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Toward parent company and home country responsibility in OECD Guidelines cases

Joseph Wilde-Ramsing Sep 25, 2009
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In his April 2009 report to the UN Human Rights Council, Professor John G. Ruggie, Special Representative of the UN Secretary-General on business & human rights, highlighted the “increase in civil cases brought against parent companies for their acts and omissions in relation to harm involving their foreign subsidiaries”. The acknowledgement that parent companies must take responsibility for the actions and activities of their subsidiaries around the world is also beginning to play out in the arena of the OECD Guidelines for Multinational Enterprises and the Specific Instance procedure.

OECD Watch, along with many other NGOs and trade unions, has long called for greater recognition of parent company responsibility for the actions of a foreign subsidiary accused of violating the OECD Guidelines, as well as the need for involvement of home country NCPs in specific instances involving both a parent company and a subsidiary. Since corporate policies and strategies are generally set at the headquarters level and passed down for subsidiaries to follow, specific instances involving a parent and a subsidiary in two different OECD or adhering countries require close cooperation between host and home country NCPs.

Traditional practice, however, has been for specific instances to be handled by the NCP of the country in which the alleged violation of the Guidelines took place (if an NCP exists in that country). This practice has the benefit of encouraging a local resolution among local actors directly responsible for and affected by a violation. However, it also often allows parent companies and home country NCPs to shirk their responsibility by transferring the case to the local NCP and subsequently wiping their hands of it as local actors with often more limited resources battle it out in a distant country.

NGOs have recently sought to highlight the issue of parent company responsibility by simultaneously filing cases at both the host and home country NCPs and calling on both NCPs to collaborate and contribute equally to resolving the case. For example, in 2007, FOCO and Friends of the Earth Argentina filed a case against Shell and its Argentine subsidiary, Shell Capsa, at both the Argentine and Dutch NCPs. The complainants viewed Shell Capsa’s alleged violations in Argentina as “reflective of systematic and repetitive violations of the OECD Guidelines by Shell and Shell affiliates around the world”.[1],[2] The complainants thus argued that “the engagement of Shell International in this Specific Instance is critical for successful outcome” and encouraged the Argentine and Dutch NCPs to collaborate closely on the case to address the issues at both the local and headquarters level.[3]

Other examples of NGOs urging parent company and home country responsibility include a 2009 OECD Guidelines case against the Norwegian company Cermaq for alleged violations in Chile and Canada. The complainants filed the case with the Norwegian NCP (rather than the Chilean or Canadian NCPs) and emphasised the necessity of handling the complaint in Norway, arguing that local violations of the OECD Guidelines were the direct result of strategic policy decisions made by the parent company. And in a case filed against Ratiopharm in 2006, Transparency International maintained that the alleged misbehaviour emanated from Ratiopharm’s German headquarters to other countries and that the German NCP should therefore take the lead in handling the complaint.

Some NCPs have also begun to acknowledge the importance of encouraging parent company responsibility by having home country NCPs be heavily involved in specific instances against a subsidiary. For example, the Dutch NCP recently stated that it “considers the involvement of the parent company in the [specific instance] procedure at least equally important as of the subsidiary”.[4] The Dutch NCP subsequently chastised Shell for seeking to shift responsibility to a local subsidiary in an OECD Guidelines case involving the company’s operations in the Philippines, noting “Shell International cannot ignore its own ultimate responsibility and accountability concerning local operations of subsidiaries”.[5]

OECD Watch also commends the Irish, Argentine, and Dutch NCPs for putting this policy into practice by cooperating closely in recent specific instances against Shell for alleged violations in Argentina and Ireland. However, some NCPs continue to avoid handling specific instances filed against companies based in their country. In the Ratiopharm case mentioned above, the German NCP refused to handle the complaint because the alleged violations had taken place in other OECD countries.[6] And in Norway, there is deep concern among trade unions and NGOs about the Norwegian NCP’s recent attempts to transfer two complaints, one being the abovementioned Cermaq case, to other countries despite the fact that the parent company as well as the complainants are in both cases based in Norway.

John Ruggie has noted that “leadership from the top is essential”. OECD Watch encourages both parent companies and home country NCPs to take this advice to heart and to proactively engage with their local counterparts in OECD Guidelines specific instances. Only if they do so will lasting, sustainable and company-wide improvements to corporate behaviour be possible.

 


[1] FOCO and FoE Argentina, “Specific Instance With Respect to the Activities of SHELL CAPSA at the Polo Petroquímico Dock Sud – Argentina”,  28 May 2008, <http://oecdwatch.org/cases/Case_141>.

[2] To date, four OECD Guidelines cases have been filed against Shell for alleged violations in Argentina, Brazil, Ireland and the Philippines. For more information on these and other cases, see the OECD Watch case database at <http://oecdwatch.org/cases>.

[3] FOCO and FoE Argentina, “Specific Instance With Respect to the Activities of SHELL CAPSA at the Polo Petroquímico Dock Sud – Argentina”,  28 May 2008, <http://oecdwatch.org/cases/Case_141>.

[4] National Contact Point of the Netherlands, “NCP Annual Report 2009”, June 2009, <http://www.oecdguidelines.nl/nieuws/annual-report-2009/>

[5] National Contact Point of the Netherlands, “Final Statement Shell Philippines”, 31 August 2009, <http://www.oecdguidelines.nl/nieuws/final-statement-shell-philippines/>.

[6] In this case, not only did the German NCP refuse to handle the case, but also refused to even forward the complaint to the NCPs in the countries were the violations were alleged to have taken place (Belgium, Canada, Estonia, Spain). For more on this case see <http://oecdwatch.org/cases/Case_102>

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