceded by an introductory paragraph that sets out the basic purpose of NCPs, together with core criteria to promote the concept of “functional equivalence”. Since governments are accorded flexibility in the way they organise NCPs, NCPs should function in a visible, accessible, transparent, and accountable manner. These criteria will guide NCPs in carrying out their activities and will also assist the Committee in discussing the conduct of NCPs.

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Core Criteria for Functional Equivalence in the Activities of NCPs

Visibility. In conformity with the Decision, adhering governments agree to nominate NCPs, and also to inform the business community, worker organisations and other interested parties, including NGOs, about the availability of facilities associated with NCPs in the implementation of the Guidelines. Governments are expected to publish information about their NCPs and to take an active role in promoting the Guidelines, which could include hosting seminars and meetings on the instrument. These events could be arranged in co- operation with business, labour, NGOs, and other interested parties, though not necessarily with all groups on each occasion.

Accessibility. Easy access to NCPs is important to their effective functioning. This includes facilitating access by business, labour, NGOs, and other members of the public. Electronic communications can also assist in this regard. NCPs would respond to all legitimate requests for information, and also undertake to deal with specific issues raised by parties concerned in an efficient and timely manner.

Transparency. Transparency is an important criterion with respect to its contribution to the accountability of the NCP and in gaining the confidence of the general public. Thus, as a general principle, the activities of the NCP will be transparent. Nonetheless when the NCP offers its “good offices” in implementing the Guidelines in specific instances, it will be in the interests of their effectiveness to take appropriate steps to establish confidentiality of the proceedings. Outcomes will be transparent unless preserving confidentiality is in the best interests of effective implementation of the Guidelines.

Accountability. A more active role with respect to enhancing the profile of the Guidelines – and their potential to aid in the management of difficult issues between enterprises and the societies in which they operate – will also put the activities of NCPs in the public eye. Nationally, parliaments could have a role to play. Annual reports and regular meetings of NCPs will provide an opportunity to share experiences and encourage “best practices” with respect to NCPs. The Committee will also hold exchanges of views, where experiences would be exchanged and the effectiveness of the activities of NCPs could be assessed.

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Institutional Arrangements

10. NCP leadership should be such that it retains the confidence of social partners and other stakeholders, and fosters the public profile of the Guidelines.

11. Regardless of the structure Governments have chosen for their NCP, they can also establish multi-stakeholder advisory or oversight bodies to assist NCPs in their tasks.

12. NCPs, whatever their composition, are expected to develop and maintain relations with representatives of the business community, worker organisations, other non-governmental organisations, and other interested parties.

Information and Promotion

13. The NCP functions associated with information and promotion are fundamentally important to enhancing the profile of the Guidelines.

14. NCPs are required to make the Guidelines better known and available online and by other appropriate means, including in national languages. English and French language versions will be available from the OECD, and website links to the Guidelines website are encouraged. As appropriate, NCPs will also provide prospective investors, both inward and outward, with information about the Guidelines.

15. NCPs should provide information on the procedures that parties should follow when raising or responding to a specific instance. It should include advice on the information that is necessary to raise a specific instance, the requirements for parties participating in specific instances, including confidentiality, and the processes and indicative timeframes that will be followed by the NCP.

16. In their efforts to raise awareness of the Guidelines, NCPs will co-operate with a wide variety of organisations and individuals, including, as appropriate, the business community, worker organisations, other non- governmental organisations, and other interested parties. Such organisations have a strong stake in the promotion of the Guidelines and their institutional networks provide opportunities for promotion that, if used for this purpose, will greatly enhance the efforts of NCPs in this regard.

17. Another basic activity expected of NCPs is responding to legitimate enquiries. Three groups have been singled out for attention in this regard: i) other NCPs (reflecting a provision in the Decision); ii) the business community, worker organisations, other non-governmental organisations and the public; and iii) governments of non-adhering countries.

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Proactive Agenda

18. In accordance with the Investment Committee’s proactive agenda, NCPs should maintain regular contact, including meetings, with social partners and other stakeholders in order to:

1. a)  consider new developments and emerging practices concerning responsible business conduct;

2. b)  support the positive contributions enterprises can make to economic, social and environmental progress;

3. c)  participate where appropriate in collaborative initiatives to identify and respond to risks of adverse impacts associated with particular products, regions, sectors or industries.

Peer Learning

19. In addition to contributing to the Committee’s work to enhance the effectiveness of the Guidelines, NCPs will engage in joint peer learning activities. In particular, they are encouraged to engage in horizontal, thematic peer reviews and voluntary NCP peer evaluations. Such peer learning can be carried out through meetings at the OECD or through direct co-operation between NCPs.

Implementation in Specific Instances

20. When issues arise relating to implementation of the Guidelines in specific instances, the NCP is expected to help resolve them. This section of the Procedural Guidance provides guidance to NCPs on how to handle specific instances.

21. The effectiveness of the specific instances procedure depends on good faith behaviour of all parties involved in the procedures. Good faith behaviour in this context means responding in a timely fashion, maintaining confidentiality where appropriate, refraining from misrepresenting the process and from threatening or taking reprisals against parties involved in the procedure, and genuinely engaging in the procedures with a view to finding a solution to the issues raised in accordance with the Guidelines.

Guiding Principles for Specific Instances

22. Consistent with the core criteria for functional equivalence in their activities NCPs should deal with specific instances in a manner that is:

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Impartial. NCPs should ensure impartiality in the resolution of specific instances.

Predictable. NCPs should ensure predictability by providing clear and publicly available information on their role in the resolution of specific instances, including the provision of good offices, the stages of the specific instance process including indicative timeframes, and the potential role they can play in monitoring the implementation of agreements reached between the parties.

Equitable. NCPs should ensure that the parties can engage in the process on fair and equitable terms, for example by providing reasonable access to sources of information relevant to the procedure.

Compatible with the Guidelines. NCPs should operate in accordance with the principles and standards contained in the Guidelines.

Coordination between NCPs in Specific Instances

23. Generally, issues will be dealt with by the NCP of the country in which the issues have arisen. Among adhering countries, such issues will first be discussed on the national level and, where appropriate, pursued at the bilateral level. The NCP of the host country should consult with the NCP of the home country in its efforts to assist the parties in resolving the issues. The NCP of the home country should strive to provide appropriate assistance in a timely manner when requested by the NCP of the host country.

24. When issues arise from an enterprise’s activity that takes place in several adhering countries or from the activity of a group of enterprises organised as consortium, joint venture or other similar form, based in different adhering countries, the NCPs involved should consult with a view to agreeing on which NCP will take the lead in assisting the parties. The NCPs can seek assistance from the Chair of the Investment Committee in arriving at such agreement. The lead NCP should consult with the other NCPs, which should provide appropriate assistance when requested by the lead NCP. If the parties fail to reach an agreement, the lead NCP should make a final decision in consultation with the other NCPs.

Initial Assessment

25. In making an initial assessment of whether the issue raised merits further examination, the NCP will need to determine whether the issue is

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bona fide and relevant to the implementation of the Guidelines. In this context, the NCP will take into account:

• the identity of the party concerned and its interest in the matter.

• whether the issue is material and substantiated.

• whether there seems to be a link between the enterprise’s activities and the issue raised in the specific instance.

• the relevance of applicable law and procedures, including court rulings.

• how similar issues have been, or are being, treated in other domestic or international proceedings.

• whether the consideration of the specific issue would contribute to the purposes and effectiveness of the Guidelines.

26. When assessing the significance for the specific instance procedure of other domestic or international proceedings addressing similar issues in parallel, NCPs should not decide that issues do not merit further consideration solely because parallel proceedings have been conducted, are under way or are available to the parties concerned. NCPs should evaluate whether an offer of good offices could make a positive contribution to the resolution of the issues raised and would not create serious prejudice for either of the parties involved in these other proceedings or cause a contempt of court situation. In making such an evaluation, NCPs could take into account practice among other NCPs and, where appropriate, consult with the institutions in which the parallel proceeding is being or could be conducted. Parties should also assist NCPs in their consideration of these matters by providing relevant information on the parallel proceedings.

27. Following its initial assessment, the NCP will respond to the parties concerned. If the NCP decides that the issue does not merit further consideration, it will inform the parties of the reasons for its decision.

Providing Assistance to the Parties

28. Where the issues raised merit further consideration, the NCP would discuss the issue further with parties involved and offer “good offices” in an effort to contribute informally to the resolution of issues. Where relevant, NCPs will follow the procedures set out in paragraph C-2a) through C-2d). This could include seeking the advice of relevant authorities, as well as representatives of the business community, labour organisations, other non-governmental organisations, and experts.

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Consultations with NCPs in other countries, or seeking guidance on issues related to the interpretation of the Guidelines may also help to resolve the issue.

29. As part of making available good offices, and where relevant to the issues at hand, NCPs will offer, or facilitate access to, consensual and non-adversarial procedures, such as conciliation or mediation, to assist in dealing with the issues at hand. In common with accepted practices on conciliation and mediation procedures, these procedures would be used only upon agreement of the parties concerned and their commitment to participate in good faith during the procedure.

30. When offering their good offices, NCPs may take steps to protect the identity of the parties involved where there are strong reasons to believe that the disclosure of this information would be detrimental to one or more of the parties. This could include circumstances where there may be a need to withhold the identity of a party or parties from the enterprise involved.

Conclusion of the Procedures

31. NCPs are expected to always make the results of a specific instance publicly available in accordance with paragraphs C-3 and C-4 of the Procedural Guidance.

32. When the NCP, after having carried out its initial assessment, decides that the issues raised in the specific instance do not merit further consideration, it will make a statement publicly available after consultations with the parties involved and taking into account the need to preserve the confidentiality of sensitive business and other information. If the NCP believes that, based on the results of its initial assessment, it would be unfair to publicly identify a party in a statement on its decision, it may draft the statement so as to protect the identity of the party.

33. The NCP may also make publicly available its decision that the issues raised merit further examination and its offer of good offices to the parties involved.

34. If the parties involved reach agreement on the issues raised, the parties should address in their agreement how and to what extent the content of the agreement is to be made publicly available. The NCP, in consultation with the parties, will make publicly available a report with the results of the proceedings. The parties may also agree to seek the assistance of the NCP in following-up on the implementation of the

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agreement and the NCP may do so on terms agreed between the parties and the NCP.

35. If the parties involved fail to reach agreement on the issues raised or if the NCP finds that one or more of the parties to the specific instance is unwilling to engage or to participate in good faith, the NCP will issue a statement, and make recommendations as appropriate, on the implementation of the Guidelines. This procedure makes it clear that an NCP will issue a statement, even when it feels that a specific recommendation is not called for. The statement should identify the parties concerned, the issues involved, the date on which the issues were raised with the NCP, any recommendations by the NCP, and any observations the NCP deems appropriate to include on the reasons why the proceedings did not produce an agreement.

36. The NCP should provide an opportunity for the parties to comment on a draft statement. However, the statement is that of the NCP and it is within the NCP’s discretion to decide whether to change the draft statement in response to comments from the parties. If the NCP makes recommendations to the parties, it may be appropriate under specific circumstances for the NCP to follow-up with the parties on their response to these recommendations. If the NCP deems it appropriate to follow-up on its recommendations, the timeframe for doing so should be addressed in the statement of the NCP.

37. Statements and reports on the results of the proceedings made publicly available by the NCPs could be relevant to the administration of government programmes and policies. In order to foster policy coherence, NCPs are encouraged to inform these government agencies of their statements and reports when they are known by the NCP to be relevant to a specific agency’s policies and programmes. This provision does not change the voluntary nature of the Guidelines.

Transparency and Confidentiality

38. Transparency is recognised as a general principle for the conduct of NCPs in their dealings with the public (see paragraph 9 in “Core Criteria” section, above). However, paragraph C-4 of the Procedural Guidance recognises that there are specific circumstances where confidentiality is important. The NCP will take appropriate steps to protect sensitive business information. Equally, other information, such as the identity of individuals involved in the procedures, should be kept confidential in the interests of the effective implementation of the Guidelines. It is understood that proceedings include the facts and arguments brought forward by the parties. Nonetheless, it remains

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important to strike a balance between transparency and confidentiality in order to build confidence in the Guidelines procedures and to promote their effective implementation. Thus, while paragraph C-4 broadly outlines that the proceedings associated with implementation will normally be confidential, the results will normally be transparent.

Issues Arising in Non-Adhering Countries

39. As noted in paragraph 2 of the Concepts and Principles chapter, enterprises are encouraged to observe the Guidelines wherever they operate, taking into account the particular circumstances of each host country.

• In the event that Guidelines-related issues arise in a non-adhering country, home NCPs will take steps to develop an understanding of the issues involved. While it may not always be practicable to obtain access to all pertinent information, or to bring all the parties involved together, the NCP may still be in a position to pursue enquiries and engage in other fact finding activities. Examples of such steps could include contacting the management of the enterprise in the home country, and, as appropriate, embassies and government officials in the non-adhering country.

• Conflicts with host country laws, regulations, rules and policies may make effective implementation of the Guidelines in specific instances more difficult than in adhering countries. As noted in the commentary to the General Policies chapter, while the Guidelines extend beyond the law in many cases, they should not and are not intended to place an enterprise in a situation where it faces conflicting requirements.

• The parties involved will have to be advised of the limitations inherent in implementing the Guidelines in non-adhering countries.

• Issues relating to the Guidelines in non-adhering countries could also be discussed at NCP meetings with a view to building expertise in handling issues arising in non-adhering countries.

  Indicative Timeframe

40. The specific instance procedure comprises three different stages:
1. Initial assessment and decision whether to offer good offices to assist

the parties: NCPs should seek to conclude an initial assessment

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within three months, although additional time might be needed in order to collect information necessary for an informed decision.

2. Assistance to the parties in their efforts to resolve the issues raised: If an NCP decides to offer its good offices, it should strive to facilitate the resolution of the issues in a timely manner. Recognising that progress through good offices, including mediation and conciliation, ultimately depends upon the parties involved, the NCP should, after consultation with the parties, establish a reasonable timeframe for the discussion between the parties to resolve the issues raised. If they fail to reach an agreement within this timeframe, the NCP should consult with the parties on the value of continuing its assistance to the parties; if the NCP comes to the conclusion that the continuation of the procedure is not likely to be productive, it should conclude the process and proceed to prepare a statement.

3. Conclusion of the procedures: The NCP should issue its statement or report within three months after the conclusion of the procedure.

41. As a general principle, NCPs should strive to conclude the procedure within 12 months from receipt of the specific instance. It is recognised that this timeframe may need to be extended if circumstances warrant it, such as when the issues arise in a non-adhering country.

Reporting to the Investment Committee

42. Reporting would be an important responsibility of NCPs that would also help to build up a knowledge base and core competencies in furthering the effectiveness of the Guidelines. In this light, NCPs will report to the Investment Committee in order to include in the Annual Report on the OECD Guidelines information on all specific instances that have been initiated by parties, including those that are in the process of an initial assessment, those for which offers of good offices have been extended and discussions are in progress, and those in which the NCP has decided not to extend an offer of good offices after an initial assessment. In reporting on implementation activities in specific instances, NCPs will comply with transparency and confidentiality considerations as set out in paragraph C-4.

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II. Commentary on the Procedural Guidance for the Investment Committee

43.The Procedural Guidance to the Council Decision provides additional guidance to the Committee in carrying out its responsibilities, including:

• Discharging its responsibilities in an efficient and timely manner.

• Considering requests from NCPs for assistance.

• Holding exchanges of views on the activities of NCPs.

• Providing for the possibility of seeking advice from international partners and experts.

  44. The non-binding nature of the Guidelines precludes the Committee from acting as a judicial or quasi-judicial body. Nor should the findings and statements made by the NCP (other than interpretations of the Guidelines) be questioned by a referral to the Committee. The provision that the Committee shall not reach conclusions on the conduct of individual enterprises has been maintained in the Decision itself.

  45. The Committee will consider requests from NCPs for assistance, including in the event of doubt about the interpretation of the Guidelines in particular circumstances. This paragraph reflects paragraph C-2c) of the Procedural Guidance to the Council Decision pertaining to NCPs, where NCPs are invited to seek the guidance of the Committee if they have doubt about the interpretation of the Guidelines in these circumstances.

  46. When discussing NCP activities, the Committee may make recommendations, as necessary, to improve their functioning, including with respect to the effective implementation of the Guidelines.

  47. A substantiated submission by an adhering country, an advisory body or OECD W atch that an NCP was not fulfilling its procedural responsibilities in the implementation of the Guidelines in specific instances will also be considered by the Committee. This complements provisions in the section of the Procedural Guidance pertaining to NCPs reporting on their activities.

48. Clarifications of the meaning of the Guidelines at the multilateral level would remain a key responsibility of the Committee to ensure that the meaning of the Guidelines would not vary from country to country. A substantiated submission by an adhering country, an advisory body or OECD Watch with respect to whether an NCP interpretation of the

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Guidelines is consistent with Committee interpretations will also be considered.

49. In order to engage with non-adhering countries on matters covered by the Guidelines, the Committee may invite interested non-adhering countries to its meetings, annual Roundtables on Corporate Responsibility, and meetings relating to specific projects on responsible business conduct.

50. Finally, the Committee may wish to call on experts to address and report on broader issues (for example, child labour or human rights) or individual issues, or to improve the effectiveness of procedures. For this purpose, the Committee could call on OECD in-house expertise, international organisations, the advisory bodies, non-governmental organisations, academics and others. It is understood that this will not become a panel to settle individual issues.