Due diligence & OECD Guidelines specific instances: An analysis based on facts & experiences

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Due diligence & OECD Guidelines specific instances: An analysis based on facts & experiences Dr. Joseph Wilde-Ramsing, Ph.D. OECD Watch Coordinator Danish Conference on non-financial due diligence and responsible business conduct 25 November 2015, Copenhagen

Presentation Outline OECD Watch at a glance The facts: Analysis of the impact of 15 years of NCP cases (graphical overview) Focus on due diligence (DD) 6 DD case studies: recent ground-breaking agreements illustrating 6 DD trends Key conclusions and lessons

OECD Watch at a glance Global network of 104 CSOs in 51 countries. Members represent diverse range of CSOs working on human rights, indigenous peoples, labour rights, environmental issues, transparency, and sustainable development. Mission Ensure that victims of corporate misconduct have access to remedy, that business activity contributes to sustainable development and poverty eradication, and that corporations are held accountable for their actions around the globe

OECD Watch at a glance Advocacy towards OECD and NCPs Capacity building & awareness raising Research & analysis of complaints Work beyond the OECD Guidelines

Presentation Outline OECD Watch at a glance The facts: Analysis of the impact of 15 years of NCP cases (graphical overview) Focus on due diligence (DD) 6 DD case studies: recent ground-breaking agreements illustrating 6 DD trends Key conclusions and lessons

www.oecdwatch.org/ remedy-remains-rare

Complaints filed by NGOs, communities & individuals (256 total) 9 13 29 19 +3 Since 2012, 68 of 108 (63%) NGO cases related to DD (II,10 & IV,5)

Union complaints by year (175 total)

NGO/community cases by issue DD = 71%! DD = 98%!

Union cases by issue

NGO/community complaints by sector

Union cases by sector

NCPs handling Guidelines complaints by NGO/communities 70 60 50 40 30 20 10 0

NCPs handling Guidelines complaints by unions

Geographical location of alleged violations of NGO/community cases

Geographical location of alleged violations of union cases

Case Status (NGO cases) DD = 9% DD = 41%

Reasons for Rejection Relevant for DD

Effective? Positive outcomes of NGO NCP cases All DD! Unions 62 positive cases (35%)

Presentation Outline OECD Watch at a glance The facts: Analysis of the impact of 15 years of NCP cases (graphical overview) Focus on due diligence (DD) 6 DD case studies: recent ground-breaking agreements illustrating 6 DD trends Key conclusions and lessons

Trends in DD cases Trend 1: Own impact ActionAid vs Arla (2014, Danish NCP) Potential adverse impacts on African farmers from Arla s sales of milk powder in western Africa Arla agrees to introduce DD procedures & engage in systematic identification, prevention & mitigation of actual & potential unintended consequences on local farmers'

Agreements in DD cases Trend 2: Upstream (suppliers) Uwe K vs. Karl Rieker (2013, German NCP) Labour rights violations in garment supply chains Karl Rieker agrees to strengthen DD & take additional precautionary measures to improve fire protection and safety standards of its suppliers in Bangladesh Trend also applies to minerals & agri

Trends in DD cases Trend 3: Downstream (consultants) Fivas vs Norconsult (2014, Norway NCP) Norconsult provided technical advice to hydroelectric dams in Malaysia without conducting HR DD Norconsult commits to implementing full HR DD procedures throughout operations and respecting FPIC

Trends in DD cases Trend 4: Gov t partner ADHRB vs F1 (2014, UK NCP) Potential contribution of F1 Grand Prix to HR abuses in Bahrain & DD failure F1 publicly commits to respect HR & develop & implement due diligence policy to prevent & mitigate HR impact on host countries Additional trend: sports events (FIFA)

Trends in DD cases Trend 5: financial sector SOMO et al. vs. ABP (2012, Dutch NCP) Pension funds minority shareholdings in POSCO iron ore mine & steel plant ABP commits to exercise their leverage bringing POSCO s business practices in line with international standards Contrast with NBIM refuses to engage with NCP or conduct DD in line with Guidelines breach of GLs

Trends in DD cases Trend 6: Preemptive strike (prevent harm) WWF vs. SOCO (2013, UK NCP) Oil company exploring in World Heritage Site (Virunga) in DRC w/o DD SOCO agrees to halt operations and to never again conduct operations in WHS Note: WWF campaign crucial to success

Presentation Outline OECD Watch at a glance The facts: Analysis of the impact of 15 years of NCP cases (graphical overview) Focus on due diligence (DD) 6 DD case studies: recent ground-breaking agreements illustrating 6 DD trends 3 key conclusions & 3 key lessons

3 Key Conclusions! DD fastest growing area of OECD cases, both NGO/community and union OECD GLs used to address DD in many sectors, types of business relationships, & project phases DD cases have a higher success rate than average case, but still low (9% success vs 41% reject)

3 Key Lessons! Analysis reveals: In order to maximize impact of OECD Guidelines in achieving DD implementation: 1. NCPs must be accessible! We re all still learning, NCPs can help! 2. Clarity about expectations. NCPs must be willing to make determinations of non-compliance if mediation fails 3. Incentives & consequences: Governments must do more

Many thanks for your attention! More information: www.oecdwatch.org j.wilde@oecdwatch.org

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