What happened with the complaint against Nestlé?

In June 2009 a coalition of organizations registered complaints regarding Nestlé S.A. to the Global Compact Office and the Swiss National Contact Point (NCP) for the OECD Guidelines for Multinational Enterprises. Both stressed that they are responsible for voluntary initiatives and that they are only prepared to promote dialogue. Although the UN Global Compact Office has powers to exclude companies, it stated: "Of course, abuses of the 10 Principles do occur; however we believe that such abuses only indicate that it is important for the company to remain in the Compact and learn from its mistakes."

The organizations that submitted the complaint, led by British civil organization Baby Milk Action, alleged that the reports posted by Nestlé on the Compact’s website “were misleading and that Nestlé was, in truth, responsible for egregious violations of the Global Compact Principles”. Baby Milk Action cited the Integrity Measures that accompany the Principles and called for Nestlé to be excluded for the violations and for bringing the initiative into disrepute by using it in its public relations campaign to divert criticism so that violations may continue.

The complaint was presented in the publication Nestlé's UN Global Compact cover up, which included information from various civil society organisations alleging violations in the areas of:

- aggressive marketing of baby milks and foods and undermining of breastfeeding, in breach of international standards;

- trade union busting and failing to act on related court decisions;

- failure to act on child labour and slavery in its cocoa supply chain;

- exploitation of farmers, particularly in the dairy and coffee sectors;

- environmental degradation, particularly of water resources.

In response, the Global Compact Office stressed that the initiative is voluntary and that it “is not a mediation, dispute resolution, or adjudicative body, nor is it an enforcement agency. Rather, its integrity measures are designed to facilitate communication and dialogue.”

Baby Milk Action pointed out that they were already in “dialogue” with Nestlé and that the company was refusing to make necessary changes, or had made promises that were not being delivered. According to the organization, Nestlé’s response to the complaint showed that its position was unchanged. Baby Milk Action asked the UN Global Compact Office to review the evidence submitted and its communications with Nestlé as called for under the Integrity Measures, with a view to excluding Nestlé. The Global Compact argued it was not its role to conduct such a review and commented: “Of course, abuses of the 10 Principles do occur; however we believe that such abuses only indicate that it is important for the company to remain in the Compact and learn from its mistakes.”

Baby Milk Action informed the UN Global Compact Office that, while it would continue to copy the Office into its ongoing “dialogue” with Nestlé and encourage the Compact to exclude Nestlé, “the correspondence with the Office had demonstrated that it was incapable or unwilling to take any action to stop the violations and that far from improving corporate behavior it was, in this instance at least, complicit in allowing violations to continue by providing legitimacy to misleading reports - which it refused to evaluate - and public relations cover.”

Detailed information about this complaint is available here. 

© Image by Matt Coleman.

BP shows the need for a rethink of regulation

By David Scheffer*, the Financial Times.

One thing at least is certain after BP’s makeover of the Gulf of Mexico into a sludge pit: corporate self-regulation and public oversight have failed. We need to rethink how companies operate in a fragile world and how governments monitor them.

During the past 15 years a fresh perspective on the behaviour of multinationals has taken hold in multilateral organisations, in the European Commission and, at least rhetorically, in thousands of companies. “Corporate social responsibility” refers to a company’s duty beyond the technical requirements of national laws and regulations to comply with global principles of human rights, fair labour, environmental protection and corruption-free management. The United Nations Global Compact, which enshrines and promotes these principles, has garnered the “active” support of many companies worldwide including, for a while, BP but not its Gulf partners, Halliburton and Transocean, or its rival Chevron.

As a result, a new regime of self-regulation guided by voluntary principles has emerged with the blessing of the UN and many governments and trade bodies. But egregious assaults on civilian populations, the environment and workers’ rights continue, often with the assistance of corporate funding and contractual relationships that sanction others to ignore Global Compact principles. The pursuit of maximum profit seems destined to prevail.

BP is exhibit A. For years it has promoted its “green” credentials to the point of transforming its logo, advertising and website into celebrations of the environment. The public relations division trumpets the company’s commitment to human rights and fair labour standards. Like some other companies, BP issues annual sustainability reports attesting to its compliance efforts in these fields. But BP’s catastrophic gusher shows how corporate hype can peddle an illusion at the expense of the oceans.

President Barack Obama’s declaration that “we will trust, but we will verify” sounds reassuring. But for some time the assumption has been that companies would regulate themselves and be competently monitored for the public good. Nothing could be further from the truth.

Government officials doubtless were seduced by rhetorical embraces of CSR. While officials of the US Minerals Management Service were betraying the public’s trust in them, they could point to all that green publicity of BP and other petroleum giants and sit back.

So trust has died south-east of New Orleans. But BP’s gusher is only one example of a bigger problem. Litigation in federal and foreign courts continues to reveal corporate malfeasance against the human rights of indigenous peoples, labourers, vast stretches of the environment and anti-corruption rules. The archaic notion that companies should serve the public’s interest merits revival. We desperately need companies that pursue the common good, not only through contributions to free markets but also through CSR.

BP has broken the mould of self-regulation. With all companies now operating in its shadow, we need tougher enforcement of CSR. Manipulation of objectives by PR departments has to stop. Congress should mandate that multinationals incorporated or operating in the US should create professionally staffed divisions to uphold Global Compact principles and core duties set forth in more enlightened codes of conduct. In a move beyond feelgood ethics and anaemic committees, compliance divisions should report directly to chief management and the board of directors, and periodically file public sustainability reports to regulatory bureaux in Washington ramped up for rigorous oversight.

Compliance divisions should act with independent authority (like police departments’ internal affairs offices) to enforce CSR and compel planning for worst-case scenarios. Conventional risk assessment reports focus on what risks might impair investors’ confidence in a company. Future ones should also examine the catastrophic risks that would undermine society’s confidence.

The advantages of a vigorous free-market economy compete now with the risks that corporate behemoths pose to core societal values, not least the integrity of the ecosphere and our common survival. With trust dead and buried, it is now a case of “comply and verify”.

* The writer is a professor at North­western University School of Law in Chicago.

Source: Financial Times (27/5/2010).

How "sphere of influence" was introduced into the Global Compact

In an widely circulated e-mail sent to the French ambassador for CSR in April 2010, professor John Ruggie wrote: "I should begin with a confession: it was Georg Kell and I who introduced the concept 'sphere of influence' into the Global Compact when we first created it. Our aim at the time was quite modest: to provide companies with an analytical device, a metaphor if you will, to begin thinking about corporate responsibility issues beyond the workplace. […] as a first approximation the concept seemed appropriate to the task."

Things are different now. Mr. Ruggie, now as the Special Representative of the UN Secretary-General on Business and Human Rights, is skeptical about using "sphere of influence". He believes that the concept of impact is a more objective basis for attributing responsibility than influence. According to Mr. Ruggie, "impact" doesn’t presuppose any geographic or spatial formula. In Ruggie's Framework for Business and Human Rights, "impact" has replaced "influence". In his framework Mr. Ruggie also introduces the concept of due diligence, which is the process whereby impact is identified and addressed.

A close look at the UN Global Compact reveals that the concept of sphere of influence was originally part of the first principle. Later it became an overarching concept, applicable to all of the ten principles. It was then included in the preamble of the Compact. 

When the Compact was launched on January 31, 1999, UN Secretary-General Kofi Annan asked world business to "support and respect the protection of international human rights within their sphere of influence." This phrase became the text of the first principle of the Global Compact. By 2005, the phrase "within their sphere of influence" was excluded. The first principle now reads: "Businesses should support and respect the protection of internationally proclaimed human rights within their sphere of influence". In 2006, the phrase was reintroduced in the first principle. A year later, apparently it was dropped for good. The concept "sphere of influence" was moved to the preamble, which currently reads: "The Global Compact asks companies to embrace, support and enact, within their sphere of influence, a set of core values in the areas of human rights, labour standards, the environment, and anti-corruption."

Curiously, the Compact now seems to use two different versions of the first principle on its website. On this page it still uses the version with the phrase "within their sphere of influence", while on this page the principle is just  "Businesses should support and respect the protection of internationally proclaimed human rights within their sphere of influence". (note: the Global Compact Office made changes to these pages after noticing there was an inconsistency - 20/5/2010)

It will be interesting to see whether "sphere of influence" will be kept as a key concept in spite of Mr. Ruggie's recent criticism on its usefulness in the context of human rights and business.

Consumers International: Global Compact supermarkets not up to scratch

Checked out: Are supermarkets taking responsibility for labour conditions in developing countries?, a new report from Consumers International (CI), was presented to the UN on 30 March, and some of the companies scoring lowest turned out to be members of the UN Global Compact, through which companies claim to sign on to labor rights principles.

The Checked out report looks at European supermarkets' policies on corporate social responsibility (CSR), labor conditions and fair trading relations in developing country food supply chains. Catherine Nicholson, senior project coordinator with CI, said: "We don't feel these companies are doing enough to [stock or promote] products that consumers could buy as sustainable alternatives."

Despite some good policies, the report found many supermarket policies on working conditions did not apply throughout developing country food supply chains - they had limited policies to ensure their trading relations were fair and there was a pervasive lack of information and transparency.

Read more at Consumers International's website.