Reflections on the OECD’s Responsible Business Conduct Forum 2016

“Only through active dialogue can we hope to address the serious issues that persist in global supply chains” — Angel Gurría, Secretary-General, OECD

On 8–9 June 2016, the OECD held its Forum on Responsible Business Conduct (RBC) in Paris, in part in celebration of the 40th anniversary of the OECD Guidelines for Multinational Enterprises.

It brought together a diverse crowd from governments, international organizations, civil society, businesses, trade unions and academia to discuss the state of RBC.

I would like to take this opportunity to thank the OECD and its Working Party on Responsible Business Conduct for organizing a top-notch event, all the speakers for sharing unique insights and everyone I spoke to for helping me come further with my own ideas on RBC.

These reflections do not aim to be representative of discussions taking place throughout the event; rather, they seek to share my take on the event — both its highlights and shortcomings.

Click here for a selection of tweets from the entire Forum

A trio of issues

From the very first session, a trio of issues took center-stage: teeth, transparency and effectiveness.

Hard v. soft law & the issue of enforcement (“teeth”)

Many of the discussions were framed in terms of the voluntary — binding dichotomy (i.e., hard v. soft law), which has tended to dominate debates on approaches to regulation and governance that integrate a degree of non-state authority.

This came as a bit of a surprise, given that this distinction misrepresents the issue by painting the public and private spheres as separate: governance scholars have long pointed out the myriad interactions between these supposedly independent spheres. [1]

Another issue is that this type of dualism often assumes a hierarchy of effectiveness (hard is better than soft) and, at times, an evolutionary notion (good soft regulation will/should eventually morph into hard law). This discounts the fact that different approaches can be mutually reinforcing.

At the core of this issue lies enforcement, which was repeatedly referred to as “teeth”. This is where the classical idea that compliance is best delivered by (the threat of) coercion — whether economic or military — surfaces. Though this certainly plays a part, other roads to compliance exist and, in fact, this is very much what makes voluntary standards interesting. A particularly interesting approach to this debate is that of Braithwaite & Drahos, which places actors in webs of dialogue that are capable of delivering compliant behavior without the need for teeth. [2]

A related issue is that of the motivations of actors for adhering to RBC: it would be overly simplistic to couch it simply in terms of regulatory risk avoidance. Firms go beyond (hard law) compliance for a whole host of reasons, including values, capturing prime mover benefits, etc. [3]

The importance of disclosures & transparency

The growing success of transparency-based approaches was very much palpable at the Forum: references were made to the EITI, to climate disclosure initiatives (e.g. CDP). What was particularly interesting in this instance was that transparency was not so much approaches from a normative stand-point (i.e., as an ideologically positive goal), but applied to specific actors — especially to investors and the financial industries — and with a clear purpose in mind: providing leverage for RBC.

Effectiveness

Since the 1990s, voluntary standards have proliferated, gaining increasing traction and authority in addressing a wide range of issues, including but by no means limited to human rights. From the very beginning, debates have focused on several issues, of which effectiveness and legitimacy. At the Forum, concerns over the former were voiced in nearly every session (whereas the latter remained somewhat more in the background, see What was missing below). Yet, in spite of the history of work on the issue of effectiveness, the Forum mostly broached it in the most general of terms: Are the guidelines effective in protecting human rights? Does the National Contact Point system work?

It was only on the second day, during the session on Multi-Stakeholder Initiatives (MSIs) that a more nuanced reflection on the topic took form. Ben Collins from the MSI Integrity initiative argued that MSIs are, for the most part, not measuring their impacts, making it challenging to determine whether they are effective or not. This may, however, be only part of the picture. For instance, standards systems such as those of ISEAL Alliance members are held to implement extensive impact monitoring (cf. their impacts code). Further, the problem may not just be one of measurement. Researchers working on forestry certification have shown how MSIs have been able to initiate a race to the top. [4]

Effectiveness is not only a notoriously tricky issue, it can also be tackled from any number of approaches — legal, sociological, economic, etc. — and distinctions can be drawn in terms of the process itself, its outputs or even its outcomes. It may well be that a focus on metrics could end up being counter-productive.

What was missing?

Though it is a challenge to capture the diversity of topics and opinions voiced at the Forum, several issues seem to have fallen through the cracks.

A restrictive vision of human rights

Human rights featured prominently on the agenda, but bizarrely the concept was almost only deployed in relation to labor rights. Egregious as they are, child- or forced-labor are but on part of the issue when it comes to businesses and human rights, and wider RBC. In particular, the quasi-absence of attention to environmental human rights came as a surprise. While there may be institutional reasons for this truncated use of human rights, it nevertheless fails to balance social and environmental concerns — and no, the former are not sufficiently covered by environmental impact assessments: more is needed.

The notable exception was during the WWF session on protecting World Heritage Sites.

Where is the climate?

Though references were made to the SDGs, the Paris Agreement and carbon disclosure efforts, climate change remained very much a peripheral concern throughout the Forum. This shows three things:

  • RBC discussions are behind the curve when it comes to climate;
  • RBC and climate are in urgent need of greater integration;
  • The longer-term relevance of RBC as an approach may well be in jeopardy if it fails to consider wider governance developments.

Resources

Money was definitely an issue on participants’ and speakers’ minds. From the start, there was talk of the power of the purse in creating leverage for RBC. However, there was less talk about the resource-related barriers faced by different actors in championing and implementing RBC — a point most salient in relation to MSIs. Indeed, civil society has a core role to play here, but often lacks the resources to (remain) engage(d) in lengthy processes. While investors certainly should make use of their leverage, mechanisms are needed to ensure that financially weaker actors not only get a seat at the table, but also that they can stay there throughout.

Legitimacy

For all the talk on RBC and various approaches to governance, precious little attention was devoted to the question of legitimacy: Are the guidelines a legitimate tool in dealing with such issues as business and human rights? Are all the actors at the table? It seems that this would be a rich topic for a future forum, which could take a more reflexive turn.

References

[1]Cf. Cutler and colleagues’ Private authority and international affairs or Grande and Pauly’s edited volume Reconstituting political authority.

[2] Braithwaite & Drahos (2000) Global Business Regulation.

[3] Cf. Greening the firm by Aseem Prakash or The Rise of Global Corporate Social Responsibility by Hevina Dashwood.

[4] Cf. Graeme Auld book on Constructing Private Governance: The Rise and Evolution of Forest, Coffee, and Fisheries Certification, or the article by Bernstein & Cashore Can non‐state global governance be legitimate?

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