Archived press release

Government failing to stop UK company abuses overseas

10 January 2006

People in developing countries are exposed to human rights abuses, environmental degradation and economic loss because the UK Government is failing to effectively implement its flagship "CSR" scheme for corporate behaviour overseas, a new report published today reveals.

The "Flagship or failure?" report [1], jointly published by Friends of the Earth, Christian Aid and Amnesty International UK, finds that despite vaunting the importance of the OECD Guidelines for Multinational Enterprises [2], which set out responsible principles for business, the UK Government has done little to enforce these standards.

"Flagship or failure?" highlights the Government's failure to adequately investigate complaints made under the guidelines and its unwillingness to declare companies in breach of the guidelines. Despite numerous complaints about company behaviour and clear evidence to the contrary, the UK Government has yet to find a single UK company in violation of the guidelines.

For example, in 2002, a UN report accused companies of profiteering from the exploitation of natural resources and of contributing to human rights abuses during the armed conflict in the Democratic Republic of Congo [3]. Eighteen British-based companies were listed by the UN as being in breach of the Guidelines Complaints were made to the UK Government's National Contact Point (NCP)- the body within the Department of Trade and Industry responsible for implementation - concerning four of the companies. But the NCP failed to declare that any of the guidelines had been breached and its investigation was severely criticised by MPs.

The Government is currently carrying out a review of implementation of the Guidelines. The "Flagship or failure?" report has been submitted in evidence.

One of the report authors, Tom Fyans of Amnesty International UK, said:

"The UK Government has been playing to the gallery - championing the OECD guidelines as a flagship initiative for encouraging good corporate practice, while it lacks the political will to enforce them. Initiatives of this kind can only work if there is a clear incentive for companies to implement good practice, and sanctions if they don't. The Government must be seen to be enforcing these guidelines if they are to be worth the paper they are written on."

The Government has made much of the importance of voluntary standards for improving company behaviour, denying the need for a tighter regulatory framework. But evidence in the report suggests that this strategy is failing developing countries because of UK company abuses overseas.

Tom Fyans continued:

"The Government needs to get it's own house in order. Alleged breaches of the guidelines must be fully investigated, transparency must be improved, and the NCP's Final Statements must include clear recommendations for improving company behaviour in the future. Without these improvements, the guidelines will continue to lack creditability and become completely redundant."

Amnesty International, Christian Aid and Friends of the Earth believe the UK Government has a duty to ensure that UK company investments are not effectively exporting human rights abuses and environmental destruction. They want to see more done to effectively implement the OECD guidelines for UK companies as well as more comprehensive and more effective regulatory frameworks at national and international level.

Notes

[1] "Flagship or failure? The UK's implementation of the OECD guidelines and approach to corporate accountability" is jointly published by Friends of the Earth, Christian Aid and Amnesty International UK. See
www.foe.co.uk/resource/reports/flagship_or_failure.pdf (PDF)

[2] The OECD Guidelines for Multinational Enterprises apply to multinational companies operating in and from the 30 member countries of the OECD and cover disclosure of information, bribery, environment, consumer interests, employment and industrial relations and competition and taxation.

[3] In 2000 the UN Security Council established a panel of experts to examine links between business, resource exploitation and conflict in the Democratic Republic of Congo (DRC). The Panel reported in 2002 that 85 companies were in violation of the OECD Guidelines. Dossiers on some 11 companies were referred to NCPs in Belgium, Germany and the UK for investigation.

See: www.nisat.org/sanctions%20reports/DR%20Congo/ ¬
UN%202002-10-16%20DR%20Congo.pdf (PDF†)

Flagship or failure? (PDF†)

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Published by Friends of the Earth Trust