If a mining operation is polluting the land—or a corporation is threatening to start digging in the near future—concerned citizens can try to protect their community with a number of strategies at the local and national level. To stop the pollution or address human rights abuses connected to the mining, activists can go through the courts. They can work with local politicians to stop the mining with legislation. They can go the consumer route and launch a boycott.
But what happens when these strategies fail to stop the mining project?
One additional option is to take the fight to the international level. If the company is headquartered in a member of the Organization of Economic Cooperation and Development—or operating in an OECD-adhering state—activists can lodge a complaint based on a violation of the OECD guidelines on corporate conduct.
The OECD is a club of the world’s 38 most prosperous states. It was founded in 1961, but its origins can be traced to the institutions that administered the Marshall Plan of post-war recovery assistance that the United States extended to Europe. Today, it is headquartered in France, and it has an operating budget of over $400 million.
In addition to the United States, European countries, Commonwealth states like Canada, Australia and New Zealand, and East Asian tigers like Japan and South Korea, the OECD has extended membership to Latin America (Chile, Colombia, Costa Rica) and the Middle East (Turkey, Israel). There are no OECD members in Africa, South Asia, or Southeast Asia. However, 13 additional countries—Argentina, Brazil, Bulgaria, Croatia, Egypt, Jordan, Kazakhstan, Morocco, Peru, Romania, Tunisia, Ukraine, and Uruguay—adhere to the OECD guidelines for multinational enterprises.
In June 2023, the OECD issued an updated version of its “OECD Guidelines for Multinational Enterprises on Responsible Business Conduct.” The guidelines apply to all corporations operating throughout the OECD space but also all companies headquartered in an OECD country.
“The OECD guidelines are recommendations from the 51 OECD-adhering governments to companies on responsible business conduct,” explains Katharine Booth, a researcher and policy advisor at OECD Watch. “The recommendations to companies are not binding. Companies are not required to comply with the standards in the OECD guidelines, but increasingly they should. Responsible business conduct is not new. It’s now embedded.”
To lodge a complaint against a multinational enterprise like a mining company, an organization must go through the National Contact Point (NCP) that each OECD member is required to establish.
“Canada’s NCP was established in 2000 and since then there have been 19 cases brought against Canadian mining companies,” relates Catherine Coumans, the research coordinator and Asia-Pacific program coordinator at MiningWatch Canada. “Between 2001 and 2012, MiningWatch Canada brought and supported seven cases against Canadian mining companies. But after the case we brought in 2012, we made a definitive decision not to support any more mining cases through the Canadian NCP because we’d become convinced that bringing the case to the Canadian NCP was very likely to deepen the harm experienced by the complainants.”
The track record of the Canadian NCP was so bad, in fact, that a complaint was officially filed against it for a recent case it handled, one of only two such complaints brought against NCPs in the OECD system.
Meanwhile, in Australia, activists continue to try to hold Lynas Rare Earth Ltd. responsible for over 1.5 million tons of radioactive waste it has produced in Malaysia. The largest rare earth producer outside of China, Lynas mines rare earth ore in Western Australia, which it transports to a secondary processing plant in Malaysia. Activists and Australian environmental groups are thinking about filing a complaint against Lynas through the Australian NCP for leaving radioactive waste in an unsafe and below-standard waste dump in a coastal peat swamp near its Kuantan plant, reneging on its original license condition to remove this waste from Malaysia.
“It may be wishful thinking to get Lynas to come to the table, let alone agree to our demands, but we have to try out the OECD complaint process,” says Lee Tan, a statistician and a social researcher who leads the Aid/Watch campaign Stop Lynas. “It’s important to raise such issues in the international arena, because Lynas depends on reputation to sell its rare earth since It claims to be a greener and more sustainable producer than China.”
These three researchers and activists came together in June to discuss the benefits and drawbacks of working through the OECD grievance mechanism. Do the revised guidelines make it easier for activists to challenge corporations that violate the OECD standards? Are some NCPs better than others? And what other international avenues can activists pursue?
The OECD guidelines on corporate conduct were first published in 1976. They were updated in 2000 to cover the National Contact Points. They were updated again in 2011 to include standards on human rights and due diligence to harmonize with the UN Guiding Principles on Business and Human Rights.
Katharine Booth works at OECD Watch, a global network of over 130 civil society organizations in 50 countries based in Amsterdam. It focuses on corporate accountability and on helping civil society navigate the OECD system of guidelines and NCPs.
With its latest update, the guidelines still “cover human rights, employment, environment, disclosure, competition,” she explains, “but the issues covered in those chapters have been even further expanded. Most importantly, the guidelines recognize value chain responsibility. That means it covers both upstream and downstream due diligence and impact: not only what happens in the factory but also in relation to sales.”
“The standards really have been strengthened in terms of climate and environment,” Booth notes. “Also, other things like animal welfare has been included. The OECD guidelines were already a leading standard on responsible business conduct. But they’ve been updated to provide more responsibilities for companies to meet. So, now, because the Paris Agreement is cited, companies should aim for net zero admissions. They should have transition plans and implement mitigation targets.”
The guidelines set out some of the impacts that companies can have in terms of the environment, and “that includes biodiversity loss, land degradation, ecosystem harm, deforestation, and water, air and land pollution,” she continues. The guidelines also reference “just transition” both in terms of energy transition and pathways for workers in a digital transition.
“The standards have also been strengthened in terms of meaningful stakeholder engagement,” she adds. “Companies should engage in two-way, good faith engagement with stakeholders’ views. This engagement should be accessible, appropriate, and safe, and companies should also remove barriers to engagement. The guidelines also pay special attention to marginalized or vulnerable groups at heightened risk of harm. Companies should also promote a safe space to raise concerns. OECD Watch is happy with the general references to harms against people, generally human rights defenders, in terms of preventing and refraining from reprisals against these people.”
Where the update falls down is around the NCPs. “We pushed for requirements that the NCPs should make determinations, rather than just have the option to make a determination, but that really hasn’t been put into the guidelines,” Booth concludes.
What the NCPs Do
There are over 50 NCPs, one in each of the countries that abide by the OECD guidelines, and they have two functions. “The first is to promote the guidelines,” Booth explains. “And the second is to handle complaints against companies that have allegedly not met the standards in the guidelines. Companies are not required to participate in NCP processes. It’s a voluntary process. Even if a complaint is accepted by an NCP, it is still up to the company whether to participate in mediation.” Anyone who has a connection to the purported breach of standards can file a complaint.
Next, the NCP makes a preliminary assessment of whether the complaint should proceed. “Often some NCPs set too high a bar, in OECD Watch’s opinion,” she adds. “But the updated guidelines make clear that the bar should be low for a complaint to proceed. It just should be essentially substantiated and be material to the OECD guidelines.”
If the complaint makes it to the next stage, an NCP will offer its good offices, which in most cases means mediation. The NCP does this internally or hires a consultant. This process can take a year or more. “The last stage is the final statement and follow up,” Booth says. “If the parties resolve the issues in mediation, they will reach an agreement and the NCP will essentially provide as much detail as it can legally provide on that agreement subject to confidentiality. But if the parties don’t reach an agreement, the NCP will issue a final statement. The quality and content of the final statement varies between NCPs. Some NCPs will provide minimal information and won’t comment on the issues raised in the final statement. Other NCPs will actually make a determination of a company’s compliance or noncompliance with the guidelines.”
Because these determinations are not judicial—and therefore not binding—the NCPs cannot enforce their implementation.
Booth enumerates the strengths and weaknesses of the process. “In general, they’re cheaper and faster,” she says. “The timeline for an NCP complaint is supposed to be about a year. Most often it is longer than a year, especially if extensive mediation is involved. Some complaints will go for two years. But some of the lawsuits we’re seeing—for example, in France with the due diligence law—have been going on for several years now.”
The process is also less adversarial. “We’re not talking about judges here,” she notes. “We’re not talking about courtrooms. The complainant and the company are face to face in a room (or, increasingly, via Zoom). The aim is to find common ground on the issues raised in the dispute and reach an agreement.”
Because the process is non-judicial, it isn’t restricted to monetary or non-monetary compensation. “Complainants might want the company to acknowledge the harm that they’ve caused or make an apology,” she adds. “In many complaints, the complainant seeks improved internal due diligence processes, such as improved human rights policies.”
Another advantage is that the process opens a line of communication. “You can speak directly with the company concerned,” she continues. “It can be a platform for long-term engagement between the parties involved and sometimes other stakeholders such as shareholders.”
Booth does acknowledge limitations, such as the voluntary nature of the process and the agreements’ lack of enforceability. “Also, many complaints are rejected at the initial assessment stage,” she notes. “Some NCPs set too high bar at the initial assessment stage, which closes the door to any sort of discussion happening between the parties.”
The performance of NCPs indeed varies greatly. “OECD Watch does NCP evaluations,” she explains. “On our website you can see which NCPs are stronger or more effective than others. An effective NCP has certain features.” For example, it will be more independent from government trade commissions, it will maintain a low bar for its initial assessment, and it will conduct its own investigations or contract an outside firm to research the case. Some NCPs have improved their performance, as in Australia following an independent review in 2017 that took place after a formal complaint was filed.
At the same time, NCPs are not well-funded. Shortage of staff and staff turnover also undermine their efficacy. And NCPs vary in terms of where they are housed and who serve as staff. “Most NCPs are staffed by bureaucrats and there is no stakeholder oversight,” Booth observes. But others, like in Australia and the Netherlands, have more effective structures with representatives from NGOs, trade unions, and business plus external experts.” Most NCPs are also subject to changes if government changes hands after elections.
More sobering still is the rarity of actual agreements. “Very, very few agreements happen,” she concludes. “In 2022, there was only one agreement reached between a company and a community or NGO complainant. So, agreements are very rare. And remedy is certainly not guaranteed.”
The Canadian NCP
MiningWatch Canada stopped bringing complaints to the OECD mechanism in 2012. But it has continued to engage with the Canadian NCP by filing briefs and recommending reforms. “In 2021 we supported a substantial submission complaint brought by OECD Watch against the Canadian NCP to the investment committee of the OECD,” explains Catherine Coumans. “This is only the second time that such a complaint has been brought against an NCP.”
As a result of this engagement with the OECD, MiningWatch Canada has concluded that “the Canadian NCP, among others, is not independent of political interference,” Coumans continues. “It does not carry out investigations, does not make findings of fact although it sometimes appears to in ways that actually harm notifiers, and does not ensure the provision of remedy for those harmed. It can offer its good offices for mediation but does so very rarely. It is protective of corporate reputations but not those of notifiers.”
She points out that the Canadian NCP had a number of opportunities to reform itself. In 2005, for instance, a parliamentary committee reviewed the operations of Canada’s NCP and concluded that there was a need to “strengthen the rules and the mandate of the Canadian NCP to enable it to respond to complaints promptly, to undertake proper investigations, and to recommend appropriate measures against companies found to be acting in violation of the OECD guidelines.” Coumans notes that “the NCP at that time did not do that, and unfortunately it still does not.”
A 2016 report from MiningWatch Canada, OECD Watch, and Above Ground concluded that the Canadian NCP lacked independence and was opaque. “The process involves unjustified delays,” the report continues.
The NCP applies a high threshold for accepting complaints. The NCP does not make findings on whether the companies have breached the guidelines. The government penalty for companies that don’t participate has proven to be ineffective in promoting compliance with the OECD guidelines for multinational enterprises. The process rarely concludes with an agreement or recommendations and there are no effective follow-up procedures in place. And in over 15 years at that point of existence the NCP had consistently failed to provide complainants with effective remedy.
In 2018, the United Nations Working Group on Business and Human Rights was equally scathing:
The NCP was perceived by stakeholders as potentially not fully independent, given that it was housed within a ministry that was responsible for promoting overseas trade and investment. Stakeholders also noted that the NCP had no external advisory or oversight body. It was highlighted to the working group that the lack of confidence of civil society in the national contact point was apparent, which might have limited the numbers of cases brought before it.
One year later, a peer review report recommended that the Canadian NCP include civil society as a social partner along with the social partners along with the business community and labor. “The NCP has not yet responded to this simple recommendation,” Coumans notes.
The Sakto Case
In 2016, the Bruno Manser Fund, an NGO based in Switzerland that works to preserve rainforests, filed a complaint with the Canadian NCP against an Ottawa-based group called the Sakto Group, a real estate and investment holding company. Sakto maintains close ties both to Canadian politicians in Ottawa and to the family of the governor of the Malaysian state of Sarawak.
In October 2016, the Canadian NCP agreed to accept the case for good offices. The Bruno Manser Fund (BMF) also agreed to participate in the NCP’s mediation. However, after providing that draft initial assessment, the NCP became unresponsive to BMF for many months. Finally, in March 2017, the NCP informed both parties that it intended to close the case without providing any reasons. Shortly after that, BMF went public with the case for the first time.
“In July 2017, without consulting BMF, the NCP published a final statement that placed blame for closing the case on both BMF, for allegedly breaching confidentiality, and on the Sakto group,” Catherine Coumans recalls. The NCP’s statement criticized Sakto for “involving a member of parliament during the confidential NCP assessment process, [its] aggressive challenge of the NCP’s jurisdiction, [and its] legal counsel making submissions to the government of Canada’s Deputy Minister of Justice.”
Almost a year later, “the Canadian NCP removed the first published final statement and replaced it with a new one,” she continues. “The May 2018 final statement removes all mention of the breach of confidentiality and the pressure exerted on the NCP by Sakto and its lawyers and political allies. But it does mention what the NCP calls a breach of confidentiality by BMF, implying that this was the sole reason for rejecting the complaint.”
Even the OECD investment committee took the Canadian government to task in its September 2022 response to a substantiated submission brought over its handling of this case, finding that the Canadian NCP was not fully transparent, that it lacked predictability, and was not fully compatible with OECD procedures. “The response also took seriously OECD Watch’s concern that Canada’s biased handling of the Sakto complaint may have resulted in harm to the Bruno Manser Fund,” Coumans relates. “The committee recommended that the Canadian government address this concern by following up with the parties and taking any appropriate measure within its mandate to mitigate any adverse effects.”
But the Canadian NCP has not followed up or “changed its final statement on the case of May 2018 to remove its blatant bias against the Bruno Manser Fund,” she reports. “Clearly this case exemplifies how engaging the Canadian NCP can harm a complainant. We repeatedly noticed how complainants would have been better off not having brought a case at all. The NCP’s dismissal of most cases was widely interpreted, for example by the media or by socially responsible investors, as evidence that there was no substance to the complaint itself.”
She adds that “the Sakto group has used the NCP complaint mechanism in the legal case to say, ‘Look, it got thrown out in Canada. You see: these people have no grounds to stand on plus you can’t trust them because they breached confidentiality.’ So, the NCP actually deeply harmed the Bruno Manser Fund in their legal case.”
Preparing a Potential Complaint
The Lynas corporation mines rare earth elements in Western Australia and then ships the ore 6,000 kilometers to Malaysia for processing. At both the points of extraction and processing, the production has considerable environmental impacts.
Near the Malaysian port of Kuantan, which also happens to be Lee Tan’s hometown, the processing has created huge piles of radioactive and otherwise contaminated waste. “In Malaysia,” Tan reports, “law enforcement for environmental protection is rather limited and technically they do not have the capacity to deal with this rather complex and massive quantity of waste. By the end of this year, we will have something like 1.6 million tons if not more of the radioactive waste plus several more million tons of the nonradioactive but hazardous waste.”
Originally, Lynas agreed to remove waste from its Malaysian plant. Now, however, it wants to construct a permanent waste disposal facility for it. “I’ve been very busy collecting expert opinions on the lack of suitability of this particular location for the permanent disposal of this waste,” Tan continues. “Malaysia is a wet, tropical country where the rainfall in a day can be more than two meters. That’s a lot of rain! Even in semi-arid environments in the sparsely populated Australian outback, this kind of radioactive waste dump has been rejected for scientific and technical reason. Yet in the wet tropical country of Malaysia, in a peat swamp close to densely populated coastal settlements, tourist resorts, and the South China Sea, the proposal has been accepted. We are appealing that decision, but we are not hopeful.”
The area around the waste facility is rather densely populated. “Children are playing in the estuary where Lynas wastewater is channeled,” Tan adds. “There are still remnants of a very large, beautiful peat mangrove, which is a very important fishing ground for the local people. Much of the shellfish comes from the mangrove, and the pollutants will also affect the quality of the shellfish that local people still consume. It does not help when Lynas claims that its operation causes zero harm.”
For the moment, Malaysian and Australian activists are still pursuing legal avenues, particularly in Malaysia around the approval process for the waste dump. “In terms of the OECD complaint,” Tan reports, “the harm was clearly established with the amount of radioactive waste that’s been produced, the manner in which this waste has been handled over the last 10 years, and the inappropriate location of the waste dump.”
Another source of complaint is the lack of transparency. The public can only gain access to the environmental impact assessment for one hour at the Malaysian Department of Environment. “We’re talking about volumes of documents that are highly technical and yet we have no easy access to it,” Tan explains. “In Australia, all the EIAs are published online and you can download them.”
Then there’s the issue of radioactivity. “Under international principles for radioactive waste there must be a justification of benefit for the waste to be stored in a particular location,” she adds. Since Lynas received a 12-year tax break from the Malaysian government, it has not paid any corporate tax. Moreover, Lynas has maintained a double standard on this issue because it operates according to much stricter regulations in Australia for its radioactive waste. “Lynas is pushing pollution into a developing country with less political will and capability to tackle these kinds of issues,” she notes.
“Our ultimate goal,” she adds, “is to revert back to the original license condition where Lynas is required to remove the radioactive waste. In fact, Lynas has signed two legal undertakings in Malaysia that it would remove the radioactive waste if there is no suitable site available for the waste in Malaysia. We have an engineer, a geo-hydrologist, and a waste specialist on our side to provide expert opinions, which we will use when we have exhausted all legal avenues in Malaysia to challenge the approval for the radioactive waste dump. We will also seek rehabilitation and clean-up by the company.”
AidWatch Australia plans to work with other groups when it eventually brings a complaint to the Australian NCP, something that OECD Watch also recommends. “There are so many flaws with NCPs that, more often than not, the case will fail to reach an agreement,” Katharine Booth explains. “So, the complaint should not rest on its own, and the NGO filing the complaint should also be targeting the media.”
Catherine Coumans also has recommendations about how to approach the Australian NCP. “I would talk to them about confidentiality,” she says. “People need to be able to campaign to protect themselves. What kind of restrictions would confidentiality put on you, your group, and others that might get involved? Ask them if they would hire a group to do an independent report on the issues that you’re raising. And would they make a statement of fact? Would they actually come out and say that the guidelines were breached?”
Although the OECD process is non-judicial and non-binding, Tan and others hope to compel Lynas to come to the table to avoid damage to its reputation. “I had experience with a NCP complaint when I worked for the Australian Conservation Foundation many years ago,” she recalls. “It was a different kind of complaint, and we didn’t get very far with that. We’re not expecting huge outcome from this one either. But we have no choice but to try.”
The OECD is not the only place where civil society organizations can go if they’ve exhausted all the options at a national level.
“There are complaint mechanisms in development banks, if the harm is caused by a development bank,” Katharine Booth relates, “Increasingly there are also legislative initiatives such as the French and German supply chain laws. Australia and the UK have modern slavery laws, though they are quite limited. The EU is going to hopefully introduce a due diligence law this or next year, which will be extra-territorial, so it will extend beyond the EU’s borders. This will also hopefully provide some sort of enforcement mechanism for companies that fail to conduct adequate due diligence. But while the scope of these initiatives is really broad, there will still be gaps. There are always gaps. And the NCPs can often fill that gap.”
Canada, too, has tabled legislation that, if passed, would “require Canadian-based companies to carry out human rights and environmental due diligence,” Catherine Coumans notes. “It provides access to our courts for people who’ve been harmed by Canadian-based companies operating overseas.” In this legislation, the OECD guidelines are one of the referenced standards. “So, the stronger the standards are the better,” she adds, though she notes that the problem with the OECD is not the standards but the NCPs.