An OECD Watch rapport shows that the OESO-guidelines are not an adequate instrument for curbing corporate misconduct.

Five years ago the OECD launched the revised Guidelines for Multinational Enterprises, including a complaint mechanism for affected communities and NGOs. Despite being the most widely endorsed instrument in existence, few multinationals have adapted their behaviour to the Guidelines’ principles and standards for responsible corporate behavior. “There are a number of inherent weaknesses in the Guidelines, the most notable being that companies cannot be sanctioned for irresponsible behavior because the Guidelines are voluntary” said Paul de Clerck of Friends of the Earth Europe at the launch of the report in Brussels. Governments, however, have clear implementation obligations, which includes establishing a ‘national contact point’ (NCP) to handle allegations of corporate misconduct.

OECD Watch examined 45 complaints that were filed by NGOs and affected communities over the last five years. In addition to an overview of the cases, the report ‘Five Years On’ analyses the way in which the NCPs have handled complaints. Most of the results are deeply worrying.

There is no evidence to suggest that the Guidelines have helped to reduce the number of conflicts between local communities, civil society groups and multinational companies. NGO experience with the Guidelines indicates that they are simply inadequate as a global mechanism to improve the operations of multinationals and contribute to a reduction in conflict between communities and investors in any comprehensive way. Without the threat of effective sanctions, there is little incentive for companies to ensure they are in compliance with the guidelines.

In those cases where a complaint was filed, the NCPs rarely contributed to resolving specific conflicts. Five years of experience with the Guidelines has revealed that most NCPs are failing to promote the Guidelines and impress upon companies the importance of adherence. When issues are raised with governments, most NCPs will not investigate the validity of the claims. The report’s author, Patricia Feeney of RAID-UK, explained, “Even when issues of the utmost gravity are raised, as in the case of the Democratic Republic of the Congo, NCPs have exerted themselves to block investigations and to shield companies from censure.”

OECD Watch’s five year review concludes that voluntary instruments such as the OECD Guidelines for Multinational Enterprises are insufficient and that legally binding international social and environmental standards are needed to curb corporate abuses. If the Guidelines are to be at all effective in solving specific problems raised by communities, OECD governments must do more to promote adherence to the guidelines and improve their implementation drastically.

For more information or to order copies of the report contact OECD Watch