2023-09-01
No agreement in mediation between NGOs and Aker
Article
The mediation regarding an alleged breach of the OECD Guidelines related to the merger of Lundin Energy and Aker BP, did not result in an agreement between the parties. Swedwatch and the other organizations behind the complaint, will now await the final statement from the Norwegian National Contact Point, hoping that it will clarify corporate responsibilities in the case.
The mediation of human rights complaints regarding Aker BP’s merger with Lundin Energy did not result in an agreement between the parties. Three South Sudanese and five European organizations, including Swedwatch, submitted complaints in May 2022 that Aker BP and Aker ASA had breached the OECD Guidelines for Multinational Enterprises on Responsible Business Conduct.
The complainants argued that the Aker companies had not conducted adequate human rights due diligence on the merger – a key OECD requirement – and that the structure that was chosen for the merger would forever deny justice to victims of war crimes. The Norwegian National Contact Point (NCP), that handles complaints about breaches of the Guidelines, found the complaints admissible and invited the parties for dialogue with an initial three-day session taking place in Oslo on August 23-25. Unfortunately, this did not resolve the issue.
As the mediation did not result in an agreement, the NCP will itself examine the complaint to assess whether it is justified. This usually takes several months.
"It is unfortunate that we did not reach a mediated agreement. However, I hope that the assessment from the NCP can clarify what proper human rights due diligence looks like in these contexts, particularly with regards to remedy for those who might have been impacted by the Lundin activities in Sudan", says Olof Björnsson, Swedwatch, who took part in the dialogue.
Before its merger with Aker BP, Lundin Energy was split into two legal entities, one comprising 98% of the company, and another one with 2%. The small one, Orrön Energy, would own Lundin’s legacy in South Sudan, including the war crimes trial and all related risks and liabilities. The large entity merged with Aker BP to form a combined company, called Aker BP. This is now the second largest oil producer in Norway. Despite the fact that 98% of Lundin is now Aker BP, Aker BP denies any links with Lundin other than its oil assets. This way, the merger separates the shares of the Lundin family and other shareholders in Lundin Energy from Lundin Energy’s past.
The eight organizations argue that Aker BP is a combined company. As it comprises the essence of Lundin Energy, it holds its human rights legacy too. Swedwatch, together with the other organizations that filed the complaint, argue that human rights legacies of corporations cannot be divided and restructured as if they were commercial assets. Business law is meant to facilitate economic development, not to serve companies to escape accountability or deny victims their right to justice.
- Focus Areas: High-risk and conflict areas
- Publication: Article
- Region: Middle East and Africa
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13 May, 2024
Sweden’s CSDDD U-turn crucial step forward
Sweden's CSDDD U-turn crucial step forward
The imminent final approval of the EU’s Corporate Sustainability Due Diligence Directive (CSDDD) is a significant moment for human rights and environmental protections in business – but no one can deny the path to adoption was twisted and torturous.
The European Parliament’s latest approval, paves the way for EU Member States to green light a law in Council which would obligate companies in scope to identify and address human rights and environmental harms connected to their activities. In a remarkable turn of events, Sweden has come around to endorse the directive. Ahead of pivotal EU Council meetings on 15 and 24 May, this confirms that support amongst Member States to formally adopt it has never been broader.
The curious case of Sweden
Sweden’s attitude during the CSDDD negotiations has been one of many twists and turns. Whereas the previous government generally supported the idea of mandatory due diligence, Sweden’s current centre-right coalition has been much more sceptical. This became evident when the Council negotiated its approach ahead of trilogue discussions with the European Commission and Parliament. During one meeting in December 2022, Sweden’s Minister of Industry Ebba Busch expressed her preference for legislation that reduced the administrative burden on companies, stuck to the concept of “supply chain” as opposed to “value chain”, limited company scope and omitted civil liability. The government nonetheless backed the Council’s negotiating position in good faith, despite it not addressing all of its reservations.
This diplomatic position fell apart shortly after co-legislators reached a political agreement in trilogue negotiations, with media reporting Sweden was isolated as the only member state intending to vote against the deal, alongside some of its peers which planned to abstain from voting. Swedish NGOs, unions and academics unanimously called the move “deeply unfortunate and surprising”, while also at odds with the government's earlier backing of the Council’s position and a 2018 recommendation by the Swedish State Treasury to harmonise business requirements with the UN Guiding Principles on Business and Human Rights. A communication from the Swedish Institute for Human Rights implored the government to reconsider its stance.
Swedish businesses leading the way
Equally puzzling was the clear disconnect between Sweden’s attempt to safeguard its industry from overregulation and Swedish businesses favouring common rules on corporate sustainability. Indeed, it was precisely the absence of regulatory oversight which for decades had given unscrupulous companies a competitive advantage over those trying to adhere to voluntary principles on business and human rights. If anything, the CSDDD offered companies a unique opportunity to level the playing field, building on established best practice.
Prominent Swedish companies repeatedly voiced their support for the CSDDD. IKEA, Volvo Cars Group and Ericsson, among others, urged the government to enact a directive in line with international normative frameworks. In April 2024, Scania, H&M Group and Axfood reminded decision-makers the directive “fosters collaborative approaches on sustainability between business partners”, hailing its implementation as “manageable”.
The final U-turn
When on 15 March EU ambassadors finally agreed on a weakened compromise – the law now only applies to companies with more than 1,000 employees and an annual turnover of over €450 million as opposed to the previously agreed 500 employees and €150 million – Sweden surprisingly refrained from casting a “no-vote” but instead abstained from voting. Perhaps the multi-stakeholder pressure and critique from opposition parties had something to do with this; just days before the COREPER deal the minister’s mandate to vote no had been challenged in a parliamentary debate.
Fast forward to 21 March. When asked about its position on the CSDDD at a parliamentary committee meeting, the minister’s State Secretary declared that “with the changes made in the final stages of the negotiations (...) the compromise text, on the whole, moved in such a positive direction in terms of the Swedish position that Sweden can support it”. Sweden is thus about to adopt a law which includes elements it initially opposed. While the reduction of the company scope to only very large undertakings presumably satisfied the government, other parts it hoped to see deleted - such as civil liability and downstream due diligence - remain present in the text. Its acceptance of civil liability in particular marks a key win for rights holders, as this will enable them to hold companies responsible for human rights and environmental harm.
In its national action plan on business and human rights, Sweden set out a clear expectation that companies must comply with internationally recognised frameworks. It appears that the government is now finally upholding this commitment. But more importantly, Sweden’s support demonstrates there is a decisive affinity within the Council to once and for all hold companies accountable.
Mathieu Vervynckt is Head of Unit for fair and responsible value chains at Swedwatch, a Swedish independent, non-profit research organisation striving to empower rights holders and to promote responsible business practices.
Mathieu Vervynckt is Head of Unit for fair and responsible value chains at Swedwatch, a Swedish independent, non-profit research organisation striving to empower rights holders and to promote responsible business practices....
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19 March, 2024
The future of due diligence in garment manufacturing
The future of due diligence in garment manufacturing
Photo: Awaj FoundationThe need for binding regulations and actions brands can take to promote living wages were key topics at a recent OECD meeting, where stakeholders gathered to discuss responsible due diligence in the garment and footwear sector. Read our analysis.
Since its adoption in 2017, the OECD Due Diligence Guidance for Responsible Supply Chains in the Garment and Footwear Sector (hereafter “the Guidance”) has become accepted as the landmark framework for the sector. But despite some positive developments, the industry continues to grapple with systemic issues - from worker exploitation to environmentally damaging practices - and with the Pandemic and recent economic developments exacerbating existing pressures.
Against this backdrop, representatives of government, business, trade unions, civil society and academia recently met at the OECD premises in Paris to discuss challenges for the garment industry, with focus on how meaningful due diligence work can be a tool for improvement.
Swedwatch, with its long-term engagement in workers’ rights and role in promoting the Guidance, participated in the event. While a vast number of topics were discussed, here are some overarching themes we find likely to shape future due diligence practices.
Need for harmonized and binding regulations – as a baseline
Given limited improvement for workers and despite the development of several frameworks including the Guidance, many speakers expressed their support of binding regulations, like the currently negotiated EU corporate due diligence directive (which since have been passed by the EU Council, however severely watered down). Bärbel Kofler, state secretary of the German Federal Ministry of Economic Cooperation and Development, highlighted the positive effects of the recent German Supply Chain Due Diligence Act as an example of proof that such regulations can be very impactful.
There was a common understanding that binding due diligence regulations should be considered a baseline and need to be complemented with sector agreements and specific laws.
Why should those companies who invest more also pay more? So, I am arguing for mandatory binding legal frameworks. Minimum rules about the basics, don’t use forced labour, allow union rights etc. /Bärbel Kofler
Far from living wages - buyers need to step in
The lack of decent pay, i.e. sufficient for a worker to afford a decent standard of living, was central to many panel sessions. It was pointed out that most producers still struggle to pay minimum wages and that current purchasing practices compel suppliers to take cost-cutting measures at the expense of worker wages and safety. Going forward the enforcement of responsible purchasing practices (including fair payment terms, sustainable costing and collaborative product planning) by brands is therefore central. Long-term cost benefits were also discussed in the context of wages. Decent pay could reduce turnover, lead to higher productivity and a decrease of textile waste, which would benefit all stakeholders.
Adapting due diligence to circular processes
As the demand for recycled materials and processes surges, new high-risk stages and actors are added to supply chains and must be incorporated into companies' due diligence scope. Examples were given from India where used textiles pass several, often informal, waste management companies before reaching their destination and workers involved in sorting and reprocessing materials face hazardous work conditions.
Panellists also highlighted the need for regulations in this area, including the proposed EU Textile Directive for Extended producer responsibility, as well as the need for buyers to engage with suppliers in skills development and cost-sharing related to recycling.
Climate has become a worker's right issue
While many companies' commitments to cutting emissions are long term, climate change is impacting workers and communities here and now. A scientist from ILR Global Labour Institute shared data on the predicted increases in temperatures in key production centers such as Karachi, Colombo and Dhaka, which will lead to unbearable temperatures in garment factories, along with data on economic damage caused by heat waves and flooding.
Suggestions of what companies can do to increase their climate adaption engagement included being flexible on order in terms and conditions, supporting altered work hours and adequate rest and elaborating with cost-sharing models for investment in production facility adaption. Again, the importance of responsible purchasing practices was highlighted. Panelist Kalpona Akter, Executive Director of Founder of BCWS, talked about ways for companies to adress climate adaption, advising them to, simply, consult factory workers' to understand what new climate related work issues they face, and make an plan based on that.More in-depth info on the various topics can be found on the OECD Forum event page, including recordings to some of the sessions.OECD guidelines
The garment and footwear sector is one of the largest consumer goods sectors in the world. The OECD Due Diligence Guidance for Responsible Supply Chains in the Garment and Footwear Sector establishes a common understanding of due diligence in the sector to help companies meet due diligence expectations.OECD Forum side session arranged by Swedwatch: How can public procurement make a change? Watch the recording 👇🏼Side session highlights:
✔️Public authorities across the EU are major textile purchasers
✔️Public procurement can be used as a lever to promote decent work
✔️A revised EU regulatory framework is needed to ensure public procurement promotes positive impacts
✔️Public authorities should include due diligence requirements in contracts – Sweden is leading with good examplesRelated Swedwatch reports
Contact
Sofia Käll, Programme Officer+46 (0)73 223 02 85sofia@swedwatch....
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Supply chains
15 March, 2024
Weakened EU law on corporate responsibility voted through
After several rounds of negotiations, EU member states finally voted in favor of a directive on corporate responsibility for human rights and the environment. Swedwatch welcomes the fact that the directive has passed an important formal stage, but deeply regrets the extensive dilution that the recent renegotiations have resulted in.
EU member states on March 15 finally passed the directive on corporate responsibility for human rights and the environment, the Corporate Sustainability Due Diligence Directive (CSDDD), in the Council's preparatory body COREPER. However, the renegotiated version contains several compromises and last-minute changes due to political maneuvers. Among other things, the law will only apply to companies with more than 1000 employees and an annual turnover of over 450 million euros, an increase from the previous 500 employees and 150 million. According to an estimate from the organization SOMO, this means that in practice only around 5400 – corresponding to 0.05 percent – of companies in the EU are be covered.
"We welcome the fact that the directive was voted through, but it is difficult to be pleased when the content has been watered down in a number of important areas. The fact that so few companies are covered is an incredible erosion of the purpose of the law; to protect the environment and people whose rights are violated in global value chains. That Sweden could not even support this version is incomprehensible," says Alice Blondel, head of office at Swedwatch.
More on the topic:
EU document with the agreed text
Learn more about the compromises agreed on between the member states March 15 in an analyse by ECCJ
Extensive analysis from Swedwatch (note well that the analysis is based on the previous political agreement, reached in December 20...
