Responsible business conduct: Which way forward?
 

OECD Observer Roundtable

Corporate social responsibility (CSR) is no longer just a marketing buzzword but has become a mainstream part of business operations in companies the world over. From so-called triple bottom line accounting through legal frameworks to stock market indices that reward responsible business conduct on social and environmental fronts, company values increasingly reflect CSR values too. But what of their global supply chains, do they hold the same high values? How can multinational companies in particular be sure that the myriad firms they source from in poorer countries do not cut corners with people’s lives or the environment? The death toll from the collapse of the brand-driven Rana Plaza garment factory in Bangladesh in 2013 was another tragic reminder that for CSR to have real value, much more needs to be done.

In this OECD Observer roundtable, we asked a range of stakeholders, from government, business, labour and civil society, for their views:

“What actions are you taking to encourage responsible business conduct and what new steps do you think are needed to strengthen corporate social responsibility worldwide?”

Government
The Netherlands: Acting decisively

Lilianne Ploumen, Minister for Foreign Trade and Development Co-operation, the Netherlands

 In the aftermath of the Rana Plaza tragedy in Bangladesh it became clear that action was needed to improve working conditions worldwide. In the Netherlands we decided to bring key stakeholders together from the Dutch garment industry (brands, companies, trade unions and civil society). This resulted in a concrete action plan for their industry’s supply chain. A big step forward, and not all that easy, since many of them are competitors.

It is a necessary approach if we are to make sure businesses remain engaged to improve the working conditions in factories they source from, instead of avoiding the issue and becoming disengaged. We must work together in a race to the top instead of allowing a race to the bottom.

In the case of Bangladesh I call upon all governments to encourage firms that sourced from Rana Plaza to contribute to the Rana Plaza Trust fund. International joint efforts have led to structural improvements. But immediate action is needed to compensate the victims. All the progress that we make for the future will look bleak and insufficient if the Rana Plaza victims do not get their rightful compensation.

Risks affecting human rights violations and environmental damage are subjects for the extractives sector. The Netherlands is focused on minimising these risks in the coal chain. Multi-stakeholder consultations with the energy sector were organised to discuss ways to interact with mines and governments to improve social and environmental standards. As a result, Dutch energy businesses joined the international Bettercoal initiative, which developed a globally recognised code of practice that members expect coalmining enterprises and other stakeholders to adhere to.

To help prevent future Rana Plaza tragedies in other sectors, the Netherlands, in close cooperation with several business sectors, is currently conducting a “due dilligence” sector risk analysis. Each supply chain will be scanned for distinctive risks of violations of human rights and the environment. In some chains, the outcome will necessitate changes. The Netherlands considers and presents the OECD MNE Guidelines as the main reference for accountability on responsible business conduct. We offer assistance in bringing business practices in line with the MNE Guidelines.

On an international level, high social and environmental standards should be part of bilateral, regional and multilateral trade agreements. In a good trade environment, regional and global value chains can become strong engines of growth. By focusing on responsible business conduct in their value chains and including social and environmental costs in their management plans, businesses can play a leading role in bringing about change.

Visit www.government.nl/ministries/bz

Government
France: Towards a global approach

Marine de Carne, Ambassador for Corporate Social Responsibility, France

Corporate social responsibility is a concept to which France is deeply committed. In a country not traditionally inclined towards recourse to soft law, CSR has been legislated extensively, beginning in 2001 with the imposition of a reporting requirement for all publicly traded companies that was extended to all firms with over 500 employees in 2010. France is at the forefront in this area, and is keen to advance further.

In particular, France has set up a CSR platform comprising all stakeholders under the auspices of the prime minister’s office, and is exploring possible improvements and good practices. The labelling of socially responsible investments to channel savings towards sustainable and ethical business enterprises is just one of the issues being tackled.

It is on the international level that action must be taken to ensure a level playing field and avert competitive “dumping.” At the UN level, France chairs the Group of Friends of Paragraph 47 [of the Rio+20 Declaration], which promotes reporting as an instrument for gauging the private sector’s contribution to sustainable development. Because business enterprises and their impacts know no borders, we deem it absolutely crucial to harness this mechanism worldwide so as to ensure accountability, and we have joined forces with our partners in the Group of Friends to incorporate reporting into the current negotiations on Sustainable Development Objectives.

The OECD is undoubtedly the most relevant and operational forum at present, since it encompasses the countries most directly concerned, and it possesses an instrument–the national contact points (NCPs)–whose full potential we wish to harness in France. The operability of all OECD NCPs should be augmented, so as to forge a kind of universal corpus of case law and take genuine remedial action to ensure the guidelines are respected.

Following the Rana Plaza disaster, the French NCP oversaw a report containing recommendations for the garment industry, which we would like to see examined and implemented by the other OECD countries as well, because it is clear that until the guidelines are applied around the globe, abuses will slip through the net.

In particular, we must work sector by sector and ensure that the system is coherent and comparable internationally.

We welcome the roundtable to be held with the ILO on Rana Plaza’s aftermath, and must do what it takes to raise CSR standards worldwide.

Visit www.diplomatie.gouv.fr

Business
Defining clear roles

Winand Quaedvlieg, Chair of BIAC’s Investment Committee*

As we all know, an open international investment climate is crucial for business and a quintessential task for the OECD. Fostering both an open investment environment and responsible business conduct go hand-in-hand.

At BIAC, we consider that responsible business conduct as promoted by the OECD Guidelines for Multinational Enterprises is an essential part of an open investment climate, and in the best interest of business. It is in this spirit that we are committed to work in partnership with the OECD and national governments to promote the guidelines in adhering countries and beyond.

At the same time, it is important to have a clear understanding of the role companies can play and the responsibility governments should have. Three essential elements need to be underlined to ensure broad-based support for the MNE Guidelines.

First, there should be a shared understanding that the national contact point (NCP) process is a mediation procedure and not a prosecution. Second, an over-extensive interpretation of responsibilities along the supply chain would be counter productive. And third, the guidelines can only apply to MNEs and not to all companies.

In our view, the MNE Guidelines have been formulated in such a way that they can be accepted by all countries participating in–and benefiting from–world trade. We strongly support additional emphasis on outreach activities. At the same time, we need to ensure that there is an enabling investment environment in place, to foster job creation and boost inclusive and sustainable growth around the world.

We strongly believe that the work of the OECD in these areas is fundamental for investment and growth.

*BIAC is the Business and Industrial Advisory Committee to the OECD; visit www.biac.org

Labour
Rebuilding Bangladesh and the global supply chain

Philip Jennings, General Secretary, UNI Global Union

On the morning of 24 April 2013, 1,138 workers, mainly young women, lost their lives in the rubble of the Rana Plaza factory disaster. Effectively the victims of corporate global manslaughter. The worst excesses of inequality, which is the 21st century global plague.

This preventable tragedy claimed as many lives as one of the twin towers of the World Trade Centre 9/11 terrorist attack. Many were complicit: the international brands that turned a blind eye to glaring problems in the factories where their garments were made; the factory owners who knowingly put their workers at risk in order to keep costs low; and the Bangladeshi authorities who made no effort to enforce their own health and safety laws.  

UNI Global Union along with our sister global union, IndustriALL, with the backing of the International Labour Organisation, took a stand and said that enough is enough. With the winds of public outrage behind us, we vowed to turn this corporate global manslaughter into real corporate global responsibility. Not lip service to a PR version of corporate social responsibility, but what John Ruggie had in mind when he set out his Guiding Principles on Business and Human Rights, now incorporated into the heart of the OECD Multinational Guidelines.

The result was the Accord on Fire and Building Safety in Bangladesh. After much behind-the-scenes arm-wrestling and colossal media pressure, by a midnight deadline on 15 May we had convinced a significant number of major brands including H & M, C & A and Inditex to sign the Accord. More than a year later, over 170 leading brands have now signed this agreement, which is both legally binding and a commitment to stay in Bangladesh and make Bangladesh’s garment factories safe places to work. Inspections are well under way and by the end of October 2014 we will have inspected more than 1,500 factories covered by the Accord in a wholehearted attempt to prevent the next Rana Plaza.

UNI and its Accord partners have changed the rules of the game in the global supply chain by introducing this enforceable Accord, which has made brands think again about their responsibilities. It is an important step in our wider goal to force back the tide of inequality so vividly described by economist Thomas Piketty and to create a more just and inclusive society. That is why UNI and IndustriALL have signed more than a hundred global agreements with multinationals to make them act responsibly to their workforces. It is also why the theme of UNI’s World Congress in Cape Town in December 2014 is “Including You.”

Visit www.uniglobalunion.org

Civil society
Safeguarding humanity’s future

Janos Pasztor, Acting Executive Director, Conservation, WWF International

As a leading global conservation organisation, central to WWF's mission is building a world where people live in harmony with nature. This is often seen as a plea to save the planet, but it is in fact about saving humanity.

The world’s most extraordinary protected places are becoming flashpoints as industrialisation comes into conflict with preservation. To reduce these pressures, WWF is working with businesses to find solutions that allow development to be achieved sustainably without jeopardising nature. Our vision is one where our food, fibre, water and energy are sourced smartly, used smartly and valued at their true worth.

One such flashpoint is Africa’s oldest national park, Virunga, located in eastern Democratic Republic of the Congo. Home to endangered species found nowhere else, 85% of this UNESCO World Heritage Site is covered by oil concessions. We believe that as long as concessions exist, Virunga’s long-term value is at risk. Research shows that this park, which currently generates over US$48 million per year and sustains 50,000 families, could grow in value to $1.1 billion. By investing in hydropower, fisheries and ecotourism, 28,000 permanent jobs could be created. 

WWF has argued that oil exploration in this protected area by UK-listed Soco International PLC breached the OECD Guidelines for Multinational Enterprises. Our OECD complaint was accepted and in June we reached a mediated solution with Soco that includes not only the company’s ending oil operations in Virunga, but also its pledging to stay out of all world heritage sites. 

A number of oil and mining companies have agreed to respect sites of outstanding universal value, but many more are seeking to exploit them. We will continue to hold the line working with governments, businesses, OECD, UNESCO and others until these precious places are no longer in danger. 

Visit www.wwf.org

See also http://oe.cd/Bi, http://oe.cd/Bj, and http://oe.cd/Fw

©OECD Observer Roundtable No 12




Economic data

GDP : +0.5%, Q4 2014
Employment rate: 65.9%, Q4 2014
Annual inflation : 0.60% Mar 2015
Trade : -3.0% exp, -3.7 imp, Q4 2014
Unemployment : 6.993% Feb 2015
More moderate expansion ahead? Composite leading indicators
Updated: 12 May 2015

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