Article - International Cooperation

National Contact Point for the OECD Guidelines for Multinational Enterprises (NCPs)

Introduction

Menschen halten Weltkugel, symbolisiert wirtschaftliche Zusammenarbeit und Entwicklung; Quelle: Ryan McVay - GettyImages

© Ryan McVay - GettyImages

Market liberalisation, lower transaction costs and increasingly powerful communications networks have made it much easier for companies to invest in other countries. To this end, and in response to greater public interest in the matter over the past few decades, the OECD has systematically extended its work on Corporate Social Responsibility or responsible business conduct. In 1976, the OECD Member States adopted the OECD Guidelines for Multinational Enterprises.

News

4 July 2018 – Publication of general OECD guidance for responsible business conduct: In order to address due diligence issues not only for each individual sector but also in a generalised manner for all companies, the OECD has now published its (General) Due Diligence Guidance for Responsible Business Conduct. You can find the document here (PDF, 2.4MB).

2 July 2018 – NCP publishes new Final statement: You can find the Final statement in the specific instance procedure ECCHR et. al. / TÜV Rheinland AG et al. here (PDF, 320KB).

18 June 2018 - Report by the Federal Government to the German Bundestag concerning the work undertaken by the National Contact Point in 2017: The German National Contact Point (NCP) reports regularly to the German Bundestag. In this way, it meets the OECD’s expectation that its work will be transparent. The NCP has transmitted its report for 2017 to the Bundestag. Amongst other things, it covers the restructuring of the NCP in the Economic Affairs Ministry, the OECD’s peer review of its work, and the NCP’s activities in the field of public relations and the complaints handled by it. You can read the report (in German) here (PDF, 907KB).

The OECD Guidelines form part of the OECD Declaration on International Investment and Multinational Enterprises and are based on the UN Human Rights Charter, the ILO’s core labour standards (in German) and the Rio Declaration on Environment and Development (PDF: 15 KB, in German). They set out standards for the conduct of companies engaging in cross-border trade and investment. In this way, the Guidelines want to encourage these companies to contribute to sustainable development, especially in developing countries. Every company registered or based in a participating country is asked to act in accordance with the OECD Guidelines and thereby help promote the standards set out therein. The Guidelines apply in addition to domestic law. Whilst the Guidelines are not legally binding, the Federal Government still expects companies registered or based in Germany to comply with them whenever they engage in activities abroad.

The following organisations accredited with the OECD are involved in the development and implementation of the OECD Guidelines: BIAC for industry, TUAC for employees, and OECD Watch, an NGO. Since their adoption, a number of countries which are not OECD members have signed up to the guidelines (Argentina, Brazil, Colombia, Costa Rica, Egypt, Jordan, Kazakhstan, Lithuania, Morocco, Peru, Romania, Tunisia and Ukraine).

Content and nature of the Guidelines

The OECD Guidelines for Multinational Enterprises are an important and comprehensive international instrument for the promotion of responsible corporate governance. They are designed to inform and encourage companies as to how they can promote sustainable economic development in the following fields:

  • Information policy
    Multinational companies are asked to act in a transparent way and to build trust by disclosing information not only about their bottom line and financial performance, but also about the social and environmental impact of their activities and any other foreseeable risks well in advance.
  • Human rights
    The 2011 revision included a separate chapter on human rights in the OECD Guidelines. It calls on multinational companies – irrespective of their size, sector, operational context and structure – to respect internationally recognised human rights as laid down in the Universal Declaration of Human Rights and the instruments specifying these. The new chapter is in compliance with the United Nations Guiding Principles on Business and Human Rights, which were also published in 2011.
  • Employment policy
    This chapter covers the internationally recognised core labour standards of the International Labour Organisation (ILO), including freedom of association and free collective bargaining, the abolition of all forms of forced and child labour, and the elimination of discrimination in working life. Companies and employees’ organisations should work constructively together and promote the conclusion of effective agreements on pay and conditions. Potential consequences resulting from changes in commercial activity should be discussed in advance; where possible, local workers should be employed and their skills enhanced.
  • Environmental protection
    Companies are to introduce an efficient internal environmental management system and transparent environmental reporting, to orient themselves to the precautionary principle, and to have effective contingency plans ready should damage to the environment occur. They should be constantly endeavouring to improve their environmental performance.
  • Fight against corruption
    In order to fight corruption, companies should not offer, promise, grant or demand bribes directly or indirectly, and should reject demands for bribes. Also, they should make activities to combat corruption transparent (e.g. management control systems).
  • Consumer interests
    In order to take account of consumer interests, companies are called on to apply fair business, marketing and advertising practices and to guarantee the safety and quality of their goods and services. This includes aspects like adequate product information and the protection of personal data.
  • Science and technology
    Companies are called on to apply procedures which – whilst giving appropriate consideration to the protection of intellectual property rights – permit the transfer and rapid dissemination of technologies and expertise.
  • Competition
    In order to protect competition, companies are expected to observe the rules of fair competition and not to form anti-competitive cartels. They are expected to comply with the rules on competition in the respective countries.
  • Taxation
    Finally, in the field of taxation, companies should make their contribution to the public finances of the host countries, should comply with the tax rules and regulations of the countries in which they operate, and should co-operate with the tax authorities.

Multinational enterprises should undertake risk-based due diligence and maintain appropriate internal procedures to prevent their own activities causing or contributing to adverse impacts on matters covered by the Guidelines and address such impacts when they occur. Further to their own activities, they should also seek to prevent or mitigate an adverse impact where they have not contributed to that impact, when the impact is nevertheless directly linked to their operations, products or services by a business relationship. In this way, their duty of care extends to include a multinational enterprise’s supply chain.

National Contact Point for the OECD Guidelines for Multinational Enterprises

Every OECD member country and every non-OECD country that has committed itself to the OECD Guidelines (PDF: 624 KB, in German) is required to set up a National Contact Point (NCP).

The tasks of the NCP are:

  • to raise awareness for the Guidelines among employers, employees and civil society, and to promote their application;
  • to act as neutral mediators to settle disputes between the different parties in the case of complaints and indications regarding potential breaches of the Guidelines by German companies;
  • to work together with other NCPs and the OECD in further developing the Guidelines, and, if necessary, to respond to the procedures which fall with in the responsibility of other NCPs;
  • to answer general inquiries and specific questions arising from the application of the Guidelines.

The German NCP is based at the Federal Ministry for Economic Affairs and Energy (BMWi). In accordance with the affirmations in the 2015 G7 Schloss Elmau Summit Declaration and the National Action Plan for Business and Human Rights (NAP, 2016), the German NCP 2016 was reorganised and assigned directly to the Director-General for External Economic Policy at the Economic Affairs Ministry. It was also equipped with additional staff and given its own budget. In their Hamburg Summit Declaration of 2017, the G20 Heads of State and Government reaffirmed their support for out-of-court complaints mechanisms such as the NCP.

Close collaboration with ministries, social partners and civil society

The federal ministries whose remit touches upon the Guidelines have formed a group (Ressortkreis OECD-Leitsätze) where they regularly discuss these matters. In this body, all the decisions and measures of the NCP, current issues relating to the OECD Guidelines, and their further dissemination and the working methods of the NCP are closely coordinated and agreed by way of consensus. Chaired by the lead ministry, the Federal Ministry for Economic Affairs and Energy, the members of the group at present are the Federal Ministry of Finance, the Federal Foreign Office, the Federal Ministry of Justice and Consumer Protection, the Federal Ministry of Labour and Social Affairs, the Federal Ministry of Food and Agriculture, the Federal Ministry for the Environment, Nature Conservation and Nuclear Safety, and the Federal Ministry for Economic Co-operation and Development. If necessary, additional ministries may be called upon to provide specific expertise.

The NCP and the ministries are furnished with advice by the OECD Guidelines Working Group. This group holds regular meetings with representatives of trade unions, industry associations and NGOs for discussions of fundamental issues relating to the OECD Guidelines and how to raise awareness of these and to promote compliance.

The current addresses and contact details of the NCPs can be found here.

The Annual Reports by the NCPs can be found here (in German). Please click here (in German) to read the reports by the Federal Government.

In the National Action Plan for Business and Human Rights (NAP), which was adopted by the federal cabinet in 2016, the Federal Government expects all companies based in Germany to introduce the human rights due diligence process described in the NAP in a manner which is appropriate for their size, sector and position in the supply and value chain. This is particularly the case when they operate in countries in which the principles of the rule of law are not, or are inadequately, implemented. In this way, the NAP implements the afore-mentioned UN Guiding Principles in Germany.

Since the 2011 revision of the OECD Guidelines integrated the UN Guiding Principles, there has been a close relationship between the two sets of rules. The NAP, which implements the UN Guiding Principles, also makes several references to the NCP and the OECD Guidelines. It describes the tasks of and approach to be taken by the NCP in its chapter “Access to remedies and redress” (pp. 24 ff., especially the paragraph about the NCP on p 26). Also, it lends a fresh significance to the NCP in the section on export credits, investment guarantees and other instruments to promote foreign trade and investment (pp. 17 ff.).

The interplay between the NAP, the OECD Guidelines and the role of the NCP can be summarised as follows:

  • Since the inclusion of the chapter on human rights in the OECD Guidelines, human rights have played a growing role in the way the NCP handles its complaints procedures and its public relations. The NAP confirms and formalises this interrelationship.
  • The NAP strengthens the interrelationship between the OECD Guidelines and the UN Guiding Principles which has been established by the inclusion of the chapter on human rights by stating for Germany that “The complaints mechanism pursuant to the OECD Guidelines (...) also serves to implement the UN Guiding Principles (...)”. No additional complaints mechanism is established; rather, it links up to the existing instruments of the OECD Guidelines. This does not alter the NCP’s mandate deriving from the OECD Guidelines. The OECD Guidelines remain the reference point for the NCP’s work. In particular, the NCP is not a mechanism to implement the NAP.
  • The NCP is being enhanced in organisational and staffing terms so that it can fulfil its growing responsibilities relating to the dissemination of the OECD Guidelines and to the human rights complaints mechanism.

Regarding the role of the NCP in the field of promotion of foreign trade and investment (p 18 NAP):

  • The NAP states that the NCP is the central complaints mechanism for foreign trade and investment promotion projects. It formulates the objective that companies using specific instruments to promote foreign trade and investment (export credits, investment guarantees, untied financial loans) must meet their due diligence obligations. This particularly includes participation in complaints procedures run by the NCP.
  • Correspondingly, the NAP assigns a fresh significance to the NCP and its complaints mechanism in terms of projects to promote foreign trade and investment: a company’s constructive participation in complaints procedures run by the NCP will be taken into account in future when the instruments to promote foreign trade and investment are deployed. The Federal Government reserves the right to exclude specific companies which do not address complaints from the instruments to promote foreign trade and investment.
  • In order to implement these provisions, the NCP has introduced a regular, intensified exchange of information with the relevant sections in the Economic Affairs Ministry and the agents entrusted with deploying the instruments to promote foreign trade and investment.

Every individual or organisation can submit a complaint against an alleged violation of the OECD Guidelines by a company to the relevant NCP. The NCP of the country in which the alleged violation took place is responsible for handling the complaint. If there is no NCP in this country, complaints should be submitted to the NCP in the country in which the company is headquartered.

Once a case has been received for consideration, a decision is taken following a careful evaluation drawing on detailed comments from the parties to the procedure as to whether the case justifies more in-depth examination. This is done in close cooperation between the NCP and the relevant ministries and the Interministerial Steering Group for the OECD Guidelines. For the case to be accepted for consideration, both parties must be capable of being a party to the proceedings, the NCP must be geographically responsible, and the complaint must fall within the scope of application of the Guidelines. If a case is inadmissible, both parties are informed of the reasons, and a summary of the grounds for the decision is published.

If the case is admissible, a mediation procedure takes place with a view to a constructive and joint solution. In this phase, the NCP provides a neutral discussion forum; with the aid of confidential separate and joint hearings and consultations, the aim is to work with the parties to find a solution. The procedure is based on comments from the complainant and the respondent, and if necessary on information from relevant agencies, experts, business representatives, NGOs and other NCPs. Furthermore, the Investment Committee can be asked to resolve questions of interpretation.

If an agreement is reached, the NCP publishes a final report outlining the course and resolution of the procedure. Even if no agreement can be reached via the mediation, the NCP publishes a final statement outlining the procedure and assessing the alleged violation of the Guidelines. Since the Guidelines are of a voluntary nature, this is not a judicial procedure; it is not possible to enforce compliance with the Guidelines or with the components of the final report in court.

The duration of the procedure depends on the special features of the case and is co-determined by a large number of players and factors beyond the NCP's sphere of influence. However, the NCP endeavours to undertake the initial assessment of the admissibility of the complaint and the applicability of the Guidelines within three months. Within the next six months, there should be clarity about the prospects for success of any mediation, and hopefully an agreement. Finally, the aim is for the NCP to publish a final statement within three months. The aim is to conclude the entire process within about a year. However, the special features of a case, and factors beyond the NCP's control, can mean that some cases last longer.

Contact in the Economic Affairs Ministry

Complaints must be submitted by email to the Federal Ministry for Economic Affairs and Energy, National Contact Point for the OECD Guidelines for Multinational Enterprises, at buero-nks@bmwi.bund.de, and if possible be submitted in parallel by post to the

Federal Ministry for Economic Affairs and Energy
National contact point in Germany for the OECD guidelines (NCP)
Scharnhorststr. 34-37
10115 Berlin

Tel.: +49 30 18 615 - 7651
E-Mail: buero-nks@bmwi.bund.de

Further information on the nature and course of this procedure can be found in the handbook on the complaints procedure (PDF: 105 KB, in German).

The wording of the principles governing the procedure in the OECD Guidelines can be found here (PDF: 81 KB).

  • General information (OECD Due Diligence Guidance for Responsible Business Conduct)

In cooperation with representatives from the employers' side (BIAC – Business and Industry Advisory Committee), from the unions (TUAC – Trade Union Advisory Committee) and from NGOs (OECD Watch), the OECD has produced a comprehensive document (PDF, 2.4MB) supplementing the existing sector-specific guidances. This is intended to help all those companies not already covered by the more specific guidances. The document addresses general issues of responsible business conduct.

  • Supply chains of minerals from conflict-affected and high-risk areas

The ‘OECD Due Diligence Guidance for Responsible Supply Chains of Minerals from Conflict-Affected and High-Risk Areas’ (PDF: 3.5 MB) was drawn up in a two-year process involving governments, the business community and civil society, including participation from the eleven countries in the International Conference on the Great Lakes Region and from international organisations.It contains detailed recommendations for companies, the intention being to prevent the extraction and trading of minerals from being used to foster conflicts and human rights violations in the relevant areas. The guidance is addressed to all companies involved in extracting raw materials in conflict-affected and high-risk areas.

  • Agricultural supply chains

The Organisation for Economic Co-operation and Development (OECD) and the Food and Agriculture Organization of the United Nations (FAO) presented the Guidance for Responsible Agricultural Supply Chains on 11 March 2016. The OECD-FAO Guidance for Responsible Agricultural Supply Chains (PDF: 4.4 MB) was elaborated by the OECD and the FAO in the context of a multi-stakeholder procedure together with government representatives, the social partners and non-governmental organisations. The work started in October 2013. The German government supported the work to draw up the Guidance. The recommendations contained in the Guidance aim to help companies in supply chains for agricultural products meet their corporate social responsibility, comply with existing standards in terms of human rights, workers’ rights, health, the right to food, land rights, the environment and the sustainable use of natural resources, good corporate governance, animal welfare, and technology and innovation, and prevent or reduce the negative consequences of their business activities.

  • Stakeholder engagement in the extractive sector (mining, oil and gas industries)

The OECD Due Diligence Guidance for Meaningful Engagement in the Extractive Sector was elaborated together with government representatives, social partners and non-governmental organisations in the context of consultations that took more than two years to complete. It addresses the dialogue with and the involvement of interest groups and parties concerned in the extractive sector (exploration and exploitation of oil, gas and mineral resources). It aims to prevent and reduce detrimental effects of business activities in these sectors, particularly by including stakeholders in the project planning and in regular operations, and by developing a strategy for the involvement of stakeholders.

  • Supply chains in the textile sector

The OECD Due Diligence Guidance for Responsible Supply Chains in the Garment and Footwear Sector (PDF: 2 MB) was jointly drawn up by governments, companies, civil society and international organisations in a two-year process chaired by Germany. It provides companies with recommendations on how they can implement their due diligence obligations specifically in the garment and footwear sector. It offers companies detailed support, e.g. by highlighting specific risks for the sector like child labour, forced labour, dangers relating to health and safety at work, or hazardous chemicals. The German government’s work on drafting the Guidance should also be seen in the context of its commitment to the Partnership for Sustainable Textiles.

  • Supply chains in the financial sector

On 28 March 2017, the OECD adopted guidance to promote responsible business conduct for institutional investors. "The recommendations Responsible Business Conduct for Institutional Investors" (2 MB) were drawn up in cooperation with a group of more than 50 stakeholders. The document offers institutional investors help with implementing the OECD Guidelines for Multinational Enterprises in their specific sector and thus prevents investments from having detrimental effects, for example on human and workers’ rights, the environment, or corruption. The Guidance addresses individual stages of a company’s due diligence process and cites specific measures to prevent and alleviate negative effects of business activities. It thus makes an important contribution towards fostering responsible business conduct in the financial sector, something which is indispensable for the creating of a sustainable global economy.”

Cases accepted for consideration

Cases not accepted for consideration

Further information