It is profitable to be responsible

Kazakhstan people can submit complaints about the actions or omissions of a large company to the National Contact Point. This refers to transnational enterprises whose activities go beyond the legislation of one state.

Activities of suc.organizations in the world are regulated by National Contact Points (hereinafter - NCPs). NCP opening in our country is quite natural, because companies with foreign participation have been operating in Kazakhstan for many years.

- NCP is a voluntary, non-judicial mechanism for addressing public complaints about businesses that violate the principles of responsible business conduct in accordance with OECD Guidelines. This is a platform for constructive dialogue between the parties, discussing the problems that have arisen and reaching mutual agreement. NCP functions in our country are assigned to the Ministry of National Economy, - Nurbek Yergeshbayev said, the Adviser to the Chairman of Economic Research Institute JSC, the Head of NCP Secretariat of Kazakhstan.

According to him, the existence of such an institution means that the investment market in this country is open, stable and transparent. A transnational company undertakes to work decently, without violating the legislation in the territory of the state, and also to comply with the principles of responsible business conduct generally accepted in developed countries.

For the last three decades, the international business environment changed significantly. Now, the driving force of the global economy is international investment, due to which governments opened the markets, and businesses took advantage of new opportunities for economic growth.

- In June 2017, Kazakhstan became an associate member of the Investment Committee of the Organization for Economic Cooperation and Development and became the 48th country to join the OECD Declaration on Multinational Enterprises. In this regard, 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, Nurbek Yergeshbayev explained.

He added that these principles imply requirements for responsible business conduct directed by governments to enterprises whose activities go beyond the borders of one state. It is a collection of principles and standards in various fields, ranging from human rights, employee rights and occupational safety, and also addressing issues of access to information, taxation and environmental protection.

Today, NCPs operate effectively in 49 countries around the world, which account for about 80% of foreign direct investment. The presence of this body in the state guarantees transparency in the consideration of disputes that arise.

- An effective, transparent and popular mechanism of NCPs activities is an important element of open international investment climate, Nurbek Yergeshbayev emphasizes.

Responsible business plays an important role in building a healthy business environment. However, enterprises should take into account the established policies in the countries they operate in, as well as the views and actions of other stakeholders (for example, employees of enterprises, the public, public associations, trade unions). They should also promote economic, environmental and social progress in order to achieve sustainable development in the country of their business.

Experts say that it is now profitable to be a responsible businessman, but in the future it is simply inevitable. Why? Investors no longer invest in companies that do not meet sustainability standards. This is confirmed by the well-known case when the Norwegian Pension Fund divested of more than 100 companies for this reason.  

OECD Guidelines are unique in that they provide a complaints mechanism through which people who believe their rights have been violated can file a complaint against a company and resolve their problem. Moreover, NCP guarantees that the complaint will be considered immediately (no more than within a year) and completely free of charge. Since it is a Collegial Advisory Body and consists of Vice-Ministers of National Economy, Justice, Foreign Affairs, Labor and Social Protection, Trade and Integration, Anti-Corruption Agencies, Deputy Chairman of Atameken NCE, heads of non-governmenta.organizations and trade unions. So the case is considered faster, without going through numerous authorities.

- The parties usually rely on mediation, and NCP recommends a way to resolve the problem. Moreover, the results of elimination of the detected violation are constantly monitored. A negative assessment of the company's actions undermines its image, because we are obliged to notify OECD Secretariat of every complaint. Thus, a company that violates the rules of responsible business is included in the black list. Such data disclosure undoubtedly undermines the company's credibility globally. This is the real punishment, Nurbek Yergeshbayev says.

There are no precedents considered by NCP in Kazakhstan yet. However, international practice shows the effectiveness and efficiency of the pre-trial mechanism for handling complaints by such centers. For example, Norway NCP considered the complaint of the Norwegian Society for the Conservation of Nature against Cermaq ASA and Mainstream Canada and Mainstream Chile, its subsidiaries. In this case, the alleged non-compliance with the requirements of OECD Guidelines concerned, in particular, inadequate respect for the rights of the local population and an acute lack of protective measures against environmental damage. In addition, Cermaq ASA employees complained of unjustified dismissals, attempts by employees to prevent the creation of a union, and wage and bonus payment systems discriminating against women.

The complaint resulted in changes to the Code of Conduct for Corporate Responsibilities of Cermaq, including clearer responsibilities of suppliers in the field of human rights; the obligation to conclude of mutually beneficial agreements with the local population and the obligation to develop measures on environmental risk mitigation.

2000 to 2019, National Contact Points considered over 500 cases in over 100 countries and territories. The majority of cases (57%) related to human rights,  employment and employees, and the environment.

Between 2011 and 2019, over a third of all cases which were accepted for further examination by National Contact Points (36%) resulted in some form of agreement between the parties. About 33% of cases resulted in changes to the internal regulations of the company inspected.

Each resident of the country can report an offense by the enterprise in the following areas:

• information disclosure
• human rights
• employment and industrial relations
• environmental protection
• consumer interest
• science and technology
• competition and taxation
• corruption, bribery and extortion

•    office of NCP Secretariat
•    web-site of NCP and the Ministry of National Economy of the Republic of Kazakhstan
•    NCP call center.

Conclusions, as well as information on the application consideration progress, are posted on NCP website, which is part of the Economic Research Institute Internet portal.