The global system for holding corporations to account is in need of serious reform

Date of publication: 
10 February 2015

National Contact Points were supposed to be a global method of holding corporations responsible for their behaviour. But do they do the job?

A British company plans to build a huge coal mine, stating in its plans that it says will displace more than 40,000 people. It will destroy over 14,000 acres of land in Bangladesh’s most fertile agricultural region Phulbari in the north west, where most people have land-based livelihoods. Unsurprisingly, local people oppose the plans to destroy the landscape and homes. For over a decade now they have tried in their thousands to prevent the coming of the mine. Three have died when the Bangladeshi paramilitary were sent into confront protesters, and many more have been injured.

To date, these protests, supported by international condemnation from UN human rights experts and NGOs such as International Accountability Project (IAP) and Global Justice Now (GJN), have prevented the mine being built. But London-listed mining company GCM Resources continues to push for their mine.

And so, in 2012, concerned at renewed efforts by GCM to progress the project, IAP and GJN decided to make use of one of the very few mechanisms available to hold corporations to account for their activities overseas by filing a complaint against the company to the National Contact Point (NCP) under the OECD guidelines for multinational enterprises.

These guidelines were set up in 1976, although they have been revised several times since. According to the OECD, they comprise the basic components of responsible corporate conduct as agreed by member countries. Though voluntary, their endorsement by national governments is understood to create an expectation that companies follow these standards in their operations around the world. Crucially, as part of the system, every signed-up country must operate a National Contact Point (NCP), a complaint mechanism which allows aggrieved communities or organisations to raise concerns about the conduct of multinational companies operating in or from countries that are members of the OECD or that adhere to the guidelines.

The idea behind the system is a good one, although not perfect. Anyone, anywhere in the world can file a complaint against any company headquartered or operating in an OECD guidelines-adherent country if they believe that company has violated the OECD guidelines. The complaint is filed at the NCP, and if the NCP determines that the complaint merits further examination, it will initiate a process to examine the complaint further. The process that follows involves trying to get the company and the complainant together for a mediated dialogue, investigating the allegations, and publishing its findings.
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Filing a complaint with the UK’s NCP for the guidelines was a major commitment for our small organisations. As well as the work that went into compiling the 44-page complaint, with first-hand accounts from Phulbari activists based in UK and Bangladesh, we anticipated a process lasting up to a year (in the end it took two), with regular input required. But we were confident of our case. We had representatives from the community in our team and we provided a great deal of evidence to substantiate our complaint, including testimonies from the affected communities and indigenous peoples from Phulbari, who said that they “would go to war, but wouldn’t leave homes and land”.

Unfortunately, our experience suggests that the OECD guidelines and complaint procedure are far from effective in holding multinational corporations to account. The NCP found that GCM had “partly breached” their obligation to “develop and apply self-regulatory practices and management systems that foster a relationship of confidence and mutual trust”. But their findings ignored the inevitable impacts of the project should it go ahead, and stated that it could only consider actions that had already taken place.

Our concerns about the high risk of further violence were dismissed, as were our concerns that the rights of indigenous people would be affected by the mine. Concerned, we requested an internal review of how the NCP had handled our complaint. The findings of this review, which was carried out by members of the NCP steering board, backed up some of our concerns, identifying a procedural error in the investigation. But when the final statement on the case was published in November 2014 it included no changes apart from a footnote noting that the review had taken place and a denial that the NCP had made the error found in the internal review. The findings state that GCM has failed to “foster confidence and trust in the society in which it operates”, a euphemistic understatement given that three people have already died at the hands of a Bangladeshi paramilitary force while protesting against the project and that local people have spoken of their intention to lay down their lives if necessary to protect their rights, land and livelihoods. But the much greater possible human rights violations should the project proceed remain ignored.

And it seems that our experience of trying to use the OECD guidelines to hold multinational corporations to account is far from unique. In 2012 a complaint that was brought against Canadian gold mining company Centerra for building on forested land that was supposed to be legally protected was largely discounted. The Canadian NCP refused to hear a complaint about a mining project in Ecuador, despite enormous controversy around the project. The Irish Attorney General is assessing the Irish NCP’s mandate to investigate the allegations against CRH, an international building materials company, for its construction activities in the Palestine territories. Three and a half years on, there is still no decision from the NCP as to whether it will even consider the case. The South Korean NCP is also notorious for summarily rejecting cases and unabashedly siding with companies, such as in cases against Daewoo, steel giant Posco, and tear gas manufacturer Dae Kwang. And a browse through OECD Watch’s quarterly updates and case database reveal many more.

This is all the more disappointing because when the NCPs do function well, they can provide such a valuable service. In 2011, for example, the Dutch NCP facilitated an agreement between Dutch corn seed producer Nidera and Dutch and Argentine civil society organisations related to poor working conditions at corn seed operations in Argentina. That agreement that led to improvements in Nidera’s human rights and due diligence policies and concrete improvements in working conditions on the ground in Argentina.

The whole process has left us with big questions as to whether or not it’s even worth bothering with these complaints. There’s a whole series of recommendations that civil society has been making to improve the process, ranging from ensuring that the NCP team includes a human rights specialist, to stopping the trend that complainants need to satisfy an impossibly high burden of proof. In reality progress seems to be limited.

Unfortunately the OECD complaints mechanism is the only initiative of its type that is based in government rather than in the private sector.

The Dutch NGO SOMO has put out a briefing paper on the current landscape of non-judicial grievance mechanisms for allegations of corporate related human rights abuses, but concludes that most of them don’t live up to the criteria of effectiveness established by the UN guiding principles – that they should be should be legitimate, accessible, predictable, equitable, transparent, rights-compatible, a source of continuous learning, and – for operational-level mechanisms – based on engagement and dialogue. Considering the global reach and impact of multinational corporations and the constant accounts of conflict, and claims of human rights and environmental abuses caused by or related to their operations, it seems unbelievable that there is no rigorous system of international accountability.

There’s been a fresh wave of violence in Phulbari after the corporate-friendly final assessment of the UK NCP. In November GCM’s CEO paid an unexpected visit to Phulbari and local protesters attacked the company offices and blocked highways.

In practice, in a world where the government-corporate nexus seems to become ever more tight and intimate, the few public mechanisms of accountability that we have seem to be in danger of becoming little more than window dressings.

Christine Haigh is an energy justice campaigner at Global Justice Now. Follow @christineehaigh on Twitter.