Arla is the 5th largest global dairy producer and a co-operatively owned by 13,500 farmers based in seven countries; Sweden, Denmark, the UK, Germany, Belgium, Luxemburg, and the Netherlands. Arla, along with other European dairy farmers, have received EU subsidies that have enabled them to export cheap milk powder, among other products, to international markets at low prices. According to the complaint, this undermines the milk industry in the Global South and has negative consequences for the livelihoods of locals.
The complaint alleges that Arla did not have adequate risk processes (due diligence) in place to be certain that the risks of adverse impacts of its activities on local stakeholders had been minimised in line with the OECD Guidelines.
Arla and ActionAid Denmark were already engaged in dialogue on this issue when the complaint was filed, but ActionAid felt that the dialogue was progressing too slowly.
Relevant OECD Guidelines
The NCP communicated with both parties, but it was not necessary for the NCP to facilitate meetings or mediation as the parties were already engaging constructively on their own. The complaint served to speed up the pace of the dialogue between the parties, and just 4 months after the complaint was filed, the parties reached an agreement to ensure Arlas compliance with international human rights standards (including the OECD Guidelines and UN Guiding Principles) in its operations in developing countries. The agreement includes a commitment by Arla to implement a proactive human rights policy in its global operations, as well as report on the actual and potential adverse human rights impacts of the company´s activities.
Arla will also introduce due diligence procedures and engage in a more systematic identification, prevention and mitigation of actual and potential unintended consequences on local farmers’ business prospects and rights that may be impacted by Arlas sales and operations.