Q & A Session with Angel Gurría,
Bad Neuenahr, Germany, 19 May 2017
Minister Andrea Nahles, Chair of LEMM and German Minister of Labour and Social Affairs, asked OECD Secretary-General, Mr. José Angel Gurría, the following two questions in the session on “Fostering decent work for sustainable global supply chains”:
Question 1: What is the reason for the rising expectations and what is your prediction for the coming years - when will the last multi-national enterprises have incorporated a transparent and responsible supply chain management and how can we best support multi-national entreprises in this endeavour?
Society expects companies to act responsibly, and there is one primary reason for this: global business activities can contribute to human rights violations, labour abuses and environmental degradation globally. The case of the collapse of the Rana Plaza building which housed numerous garment factories exporting to G20 countries, killing over 1000 workers is well known. But there are many other cases of damage to people and the environment linked to global supply chains.
But responsible business conduct is good for business: Research demonstrates that “high sustainability” companies with strong environmental and social governance systems, outperformed “low sustainability” companies, as measured by stock performance and in real accounting terms. Companies – which are increasingly operating across countries and geographies – benefit from common expectations and standards on how to conduct business.
But for this to work, it is essential that all of our companies play by the same rules. G20 countries can help create this level playing field by putting in place appropriate standards which companies must implement throughout their supply chains.
And this is happening: there are currently 47 countries including 17 from the G20 which adhere to the OECD MNE Guidelines and they are turning this into law. France for instance, just recently adopted a law on companies’ due diligence which mandates supply chain due diligence in accordance with the Guidelines. The law would apply to all French companies employing 5 000 employees or more domestically or 10 000 employees or more internationally. The German National Action Plan on Business and Human Rights finalized last December aims for “at least 50% of all companies based in Germany with over 500 employees to have integrated the elements of human due diligence described in Chapter III into their business processes by 2020.”
And the business sector is following through: nearly 1,700 investors from over 50 countries and representing US$62 trillion have signed on to the UN principles for responsible Investment. This is why we have developed and launched just two months ago a paper providing guidance for Institutional investors on due diligence. And we are working closely with your countries’ industries which want to advance this agenda. For instance, we are supporting the development of a Chinese Guidance – aligned with OECD sector guidance –by the China Chamber of Commerce of Metals, Minerals and Chemicals Importers & Exporters in 2016. This shows that businesses from all your countries are catching up!
But, we must continue to build the moment: we need all G20 countries to put in place strong policy framework for your companies to behave responsibly.
Question 2: Through the OECD Guidelines for Multinational Enterprises and the National Contact Points, the OECD has a lot of experience with access to remedy in case of potential violation of the rights of workers. Can you give us some examples how international non-judicial grievance mechanisms can help workers and be an opportunity for both - workers and companies - to settle disputes?
First National Contact Points are increasingly being used and being used successfully: Since 2000, over 400 cases of alleged corporate misconduct have been submitted to NCPs set up under the OECD MNE Guidelines by NGOs, workers' unions or individuals. The NCP offer mediation between the complainant and the company and in 2016, 60% of cases ended in an agreement between the parties.
Around half of the cases deal with issues that address workers’ rights: For example, a case handled by the NCP of Germany concerning a German company sourcing from a company involved in the Tazreen factory fire in Bangladesh, led to an agreement by which the company committed amongst other measures to improve the fire and building safety standards in its supplier factories.
NCPs do not only address traditional companies versus workers disputes but also employees from different organisations: For example, a recent case submitted to the Swiss NCP brought together the international trade union representing building and wood workers (BWI) and FIFA, the International Football Association. The dialogue between BWI and FIFA lead to concrete outcomes, including a commitment from FIFA to a human rights policy, a robust process for monitoring labour conditions, and the establishment of a mechanism for workers’ complaints and grievances.
Finally, the impact of NCP mediation often goes beyond settling a particular dispute. For example, a case handled by the NCP of the UK involving alleged misconduct by a company operating in the Democratic Republic of Congo, found that the company did not undertake appropriate due diligence in its supply chain and failed to take requisite steps towards the elimination of child labour and forced labour in the mines it was sourcing from. This case also helped to catalyse the development of the OECD Due Diligence Guidance for Responsible Supply Chains of Minerals from Conflict-Affected and High-Risk Areas, which today is the leading standard for responsible mineral supply chains.