I am not alone. In fact, the following international guidelines promote conducting effective due diligence and establishing responsible business conduct for all enterprises: The OECD Due Diligence Guidance for Responsible Business Conduct[i] provides practical support to enterprises on the implementation of the OECD Guidelines for Multinational Enterprises[ii] and UN Guiding Principles on Business and Human Rights.[iii] While these guidelines are most commonly applied to businesses, I would like to illustrate why we should expect all enterprises, including sustainability multi-stakeholder initiatives (MSIs), to operate in conformance with these standards. I will do so by reviewing a recent complaint made against Bonsucro Ltd, a UK-registered non-profit company and MSI for the sugar industry.
The complaint was issued by three human rights organizations to Bonsucro in March of 2019 for its breaches of the OECD Guidelines for Multinational Enterprises. Specifically, the complaint accuses Bonsucro of failing to: conduct sufficient due diligence of its members; implement a grievance mechanism, including resolution of legitimate concerns; and leverage its influence to prevent, mitigate or remediate an adverse impact. The March 2019 complaint builds on an earlier complaint made to Bonsucro in 2011 citing harm caused by Mitr Phol Group, a sugar producer and member of Bonsucro, on behalf of approximately 3,000 people who were forced from land to which they claimed rights—albeit undocumented—under Cambodian law.[iv] The evictions, which took place between 2008 and 2009, were facilitated by the Cambodian government after Cambodia’s Ministry of Agriculture, Forestry and Fisheries granted three 70-year economic land concessions (ELCs) to three companies connected to Mitr Phol Group for industrial sugarcane production. I would like to note that Mitr Phol Group cancelled the three ELCs in 2015 and requested that the government of Cambodia return the communities that were forcibly removed in 2008 and 2009. While the displaced people presumably were allowed back onto their land in 2015, no compensation or restitution was made for the hardships the families endured over the seven to eight year period when they were evicted from the land.
In response to the 2011 complaint, Bonsucro claims to have completed a review of the complaint and that no further action was necessary citing, in part, that Mitr Phol had publicly committed to improving social, environmental and economic sustainability of their sugar production. However, there was no mention of any requirement or expectation for Mitr Phol to avoid, mitigate and remediate harm—requirements set forth in OECD Guidelines for Multinational Enterprises and UN Guiding Principles on Business and Human Rights and OECD Due Diligence Guidance for Responsible Business Conduct.
The complainants, Inclusive Development International, Equitable Cambodia and the Cambodian League for the Promotion and Defense of Human Rights, originally took action by citing Bonsucro for violating their responsibility to avoid contributing to adverse human rights impacts through their members’ activities, and to address such impacts when they did occur, including through commensurate remediation under the OECD Guidelines and the UN Guiding Principles on Business and Human Rights. In 2012, Mitr Phol Group had voluntarily withdrawn its membership in Bonsucro, rather than addressing the original complaint brought forth in 2011.
At the time that Mitr Phol Group voluntarily given up its membership, Bonsucro had assured the complainants that Mitr Phol Group would have to re-engage in the complaint’s resolution process for its membership to be reinstated—a process that the complainants state never occurred. However, Mitr Phol Group was reinstated as member of Bonsucro in 2015 despite its failure to remediate the harm it caused to those evicted from their land for several years.
The complainants view Bonsucro as a business that is obliged to operate in conformance with OECD Guidelines on Multinational Enterprises. Bonsucro now stands accused of the following breaches of OECD Guidelines on Multinational Enterprises, each of which is cited in the associated footnote:
· Direct linkage to adverse human rights impacts as a result of its business relationship with Mitr Phol Group[v]
· Failure to carry out due diligence[vi]
· Failure to use its leverage to mitigate adverse human rights impacts[vii]
· Illegitimate and ineffective complaints resolution process[viii]
· Weak human rights policy commitments[ix]
Given the nature of the complaints to Bonsucro, I reviewed Bonsucro’s position on undocumented land rights, which is addressed in its Guidance for the Production Standard, Criterion 1.2: To demonstrate clear title to land and water in accordance with national practice and law.
Let me share a few relevant highlights from the guidance with you:
The operator shall identify the local communities and their use of lands and water to identify relevant customary and statutory land users and their rights.
When statutory, customary or user right of land has been relinquished (for example if the land has been sold or rented out) by a third party to the benefit of the operator, the operator shall demonstrate that the decision was:
· taken by Free Prior Informed Consent taking special care of collecting the views of affected parties and vulnerable groups, including, but not limited to, women, and
· negotiated (potentially including provision for fair compensation).
In cases where the operator is involved in a conflict on right to use land or water with local communities, the operator shall carry out actions aimed to resolve such a conflict. The operator shall involve an independent third party authority such as government or local agencies, in the process. The operator shall use stakeholder consultation to achieve a negotiated resolution of the conflict (potentially including provision of fair compensation) based on Free Prior Informed and documented Consent as stated in indicator 5.8.1, which states: “Conflicts involving stakeholders (including workers and contracted workers) shall be prevented by a clear grievance and dispute resolution mechanism and if conflicts happen they must be identified and resolved in a transparent and consultative manner.”
The operator which is involved in legal action, either as claimant or defendant, shall make appropriate actions to resolve the conflict. The operator shall resolve and conform to any justice court case, court rulings, or appeals. A recognised justice system can be national or international court of law. The operator shall act toward the definitive settling of the dispute. A court decision shall demonstrate the settlement of the dispute has been reached.
In other words, any conflicts related to undocumented land rights should be resolved through a credible grievance and resolution mechanism in a transparent and consultative manner. However, there is no obligation to remediate any harm caused.
The claimants view Bonsucro as a business that is obliged to operate in conformance with OECD Guidelines on Multinational Enterprises. Bonsucro now stands accused of the following breaches of OECD Guidelines on Multinational Enterprises, each of which is cited in the associated footnote:
· Direct linkage to adverse human rights impacts as a result of its business relationship with Mitr Phol Group[x]
· Failure to carry out due diligence[xi]
· Failure to use its leverage to mitigate adverse human rights impacts[xii]
· Illegitimate and ineffective complaints resolution process[xiii]
· Weak human rights policy commitments[xiv]
I have come away from my review with many questions regarding Bonsucro’s actions (or inactions) as they relate to their due diligence and governance processes, largely because Bonsucro does not publicly provide enough information about their due diligence or grievance processes and resolutions. As an interested stakeholder, I was unable to evaluate whether or not Bonsucro takes adequate measures to uphold standards set forth in OECD Guidelines for Multinational Enterprises and UN Guiding Principles on Business and Human Rights and OECD Due Diligence Guidance for Responsible Business Conduct, namely:
· Identify whether or not Bonsucro directly or indirectly contributes to adverse human rights impacts across its membership base
· Carry out adequate due diligence of its members
· Mitigate adverse human rights impacts through its leverage as a global sustainability initiative
· Implement an effective and legitimate grievance mechanism, including a resolution process
Regardless of how this case concludes (Bonsucro plans to provide a public response soon), I hope one outcome for Bonsucro and all other sustainability MSIs is that they lead their respective sectors in establishing strong governance and due diligence standards for themselves, their members and all actors across their sectors. This effort should begin with an expectation that Bonsucro, its members and its certified businesses will publicly state and demonstrate its commitment to responsible business conduct under OECD Guidelines for Multinational Enterprises and to prevent, address and remedy human rights abuses committed in business operations under the UN Guiding Principles on Business and Human Rights. These are two of the most fundamental and widely recognized standards for responsible business that all enterprises—whether an MSI or individual business—should meet. They also set the foundation for identifying, understanding and addressing risks of harm due to an enterprise’s operations as well as promote continuous improvement.
We have a long way to go before our economies are underpinned by the protection of human rights and prevention of environmental degradation. While we need every actor in every sector to do their part, we also need MSIs to lead their members and respective sectors by example under internationally recognized responsible business conduct. As such, Bonsucro and all MSIs should explicitly recognize, adhere to the principles set forth in OECD Guidelines for Multinational Enterprises and UN Guiding Principles on Business and Human Rights, and require their members to follow suit. And those of us who play a role in policy making should take heart in the opportunity to make our own contributions to a more just and responsible economy.
[i] The OECD Due Diligence Guidance for Responsible Business Conduct provides practical support to enterprises on the implementation of the OECD Guidelines for Multinational Enterprises by providing plain language explanations of its due diligence recommendations and associated provisions. Implementing these recommendations can help enterprises avoid and address adverse impacts related to workers, human rights, the environment, bribery, consumers and corporate governance that may be associated with their operations, supply chains and other business relationships.
[ii] The OECD Guidelines for Multinational Enterprises provide non-binding principles and standards for responsible business conduct in a global context consistent with applicable laws and internationally recognized standards.
[iii] The UN Guiding Principles on Business and Human Rights are a set of guidelines for States and companies to prevent, address and remedy human rights abuses committed in business operations.
[iv] Cambodian 2001 Land Law states that, if before the effective date of the law, a person started to peacefully and openly occupy and use (Article 38) “State private land” (Article 17), then under the law he/she is a “possessor” of the property. No formal possession title is necessary to secure this right, although it is possible to obtain a possession title (Article 40). After five years of possession the possessor has the right to obtain a formal ownership title to the land (Article 30).
[v] OECD Guidelines on Multinational Enterprises, Chapter II General Policies (12): Enterprises should seek to prevent or mitigate an adverse impact where they have not contributed to that impact, when the impact is nevertheless directly linked to their operations, products or services by a business relationship. This is not intended to shift responsibility from the entity causing an adverse impact to the enterprise with which it has a business relationship.
[vi] OECD Guidelines Chapter II General Policy (A)(10): Enterprises should carry out risk-based due diligence, for example by incorporating it into their enterprise risk management systems, to identify, prevent and mitigate actual and potential adverse impacts [...], and account for how these impacts are addressed. The nature and extent of due diligence depend on the circumstances of a particular situation.
Chapter IV Human Rights (5): Enterprises should carry out human rights due diligence as appropriate to their size, the nature and context of operations and the severity of the risks of adverse human rights impacts.
[vii] OECD Guidelines Chapter II General Policy (A)(12) Enterprises should seek to prevent or mitigate an adverse impact where they have not contributed to that impact, when the impact is nevertheless directly linked to their operations, products or services by a business relationship.
[viii] OECD Guidelines Chapter IV Human Rights (6) Enterprises should provide for or co-operate through legitimate processes in the remediation of adverse human rights impacts where they identify that they have caused or contributed to these impacts.
UN Guiding Principles on Business and Human Rights, Principle 30: Industry, multi- stakeholder and other collaborative initiatives that are based on respect
[ix] OECD Guidelines Chapter IV Human Rights (4): Enterprises should, within the framework of internationally recognized human rights, the international human rights obligations of the countries in which they operate as well as relevant domestic laws and regulations, have a policy commitment to respect human rights.
[x] OECD Guidelines on Multinational Enterprises, Chapter II General Policies (12): Enterprises should seek to prevent or mitigate an adverse impact where they have not contributed to that impact, when the impact is nevertheless directly linked to their operations, products or services by a business relationship. This is not intended to shift responsibility from the entity causing an adverse impact to the enterprise with which it has a business relationship.
[xi] OECD Guidelines Chapter II General Policy (A)(10): Enterprises should carry out risk-based due diligence, for example by incorporating it into their enterprise risk management systems, to identify, prevent and mitigate actual and potential adverse impacts [...], and account for how these impacts are addressed. The nature and extent of due diligence depend on the circumstances of a particular situation.
Chapter IV Human Rights (5): Enterprises should carry out human rights due diligence as appropriate to their size, the nature and context of operations and the severity of the risks of adverse human rights impacts.
[xii] OECD Guidelines Chapter II General Policy (A)(12) Enterprises should seek to prevent or mitigate an adverse impact where they have not contributed to that impact, when the impact is nevertheless directly linked to their operations, products or services by a business relationship.
Chapter IV Human Rights (3) Enterprises should, within the framework of internationally recognized human rights, the international human rights obligations of the countries in which they operate as well as relevant domestic laws and regulations seek ways to prevent or mitigate adverse human rights impacts that are directly linked to their business operations, products or services by a business relationship, even if they do not contribute to those impacts.
[xiii] OECD Guidelines Chapter IV Human Rights (6) Enterprises should provide for or co-operate through legitimate processes in the remediation of adverse human rights impacts where they identify that they have caused or contributed to these impacts.
UN Guiding Principles on Business and Human Rights, Principle 30: Industry, multi- stakeholder and other collaborative initiatives that are based on respect for human rights-related standards should ensure that effective grievance mechanisms are available.
[xiv] OECD Guidelines Chapter IV Human Rights (4): Enterprises should, within the framework of internationally recognized human rights, the international human rights obligations of the countries in which they operate as well as relevant domestic laws and regulations, have a policy commitment to respect human rights.