The Norwegian government has insisted that its decision not to renew the mandate of the head of the body which reviews complaints under the OECD’s Guidelines for Multinational Enterprises is not linked to its actions against the country’s giant wealth fund.
Hans Petter Graver, a law professor who also chaired the committee which drew up the ethical guidelines for the Government Pension Fund back in 2003, has been replaced by fellow Oslo University professor Ola Mestad as head of the body, known as the ‘National Contact Point’ (NCP). Mestad is the outgoing chair of the fund’s Council on Ethics, whose functions have largely been absorbed within Norges Bank Investment Management (NBIM), the arm of the central bank which runs the fund.
The Norwegian Forum for Development and Environment (ForUM), a network of 50 NGOs, have raised concerns about political interference and Graver himself has raised similar concerns.
But Foreign Ministry spokesman Frode Overland Anderson told Responsible Investor: “The claim by certain NGOs that the change of leadership in the Norwegian NCP was politically motivated is without merit. The current leader’s four-year period is at an end and it was therefore natural to also consider other candidates to take the NCP forward in the coming years.”
The NCP structure is the mechanism by which stakeholders can highlight issues under the OECD Guidelines, a ‘soft law’ mechanism last updated in 2011. It has come to prominence for institutional investors due to the ‘POSCO’ test case brought by a group of NGOs against NBIM, which the Norwegian authorities are contesting at the highest level.
The Norwegian NCP decided against NBIM in 2013 in the case, which centres on the responsibilities of minority investors to do what they can to mitigate human rights issues at companies they invest in. After this, Graver told RI, the NCP “noticed increased pressure from the Norwegian government”.
He said: “Our lease was cancelled and our arrangement with the foreign ministry to organise our filing system and website was terminated. Our mandate was changed to put our operations more under government control,” he said. Graver added: “Personally, I am in no doubt that the decision not to give me a new term as head of the NCP is connected with this.”He also says the body was hindered as the government didn’t appoint new members after the expiration of the term of three of its four members: “For almost a year the NCP had to function with only one its members (me) in place,” he says.
The other outgoing members of the NCP are Elin Myrmel-Johansen, communications director at insurer Storebrand and Jan Erik Korssjoen, ex-CEO at oil and gas firm Kongsberg. Foreign Affairs Minister Borge Brende said: “The government attaches great importance to human rights. Corporate social responsibility is a key part of this work. We have made it very clear that we expect Norwegian businesses to comply with the principles adopted by the OECD and the UN.”
Graver claims the Norwegian NCP was pressurised when two new claims against NBIM were filed with it last year. He told Responsible Investor: “When the NCP last autumn received two new complaints against the NBIM it was brought to my notice that the preferred course of action would be for the NCP to dismiss these cases.”
There have been requests for a review of NBIM’s investments in Crown Holdings, a food can and metal beverage manufacture, and Daewoo International, a subsidiary of POSCO.
Graver says NBIM had told the Norwegian NCP that the cases should be dismissed, arguing that the NCP should not concern itself with investors independently of the outcome of any case against a company. And it argued a case shouldn’t be brought against just one minority shareholder.
He said: “In effect this shows that the NBIM still does not accept the outcome of the discussions that have been taken part in the OECD for the past year and a half on the application of OECD guidelines to institutional investors and minority shareholders.”
Just last week, Professor John Ruggie explained to Responsible Investor how the United Nations Guiding Principles which bear his name, and which are all but identical to the OECD guidelines, apply to institutional investors.
A spokesperson for NBIM told RI: “Norges Bank has collaborated with the National Contact Point on the two specific instances brought against the bank. It is our assessment that these cases should be rejected by the Norwegian contact point, and that the role of minority investors in companies is different from the role of the companies themselves.”