CORPORATE GOVERNANCE MNE guidelines Spotlight The supply chain: a key link for better governance

One of the OECD’s main roles is to bring stakeholders together to discuss key global challenges. Few gatherings exemplify this more than the roundtables held to discuss progress on implementation of the OECD Guidelines for Multinational Enterprises. The most recent one was held over the summer.*

lobalisation has given rise to a kind intense. Many companies have taken published by a group of leading French of economic “culture shock” and positive steps by introducing corporate retailers. In the view of Neil Kearney of Ginternational business is one of the codes, embracing multilateral principles and International Textile, Garment and Leather principal sufferers. Tens of thousands of so on, yet, according to participants at a Workers’ Federation “the details companies are trying to conduct business in recent roundtable on the OECD Guidelines make grim reading” – children under 13 a global mosaic of legal, regulatory, business for Multinational Enterprises there is much hard at work, non-compliance with and social environments. Operating in all of more to do. minimum wage laws, working weeks of “86 these environments and responding to their hours or more”, “inadequate” occupational diverse expectations of corporate behaviour Take a recent study of the results of audits health and safety conditions, “endemic” is a formidable challenge, in particular as of 300 supplier establishments operating in abuse of workers’ rights, including suppliers public (and market) pressure becomes more poorer countries that was financed and using physical force to prevent workers

10 Observer No. 234 October 2002 CORPORATE GOVERNANCE Spotlight MNE guidelines

from exercising their right to organise. and rules that matched those of many people as possible know about them. The Other documents highlighted obstacles to OECD countries, but their enforcement MNE Guidelines are now quite well known organising labour unions and the presence was lacking. International declarations on by business, unions and civil society in of children in the supply chains of major labour and human rights, and standards some countries and are featured on many agrifood companies. These are probably and principles such as those from the websites. But as reports from the NCPs exceptional cases and most good OECD help to fill that vacuum, as do show, they are hardly known at all in other corporations would not tolerate them, but corporate codes of conduct and other countries. where they exist, all would agree they must private standards issued by labour unions be taken seriously. and NGOs. Yet, if the MNE Guidelines succeed in winning the confidence of business, trade The OECD roundtable’s theme was supply Business representatives stressed their view unions and NGOs, they could become one chain management. It showed the that corporate responsibility in the supply of the most important global initiatives for advantages and difficulties of chain could not extend to “taking on” other global corporate responsibility there is, multistakeholder cooperation. For while companies’ problems – in particular, their bolstering such instruments as the UN all participants, whether government, legal or regulatory responsibilities. Global Compact. The OECD, as home to business, labour or civil society Companies exist as discrete units for most of the world’s multinationals, can and must win that confidence. Companies exist as discrete units for reasons of economic efficiency The NCPs have already begun to bring and legal accountability, business representatives said. It is not material on specific cases for investigation, economically or logistically feasible for all enterprises to monitor of which there are now over 20. These and audit all their suppliers. This position sparked a reaction involve consideration by adhering governments of issues that go to the core of the debate on globalisation, whether it be behaviour of French companies (there were groups, clearly cared about the problem, reasons of economic efficiency and legal two) in Burma, a Canadian company’s they had different views on how accountability, they said. In any case, it is “resettlement” problems in the Zambian best to tackle it. Business generally argues not economically or logistically feasible for copper belt, occupational health and safety that the key lies in better supply all enterprises to monitor and audit all and accident indemnities for Indonesian chain management to alleviate poverty their suppliers. and Philippine sailors working for OECD and improve respect of human rights, based maritime transport companies, a others see tighter regulation and This position sparked a reaction. Carol Korean-run production site in Guatemala or surveillance as the only way to achieve Pier of Human Rights Watch argued that even a UK retailer’s behaviour elsewhere in progress. Deborah White of Proctor and when companies fail to use their influence the OECD. Gamble said the business community over their suppliers’ regarding respect of was committed to finding answers, and labour rights, these companies are complicit No one has a monopoly on the answers, while André Driessen from the in those human rights violations. but it is only by knowing and Confederation of Netherlands Industries Ineke Zeldenrust of the Clean Clothes understanding the problems face on, and Employers underscored the Campaign was pragmatic in stressing and working together to deal with them business sector’s willingness to responsible supply chain management that corporate responsibility will improve. co-operate with unions, NGOs and and the need to “break it down … and After all, whether the goal be sustainable governments to search for solutions, look at how it (supply chain management) development, poverty reduction, Stephen Canner of the US Council for can be operationalised.” equitable rights or just plain decent ethics, International Business noted that better business behaviour is in everyone’s governments have to act too as “there are Monitoring the guidelines interest. limits to what companies can and cannot do”. Others countered that while Roundtables like this one on MNE supply The OECD Guidelines for Multinational governments clearly had an important job chains are held annually at the OECD in Enterprises can be consulted at to do, lack of government responsibility conjunction with meetings of the National www.oecd.org/daf/investment. Detailed “is not an excuse for lack of corporate Contact Points (NCPs). These have been set accounts of the proceedings of this responsibility”. up in 37 countries to monitor the roundtable are available on request at implementation and efficacy of the MNE [email protected] or at Can domestic law help? Yes, but it is not Guidelines and to promote awareness of [email protected]. enough. Some countries like China, as them. Promoting the Guidelines is Serena Lillywhite from Brotherhood of Saint important, since standards and principles, * Views expressed by participants at the roundtable Laurence, an NGO that inherited a small however eloquent or tough to negotiate they are not necessarily shared by the OECD or its business, noted, set certain labour standards may be, are quite powerless unless as many member governments.

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