10 February 2023, prepared by professor Jernej Letnar Černič
In my comments on the Consultation draft of the OECD Guidelines for Multinational Enterprises and their implementation procedures, I am concentrating on three seminal issues:
- The language of the OECD Guidelines
The drafters of the Guidelines are recommended to minimize conditional language through different chapters of the guidelines and to employ more defined wording, which would introduce clear and transparent obligations of multinational enterprises.
2. Include Hightened Human Rights Due Diligence in the text of the OECD Guidelines
Several multinational enterprises registered in the OECD Member States continue to operate in the Russian federation after the aggression on Ukraine started on 24 February 2022. The section on human rights due diligence in chapter II on General policies (para. 11-13) and Chapter IV on Human Rights (para. 12) should refer to necessity for heightened human rights due diligence of multinational corporations doing business in the conflict-affected areas. United Nations Principles on Business and Human Rights stipulated in principle 7 that »Because the risk of gross human rights abuses is heightened in conflict-affected areas, States should help ensure that business enterprises operating in those contexts are not involved with such abuses, including by: (a) Engaging at the earliest stage possible with business enterprises to help them identify, prevent and mitigate the human rights-related risks of their activities and business relationships;….«
The UNDP in June 2022 published guide on Heightened Human Rights Due Diligence for Business in Conflict-Affected Contexts, which notes that corporations »can use a number of ‘red flags’ as early signs of armed conflict or mass violence, which should prompt them to initiate heightened human rights due diligence.« (p. 20.) We have argued with Eva Gerritse that »Businesses, therefore, should more diligently and carefully respect human rights in their operations in conflict areas by employing heightened human rights due diligence. The UNGPs thus establish clear and direct expectations of conduct for home states and businesses to ensure that they comply with international human rights and humanitarian law in conflict areas.« Jernej Letnar Černič, Eva Gerritse, Opinion – Responsible Business Conduct in Times of War, E-International Relations, 22 October 2022, https://www.e-ir.info/2022/10/22/opinion-responsible-business-conduct-in-times-of-war/. Therefore, the OECD Guidelines of Multinational Enterprise must include these latest developments on need for heightened human rights diligence of multinational enterprises in its Chapter on Human Rights.
3. Improve the Implementation Mechanisms under OECD Guidelines
The Enforcement Mechanisms under the OECD Guidelines for Multinational have struggled to provide meaningful justice for rights-holder for some time. As such, the room for improvement of OECD Guidelines is the widest in the area of enforcement. Several National Contact Points (NCPs) have strengthened their proceedings’ independence, impartiality, and fairness in the last decade. However, the practice of different NCPs remains variable. As a result, rights-holders in different Members States of the OECD do not have equal access to fair, impartial, and independent proceedings before NCPs concerning business-related human rights and environmental violations. Although revisions in the Consultation Draft will partially improve the enforcement of the Guidelines, particularly regarding the role of the OECD Investment Committee, further steps are necessary. Notably, there needs to be more uniformity, impartiality, and independence in the practice of many NCPs. Politics and corporate interests have undermined several of them in the past.
Therefore, I suggested earlier »… that the OECD Investment Committee reforms its supervision system and imposes on obligations on the OECD Member States to make NCPs fully impartial, independent, and fair in order to be able to properly enforce accountability for corporate-related human rights abuses…The lack of NCPs final decisions on merits effectively calls for NCPs to be more open, fair, independent and impartial when considering alleged violations of the OECD Guidelines. Alternatively, the OECD could consider establishing an independent and impartial international supervisory mechanism to address deficiencies of the functioning of the OECD NCPs. In conclusion, the OECD and its Member States have several reasons to pay greater attention to the plight of rights-holders. Not adequately protecting their human dignity in business-related human rights abuses could in future even further undermine the credibility of OECD and its member states to address business-related human rights abuses effectively.« Jernej Letnar Černič, »The Divergent Practices of NCPs under OECD Guidelines for Multinational Enterprises: Time for a More Uniform Approach?, International Labor Rights Case Law 7 (2021) 11-16, p. 16.
The OECD Investment Committee should ensure that NCPs comply with fundamental principles of fair, independent, and impartial proceedings. Arguably, the OECD must strengthen implementation procedures under the Guidelines for the system of NCPs to regulate multinational enterprises’ activities effectively and provide efficient redress to rights-holders.
Business and Human Rights in Central and Eastern Europe Forum 