Online Seminar on Responsible Business Conduct

On August 26, an online seminar was held on Responsible Business Conduct in accordance with the OECD Guidelines and the role of the National Contact Point in this process.

The event wa.organized by the Ministry of National Economy of the Republic of Kazakhstan - the body responsible for implementing the functions of the National Contact Point (NCP) and Economic Research Institute JSC - the NCP Secretariat.

International business environment has undergone a number of significant structural changes over the past three decades. Since the beginning of the new millennium, the world economy has been driven by international investment, through which governments have opened up markets and businesses have taken advantage of new opportunities that have led to unprecedented economic growth.

In June 2017, Kazakhstan became an associate member of the Investment Committee of the Organization for Economic Cooperation and Development (OECD) and became the 48th country to join the OECD Declaration on Multinational Enterprises.

As part of joining the Committee, the Government of Kazakhstan has made a number of commitments, including the dissemination of the principles of responsible business conduct in accordance with the OECD Guidelines.

The guidelines are requirements for responsible business practices that governments apply to multinational companies. OECD National Contact Points (NCP) have been established to disseminate and ensure compliance with the Guidelines.

Today, NCPs operate effectively in 49 countries around the world, which account for about 80% of foreign direct investment.

Kazakhstan enterprises that operate in any area outside the borders of one state, conduct corporate policy in accordance with international standards of responsible business conduct. In order to effectively implement the Guidelines, a National Contact Point has been established in Kazakhstan.

Representatives of government agencies and national companies, such as KEGOC, KazInvest, Republican centre of space communication JSC and others took part in the seminar on Responsible Business Conduct and the work of the National Contact Point.
 
The event was opened by Nurbek Yergeshbayev, Adviser to the Chairman of the Management Board of Economic Research Institute JSC, Head of the NCP Secretariat.

In his speech, he spoke about the activities of the NCP in Kazakhstan.

The NCP is a collegial Advisory Body that takes decisions on complaints of violations of the provisions of the OECD Guidelines.

The main functions of the NCP include implementing the OECD Guidelines by raising awareness of relevant OECD documents; reviewing claims of individuals and (or) legal entities that violate the Guidelines; and making decisions on complaints.

The NCP is guided by the Constitution, laws of the Republic of Kazakhstan, regulatory legal acts of the Republic of Kazakhstan, the OECD Guidelines and the OECD Declaration.

One of the important tasks of the NCP is to assist employees of multinational enterprises who have detected a violation on the part of the employer, namely, to make a fair decision regarding the submitted application.

As noted by Yergeshbayev, applications are considered exclusively in the legal field. Conflicts and disputes are regulated through bilateral agreements. And after the violation is resolved, the NCP monitors corporate processes to avoid formalization of the OECD principles.

It is important to note that the NCP considers precedents that affect the areas of dissemination of the Guidelines:

•    Concepts and principles
•    General Policy
•    Information disclosure
•    Human rights
•    Labor and industrial relations
•    Environmental protection
•    Anti-bribery
•    Consumer interest
•    Science and technology
•    Competition
•    Taxation

During the seminar, Tatiana Zinovich, Director of the Legal Policy Research Point Public Foundation, member of the National Contact Point, provided detailed information on the OECD Guidelines for Multinational Companies.

The OECD Guidelines address the interests of the country's government, business, society and workers. In this regard, enterprises should fully take into account the established policies in the countries in which they operate, as well as take into account the views of other stakeholders.

According to the Concepts and General Policies of the Guiding Principles, multinational companies should promote economic, environmental and social progress in order to achieve sustainable development.

Respect for internationally recognized human rights is of particular importance. Note that the majority of cases (57%) reviewed by the NCP relate to human rights, employment issues, and the environment.

In total, during the period 2000-2019, National Contact Points reviewed more than 500 cases in different countries.

The seminar ended with a review of cases and discussion of topical issues of NCP activities.  

Cases reviewed by the NCP

World practice testifies to the effectiveness and efficiency of the pre-trial complaints mechanism (there are no precedents considered by the NCP in Kazakhstan at the moment).

1.    NCС of Norway considered the application of the Norwegian Society for Nature Conservation in relation to Cermaq ASA and its subsidiary (MainstreamCanada and MainstreamChile).

The alleged non compliance with the requirements of the OECD Guidelines concerned in particular:

- improper observance of the rights of the local population;
- inappropriate labour and employment practices (for example, unjustified dismissals, attempts to prevent employees from forming a Trade Union, wage and bonus payment systems that discriminate against women);
- acute lack of protective measures against environmental damage

The statement resulted in changes to the Code of Conduct on Cermaq's corporate responsibilities, including clearer obligations of suppliers in the area of human rights observance based on the recommendations contained in the Guidelines; a commitment to enter into mutually beneficial agreements with the local population; and a commitment to further develop measures to minimize the risks of significant environmental damage.

2.    In 2017, a case submitted by two labor confederations was sent to the NCP of France regarding the activities of the Cambodian subsidiary of VinciAirports in Cambodia. A labor dispute that began in 2012 when Cambodia's airports introduced a new method o.organizing work under the "multi-taskingscheme".

The NCP determined that for many of the issues raised, Vinci complied with the recommendations of the OECD Guidelines. However, in its conclusion, it included eight recommendations aimed at strengthening the due diligence process. In addition, the NCP will monitor the implementation of its recommendations for one year.

3.    In 2017, three NGOs submitted a case to the representative of the Dutch NCP, according to which Bresser, as an SME entity specializing in the relocation and maintenance of buildings, was unable to carry out its preliminary work on the relocation of an ancient tomb. The reason for this was a conflict with the local population, which stated a fact that violated the community's right to cultural heritage. All the parties involved in the case agreed to actively participate in the mediation of the Dutch NCP.

On 20 August 2018, the Dutch NCP issued an opinion concluding that Bresser "does not meet the due diligence criteria of the OECD Guidelines" and that the right to cultural heritage "should be considered as a human right in accordance with the OECD Guidelines". This was the first specific case of recognition of cultural rights as human rights.

4.    In April 2014, nine non-governmenta.organizations submitted an application to the Austrian NCP for consideration of a case related to the supply by AndritzHydro of hydroelectric turbines intended for the construction and operation of the Xayaburi hydroelectric power station project in the Lao People's Democratic Republic.     

After mediatio.organized by the NCP, the parties came to an agreement in which AndritzHydro is obliged to develop: policies and procedures related to the implementation of human rights and environmental standards; and to exchange information, as well as to involve relevant groups of interested parties in this process.

The NCP issued a follow-up report in October 2018, noting that four follow-up meetings had been held since February 2018 to discuss mitigation measures for the Xayaburi Project. The cooperation of AndritzHydro with NGOs and experts provided the basis for the development of a new draft code of conduct based on international principles that will apply to all companies that are part of the AndritzGroup.

It should be noted that more information about the activities of the NCP can be found on the NCP website, which is located on the economy.kz portal in the OECD section.

Reference: the OECD Guidelines for multinational enterprises is a document created in 1976 and strengthened by an effective mechanism for dissemination and reporting of violations during subsequent audits.