Handling of specific instances

The OECD National Contact Point system gives individuals, local communities and organisations a grievance mechanism when they believe that multinational enterprises have had a negative impact on people, society or the environment. This makes the OECD Guidelines for Multinational Enterprises unique. No other international instruments have a corresponding grievance mechanism.

Norway’s NCP handles complaints against Norwegian multinational enterprises concerning allegations of non-compliance with the OECD Guidelines.

Groundbreaking climate change complaint

The first ever complaint relating to climate change handled by a National Contact Point gave unprecedented results: Commercial banks such as ING must put effort into defining concrete targets and managing their lending portfolios in line with the Paris Agreement.

Text: Marianne Alfsen, Felix Media.

In November 2017, the Dutch National Contact Point (NCP) accepted a complaint lodged by Greenpeace Netherlands, Oxfam Novib, BankTrack and Milieudefensie. The four NGOs claimed that continued investments in fossil fuels by ING were in violation of the OECD Guidelines.

For an international bank with 57,000 employees in 40 countries, priding itself on taking the lead on climate change, the complaint came as an unpleasant surprise.

‘Our initial reaction was that the complaint was not fair,’ recalls Arnaud Cohen Stuart, Head of Business Ethics at ING.

However, as the process began, a remarkable partnership formed and the final outcome was a leap forward for the Paris Agreement from 2015.

Arnaud Cohen Stuart, Head of Business Ethics at ING.

The essence of the case

The NGOs claimed that ING ‘was falling seriously short‘ in working towards the Paris Agreement, where states agreed to keep global warming below 2 degrees Celsius, with an ambition to keep it below 1.5 degrees.

The NGOs wanted ING to define a methodology to measure indirect emissions, publish its carbon footprint and set targets for reductions in line with the 1.5 degree goal – in other words, to steer its lending portfolio to align with the Paris Agreement’s most ambitious goal.

‘But that was impossible, as there was no methodology nor data to measure indirect emissions from our lending portfolio. No one could do it,’ says Cohen Stuart

No more coal

The issue had already been on ING’s radar for some time. Since 2015, ING has been working with outside parties to develop a methodology to measure and manage the impact of its lending portfolio. In the run-up to the United Nations Climate Change Conference in 2015 (COP21), in order to convey its commitment to being part of the solution in Paris, ING announced it would no longer take on new thermal coal ventures. Two years later, ING upped the ante, actively phasing out thermal coal from their portfolio.

‘The financial industry has no formal role in the Paris Agreement, as it only targets governments. However, as part of the value chain we do have a role to play,’ underlines Cohen Stuart.

A positive process

‘The questions asked by the NGOs were fair to discuss. And indeed we had been discussing with the NGOs the importance of measuring the climate impact of our lending portfolio and our efforts to find a way to do that accurately. We were therefore surprised that the complaint was notified to the NCP,’ says Pim Brouwer, Legal Counsel at ING.

When the NCP offered to facilitate a dialogue, it was never an option to decline to participate in the process.

‘As a bank, we are committed to the OECD Guidelines, and we respect the institution of National Contact Points,’ Cohen Stuart emphasises.

The initial response was soon replaced by a more constructive approach:

‘Emotions do not fuel good discussions, so we decided to consider this an opportunity,’ adds Brouwer.

The ING representatives felt they were given room to make their case, explain the realities of the situation and document their commitment to contribute to the Paris Agreement goals. A commitment that was recognised in the final statement by the NCP.

‘We were allowed to bring in external experts that we could sharpen our thinking with,’ says Brouwer.

According to Brouwer, the attitude at the table quickly turned from adversarial into one that enabled all parties to focus on a common interest in finding solutions.

A new scenario

‘It is never a bad thing to spend time together and talk. We developed a mutual understanding of what was feasible or not, and better insight into how the NGOs think,’ Cohen Stuart says.

Parallel to the NCP process, ING continued its hunt for a methodology. Progress was made. However, every methodology needs data. Since the International Energy Agency (IEA) only publishes scenarios based on the well below 2 degrees goal, there is no data for the 1.5 degrees goal.

‘So, we asked ourselves: Why not lobby jointly,’ says Cohen Stuart.

‘It is never a bad thing to spend time together and talk.‘
Arnaud Cohen Stuart

And that was one of the unprecedented outcomes of the process; the NGOs and ING jointly lobbied the Dutch government to ask the IEA to develop the necessary scenarios.

In the spring of 2021, the IEA is expected to publish a 1.5 degree scenario.

‘Who knows if indeed our joint effort with the NGOs did trigger the latest developments,’ Cohen Stuart says, adding that their request was part of a chorus pushing the same agenda.

The final NCP statement was published in April 2019. Since then, other banks have joined the open source methodology called PACTA, developed by ING and 2˚Investing Initiative (2dii).

‘By making the methodology open source, we hope to help and inspire other banks to use PACTA and contribute further to its development,’ according to Cohen Stuart and Brouwer.

Ten groundbreaking specific instances

In 2020, the NCP published a compendium containing ten groundbreaking international specificinstances. These illustrate the possibilities of the unique grievance mechanism.

Downoad compendium

The collection was launched on 14 December 2020 to mark the 20th anniversary of the OECD National Contact Points’ system. The compendium contains specific instances handled by different NCPs.
‘All of the cases selected have led to some form of remedy or compensation for the complainant, or the NCP has made recommendations to the companies on responsible business conduct in line with the Guidelines,’ explains Cathrine Dehli, member of the NCP.
One example is the specific instance on the rights of former employees in the Congolese Heineken company Bralima. The Dutch NCP contributed to negotiating an agreement that gave former employees compensation in 2017. In the specific instance concerning working conditions and trade union rights at facilities related to the FIFA World Cup in Qatar in 2022, the Swiss NCP brought FIFA to the mediation table. The parties entered into an agreement that requires FIFA to respect human rights and establish a complaints mechanism with possibilities for workers to apply for compensatory damages.

‘We have seen that the complaints increasingly concern investors, companies, subsidiaries or suppliers and other business relationships across several countries. This means that they also involve more than one NCP,’ says Dehli.

The Guidelines recommend that the NCPs collaborate on such complaints. An example is a specific instance from 2012 concerning the South Korean company Posco in India and two investors. Part of the complaint was related to investments made by Norges Bank Investment Management (NBIM), which manages the Government Pension Fund Global.

The final statement issued by Norway’s NCP concluded that the OECD Guidelines for Multinational Enterprises also apply to the financial sector and minority shareholders. This triggered a process in the OECD, the outcome of which was the guidance document Responsible Business Conduct for Institutional Investors, published in 2017.

‘It is no secret that there is great variation in the way the different NCPs handle specific instances. The cases selected do not therefore give a representative impression of how the grievance mechanism has actually worked, but instead illustrate the possibilities that lie in this unique system,’ says Dehli.

Results

Outcome of complaints handled by National Contact Points (2011–2019)

Specific instances

Specific instances handled by a National Contact Point since 2011 encompass the following topics:

http://mneguidelines.oecd.org/Flyer-OECDNational-Contact-Points.pdf

Complainants

Most complaints are submitted by trade
unions and organisations (2011–2019):

Complaints from a to z

The OECD gives individuals, local communities and organisations a place to turn to when they are concerned about how multinational enterprises are affecting people, society and the environment. In 2020, the NCP handled five specific instances.

Non-judicial system

The grievance mechanism is non-judicial, but the NCP relies on key legal concepts such as the adversarial principle and documentation requirements when handling specific instances.

1. Assessment

When a complaint is filed, the NCP first carries out a procedural assessment: Does the complaint concern matters related to the OECD Guidelines? Does the complainant have an interest in the matter or represent the impacted parties? Will handling of the complaint contribute to the purpose of the Guidelines?

New, unpublished specific instance

In May 2020, Norway’s NCP was involved in a new complaint received by another NCP. The complaint involves NCPs and companies in three countries, and targets both a company and its investors.

Norway’s NCP has discussed the best way of cooperating on handling the specific instance with the other NCPs involved. The outcome was that part of the case will be transferred to Norway’s NCP.

2. Guidance

The NCP can provide guidance on how the complaint should be worded and structured and can ask the complainant for more documentation and specification. This includes documenting claims and relating them to the Guidelines.

3. Response

The company that the complaint concerns is then given an opportunity to respond to the complaint. The response is normally shared with the complainant and published when the complaint is handled.

4. Decision

When the statement from the company the complaint concerns has been received, the NCP decides whether the formal criteria are met and accept the specific instance for case handling.

5. Publication

Only now that the specific instance has been accepted for handling will it be made public. At this point, the NCP has not yet considered the content of the specific instance.

6. Dialogue

One of the first things the NCP does is to offer its ‘good offices‘, and facilitate dialogue. The objective is that the parties, through dialogue and mediation offered by the NCP, are given the tools they need to resolve the conflict themselves. This process also creates a platform for resolving future challenges.

The Committee Seeking Justice for Alethankyaw (CSJA) vs Telenor

In 2019, CSJA submitted a complaint concerning Telenor and its subsidiary Telenor Myanmar. The committee claimed that the military had used an inactive telecommunications tower owned and operated by Telenor Myanmar as a lookout post to shoot unarmed civilians from the village Alethankyaw in the state of Rakhine in 2017.

CSJA claims that the company failed to carry out the appropriate level of due diligence to prevent this, and that Telenor has not handled the incident in accordance with the OECD Guidelines. The specific instance also concerns other matters related to land acquisition and a network closure in Myanmar.

The NCP decided to accept the complaint for handling on 28 October 2020. The complainant does not wish to participate in a mediation process and the NCP has offered other types of assistance to both parties, including a third-party investigation of the matter and/or to develop a remit for an investigation report in dialogue with the parties.

The coronavirus situation has prevented travel and meetings in person. The NCP has strived to use digital platforms to achieve the best possible dialogue with the parties under the circumstances.

7. Mediation

The NCP offers free mediation services where necessary.

Society for Threatened Peoples Switzerland vs the Swiss BKW Group/Fosen Vind

Norway’s NCP has a supporting role in a specific instance being handled by Switzerland’s NCP that concerns Norwegian interests.

The organisation the Society for Threatened Peoples Switzerland has submitted a complaint concerning the Swiss BKW Group for its investment in the consortium Nordic Wind Power. The consortium has ownership interests in Fosen Vind, which has established a wind farm in areas grazed by reindeer. This has been met with resistance from Sami reindeer herders.

Switzerland’s NCP accepted the case on 12 May 2020. The parties are in dialogue and have started mediation.

The case concerns, among other things, stipulating the amount of compensation, and raises matters of principles about the state’s international law commitments relating to indigenous people and the rights of the Sami people.

Norway’s NCP is contributing by providing information about the situation in Norway and the ongoing legal proceedings. The claim for compensation concerning Fosen Vind and the Sami reindeer herders will be considered by the Supreme Court of Norway in 2021. Both parties have appealed the Court of Appeal’s decision to the Supreme Court. The state has become involved as a third-party intervener to assist Fosen Vind.

KTNC Watch and Workers Support Group vs Total E&P Norge, Total, Equinor, TechnipFMC and Samsung Heavy Industries

The complaint was received in 2019 and involves businesses and NCPs in Norway, France, the UK and South Korea.

The complaint was submitted by the two South Korean organisations KTNC Watch and Workers Support Group. The complainants claim that Total E&P Norge, Total, Equinor, TechnipFMC and Samsung Heavy Industries have acted in breach of the OECD Guidelines in connection with a serious incident during the construction of an oil platform for the Martin Linge field on the Norwegian continental shelf.

Norway’s NCP is in charge of handling the European part of the complaint on behalf of the Norwegian, French and British NCPs. South Korea’s NCP wishes to handle the parts of the complaint that concern the Korean parties itself.

The case is complex in terms of content, the number of parties involved and the involvement of four NCPs.

Norway’s NCP announced its decision to handle the specific instance on 13 May 2020. The status at the end of 2020 was that the NCP has offered dialogue and mediation, and that the parties have agreed on a mediator.

The coronavirus situation has prevented travel and meetings in person. The NCP has strived to use digital platforms to achieve the best possible dialogue with the parties under the circumstances.

8. Joint statement

When the parties reach agreement, the result will be enshrined in a joint statement.

9. Final statement

If the parties fail to reach agreement, or one or more of the parties is not willing to engage in mediation, the NCP issues a final statement containing an assessment of whether the Guidelines have been breached and make recommendations for the road ahead. This constitutes a deterrent factor: The public statement is the NCP’s possibility to impose sanctions.

Industri Energi vs DNO

In January 2019, the NCP started its handling of the trade union Industri Energi’s complaint against the oil company DNO ASA. The complainant claims that DNO has not complied with Yemeni law concerning pay and working conditions for former employees in Yemen, in violation of the recommendations of the OECD Guidelines.

Due to the challenging situation in Yemen, a country ravaged by civil war, as well as DNO’s unwillingness to participate in elucidating the case, the NCP has not succeeded in clarifying whether DNO has acted in breach of national labour law and thereby also the OECD Guidelines.

In its final statement of 10 February 2020, the NCP recommended that DNO in future should:

respect the grievance mechanism and cooperate with the NCP in good faith
map what constitutes comparable pay conditions in Yemen, and apply them
follow up its promise to enter into agreements on pay and back payment in line with Yemeni law.