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Influence of National Contact Points on the

Corporate Response to a Human Right Violation

Oil spill in Ogoniland, caused by Shell1.

MSc Business Administration - International Management Supervisor: Dr. Michelle Westermann-Behaylo

Second supervisor: Dr. Erik Dirksen Student: Lotte Marije Jongstra, 10142703 Word count: 19 177

Date: 25 March 2016

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Statement of Originality

This document is written by Student Lotte Marije Jongstra who declares to take full responsibility for the contents of this document.

I declare that the text and the work presented in this document is original and that no sources other than those mentioned in the text and its references have been used in creating it.

The Faculty of Economics and Business is responsible solely for the supervision of completion of the work, not for the contents.

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Abstract

There is a discussion about who should regulate and protect human rights, states, multinationals or international law. In 1984 the OECD invented National Contact Points, through which civil societies and NGOs can claim human right violations by multinationals. This research studies the relationship between the existence and the amount of resources of an NCP and the corporate response to a human right violation. A multiple case study approach is used to analyze the corporate responses under different circumstances, (e.g. resource rich NCP presence, resource poor NCP presence or no NCP presence). The qualitative data is provided by CHRD, TUAC Database, OECD Specific Instance Database, the OECD Watch Database, BHRRC, newspapers, documents of the NCP, documents of the complainants and documents of the companies. The findings support the working propositions partially, stating that NCP involvement has as positive influence on the corporate response to a human rights violation. The procedures of the resource-rich NCPs are more efficient and extensive than the procedures of the resource-poor NCPs. However, these relationships are not always strong.

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Table of contents

Statement of Originality ... 2 Abstract ... 3 Table of contents ... 4 1 Introduction ... 6 2 Literature review ... 9 2.1 Introduction ... 9 2.2 States ... 10 2.3 Multinational enterprises ... 11

2.4 International law and National Contact Points ... 12

2.4.1 Development OECD Guidelines and National Contact Points ... 13

2.4.2 National Contact Points ... 14

2.4.3 The power of National Contact Points ... 14

2.4.4 How National Contact Points operate ... 15

2.4.5 Advantages and disadvantages of National Contact Points. ... 16

2.5 Summary and research gap ... 17

3 Methodology ... 20

3.1 Research Design ... 20

3.1.1 Multiple case strategy ... 20

3.2 Research Strategy ... 22 3.3 Data collection ... 22 3.3.1 NCP presence ... 22 3.3.2 Corporate response ... 23 3.3.3 NCPs’ resources ... 23 3.4 Sampling ... 23 3.5 Variables ... 24 3.6 Data Analysis ... 24

3.6.1 Process of data analysis ... 25

4 Results ... 26

4.1 Within Case Analysis ... 26

4.1.1 SOCO ... 26

4.1.2 Shell ... 30

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5 4.1.4 Xstrata ... 37 4.1.5 PPMC ... 40 4.1.6 CNLC ... 41 4.1.7 IMI ... 41 4.2 Cross-Case Analysis ... 43 4.2.1 NCP presence ... 43 4.2.2 NCPs’ resources ... 46 5 Discussion ... 51

5.1 Evaluating and interpreting the results ... 51

5.1.1 NCP presence ... 51

5.1.2 NCP resources ... 53

5.2 Contributions and recommendations ... 54

5.3 Limitations and future research ... 55

6 Conclusion ... 57

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1 Introduction

12 May 2007, 28 August 2008 and 7 December 2008: on these dates three oil spills destroyed parts of the Niger Delta. These oil spills affected the Niger Delta environment, and the local communities faced difficulties. Their main source of income disappeared because they could not fish anymore and all their crops are polluted. Moreover, the people who live in the Niger Delta face health problems and their ground water is polluted. According to Amnesty International and Friends of Earth International, these oil spills were caused by Royal Dutch Shell. Afterwards Shell failed to do sufficient clean ups, to take appropriate action and remediation. However, Shell claims that criminality causes the majority of the oil spills in Nigeria and that all organizations should focus on the criminality problem. This tragic example stresses the complexity of the division of responsibilities in the international field and their consequences, violating the human rights of the local community. Therefore, this topic, human rights and multinationals, is of great importance.

The Universal Declaration of Human Rights, developed in 1948 by the United Nations General Assembly, is the most widely accepted document of the modern era of human rights and is a common standard of achievement for all individuals and all countries (Cassel 2001, p. 262). The Universal Declaration of Human Rights consist of 30 articles, shortly summarized; they stress the fact that all human beings are born free and equal without any kind of discrimination, everyone has the right to work, everyone has the right to a fair and public hearing and every individual has the right to a standard of living adequate for the health and well-being of himself and of his family (The Universal Declaration of Human Rights). Ruggie (2007) states that multinational enterprises (MNEs) are responsible for defending human rights because they have the power (even more than some states) to influence the realization of human rights (p. 824). But MNEs are not able to influence all human rights entities; in some area, like civil and political rights, they are not the direct or indirect agent of the particular harm (Ruggie 2008). That is why this thesis focusses on how MNEs can influence environmental and labor rights. The articles related to labor rights are Article 20: ‘Everyone has the right to freedom of peaceful assembly and association and no one may be compelled to belong to an association’, Article 23: ‘Everyone has the right to work, to free choice of employment, to just and favourable conditions of work… Everyone has the right to form and join trade unions for the protection of his interests’ and Article 24 ‘Everyone has the right to rest and leisure, including reasonable limitation of working hours and periodic holidays with pay’ (The Universal Declaration of Human Rights). Environmental rights are important because all human beings depend on the environment in which they live. Without a

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7 sustainable and healthy environment, human beings are unable to fulfill their basic needs2. Choices made by actors that affect the environment impact the realization of human rights directly. The United Nations Environment Programme (UNEP) mentions three main dimensions of the interrelationship between human rights and environmental practices. First, the environment is a pre-condition for the enjoyment of human rights. Second, some human rights, for example access to information, are essential to make good decisions about the environment. Third, the right to a safe, healthy and sustainable environment is a human right in itself3. The Stockholm Declaration of the United Nations Conference on the Human Environment (1972) and the Rio Declaration on Environment and Development (1992), demonstrate the link between human rights and the environment was important in the early stages of the United Nations efforts to address environmental problems4.

Up until now, much research has been done about human rights and multinational enterprises (MNEs), about who is responsible and why. Mostly authors argue one actor is responsible and explain why, but they neglect the other actors. Overall authors mention that there is a lack of international law, even though international law is crucial to prevent MNEs to violate human rights (Giuliani & Macchi 2013, 490). In 1976 the Organization for Economic Co-operation and Development (OECD) introduced Guidelines for MNEs. The OECD started in 1960 with 20 countries who signed the Convention on the Organization for Economic Cooperation and Development; today 34 countries are member of the OECD5. Their 2011 update of the Guidelines included active involvement of NGOs, business, international organizations and non-adhering countries6. These Guidelines make clear how OECD countries expect companies to do responsible business. These Guidelines address that MNEs have to respect human rights and have to prevent human rights violations by their own company and companies involved in their business. Furthermore, MNEs need a policy about human rights and when an MNE violate human rights they have to solve it. Because circumstances are variable, all human rights should be evaluated from time to time (De OESO-richtlijnen voor Multinationale Ondernemingen 2011). Governments who apply the OECD Guidelines constructed a National Contact Point (NCP), NCPs were developed to create attachment to OECD Guidelines for MNEs (Daniel, Wilde-Ramsing, Genovese & 2http://www.ohchr.org/EN/Issues/Environment/SREnvironment/Pages/SRenvironmentIndex.aspx, accessed on 26 January 2016. 3http://www.unep.org/environmentalgovernance/Events/HumanRightsandEnvironment/tabid/2046/Default.aspx, accessed on 26 January 2016. 4http://www.ohchr.org/EN/Issues/Environment/HREnvironment/Pages/HRandEnvironmentIndex.aspx, accessed on 26 January 2016. http://www.oecd.org/about/membersandpartners/list-oecd-member-countries.htm, August 22, 2015. 6 http://mneguidelines.oecd.org/about/, June 21, 2015.

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8 Sandjojo 2015). Moreover, ECCHR (2011) claims ‘NCPs might actually transform the currently non-binding soft law into binding standards applicable to enterprises’ (p. 2), so they kind of fill the gap of non-binding international laws.

There has been some research about the effectiveness of NCPs, among other things by OECD Watch and Ruggie. Ruggie is a Harvard professor and he is the United Nations Special Representative to the Secretary General for Business and Human Rights. The report of the OECD Watch states that NCPs contribute to MNEs implementation of the OECD Guidelines and increase awareness of the Guidelines, but they were not able to make the Guidelines more efficient (Daniel, Wilde-Ramsing, Genovese & Sandjojo 2015). In addition, when the NCPs are well implemented they could stimulate MNEs to follow the Guidelines and prevent future human rights harms caused by MNEs. Ruggie (2008) argues that NCPs lack the resources to investigate human rights violations sufficiently (p. 208) and that they cannot accomplish their mission, promoting companies’ attachment to the Guidelines.

So there has been research about the effectiveness of NCPs on its own, but there is a lack of research about comparing cases where NCPs were involved with cases where NCPs were not involved.

This thesis will investigate if NCPs make a difference, if the MNE’s response and remedy to a labor or environmental right violation is different when an NCP is involved. Labor and environmental rights violation claims with NCP’s involvement will be compared with labor and environmental rights violation claims without NCP involvement. Moreover, the effectiveness of resources in NCP cases will be investigated.

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2 Literature review

2.1

Introduction

In the past twenty years the international business environment changed a lot. Due to an increasing globalization, MNEs have become more powerful which leads to greater expectations of their corporate responsibility (Preuss & Brown 2011, p. 297, Westaway 2011, p. 2). Globalization creates a risk environment where the market forces, like free market and competitive advantages, which drive globalization are more important than human rights (Westaway 2011, p. 7).

The increasing integrated world market, due to increasing globalization, means more competition for MNEs. The international community fears a race to the bottom between MNEs in areas of human rights and environmental standards (De Schutter 2004, p. 18). MNEs will scrimp on human rights and environmental standards to be more successful than their competitors. Not only MNEs create possibilities of a race to the bottom, governments do it as well. Governments seek to attract foreign direct investment by relaxing policies that are seen as unattractive to firms. Governments decrease labor standards and environmental regulations to attract firms. This is strongest among developing countries with weak standards (Davies & Vadlamannati 2013). There is a “race to the bottom” relationship between trade openness and collective labor rights. Especially when labor has little economic power, the welfare-state policies decline when there is trade openness (Mosley & Uno, 2007). When developing nations participate in global commodity chains, they are often forced into competition with one another. The major driver of MNE’s subcontracting and outsourcing decisions are cost concerns; therefore a country’s ability to produce at the lowest possible cost level is crucial to attract businesses for subcontracting local firms (Mosley & Uno, 2007). Collective labor rights are an important part of the production costs; MNEs can restrict collective labor rights and therefore reduce the demands for (non)wages benefits. For example, to meet MNEs’ demands for lower production costs, many developing nations create Export Processing Zones. These zones are specialized in manufacturing export products, and the labor rights in these zones are often restricted (Mosley & Uno, 2007).

Preuss & Brown (2011) mention the mismatch between global opportunities to search for cheaper labor, new customers and new sources of raw materials and the appearance of a transnational governance structure (p. 289). This mismatch is especially visible regarding the relationship between MNEs and human rights. MNEs and host governments have conspired in

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10 violation of human rights. Seeing these concerns and the growing attention by civil society for human rights violations, there is a debate about who is responsible for human rights violations, between home country government, host country government, MNEs, international community or international laws. Ruggie (2008) mentions three core principles, firstly the government’s duty to protect their citizens against human rights violations by MNEs and secondly the responsibility of corporations to regard human rights and thirdly the need for more efficient access to remedies to prevent violations (p. 191).

2.2 States

The traditional view is that only states are responsible for human rights violations, but increasingly MNEs are being held accountable (Muchlinski 2001, p. 31). The traditional view has limitations, namely some states are unable to protect their citizens from human rights violations (De Schutter 2004, p. 2). The formal institutional environment of certain MNEs’ host countries are often too weak to protect their citizens, employees and environment (Kapstein 2001, p. 106). When MNEs operate in these kinds of host countries, they must ensure that they do not violate human rights. Governments are not able to guarantee human rights alone, and MNEs have to show direct responsibility (Muchlinski 2001, p. 43, Cassel 2001, 262). Ruggie (2007) argues that MNEs’ growing responsibility to protect human rights further undermines domestic political incentives for governments to act more responsive to defend human rights. However, due to Ruggie, domestic political incentives are the most efficient way to realize human rights (p. 826).

Moreover, MNEs have bargaining power over national governments as discussed below. Westaway (2011) argues that it is impossible for an MNE to function without becoming involved in human rights violations, when they operate in a political instable environment.

Stephens (2001) wonders if the home country or host country should govern with their legal system; at the first sight it is ‘obvious that the country where events take place should have the final say’ (p. 402). MNEs use differences among legal systems to increase their profit: they transfer their operations to locations with the most competitive advantages, for example low wages, few restrictions. Often these are the countries that do not held MNEs accountable for human right violations (Stephens, 2001). MNEs’ stakeholders expect MNEs to have a great attention to corporate social responsibility. Surroca and Tribo (2013) argue that when these stakeholder pressures are important in an MNE’s home country, the MNE is likely to transfer their social irresponsible businesses from its headquarters to a subsidiary overseas.

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11 This is even more likely when the level of institutional enforcement, vigilance and sanctions for social irresponsible practices is low in the subsidiary’s host country. By shifting the production from the home country with high CSR expectations to the subsidiary’s host country with low(er) stakeholder expectations, the MNE gains advantages in labor costs, raw material costs and other expenses. ‘MNEs are in a unique position to exploit cross-national differences in institutional environments’ (Surroca & Tribo 2013, p. 521). An MNE can shift its operations from headquarters to a subsidiary when it perceives that the institutional environment in the host country offer more comparative advantages compared with the institutional environment of the home country.

It can be difficult for host countries to reinforce their social and environmental standards, inclusive their human rights standards, because they are afraid to lose foreign investments (Ruggie 2008). Ruggie (2011) states that responsible MNEs ask states more and more for guidance about how to prevent human rights violations in difficult contexts. The risk for MNEs to get involved with human rights violations differs per area, for example conflict-affected areas have a higher risk and host countries could be unable to protect human rights, so home countries have to take care of this (Ruggie 2011).

Ruggie (2008) states that experts disagree about whether international law requires home countries to prevent ‘their’ MNEs’ human rights violations abroad. On the one hand, based on existing jurisdictions, home countries are not prohibited to protect MNEs' human rights violations abroad. On the other hand, the encouragement at the international level for home countries’ intervention is rising, home countries should take regulatory action to inhibit human rights violations abroad by their MNEs (Ruggie 2008, p. 193).

2.3 Multinational enterprises

With increasing globalization and the rising power of MNEs, there is an ongoing debate about MNEs’ role in defending human rights, instead of or together with (national) governments. MNEs have bargaining power over governments because attracting foreign direct investment is important for (developing) countries to develop their economy. MNEs are potential important players in this development, as MNEs intervention is associated with human rights violations (De Schutter 2004). Developing countries benefit from MNE’s investments because these investments bring employment, knowledge, technology transfers and infrastructure. Furthermore, they diversify the local economy and local firms can increase their productivity and export potential (Giuliani & Macchi 2013). Host governments think that MNEs’ investment will have a positive impact on society, that is why they prioritize economic

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12 development over human rights (Giuliani & Macchi 2013). Because producing goods is highly mobile nowadays, MNEs can transfer their operations easily to their most favorable country, where there are low costs and less regulations (De Schutter 2004, Cassel 2001).

Westaway (2011) explains from two perspectives why it is problematic to prosecute corporations successfully. Firstly, (developing) countries need MNEs, so there is a power imbalance which the MNE can exploit. Secondly, MNEs function with limited liability with the parent company who is located in a jurisdiction outside the control of the host country (Westaway 2011, p. 19). Preuss & Brown (2011) argue that the role of MNEs is doubtful nowadays; through MNEs’ international economic contribution and creating work they increase human rights circumstances. But at the same time the international economic contribution of MNEs is distributed unequally and thus leads to a decreasing human rights protection. Westaway (2011) claims that because MNEs are not states, they are not responsible to influence the states’ human rights liabilities and they are not forced to do this by international law. MNEs have the power to defend human rights, and therefore the responsibility, but MNEs’ main goal is not defending human rights but being profitable.

According to Mary Robinson, the United Nations Human Rights Commissioner in 1998, ‘business needs human rights and human rights needs business’ (Muchlinski 2001, p. 38). An MNE is not able to flourish in an environment where human rights are violated. In addition, when MNEs violate human rights, they will be monitored and their reputations will suffer.

2.4 International law and National Contact Points

Human rights scholars addresses the importance of a strong legal system, which is crucial to organize MNEs’ practices to prevent human rights violations in host countries (Giuliani & Macchi 2013, 490). Because national legal systems are insufficient to manage MNEs, international law has to guide MNEs’ corporate responsibilities (Stephens 2001, Ruggie 2007). Ruggie (2007) argues ‘international law has an important role to play in constructing a better functioning global regime to govern business and human rights’ (840). It was hard for the global governance to influence MNEs dealing with human rights. The OECD Guidelines for MNEs are an instrument to promote responsible business conduct at global level (Egelund & Sørensen 2014). The OECD created a set of criteria, accessibility, visibility, accountability and transparency. All the NCPs have to operate in accord with these criteria (Ochoa Sanhez

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13 2015). But at local level, the OECD members have created different models for their NCPs. So, the standards, the Guidelines, is an international soft law, but the implementations of the Guidelines are at national level.

2.4.1 Development OECD Guidelines and National Contact Points

The OECD promotes policies that will improve the social and economic welfare of people around the world. The OECD provides a forum where governments can cooperate to share experiences and seek solutions. Today, the OECD has 34 member states7. The OECD Guidelines for MNEs covered human rights standards in 1976; in 1984 the OECD members set up NCPs, their goal being to promote the Guidelines and ‘to contribute to the solution of problems which arise.’ NCPs are a complaint mechanism (Ruggie & Nelson 2015, p. 2). The decisions of the NCPs are non-binding. The OECD Guidelines for MNEs are the main initiative for corporate responsibility because governments were involved in their formation (ECCHR policy paper 2011). The OECD Guidelines have been reviewed five times, the last revision about human rights was in 2011.

In 2008 Ruggie invented the ‘Protect, Respect and Remedy’ Framework, as explained earlier this framework gives three important messages. Firstly, governments have the obligation to protect citizens against human rights violations. Secondly, businesses are responsible to respect human rights and they should do business with due diligence. Thirdly, people which human rights are violated need greater access to effective remedy (Ruggie 2011, Ruggie & Nelson 2015). The Human Rights Council asked Ruggie to operationalize his ‘Respect, Protect and Remedy’ framework, this operationalization created 31 Guiding Principles. Governments, MNEs and NGOs support these Guiding Principles. The 2011 Guidelines embodied two central elements of the Guiding Principles: a human rights chapter was incorporated and corporate responsibility to respect human rights (Ruggie & Nelson 2015, p. 6). Furthermore, the 2011 update is not just about what MNEs should do but it explains also how MNEs should behave. The NCPs are a potential place where civil society and NGOs can make complaints about MNEs that violate human rights. The human rights revision of 2011 has five impacts; there is a greater diversity of human rights cases; the industries where the violations took place is more diversified; the human rights cases are the majority of complaints; there is an increasing role of the Guidelines’ due diligence provisions with a high level of guidance; and the admissibility rate is higher for human rights cases than for other cases (Ruggie & Nelson 2015, 13).

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14 ‘The updated Guidelines of 2011 expanded their scope, stating that MNEs should avoid causing or contributing to adverse impacts on the social, environmental and other interests related to the Guidelines, not only through their own activities but also through their business relationship’ (Ruggie & Nelson 2015, p. 17).

2.4.2 National Contact Points

Governments who adhere the OECD Guidelines have to set up NCPs, whose main goal is to further the effectiveness of the Guidelines. The governments are responsible through their NCPs (Liberti, 2012). The three main functions of NCPs are: to promote the Guidelines, to handle questions and to contribute to the solution of issues related to the implementation of the Guidelines (Ochoa Sanhez 2015, p. 94). NCPs receive complaints of stakeholders about the behavior of MNEs, and the NCPs create room for discussion and assist the business community (Ochoa Sanhez 2015, p. 95). NCPs have to make sure that there is easy access to them, that it is easy to make a complaint (Egelund & Sørensen 2014). The OECD Guidelines say that NCPs should handle issues arising in their national territories or issues that are related to MNEs headquartered in their country. In this framework there is also a role for MNEs, they should stimulate all their business partners to apply to responsible business related principles of the Guidelines (Egelund & Sørensen 2014).

2.4.3 The power of National Contact Points

Organizations needs power to influence other actors and to make a difference. The degree to which an organization can exercise power depends on their access to resources. Mitchell, Angle and Wood (1997) describe three kinds of power. Coercive power, based on physical resources; utilitarian power, based on material and/or financial resources; normative power, based on symbolic resources (p. 865). There are a few reasons NCPs get authority. To begin with NCPs are government-backed instruments; this gives authority to their procedures and statements, these symbolic resources create normative power (Ochoa Sanhez 2015, p. 117). Furthermore, NCPs have the power to make the final statement; however this is not binding, and they conclude whether or not the MNE violated the Guidelines, showing that NCPs’ authority goes beyond presenting their services (Ochoa Sanhez 2015, p. 114). Moreover, MNEs care a lot about their reputation, which gives normative and symbolic power to NCPs. NCP’s conclusion about an MNE’s involvement in human rights violations can lead to public shaming of the MNE. MNEs want to avoid this, and this desire can encourage them to pay

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15 attention to NCPs and the OECD Guidelines while doing business (Ochoa Sanhez 2015, p. 110).

So despite NCPs make non-binding recommendations, their statements can have a huge influence, it can harm the MNE in question. Egelund and Sørensen (2014) argue that the OECD Guidelines has moved from being just a voluntary soft law instrument to being an instrument that is near to hard law, and this movement is through the role of NCPs (p. 27). Ochoa Sanhez (2015) shares this view and sees it in line with the growing current trend in corporate social responsibility, away from a pure voluntary approach in a level of private business (p. 126). Moreover, ECCHR (2011) claims ‘NCPs might actually transform the currently non-binding soft law into binding standards applicable to enterprises’ (p. 2), so they fill the earlier discussed gap of non-binding international laws.

NCPs have the power to deal with individual complaints about all issues covered by the OECD Guidelines. This is very important due to the lack of effective access to other remedial instruments or organizations, especially complaints about human rights violations in developing countries are difficult to make (Ochoa Sanhez 2015, p. 123). To investigate if the presence of NCPs influences MNEs behavior regarding human rights, proposition one is established.

Proposition 1:

Any kind of National Contact Point is better than nothing at all.

2.4.4 How National Contact Points operate

NCPs have to estimate the interest of the complainant and the seriousness of the issue. NCPs have the authority to dismiss a complaint when it is not made in good faith (Egelund & Sørensen 2014). If the NCP receive a complaint, Ochoa Sanhez (2015) describe three phases in which the complaint will be treated. First there is the initial assessment, to decide if the issues raised deserve further investigation. Secondly, offering of good offices, to search for advice and facilitate access to resources to solve the issues. Finally, the conclusion, where they make statements and reports (p. 96). Beside Ochoa Sanhez (2015) describes four scenarios or possible outcomes of an NCP case. Firstly, the NCP decides that the complaint does not deserve further consideration. In this case no procedure will be started. Secondly, the parties involved reach an agreement on the complaints. This is the ideal situation; it depends on the agreement but remedy is likely to be part of the agreement. Thirdly, no agreement is reached. Finally, a party does not want to participate. In the last two scenarios the case is over

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16 and the businesses will not provide remedies to the victims of the human right violation. In these cases, the NCP should mention why they decided that the complaints merit further examination and the procedures the NCP started to assist both parties in reaching an agreement. The OECD encourage cooperation between NCPs to make all NCPs effective.

The OECD members created very different models for their NCPs, so NCPs play different roles in different member states (Egelund & Sørensen 2014). So individual NCPs have flexibility. But there is, as Ochoa Sanhez calls it, ‘functional equivalence’; this means that regardless of the different structures of NCPs, they all have to operate in accord with a set of criteria, including accessibility, visibility, accountability and transparency (2015, p. 95). However, the totally different structures and policies of NCPs create an uneven playing field (Ochoa Sanhez 2015, p. 115). The differences between NCPs among other things come forward in their accessibility to resources; they all have different kinds of and amounts of resources. For example, the Dutch NCP has access to three staff members, a budget, an advisory body and partnerships. While the United States NCP has access to one staff member, there is no budget or advisory bodies and they have no partnerships. Ochoa Sanhez argues that the credibility of the NCP mechanism relies on the authority to make a thorough investigation of the facts. To undertake an effective investigation, NCPs need the necessary financial and human resources (2015, 121). The OECD Guidelines requires their member states to provide their NCPs with financial and human resources to that they can accomplish their responsibilities effectively. Resources determine how many staff a NCP has at its disposal for mediation and investigation the complaints; it is not about just funding, although funding will have a crucial impact on the activity level (Egelund & Sørensen 2014, p. 6). To investigate if the amount of resources makes sense, proposition two is established.

Proposition 2:

Resource-rich National Contact Points have more influence on multinational enterprises’ behavior than resource-poor National Contact Points.

2.4.5 Advantages and disadvantages of National Contact Points.

A positive argument about NCPs’ effectiveness comes from the National Contact Point OECD Guidelines (2015), which argues that NCPs increase awareness of the OECD Guidelines with businesses, trade unions and NGOs and NCPs’ conduct regarding decisions about issues originating from non-observance of the Guidelines. Moreover, as explained earlier, NCPs fill the gap of a non-binding international law.

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17 Another advantage of the NCPs is that they can protect different actors. They can protect the civil societies and the complainants when they accept the case and offer mediation. But the NCPs can also protect MNEs because NCPs have the authority to dismiss a complaint when it is not made in good faith (Egelund & Sørensen 2014). The NCPs have to estimate the interest of the complainant and the seriousness of the issue. NCPs are clear in their expectations towards the MNEs and they protect the MNEs for complainants’ unrealistic wishes.

But the reports of the OECD Watch are quite skeptical about the effectiveness of NCPs. They argue that NCPs contribute to OECD Guidelines for MNEs implementation but NCPs do not achieve their main target, making the Guidelines more efficient. In the last 15 years just one per cent of the 250 NCP complaints resulted into improved conditions for the victims (Daniel, Wilde-Ramsing, Genovese & Sandjojo 2015, p. 19). Ruggie (2008) argues that NCPs lack the resources to investigate the complaints sufficiently and the training to give effective mediation (p. 208). Moreover, the NCPs’ outcomex are not measurable and NCPs cannot accomplish their mission, promoting companies’ attachment to OECD Guidelines. But there is also hope that, when the NCPs are well implemented, they could stimulate the Guidelines’ adherence, assist to prevent future harms caused by MNEs and take care of remedy for those who are damaged by MNEs’ misbehavior. To realize these potential positive outcomes, the NCPs must be revised (OECD watch 2015). ‘Functional equivalence’ argues that NCPs have to operate in accordance with a set of criteria. Because currently NCPs have different structures and ways in which they operate, therefore NCPs mechanisms as a whole lack equal treatment, consistency and predictability (Ochoa Sanhez 2015, p. 125). Furthermore, NCPs have to be impartial while at the same time they have to keep an adequate level of accountability to their adhering government (Egelund & Sørensen 2014, p. 4). To play a more prominent role, next to impartial NCPs have to be predictable and equitable (Liberti 2012). So the current trend is that NCPs nowadays are not efficient enough to achieve their goal, but there is potential, but to achieve this, NCPs have to change their way of operating.

2.5 Summary and research gap

As explained above there are different opinions about who should regulate and protect human rights. Some authors claim that states are responsible and most effective in protecting human rights, while others argue that some states are unable to protect human rights, inter alia because MNEs’ bargaining power over those states. MNEs have the power to defend human

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18 rights, and therefore the responsibility according to Ruggie, but MNEs’ main goal is not to defend human rights but to be profitable. A strong (international) legal system is crucial to organize MNEs practices and prevent them for human rights violations. If international law determines MNEs’ duties, the influence of national governments reduces (Ruggie 2007). Furthermore, Ruggie (2007) states that strong international law reduces governments’ incentives to be more responsible to their population, while the governments’ way is the most effective way to protect human rights (p. 826).

Yet there is currently no binding international law about human rights. The OECD constructed Guidelines for MNEs and recently NCPs, which fill the gap of non-binding international laws. Furthermore, they link the responsibilities of governments with responsibilities of MNEs and in this way both actors are involved. Most research on the NCPs is focused on their operation under the previous version, before 2011, of the Guidelines (Ochao Sanhez 2015). So little is known about their current way of operating; however this is important because the 2011 update had a great impact on the human rights section. The 2011 update embodied two central elements of the Guiding Principles, a human rights chapter was incorporated along with corporate responsibility to respect human rights (Ruggie & Nelson 2015). Moreover, the 2011 update was not just about what MNEs should do but it also explains how MNEs should behave. The 2011 update had five impacts as explained earlier. There is a research gap in NCP cases after the 2011-update. This thesis will focus on NCP cases after 2011.

Furthermore, most research is being done about the effectiveness of NCPs on itself or NCP policies compared to other NCP policies. There is no research done about cases where NCPs were involved compared to cases where no NCPs where involved, to measure if NCPs make sense at all.

Based on the theoretical framework and propositions above, the following model illustrates the propositions of this study.

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3 Methodology

This research used a qualitative multiple case study design to gain a thorough understanding of the influence of NCP involvement on MNEs’ behavior. This section describes why this research design is chosen and how the data is collected. Furthermore, it will address the research strategy, databases and sampling.

3.1 Research Design

To investigate the propositions, ‘any kind of NCP is better than nothing at all’ and ‘resource- rich NCPs have more influence on MNEs’ behavior than resource-poor NCPs’, this study uses a comparative design. It compares a few contrasting cases with more or less the same methods. When a comparative design is used together with a qualitative research strategy, it is a multiple case study design. A case study is a detailed and intensive analysis (Bryman 2008). The case study design is chosen because it is a preferred strategy when the investigator has little control over the events, there is no control over how the NCP cases happened (Yin 1981). This research is a deductive study, and the research question is adopted from theoretical concerns and guide the research design and data collection (Bryman 2008).

3.1.1 Multiple case strategy

This thesis approaches a multiple case strategy. In a case study, contemporary phenomena in a real life context are examined,;all the cases in this research happened after 2011. Schramm (1971) in Yin (2003, p. 12) ‘the essence of a case study (…) is that it tries to illuminate a

decision or set of decisions: why they were taken, how they were implemented, and with what

result’. The objective of this research is to investigate if MNEs take NCPs into account and why they do or why they do not.

All the selected cases will be analyzed in a within case and a cross case study to find replication across cases and contrasting results (Yin 2013). The within case analysis helps to deal with the huge amount of data; it involves pure, detailed case study descriptions. They are simple, but because they help researches to deal with the enormous volume of data in an early stage they are central to generate insights (Eisenhardt 1989). The main idea of the within case analysis is to become familiar with every case in isolation. A contribution of this process is that a researcher sees the unique characteristics of each case before they are focused on generalizing patterns across cases (Eisenhardt 1989). Moreover, due to the fact that the researchers are familiar with each case, the cross-case comparison process goes faster. Cross case analysis will be done via case-comparison approach (Yin, 1981). Each case needs an

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21 adequate explanation (within case analysis) for investigating the causes of similarities and differences between cases.

The figure below shows the multiple-case study procedure that this thesis used. Source: Yin, 2014.

Case study research has some advantages:they allow research to preserve the holistic and meaningful characteristics of the cases. Furthermore, case study can deal with a variety of evidence, documents from different sources, interviews and observations (Yin 1981). The advantage of a multiple case study, compared to a single case study, is that it advances the theory building because it compares several cases and is in a better position to determine circumstances in which theory will or will not hold (Bryman 2008). A case study research also has some concerns. Firstly, there is a lack of rigor, which can be reduced by following systematic procedures (Yin 2003). Moreover, case studies provide little basis for generalization and external validity;they provide generalizations for theoretical propositions and not to populations.However providing generalizations to populations is not the goal of this research (Yin 2014, Bryman 2008). The objective is to use the cases as basis for inductive theory building, this process occurs via recursive cycling among the case data, emerging theory and extant literature (Eisenhardt & Graebner 2007). Another concern is that case studies can take too long and the results are huge documents; however this is not necessarily the way (Yin 2003). Lastly, a specific concern for the multiple case study is that it is focused on how cases can be contrasted instead of paying attention to the specific context. The goal of this research is to identify how cases are contrasted, so it is not a limitation for this research.

D

eve

lop the

or

y

Select cases

Conduct first case study

Write individual case report

Draw cross-case

conclusions Modify theory

Develop policy implications Write cross-case report Conduct second case study Write individual case report Conduct third case

study

Write individual case report Conduct fourth case

study

Write individual case report Conduct fifth case

study

Write individual case report Conduct sixth case

study Write individual case report Conduct seventh case study Write individual case report Design data collection protocol

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22

3.2 Research Strategy

Case studies can be based on quantitative as well as qualitative evidence. This research will use qualitative data. Because of the study’s exploratory purpose, the goal of an exploratory research is to reveal information about a subject that is not clearly understood (Searcy & Elkhawas 2012). Qualitative research implicates interpreting and analyzing documents to discover considerable patterns in a specific phenomenon. The objective of this thesis is to identify plausible relationships between the involvement of NCPs and MNEs’ behavior. In qualitative data the focus is on words that the data provides instead of numbers.Qualitative researchers try to understand behavior in terms of the context in which the research is done and use rich data (Bryman 2008). Because this thesis is about understanding of MNEs behavior in relation with or without NCP involvement, qualitative evidence in terms of cases will be used. The second proposition about resources includes a lot of unstructured qualitative data, to present these qualitative data more clear there will be quantification in the qualitative data (Bryman 2008).

3.3 Data collection

The data source of this research is documents: they cover a wide range of sources and are not produced at the request of a researcher. This thesis uses official documents deriving from the state, official documents deriving from private sources and mass media outputs. Scott (in Bryman 2008) describes four criteria for judging the quality of the documents (p. 516). The first criterion is authenticity: is the evidence authentic and of unquestionable origin. The second criterion is credibility: is the evidence without error and distortion. Thirdly representativeness is important: is the evidence typical of its kind. The last criterion is meaning: is the evidence comprehensive and clear (Bryman 2008, p. 516).

3.3.1 NCP presence

The data consists of cases with NCP involvement and cases without NCP involvement. The cases with NCP involvement are from the OECD specific instance database, the OECD Watch database, and/or the Trade Union Advisory Committee (TUAC) database. The OECD Specific Instance Database is the OECD’s official public online store of cases. The OECD Watch database isa global network of NGOs that tries to make companies accountable for their negative impact around the world. The TUAC database represent workers’ organizations. The cases without NCP involvement are from the Corporations and Human Rights Database (CHRD). This database works with data that is available from the Business

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23 and Human Rights Resource Center (BHRRC). A limitation of using the CHRD is that the database is not complete yet. There are human rights violations who are not included in the database and therefore it can show a distorted picture. However, this database is the only one with the needed information available. An important criterion for the non-NCP cases is that both the home country as the host country may not be an OECD member state, so that NCP involvement is impossible.

3.3.2 Corporate response

All the databases include links to the corporate responses on the allegations or summarize the corporate responses, except when there is no corporate response.

3.3.3 NCPs’ resources

The annual reports of the particular NCPs are used even as the annual report of the OECD Guidelines for MNEs. Because NCP’s amount of resources can vary over time, the reports of the year of NCP’s final statement are used to give an honest picture. With the exception of the United States NCP, there was no data available of 2012, year of final statement, so the information of the 2014 report is used. However, because the United States NCP did not have resources, except one staff member, in 2014 it is assumed that this was the same in 2012. To determine if the NCPs are resource-rich or -poor, five dimensions are taken into account: amount of staff members, the presence of a budget, advisory body, promotional plan and partnerships.

3.4 Sampling

This research had to select cases from the databases because not every case makes sense for the research question. Purposive sampling is used: purposive sampling is a non-probability form of sampling, meaning that the selecting procedure is not random and cases are selected because they are relevant for understanding the phenomenon (Bryman 2008, p. 415). Purpose sampling is used because the sampled cases need to be relevant to the research questions; a good deal of variety is needed for this research question. Cases with involvement of NCPs are needed even as cases without involvement of NCPs; furthermore the cases with involvement of NCPs need NCPs who are diverse in resources. The sample members have to differ from each other in term of characteristics, purposive sampling samples in a strategic way (Bryman 2008). A result of a non-probability approach is that generalizations are not allowed.

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24 For a purposive sampling the criteria to include or exclude cases need to be clear, so that the researcher is sure that relevant cases are selected. For this research there are a few criteria. Firstly, the case has to be part of the CHRD, OECD specific instance database, OECD Watch database or the TUAC database. Moreover, to make a good comparison the cases have to have as many similarities as possible; therefore only cases from the natural resources industry, oil, gas and mining in Africa or South-America are selected. Another important criterion is about the corporate response of the company, because this study investigates the relationship NCP involvement and corporate response, information about the corporate response to a human rights violation allegation has to be available. In addition, it is necessary that the NCP decided that the case deserves further consideration. This is important because if the NCP decided that the case does not deserve further consideration, the complaint was not valid and nothing happens with the case. Lastly because the NCP policies changed a lot after the 2011 update and there is not a lot of research on NCPs after the 2011 update, only cases after 2011 are selected.

So there are six criteria to include the cases: (1) The case has to be in the CHRD, OECD Watch database, OECD Specific Instance database or TUAC database (2) the case has to operate in de natural resources industry, oil gas and mining, (3) the violation happened in Africa or South America (4) there is information about the corporate response, (5) the NCP cases deserve further consideration and (6) the case happened after 2011.

3.5 Variables

In this research the independent variables are NCP involvement or no NCP involvement and the amount of resources an NCP has. The dependent variable is the corporate response. Because this research investigates if NCP involvement (independent variable) influences corporate response and behavior (dependent variable) and if the amount of resources an NCP has affects this relationship. The corporate responses are taken from the CHRD; they are coded under nine different categories and are briefly summarized. The CHRD also describes if there is a remedy. The CHRD distinguishes seven categories of remedies; apology/apologies, financial compensation, non-financial compensation, restitution, rehabilitation, guarantee of non-repetition and other.

3.6 Data Analysis

In this thesis a multiple case study is done, the source of evidence being documents. Yin (2013) addresses that documents must be used carefully; every document is written with a

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25 particular purpose. Therefore this thesis investigates documents of different actors in the cases, the blamed company, the involved NCP(s) and the NGOs. As a result, a lot of pages are in the dataset and are investigated. Miles and Huberman (2014) argue that credible analysis requires displays that are focused enough to allow a viewing of the data set and are systematically regulated to answer the research questions. Miles and Huberman (1984) prescribe a flow model of qualitative data analysis, consisting of to collect data, to reduce data, to display data and to draw conclusions and validate them. This thesis arranged the data through coding and analyzed the data through a within case study and a cross case study. Furthermore, to make the dataset understandable and clear, matrices and networks are used fors well for the reader as well because for the investigator, because displaying the data in a systematic way makes it easier for the investigator to understand the data and to draw conclusions and it requires the investigator to make a full analysis (Miles and Huberman 1984).

3.6.1 Process of data analysis

The data was collected through documentary research using NCPs’ case reports and final statements, annual reports of the NCPs, companies’ responses, documents published by NGOs and newspaper articles. Bryman (2008, p. 550) created steps in coding. Reading all the data without taking notes was the beginning of the data analysis; afterwards read the data again while making as many notes as possible (coding), review the codes and finally consider more general theoretical ideas in relation to the codes and data. Yin (2014) describes four general strategies to analyze data, in this research the strategy ‘working the data from the ‘ground up’’ is used. The cases have been analyzed without the propositions in mind but with the question ‘which incidents leaded to the final statement’?

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4 Results

The results of the conducted research are discussed in this chapter. This chapter consists of two parts, the within case analysis which presents each case individually and the cross-case analysis which takes all the cases into account and search for similarities and differences.

4.1 Within Case Analysis

This section presents each case individually. The cases will be reviewed from three different perspectives, the complainant’s perspective, the company’s perspective and the NCP’s perspective.

4.1.1 SOCO

SOCO is an international oil and gas exploration and production company, and its headquarters is in the United Kingdom. In 2010 SOCO started an oil project in Virunga, Democratic Republic Congo (DRC) (Radio Opaki, 26 March 2012). In this case the United Kingdom NCP is involved.

4.1.1.1 WWF’s perspective

On 7 October 2013 World Wide Fund for Nature (WWF) filed a complaint with the United Kingdom NCP. WWF is an international non-governmental organization, WWF’s goal is to reduce humanity’s footprint on the environment and conserve the biodiversity8. According to WWF, SOCO’s oil exploration activities do not contribute to sustainable development. Because ‘SOCO has disregarded the DRCs legal commitment to preserve Virunga as a World Heritage Site’, ‘SOCO negotiated a production sharing contract (PSC) with the DRC government that includes a “full freezing” stabilization clause that effectively exempts it from any new laws or regulations’, ‘SOCO has not provided any evidence that it has conducted appropriate and systematic human rights due diligence and that it has failed to inform the public about the potential environment, health, and safety risks and impact of its activities’ and ‘SOCO’s community consultations have not been characterized by meaningful two-way communication’ (WWF International 2013a, p. 6). WWF states that ‘SOCO’s operations in Virunga are putting people, animals and habitats at risk…. And that it (SOCO’s operations) could harm the health of people who live there, and damage the natural resources that 50,000 people depend on’ (WWF International 2013b). WWF request the United Kingdom NCP to facilitate a dialogue with SOCO to discuss SOCO’s activities. WWF wants SOCO to stop all

8

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27 its activities within Virunga National Park, to respect the current boundaries of the park and to stay out of all World Heritage Sites (WWF International 2013a). According to WWF, SOCO has violated to following OECD Guidelines; Chapter VI, SOCO has neglected DRC’s legal commitment; Chapter II, Paragraph 5 and Chapter VI, ‘SOCO has negotiated a contract that contains a “full freezing” stabilization clause’ (WWF International 2013a) (rejected by the United Kingdom NCP); Chapter IV, Paragraph 5, SOCO did not provide evidence about sufficient human rights due diligence; Chapter VI, Paragraph 2a, SOCO failed to provide the public with adequate information; Chapter II, Paragraph A.14, SOCO did not use two-way communication; Chapter VI, chapeau, SOCO failed to protect the environment (WWF International 2013a).

4.1.1.2 SOCO’s perspective

On 7 October 2013 SOCO presented a statement on WWF’s complaint. SOCO denied the allegations made by WWF but welcomed a dialogue with WWF. ‘SOCO would like to make it clear that all alleged breaches of the voluntary guidelines raised are absolutely ill-founded, tendentious and not supported by facts’ ‘For the record SOCO has not commenced any operational activities and would not consider doing so until all environmental studies were fully completed’ (SOCO International Plc 2013, p. 1). SOCO argues that their operations in Virunga National Park are limited to environmental studies and social projects. Furthermore ‘SOCO would like to make clear that its operations abide by all laws and regulations set out by the Government of DRC’ (SOCO International Plc 2013, p. 1).

4.1.1.3 United Kingdom NCP’s perspective

On 15 May 2012 and 4 July 2013, WWF and SOCO hold a meeting to discuss WWF’s complaints about SOCO. WWF and SOCO were unable to find common ground. So on 7 October 2013 WWF filed a complaint about SOCO to the United Kingdom NCP. On 14 October 2013 the United Kingdom NCP shared the complaint with SOCO and asked for their response. The United Kingdom NCP received SOCO’s response on 12 November 2013, SOCO denied the allegations made by WWF but welcomed a dialogue. In November 2013 the United Kingdom NCP had separated meetings with WWF and SOCO. The United Kingdom NCP investigated the case and accepted most parts of the complaints, only the “full freezing” stabilization clause complaint was rejected. The United Kingdom NCP published their initial assessment in February 2014 (United Kingdom NCP 2014a). On 18 May 2014 and a few days later, WWF and SOCO had two meetings with an independent mediator offered by the United

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28 Kingdom NCP9. These meetings resulted in an agreement and joint statement on 11 June 2014. SOCO agreed ‘not to undertake or commission any exploratory or other drilling within Virunga National Park unless UNESCO and the DRC government agree that such activities are not incompatible with its World Heritage status. SOCO commits not to conduct any operations in any other World Heritage site.’ ‘SOCO confirms that when we undertake environmental impact assessments and human rights due diligence, the processes we adopt will be in full compliance with international norms and standards and industry best practice’ (United Kingdom NCP 2014b). ‘The NCP’s report of the agreement in this Final Statement concludes the process and closes the complaint. The NCP will not make any further examination of the issues raised in the complaint and will not make any follow-up statement because the parties’ agreement does not provide for this (United Kingdom NCP 2014b).

By these promises of SOCO, WWF’s wishes became reality. The WWF-SOCO agreement is the first time a company agreed to stop their operations during NCP-facilitated mediation10.

9http://www.oecdwatch.org/cases/Case_307, accessed on 10 December 2015. 10

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29 Scheme SOCO, source: author.

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4.1.2 Shell

Royal Dutch Shell (Shell) is an Anglo-Dutch multinational oil and gas company with its headquarters in the Netherlands. Shell is active in every area of the oil and gas industry. In this case the Dutch NCP is involved.

4.1.2.1 Amnesty International and Friends of Earth International’s perspective

Amnesty International is an NGO focused on human rights. Its goal is to do research and create action to prevent and end human rights violations and to demand justice for people whose rights have been violated11. Friends of Earth International is an international network of environmental organizations. Their vision is ‘of a peaceful and sustainable world based on societies living in harmony with nature’12. On 30 December 2011, Amnesty International and Friends of Earth International together filed a complaint about Shell with the Dutch NCP. They claim that Shell violated human rights and environmental provisions of the OECD Guidelines at its oil operations in Ogoniland, Nigeria. Amnesty International and Friends of Earth International argue that Shell violated the OECD Guidelines because they caused pollution and reacted slow and inadequate to the oil spills. Furthermore, the complainants claim that Shell’s control and maintenance of oil infrastructure is insufficient. Shell failed to do sufficient clean ups of the oil spills and to take appropriate action and remediation. Due to the oil pollution the local communities face difficulties; for example they cannot fish anymore and their crops are polluted andtheir source of income is in danger. Furthermore, the local communities face health problems and their ground water is polluted, so Shell violated human rights of the local communities. In addition, the complainants argue that Shell had breached consumer interests. Moreover, they argue that the information about these matters provided by Shell is incorrect, misleading and unsubstantiated. Amnesty International and Friends of Earth International base their arguments on the United Nations Environment Programme (UNEP) report and the complainants documented the impact of the oil industry on human rights and the environment in the Niger Delta for many years. Shell reacted to the UNEP report; however UNEP argues that Shell’s statements are false. The communications and practices of Shell has breached several OECD Guidelines, specifically section III (disclosure), section IV (human rights), section VI (environment) and section VIII (consumer interests). Moreover, the OECD Guidelines demand MNEs to reveal information on foreseeable risk factors, and Shell failed to accomplish this demand.

11https://www.amnesty.org/en/who-we-are/, accessed on 23 January 2016. 12

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31 On 21 March 2013, the Dutch NCP published concept final statement, which stated that no agreement could be reached and it included recommendations. The Dutch NCP found that Shells statements are based on disputed evidence and flawed investigations. On 19 June 2013, Amnesty International and Friends of Earth International responded to this concept final statement,arguing ‘that the NCP should have much further in its criticism of Shell’ (Dutch NCP 2014a). Because ‘the NCP did not comment on whether Shell’s failures constituted a breach of the Guidelines. It did not make a full assessment of the evidence provided and it failed to investigate whether Shell’s statements were indeed misleading. Amnesty International and Friends of Earth International repeatedly expressed serious concern that this approach effectively left unaddressed all past harm done to the people of the Niger Delta as a result of Shell’s misleading statements’ (Friends of Earth International & Amnesty International 2013). Furthermore, the complainants argue that ‘the NCP is not fit for the purpose. It has proven unable or unwilling to tell Shell it should accept responsibility for its mistakes. It is time that the Dutch government introduces a corporate accountability supervisory body with strong teeth’ (Friends of Earth International & Amnesty International 2013). The complainants argue that there is a serious problem with the NCP process, namely ‘the company was able to set many of the parameters for the dialogue and the NCP was unable to deal the substance of the complaint’ (Dutch NCP 2014a). Therefore, on 17 June 2013 the complainants decided to withdraw a second complaint, they do not believe that the NCP can create a meaningful outcome.

The complainants reacted to the draft final statement on January 17 2014, ‘by stating that they did not agree with the interpretation by the NCP of the situation that exists after the so called “withdrawal of the complaint”’ (Dutch NCP 2014a). On February 2014, the NCP discussed the withdrawal with the complainants, the outcome of the meeting was a better understanding.

4.1.2.2 Shell’s perspective

In their response, on 7 January 2013, Shell says: ‘we take our responsibilities in Nigeria, as we do wherever in the world we operate, very seriously. We are committed to cleaning up all spills from our facilities, whatever the cause, and to paying fair compensation to people affected by operational spills, as required by Nigerian law’ (Shell 2013). Furthermore, Shell claims that criminality causes the majority of oil spilt in Nigeria, which is a real tragedy and all organizations in Nigeria should focus on this problem. In their response to the concept final statement by the Dutch NCP Shell stated that ‘SPDC has welcomed the UNEP report

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32 and is advocating more concerted efforts by all stakeholders in the hopes that the report will drive real change in Ogoniland and the wider Niger Delta’ (Dutch NCP 2014a).

4.1.2.3 Dutch NCP’s perspective

On 30 December 2011 the complaint was filed with the United Kingdom NCP and the Dutch NCP;the NCPs decided that the Dutch NCP would take the lead. The Dutch NCP accepted the case but put it on hold until a related complaint filed in January 2011 was concluded. The outcome of the related case was a disappointment for the complaints. In February 2012 the Dutch NCP attempted an initial assessment of Amnesty International and Friends of Earth International’s claim and concluded that the complaint merit further consideration.

In February 2012 the Dutch NCP published its initial assessment and concluded that the specific instance merited further consideration. The NCP was not able to facilitate a mediation between Shell and the complainants. Shell did not want to discuss the complaint with the complainants and the complainants agreed to step back to facilitate the process. The demands of Shell were unacceptable for the complainants, including that the complainants could not campaign on certain cases during the NCP process. The organizations refused to guarantee these demands (Friends of Earth International & Amnesty International 2013).

On 21 March 2013, the Dutch NCP published concept final statement, which stated that no agreement could be reached and it included recommendations. The Dutch NCP found that Shells statements are based on disputed evidence and flawed investigations. Taken the comments of Shell and Amnesty International and Friends of Earth International into account, the Dutch NCP sent its draft final statement for comments to both parties on 30 December 2013.

In September 2014 the Dutch NCP published their final statement concluding that Shell accepted that the complex situation in Ogoniland has a negative influence on local living circumstances and the rights of many people and that Shell was part of the problem. The Dutch NCP expects Shell to regard the rights of the local people and provide access to proper remedy. Besides, the Dutch NCP recommended that Shell should share data from previous years as they do with data since 2011. Furthermore, the NCP remains open to play a role in future dialogue between Amnesty International, Friends of Earth International and Shell.

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33 Scheme Shell, source: author

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34

4.1.3 Innospec

27th of August 2011, the LEAD Groups filed a complaint about Innospec Inc, Xstrata and tetraBOOST Ltd., the companies have violated the Environment Chapter of the OECD Guidelines. This thesis focuses on the complaint against Innospec Inc. Innospec Specialty Chemicals (Innospec) is a global specialty chemical company. Innospec covers three business units: Fuel Specialties, Performance Chemicals and Octane Additives. Innospec is headquartered in the United States. In this case the United States NCP is involved.

4.1.3.1 The LEAD Group’s perspective

The Lead Education an Abatement Design Group (LEAD Group) is an NGO who wants to eliminate lead poising globally. Furthermore, they want to protect the environment from lead13. Innospec is the only distributor of Tetra Ethyl Lead (TEL) for leaded gasoline. The LEAD Group wants an end to TEL sale, because it violates the OECD’s Environment Guidelines for MNEs (O’Brien 2011). ‘The estimated global annual impacts of lead in fuels were found to be significant: close to 1.1 million deaths, a loss of 322 million IQ points, close to 60 million crime cases, economic loss of USD 2.4 trillion per year’ (O’Brien 2011, p. 3). The civil society in the six countries, Afghanistan, Algeria, Iraq, Myanmar, Democratic People’s Republic of Korea and Yemen, were TEL is sold do not have NGOs to speak for them, therefore The LEAD Group asked the United States NCP for help (O’Brien 2011). On 27 August 2011, the LEAD Group filed the complaint with the United States NCP. The LEAD Group based their arguments on information from the UN Environment Program’s Partnership for Clean Fuels and Vehicles (United States NCP 2012).

On 13 October 2011, the LEAD Group argues that Innospec does not conform to Section VI, specially paragraphs 1 (a, b and c), 2 (a and b), 3, 6 (a, b, c and d), 7 and 8, of the OECD Guidelines, ‘take due account of the need to protect the environment, public health and safety’ (Gethin-Damon & O’Brien 2011, p. 2). According to the LEAD Group, ‘Innospec should buy back stocks of TEL from the six countries and replace them with their non-leaded octane enhancers’ (O’Brien 2011, p. 2). The LEAD Group asked the United States NCP to organize a mediation meeting.

4.1.3.2 Innospec’s perspective

On 4 October 2011, Innospec contacted the United States NCP and told them that they had no previous interaction with The LEAD Group. Innospec stated that The LEAD Group’s

13

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35 complaint had some inaccuracies and misunderstandings. ‘Innospec stated that it saw no merit in The LEAD Group’s complaint and was considering not engaging in the specific instance process’ (United States NCP 2012). On 5 October 2011 Innospec informed the United States NCP that it had not sold TEL to Burma, North Korea or Afghanistan. Later Innospec refused to engage in the process: ‘After further internal consideration, Innospec decided it would be unproductive to engage in the process, stating that it believed the LEAD Group’s request to close down all TEL production for leaded gasoline and cease sales prior to the end of 2011 was unrealistic’ (United States NCP 2012).

4.1.3.3 United States NCP’s perspective

The LEAD Group filed their complaint with the Australian, Swiss, United Kingdom and United States NCPs. The NCPs agreed to collaborate and that the United States NCP will take the lead in dealing with the Innospec case14. After initial assessment, the United States NCP accepted the case for further consideration. The United States NCP offered to host a mediated dialogue, but Innospec refused because the complaint was inaccurate and Innospec did not believe that The LEAD Group would participate in good faith dialogue. As a result, the United States NCP concluded that mediation was impossible; in February 2012 they published their final statement without making an analysis to whether Innospec had violated the Guidelines15. The United States NCP encouraged Innospec and The LEAD Group ‘to consider how to achieve the conditions necessary for a good faith dialogue on this matter’ (United States NCP 2012, p. 3).

14http://www.oecdwatch.org/cases/Case_241, accessed on 12 December 2015. 15

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36 Scheme Innospec, source: author.

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