Norges Bank Investment Management (“NBIM”) welcomes the Stocktaking of the OECD Guidelines for Multinational Enterprises (“the Guidelines”).
NBIM is responsible for investing the Norwegian Government Pension Fund Global. As a long-term investor, we consider our returns over time to be dependent on sustainable development in economic, environmental and social terms.
We support the OECD Guidelines and the National Contact Point (“NCP”) mechanism. The Guidelines are referenced in our management mandate, they form part of our responsible investment policy, and our expectations of companies on sustainability topics are based on the Guidelines. In our view, the Guidelines and associated Guidance have contributed to levelling the playing field by providing a global standard for responsible business conduct.
The report highlights new trends since the last update of the Guidelines which are not necessarily reflected in the current standards. For instance, we agree that there could be further clarity on responsibilities across complex corporate structures and value chains and see the benefits of further guidance from the OECD. We also note the significant developments in sustainability reporting and lack of uniform metrics to assess company performance on responsible business conduct.
With regards the NCP mechanism - as raised by several stakeholders - it is important that the NCPs apply the requirements in the Guidelines in a uniform manner when considering further examination of a specific instance. The requirements have been set by OECD Member States and should prevail over - and not be diluted by - subsequent interpretations. They are supposed to constitute a real threshold, with an examination of whether there are indications of a norm violation, to prevent abuse of process. A decision to open a case can have significant consequences for the dependent party. An important requirement is that there must be an actual (“bona fide”) issue, and the issue must be both material and substantiated. We believe additional attention from the OECD on consistent application of these requirements in situations where an entity may be directly linked to a potential norm violation through a business relationship, but not itself causing or contributing to a potential violation, would be beneficial.
Another core criterion in the Guidelines is that the NCPs shall promote functional equivalence to prevent the problem of “forum/NCP-shopping”. The Guidelines and adherent procedural system were not set up with the purpose of targeting multinational enterprises regarded as “best in class” with specific instances and by correlation getting the NCPs considered as the most active to accept a case. Rather, specific instances should be reserved for issues that constitute risks of breaches of the Guidelines. The promotion of good practices – in itself an important objective – should be pursued through other means. We would welcome further efforts by the OECD to strengthen the functional equivalence of NCPs and preserve the legitimacy of the NCP mechanism.
Carine Smith Ihenacho
Chief Corporate Governance Officer
Senior Analyst, Corporate Governance