Corporate Social Responsibility Home And Away

The Age

Thursday June 14, 2007

Serena Lillywhite

Companies doing business abroad should uphold corporate practices too, writes Serena Lillywhite.

TAKING ownership of the environmental and social impacts of business is becoming a critical aspect of responsible corporate activity. There is a stronger focus now on corporate social responsibility (CSR) in Australia and a resolve by community organisations to monitor local companies.

Some of those organisations are using international guidelines developed by the Organisation of Economic Co-operation and Development (OECD), to which Australia is a signatory, to take businesses to task for what they see as corporate irresponsibility.

Two recent Federal Government inquiries into corporate social responsibility - by the Corporations and Markets Advisory Committee and the Parliamentary Joint Committee on Corporations and Financial Services - both recommended that the voluntary framework for CSR continue.

However, the OECD's Guidelines for Multinational Enterprises may prove to be the "sleeping watchdog" for Australian companies involved in cross-border trade and investment. If such companies are not already familiar with the guidelines, they should begin taking note.

The guidelines are the best existing multilateral mechanism to promote corporate accountability and sustainable development. They are a non-binding means by which governments can urge companies to embrace ethical business practices, and they cover issues such as labour and human rights, bribery and corruption, the environment, consumer interests and disclosure of information.

It is the "specific instance" complaint mechanism that makes the OECD guidelines an important tool for encouraging corporate social responsibility. Any individual or organisation, such as a trade union or non-government organisation, can use this mechanism to raise concerns - based on evidence - about the ill effects of business activities that breach the guidelines.

Because the guidelines are non-binding, there is no penalty. However, the drawbacks for companies found to be at fault include negative publicity. The benefits include a mediation process that helps them improve their practices, and encourage engagement and discussion with stakeholders.

Being the subject of a complaint is not a remote possibility. Since 2000, there have been more than 110 cases raised internationally, against enterprises frequently operating in emerging economies and in conflict zones. Most of these have involved breaches of the guidelines' environmental, human rights, employment and consumer interest principles.

As a signatory to the guidelines, the Australian Government's responsibilities include active promotion and investigating such "specific instance" complaints. This task now falls on one Treasury official who is the "national contact point" for the guidelines (see www.ausncp.gov.au).

The complaint mechanism was tested here in 2005-06 when the Brotherhood of St Laurence, in partnership with four other non-government organisations, used the human rights and consumer interest principles of the guidelines to raise a case against Global Solutions Limited (Australia), the company responsible for managing immigration detention centres. The organisations accused the company of human rights violations.

The result, after mediation between the organisations and the company, was improvements in the wellbeing of detainees and an enhanced corporate culture and practices for Global Solutions.

This case, while highly sensitive, is internationally recognised as a "best practice" use of the OECD guidelines to encourage greater corporate accountability.

Last year, the Australian Conservation Foundation also tried to use the complaint mechanism, against ANZ bank, for allegedly financing unsustainable logging in Papua New Guinea. The case was rejected by the Australian Government on the basis that there was an insufficient investment relationship between the bank and the logging company.

Australian companies doing business abroad are well advised to seriously consider and uphold the OECD Guidelines for Multinational Enterprises. Effectively, they comprise a watchdog that is increasingly being used by civil society to ensure that voluntary mechanisms have the teeth to bring about better corporate practices.

Serena Lillywhite is manager, ethical business, at the Brotherhood of St Laurence. She is presenting a paper on June 18 in Paris at the OECD annual Roundtable on Corporate Social Responsibility.

© 2007 The Age

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