Opening address at The 4th Global Forum on Responsible Business Conduct by Gabriela Ramos OECD Chief of Staff, G20 Sherpa and Special Counsellor to the Secretary-General
Wednesday, 8 June 2016
Let me also join the Secretary-General in extending a warm welcome to you to the 4th Global Forum on Responsible Business Conduct and to the celebrations of the 40th anniversary of the OECD MNE Guidelines. As I mentioned yesterday in the High Level Round Table, 40 years is midlife celebration, but for many, it is where the real fun begins.
Over the past decades, the Guidelines have evolved to represent the world’s leading instrument on responsible business conduct. The scope of the Guidelines has been broadened and provisions to promote their enforcement have been strengthened. I can confidently say that they are the gold standard on this field, and that, focusing on implementation, is the way to continue strengthening them.
They are the gold standard because their comprehensive scope, dealing with human rights, environmental issues, labour and anticorruption. But they are also the gold standard due to their innovative grievance mechanism based on National Contact Points. These are the only governmental, non-judicial mechanism, providing access to remedy to anyone wishing to raise an issue related to non-observance of the Guidelines.
Stakeholder engagement is another key element that contributes to their strengths.
We know more on where they are being effective. Specific instances (the 360 cases mentioned by the Secretary-General) covered all the chapters in the Guidelines, with the majority dealing with employment, human rights and environmental issues. 25% of the cases have dealt with supply chains. Since 2011, about half of all specific instances brought to the NCP mechanisms deal with issues of non-adhering host countries.
What is more significant is the impact that these specific cases are having. Between 2011 and 2015, approximately half of all specific instances which were accepted to further examination by NCPs resulted in an agreement between the parties. And the Guidelines are better known and explained.
And we are continuing to improve the system. As Secretary-General mentioned, we were proud last year, during the Chairmanship of the G7 Presidency of Germany that the attention of leaders was brought to improve implementation, and for these countries to undertake peer reviews, and establish clear benchmarks. By 2018 all G7 countries would have taken a peer review.
This is important because NCP have very uneven track record. While some are real champions that have avoided important abuses, some others are completely lost in their role. So a raise to the top is welcome.
We also need to widen the geographical coverage and invite additional emerging economies to join, and again we are counting on the upcoming G20 Presidency, that will be again Germany, to bring this issue to the table.
Progress is being made, as 15 G20 countries have adhered to the Guidelines, but many more are party to the ILO conventions. Recent innovative legislations in G20 countries –like the Antislavery act in the UK- is changing the supply chain landscape.
The OECD Working Party on RBC also adopted in 2015 an Action Plan to strengthen NCPs which includes also peer reviews, capacity building and peer learning. Denmark and Belgium carried out their reviews and 12 more countries will be doing it in the next two years.
They are also a living instrument with continuous improvement. The 2011 revision of the Guidelines also introduced the so called “proactive agenda”, which is the basis for our sectoral work. With this, and in the context of GVC, enterprises are expected to carry out risk-based due diligence on their own operations and across business relationships, extending their scope down the supply chain. Stakeholders are deeply engaged in our work.
The Guidance is also referenced in domestic regulations on mineral supply chain due diligence in the United States, in several countries of Central Africa, and in an EU Regulation currently being prepared. Chinese industry has also recently adopted it in order to promote responsible mineral supply chains in over 6000 Chinese companies.
On-the ground implementation of this Guidance is by far most advanced in the tin, tantalum, and tungsten (3T) sector. By May 2015, the programme reported to cover the mineral output of over 80 000 miners at over 1,300 mining sites in the DRC, Rwanda and Burundi, and to have 272 participating companies in 35 countries. This is great news.
We also recently adopted guidances for responsible agricultural supply chains and for meaningful stakeholder engagement in the extractives sector at the end of 2015. Guidance on garment and footwear supply chains and good practices in the financial sector should be adopted by the end of the year.
Think about the fact that agriculture accounts for up to a third of global employment. Among child labourers aged 5-17, over half work in agriculture, and two thirds of these as unpaid family workers. With these numbers, we cannot but recognize the importance of the OECD-FAO Guidance for Responsible Agricultural Supply Chains.
Large multinationals have recognised the risk of forced labour in their supply chains. For instance, last November, Nestlé publicly announced that it had found forced labour in its supply chains in Thailand, marking an important turning point in company disclosures on non-financial risk.
We should also build the business case of RBC. Figures show that irresponsible business conduct has a huge cost: In one study, nearly 20% of companies in a sample of over 2,500 were found to be subject to sanctions related to their social or environmental performance over the course of one year, amounting to penalties upwards of 95.5 billion euro. On the flipside, responsible business conduct can offer enterprises a competitive advantage.
A broadly cross-sector study by Harvard tracking performance of companies over 18 years, found that ‘high sustainability’ companies, those with strong ESG systems and practices in place, outperformed ‘low sustainability’ companies as measured by stock performance and in real accounting terms.
In our upcoming Development Cooperation Report we conclude that RBC can help mobilise the resources that will be necessary for financing the SDGs, while improving access to markets and participation in value chains for developing country industries. It can also promote accountability and inclusiveness, particularly important for marginalised or vulnerable segments of the population.
The international economy is at a complex juncture. Our Chief Economist recently warned against the persistent “low growth trap”. Due to the increased inequalities and the major scandals derived from the dark side of globalization (like the Panama papers, or the Rana plaza), citizens have lost confidence in public institutions, in business or in international organizations. We need to turn this around. And we can do it by increasing the level of commitment and effectiveness of our standards.
We need to build on the inspiring stories of success, and to continue pushing for more ambitious implementation of the right policies. We need to make it real.
Last week, during the OECD Forum, Secretary General joined forces with Nobel laureate Kailash Satyarthi, who has fought child labour for decades.
During the bilateral discussion, Kailash said that, with the OECD support, he was confident that during his lifespan he would see the end of slavery. This is a very encouraging statement.
Well, let me turn it around. We are sure that, with your support, and commitment, the OECD Guidelines will deliver on this and on many other urgent goals. So keep up the good work, and keep counting on us to deliver. I wish you the best of Forums, and the best of celebrations of our dear middle age instrument.