The OECD’s ‘soft law’ human rights grievance mechanism, which allows stakeholders to refer human rights and environmental issues at companies – and investors – to local ‘National Contact Points’, is being hamstrung by a lack of resources, according to an internal report.
It found inconsistent budget sizes, staff numbers and application of guidelines across participating countries.
Governments that adhere to the OECD’s Guidelines for Multinational Enterprises are obliged to set up National Contact Points (NCPs) to deal with complaints, as well as handling general enquiries and promotion on a local basis. An OECD report has, however, detailed several ways in which NCPs provide inconsistent support, attributed largely to a lack of resources and trained staff.
The OECD report, which summarises the key findings of a full report to mark the NCP system’s 15th anniversary, also finds that most local NCPs are operating inefficiently, with frequent staff turnover and weak knowledge management among the most hampering factors.
A third of all disagreements examined by NCPs resulted in an internal policy change at the company targeted.
Though the Guidelines were at first designed to apply to corporates, test cases brought against Dutch pension fund manager APG and Norges Bank Investment Management (NBIM) showed that even minority investors could also come under scrutiny – with Harvard Professor John Ruggie, the architect of the current guidelines, confirming to RI last year that they were wholly applicable to financial institutions and minority shareholders.In 2013, several campaign groups brought a de facto incident to Dutch and Norwegian NCPs regarding APG and sovereign wealth fund manager NBIM relating to the institutions’ minority stakes in controversial Korean steelmaker POSCO.
Though APG reached an agreement with the OECD in September 2013, NBIM pushed back against three claims filed with the Norwegian NCP.
A fund spokesperson at the time urged for the cases to be rejected by the Norwegian contact point, claiming that “the role of minority investors in companies is different from the role of the companies themselves”.
The Norwegian NCP concluded in October 2013 that NBIM had violated the Guidelines, firstly by refusing to cooperate and by “not having any strategy on how to react if it becomes aware of human rights risks related to companies in which NBIM is invested, apart from child labour violations”. The case is now listed as concluded.
The Norwegian government eventually chose not to renew the mandate for Hans Petter Graver, a law professor and chair of the country’s NCP, though it denied that the change of leadership was politically motivated.
The new OECD report concludes that strengthening the internal function of NCPs is vital to their future success – which will require further resources and coherent policies.
It continues: “This may include tying consequences to specific instance proceedings in export credit decisions or support in international economic diplomacy, or recognizing the role of NCPs in National Action Plans or other relevant government policy.”