1. Introduction and summary

Transcription

1 The OECD Guidelines fr Multinatinal Enterprises Draft OECD Due Diligence Guidance fr Respnsible Business Cnduct and Due Diligence Cmpanin Submissin by the Trade Unin Advisry Cmmittee t the OECD (TUAC) 1 February Intrductin and summary 1. TUAC welcmes this public cnsultatin n the draft OECD Due Diligence Guidance fr Respnsible Business Cnduct and the pprtunity t make a written submissin. Overall, TUAC finds that there is much t cmmend in the draft Guidance. It is well structured, fcused guidance that is largely anchred in and aligned with the due diligence framewrk described in the OECD Guidelines fr Multinatinal Enterprises (OECD Guidelines) as well as the UN Guiding Principles n Business and Human Rights (UNGPs). 2. Hwever, TUAC cnsiders that the guidance culd still be imprved in a number f areas particularly in terms f the accessibility f the text and the emphasis given t stakehlder engagement, including wrkers and trade unins, and transparency. The remainder f this submissin sets ut TUAC s recmmendatins fr imprving the text under the fllwing headings: - Sectin 2: Substantive Pints; - Sectin 3: Accessibility/Use f Examples; - Sectin 4: Terminlgy; - Sectin 5: Cmpanin Dcument. 2. Substantive Pints 2.1 Substantive Pints: Overarching Stakehlder Engagement: stakehlder engagement shuld be given a greater fcus in the main Guidance dcument including in the Summary f Key Actins, and by prviding examples: - The OECD Due Diligence Guidance fr Meaningful Stakehlder Engagement in the Extractive Sectr sets ut an verall framewrk due diligence framewrk fr stakehlder engagement, including the need t psitin stakehlder engagement strategically thrugh a cmpany plicy r cmmitment n stakehlder engagement; - The OECD Due Diligence Guidance fr Respnsible Supply Chains in the Garment and Ftwear Sectr lists likely stakehlders including emplyees, wrkers and trade unins in the supply chain (Sectin 1.2, page 8) as well as giving different examples f engaging stakehlders in the different stages f due diligence Rle f trade unins and cllective agreements: - The Guidance shuld include examples f the rle f independent trade unins at the lcal and internatinal level in the different stages f due diligence, including the rle f cllective agreements between emplyers and trade unins. Specifically the text shuld explain that trade unins shuld be engaged (i) t facilitate wrker invlvement in the design and implementatin f due diligence prcesses, (ii) t implement standards n wrkers rights and hld enterprises accuntable t them, r (iii) t raise grievances against enterprises in relatin t wrkers rights and that this can be dne in the frm f direct agreements. The apprved OECD guidance n the Garment and Ftwear Sectr includes a sectin n Direct agreements with trade unins (Sectin 2.1 p.10). 1 This submissin is endrsed by the Internatinal Trade Unin Cnfederatin (ITUC).

2 References t/examples f trade unins in the text - The text mits reference t imprtant labur issues that are included in the Guidelines, including the terms trade unins and cllective bargaining, bth f which are included in the text f the OECD Guidelines (Chapter V1a and 1b): Review labur practices: it wuld be useful fr the Guidance t explain that in cnducting due diligence enterprises shuld review their labur practices, including whether the labur is directly emplyed r nt. The decisin t utsurce activities f the rganisatin requires due diligence. The Guidance shuld explain that the use f precarius wrk is a risk factr. The ITUC has written a reprt n the hidden wrkfrce which demnstrates bth the prevalence f precarius wrk and the risk this represents fr human/labur rights ( Cnflatin f due diligence recmmendatins and ther prvisins f the Guidelines: the sectin n Part II. Practical Steps fr Implementing Due Diligence under the Guidelines cnflates the recmmendatins f the Guidelines with the requirements f due diligence with respect t adpting plicies (II.I.C.1) stakehlder engagement and cmmunicating n due diligence (II.II- D.B.1). TUAC cnsiders this t be highly prblematic in particular in relatin t the respnsibility f cmpanies t cmmunicate n hw they are identifying and addressing their adverse impacts, which shuld nt be framed within the disclsure recmmendatins n material financial infrmatin (Chapter III.1 f the OECD Guidelines) Mitigating actual adverse impacts: In the text f the OECD Guidelines, the recmmendatin t undertake mitigatin applies nly t the situatin where a cmpany s adverse impacts are directly linked t its prducts and peratins thrugh its business relatinships. Where an enterprise causes r cntributes t adverse impacts its respnsibility is t Cease, Prevent and Remedy. When it is directly linked t adverse impacts its respnsibility is t use its leverage t influence the supplier t mitigate remaining impacts. This is represented visually in Figure 1 Addressing Adverse Impacts under the Guidelines (p. 20) f the Guidance. Hwever, the text (II.II-B-C.1, p19) prvides recmmendatins n mitigating adverse impacts, where the cmpany has caused r cntributed t adverse impacts. The text needs t be revised fr cnsistency and als t better explain the relatinship between preventin, mitigatin and remedy where a cmpany causes r cntributes t adverse impacts Transparency: transparency shuld be given mre prminence thrughut the Guidance, in particular regarding business relatinships/supply chains where the guidance shuld indicate that wrksites and supplier lcatins shuld be made public. There is als a need fr greater transparency in relatin t remedy: the grievances filed and actins taken t remedy grievances Gender: there is n reference t gender in the Guidance: - The OECD Due Diligence Guidance n Meaningful Stakehlder Engagement in the Extractive Sectr makes recmmendatins n engaging with wmen stakehlders thrughut the text, and includes a separate Annex n Engaging with Wmen ; - The OECD Due Diligence Guidance fr Respnsible Supply Chains in the Garment and Ftwear Sectr emphasises the imprtance f taking accunt f the psitin that wmen may have in any particular cntext (Sectin 1.4. page 12). Its recmmendatins include invlving wmen in the design f mnitring and evaluatin, and ensuring accessibility f grievance mechanisms.

3 3 2.2 Substantive Pints: Intrductin Bx 1: Characteristics f the OECD Guidelines fr Multinatinal Enterprises - Replace vluntary with nn-binding t avid the misinterpretatin that the Guidelines are ptinal and t strengthen the authrity f the guidance; - Bullet pints 1, 3, 4, and 5 make similar/ related pints, which culd be cmbined int ne pint, whereas ther essential pints abut the Guidelines are missing, including the fllwing: The explanatin that MNEs have a respnsibility fr aviding and addressing their adverse impacts, including in their supply chains and ther business relatinships; The recmmendatin that MNEs shuld cnduct due diligence in rder t meet this respnsibility this is the link between the OECD Guidelines and this guidance; The imprtant pint that the respnsibility f MNEs t respect human rights under the Guidelines exists independently f States abilities and/r willingness t fulfil their wn bligatins; A clearer explanatin f the cmplaints mechanisms including the number and nature f cases filed under the Guidelines. The last bullet pint uses the language f the Guidelines and is nt easy t understand. 2.3 Substantive Pints: Key Terms Salient risks : salient risks shuld be included in the sectin n Key Terms Severity : severity shuld be included in the list f Key Terms. 2.4 Substantive Pints: Capturing the Essence f Due Diligence Cnducting due diligence against specific adverse impacts: a bullet pint shuld be included stating that due diligence shuld be cnducted with respect t specific adverse impacts it cannt be perfrmed in an abstract way Salient risks r sectr specific risks: a bullet pint shuld be included stating that due diligence shuld begin with salient risks these are risks f specific adverse impacts in all activities and all gegraphical lcatins that are generally understd/nt difficult t identify. In many cases, where labur is invlved, the abuse f wrkers human rights will be such a salient risk. Salient risks shuld be included in the sectin n Key Terms Due diligence is the means nt the end: there is cncern within the trade unin mvement that due diligence will be misunderstd and that cmpanies will cnsider that they meet their respnsibility under the Guidelines by establishing a due diligence prcess, regardless f whether r nt due diligence is effective in aviding and addressing adverse impacts. While this is explained in the text f Cre Cncept 3 (p.8) it shuld als be included as a pint in Capturing the Essence f Due Diligence Priritisatin is a matter f sequencing: The main text explains (Priritising preventin & the mst severe impacts, II.II-B.C.2, p.20) that priritising risks n the basis f severity relates t the sequencing f respnses where cmpanies are unable t address all adverse impacts at nce and des

4 4 nt mean that cmpanies d nt need t address ther less severe adverse impacts. Bullet pint 3 f Capturing the Essence f Due Diligence n priritisatin (p.5) shuld be amended t reflect this Stakehlder engagement: strengthen bullet pint 6 n stakehlder engagement as fllws: invlves meaningful cnsultatin with ptentially affected grups and ther relevant stakehlders directly r indirectly affected by its peratins r business relatinships. 2.5 Substantive Pints: Summary f Key Actins t put a due diligence prcess in place Stakehlder Engagement: map stakehlder engagement n t the ne-page schematic f the due diligence prcess s that it is clear that stakehlder engagement plays a rle at different stages f due diligence Cmmunicate: revise the pints n II-D Cmmunicate t reflect the requirements f due diligence and nt the mre limited requirements f Chapter III t disclse material infrmatin n financial infrmatin. 2.6 Substantive Pints: Cre Cncepts fr Implementing Due Diligence under the Guidelines Cre Cncepts: This sectin cvers a number f issues, nt all f which are Cncepts. The sectin culd be renamed Key Cnsideratins. The text culd be made mre accessible by reducing the cmplexity/presentatin and nt repeating descriptins that are cvered in Part II: - Shrter texts: the aim shuld be t present headline messages that users f the Guide really need t grasp befre reading mre detailed explanatins in Part II; - Bullet pints: the accessibility f the text wuld be imprved thrugh use f bullet pints rather than using dense text; - Single issues: sme paragraphs are quite cmplex cvering a number f pints: E.g.: Cre Cncept 3 (p8) RBC is a means fr enterprises t meet their respnsibilities t address RBC adverse impacts and differs in several ways frm cmmercial r cmpliance due diligence : Cre Cncept 3 cvers three majr pints: that due diligence is a means nt an end; that due diligence shuld be cmmensurate with the risks; and that the risks/impacts being addressed are the risks t sciety nt fr the enterprise. It wuld be better t address these separately Bx 1: Examples f RBC Cvered by the Guidelines (p7-p8): the examples fr the sectin f the table n Wrkers and Industrial Relatins shuld include vilatins f trade unin rights. Twthirds f cmplaints brught by trade unins under the Guidelines cncern vilatins f trade unin rights (Chapters IV.1a and V1.a and 1b). The examples in Bx 1 shuld include the fllwing: - intimidating, r therwise discuraging wrkers frm frming r jining a trade unin; - refusing genuine pprtunities t bargain cllectively; - risks t trade unin rights in the cntext f the issues f cntracting ut wrk Cre Cncept 4 RBC due diligence can help enterprises bey dmestic law (p. 9): This heading shuld be changed t RBC due diligence helps enterprises meet internatinally-recgnised standards n business behaviur, ging beynd natinal law. The paragraph is essentially abut the fact that the Guidelines g beynd the law and an explanatin f what it means fr there t be a cnflict with natinal law. The key pint is nt that due diligence can help cmpanies bey the law, which they have t d anyway, regardless f the Guidelines Cre Cncepts 8 and 9 RBC due diligence priritisatin : Cre Cncepts 8 and 9 are quite cnfusing as they bth have priritisatin/priritising in the header/title but address due diligence

5 5 in the cntext f a cmpany s wn activities and its business relatinships respectively. The text and the headings culd make the distinctin clearer Cre Cncept 8 RBC due diligence is risk-based and therefre invlves priritisatin : - Explanatin f the factrs fr determining severity given n the last line f the secnd paragraph shuld be given mre emphasis as this is a key element. As suggested abve, a definitin f severity shuld als be included in the list f Key Terms at the beginning f the Guidance. - The text shuld explain that priritisatin is a matter f sequencing and that cmpanies als need t address ther less severe adverse impacts Cre Cncept 9 Priritising RBC due diligence n business relatinships - Number f suppliers: the text shuld explain that having a high number f suppliers/cmplex supply chains is a risk factr. This is explained in the OECD Due Diligence Guidance fr the Garment and Ftwear Sectr; - Factring in the csts f due diligence: the Guidance shuld explain that the cst f due diligence shuld in itself be a factr taken int accunt by the enterprise befre deciding t undertake an activity r t enter int a business relatinship e.g., the decisin t stitch leather ftballs in Indnesia Cre Cncept 10 Enterprises can be invlved with adverse impacts in three ways : - Shifting respnsibility: the Guidance explains that the expectatins f MNEs with regard t business relatinships d nt shift the respnsibility frm the supplier/entity that is causing the abuses. The Guidance shuld als make clear that enterprises are, hwever, respnsible fr the decisin t enter int the business relatinship Cre Cncept 12 Stakehlder Engagement - The text n stakehlder engagement shuld be strengthened t make it clear that enterprises shuld cnsult with stakehlders in cnducting their due diligence; - The text shuld als make clear that industrial relatins are an imprtant frm f stakehlder engagement; - The text cnflates the recmmendatin f the Guidelines n stakehlder engagement and disclsure with the requirements f due diligence t hld meaningful cnsultatins with stakehlders. This is cnfusing and bscures the requirements f due diligence; - The text fcuses n the need t engage with threatened grups (whistle-blwers) as stakehlders. The issue f nn-retaliatin against whistle blwers is an imprtant ne that deserves separate treatment in the text. But reference shuld als be made t ther stakehlders: The apprved OECD guidance n the Garment and Ftwear Sectr usefully prvides an indicative list f stakehlders that includes emplyees, wrkers and trade unins in the supply chain (Sectin 1.2, p. 8). It als gives example f stakehlder engagement in the design and implementatin f due diligence prcesses (identificatin, assessments, develpment f crrectin plans, tracking perfrmance and the design f peratinal grievance mechanisms) Cre Cncept 12 Stakehlder Engagement : Cnsultatin (p.12): Cnsultatin is abut infrming a decisin and it must take place befre the decisin has been made. The enterprise must als prvide the stakehlder(s) with all f the infrmatin needed t make an infrmed decisin in a

6 6 timely manner. The clarificatin f the difference between cmmunicatin and cnsultatin prvided in the Guidance misunderstands the nature f cnsultatin Cre Cncept 13 Cllabratin can Enhance RBC Due Diligence (p.12): the text shuld explain that cllabratin n "rt causes" shuld nt becme a way fr enterprises t use philanthrpy t ffset the adverse impacts that business decisins have cause r cntributed t. Stressing rt causes can easily lead t the substitutin f philanthrpy fr respnsibility Due diligence is practive: an additinal Cncept/Key Cnsideratin shuld be included that say that due diligence requires cmpanies t d smething their respnsibility ges beynd ding n harm and extends t being practive in identifying and addressing their adverse impacts. 2.7 Substantive Pints: Embed Respnsible Business Cnduct int Plicy and Management Systems II.1 Embed RBC int Plicy and Management Systems. C.1 Key Actins (p.14): the first bullet pint cnflates the general respnsibility t devise and adpt an RBC plicy t supprt due diligence and recmmendatins made in the Guidelines t adpt plicies n specific issues (disclsure, human rights and bribery). This is cnfusing. 2.8 Substantive Pints: Due Diligence Prcesses II.A. Due Diligence: Identify and Assess Adverse RBC Impacts: - Key Actin 1: add including stakehlder engagement in the 1 st bullet pint; - C. Explanatin f Key Actins, 1. Building RBC risk-identificatin, last bullet pint: stakehlder engagement is nt limited t the prvisins f Chapter II, paragraph 14 f the Guidelines. It is an peratinal principle f due diligence (see UNGP 18). - C. Explanatin f Key Actins, 2. Using iterative investigative appraches: first bullet pint: intrduce the idea f cnducting due diligence against salient risks II.B. Prevent and mitigate adverse RBC impacts: in the Guidelines the steps required are t Cease, Prevent r Mitigate. - This is als the heading in the apprved OECD Guidance fr the Garment and Ftwear Sectr as well as in the Cmpanin Dcument (p.16) II.C Track Perfrmance, Explanatin f Key Actins, 1. Develping r adapting tracking systems (p.26): in relatin t auditing the guidance shuld make it clear that private wrkplace inspectin and scial auditing perfrmed by cmmercial enterprises, r similar auditing undertaken by cllabrative initiatives (whether industry-led r multi-stakehlder) des nt change the respnsibility f the enterprise fr any specific adverse impacts related t its activities. Cmmercial auditrs are agents f the enterprises that engage them and enterprises must assume respnsibility fr the effectiveness II.D Cmmunicate: the text cnflates the requirement f due diligence t accunt fr hw adverse impacts are addressed and the disclsure respnsibilities under Chapter III f the OECD Guidelines. The inclusin f Pint II-D 1, a recmmendatin n the disclsure f material financial infrmatin (Chapter III, paragraph 1 f the OECD Guidelines), is cnfusing. The result is that the respnsibility t reprt n hw adverse impacts were addressed, which shuld be directly stated, is bscured. 3. Accessible/Use f Examples 3.1 Accessibility: the readability f the Guidance culd be imprved, especially the Sectin n Cre Cncepts and the Cmpanin Dcument:

7 7 - Cre Cncepts: suggest re-writing t fcus n the main messages/essential explanatins and greater inclusin f visual aids/examples; - Cmpanin Dcument: this shuld be far less text-based and included bxes and diagrams. It repeats much f the cntent f the main Guidance, which is cnfusing. It wuld be strengthened by less text/greater use f visual material (bxes/diagrams). 3.2 Increase the number f examples in the text including f adverse impacts: there are few examples f adverse impacts in the text. It wuld be useful t include detailed examples f adverse impacts in relatin t wrkers rights and specifically freedm f assciatin. 4. Terminlgy 4.1 Adverse impacts: due diligence is required in relatin t adverse impacts nt psitive impacts under the Guidelines, s the term that shuld be used thrughut the text is adverse impacts r adverse RBC impacts. It wuld be better if the text used just ne term thrughut the text. 4.2 Right-hlders/Stakehlder Engagement: the term rights-hlders shuld be used in additin t stakehlders. This is cnsistent with Chapter IV f the Guidelines n Human Rights. 4.3 Business relatinships nt business partner : the term partner shuld nt be used as a synnym fr business relatinships. The term partner generally dentes a relatinship where gains and lsses as well as risks and rewards, are shared in ne way r anther. This is nt true fr mst business relatinships, especially thse in supply chains. In the text f the OECD Guidelines, business partner is used as ne example f a business relatinship, nt as a synnym. 5. Cmpanin Dcument 5.1 The purpse f the Cmpanin is nt very clear. There are many areas where it largely verlaps with the same recmmendatins prvided in the main Guidance. Furthermre, the nrmative value f the Cmpanin is blurred as it is described as additinal tips and explanatins. Instead f a Cmpanin, it wuld be clearer and mre cherent t develp an Annex t prvide further guidance and gd practice examples in relatin t the cncepts intrduced in the Guidance. - Given the time cnstraints, it may be better t fcus n prducing a stand-alne guidance dcument that includes examples, and t pstpne the prductin f the Cmpanin Dcument until a later stage.