Columbia FDI Perspectives

 
Columbia FDI Perspectives 
Perspectives on topical foreign direct investment issues 
Editor-in-Chief: Karl P. Sauvant (Karl.Sauv[email protected]u) 
Managing Editor: Matthew Conte (msc2236@columbia.edu) 
 
The Columbia FDI Perspectives are a forum for public debate. The views expressed by 
the authors do not reflect the opinions of CCSI or our partners and supporters. 
 
No. 351   February 20, 2023 
 
Hardening soft law: strategic use of the OECD Guidelines to achieve meaningful outcomes 
by 
Marian Ingrams and Katharine Booth* 
 
Despite their soft law nature, the OECD Guidelines for Multinational Enterprises (Guidelines) 
have clear and proven potential  to help generate impactful outcomes for victims  of  corporate 
misconduct. This Perspective outlines several strategies civil society has employed either to use 
the soft law standards in the Guidelines to influence development of hard law or to use hard law 
to reinforce the standards and positive outcomes from complaints, thereby successfully promoting 
business uptake of the standards and/or ensuring remedy for complainants.  
•  Using the expectations in the Guidelines to urge lawmakers to close gaps in national and 
regional laws. Civil society has used both the Guidelines and the associated OECD due 
diligence guidance in advocating for several (proposed) laws on due diligence, including 
in Canada, France, Germany, the Netherlands, and the EU. These laws, which are largely 
based  on  the  norms  in  the  Guidelines  and  the  United  Nations  Guiding  Principles  on 
Business  and  Human  Rights  (UNGPs),  have  the  potential  to  deliver  real  remedies  to 
adversely impacted people. The Guidelines have also been used to encourage national 
legislators to close gaps in existing domestic law. For example, in FNV vs NUON Energy, 
a Dutch National Contact Point (NCP) complaint filed by the Federation of Dutch Trade 
Unions at the NCP, the complainants alleged that the energy company had breached the 
Guidelines’ labor and employment provisions. Specifically, FNV alleged that NUON had 
relied on a loophole in Dutch labor law allowing its subcontractor to pay foreign workers 
less  than  Dutch  workers  performing  the  same  duties.  In  its  final  statement,  the  NCP 
acknowledged the stronger expectations in the Guidelines vis-à-vis Dutch law in terms of 
the  supply  chain  responsibilities  of  companies  for  employment  practices.  The  NCP 

recommended that the government close this gap—and the Dutch parliament did so soon

thereafter.

• Citing the Guidelines in legal proceedings to encourage their implementation by

companies. In a recent well-known Dutch court case, Milieudefensie et al. vs. Royal Dutch

Shell, the applicant argued that the company owed a duty of care to address its climate

impacts based on soft law standards, including as contained in the Guidelines and UNGPs.

In May 2021, the court found that these standards do form the basis of this duty of care

under Dutch tort law. By accepting this argument, the court effectively implemented the

Guidelines and UNGPs into Dutch law.

• Insisting that companies comply with NCP-brokered agreements. During NCP mediation

in Sherpa et al. vs Bolloré, the parties reached an agreement that palm oil company

SOCAPALM’s shareholder Bolloré would exercise its leverage to encourage remedy of

SOCAPALM’s negative impacts on the environment and labor rights. In 2013, the parties

developed a remedial action plan to be implemented under external monitoring; however,

in 2014, Bolloré ceased implementing the agreement. Sherpa subsequently sued Bolloré in

French court, requesting enforcement of the NCP-mediated agreement under French

contract law. Although the case is still pending, it demonstrates the potential for companies

to be bound by joint agreements brokered during NCP processes.

• Using NCP complaints to clarify or expand responsible business conduct standards from

relevant international (expert) bodies. The NCP complaint Society for Threatened Peoples

Switzerland vs UBS Group addressed the bank’s ties to passive investments supporting the

forced labor of Uighurs. Following the Swiss NCP’s determination that no business

relationship under the Guidelines existed between UBS and its nominee shareholdings,

thereby exempting the bank from related human rights responsibilities, BankTrack and the

Centre for Research on Multinational Corporations sought and attained contrary

clarification from the UN Office of the High Commissioner for Human Rights (OHCHR),

establishing more broadly applicable soft law guidance on the responsibility of banks with

respect to their financial services. The OHCHR’s opinion clarified the issues raised in the

NCP complaint and the expectations in the UNGPs. While not legally binding, expert

opinions such as the OHCHR’s would be highly persuasive in any future litigation or

legislation on this issue and influential for another NCP considering a different complaint

on the same issue.

Using the Guidelines and NCP complaints in connection with hard law, either to push for a broader

interpretation of responsible business conduct in legislation or case law or to seek enforcement of

positive NCP outcomes, has been successful in cases brought by civil society. These cases suggest

that the soft law Guidelines can be a useful tool not only in advocating for greater corporate

responsibility to respect human rights and the environment—but also in strengthening the legal

framework on corporate accountability.

*Marian Ingrams ([email protected]l) and Katharine Booth ([email protected]l) are, respectively, Network

Coordinator and Policy Advisor/Researcher for OECD Watch, the official representative of civil society to the OECD

Investment Committee. Both are also researchers at the Centre for Research on Multinational Corporations (SOMO).

This Perspective draws on OECD Watch’s webinar, “The OECD Guidelines and the pursuit of accountability:

Exploring case examples on how the OECD Guidelines are influencing development of ‘hard law’ on business &

human rights,” February 22, 2022. The authors wish to thank their colleagues from the following organizations for

their comments: BankTrack, European Coalition for Corporate Accountability (ECCJ), Milieudefensie/Friends of the

Earth Netherlands, and Sherpa. The authors also wish to thank Federico Ortino, Stephan Schill and an anonymous

peer reviewer for their helpful peer reviews.

The material in this Perspective may be reprinted if accompanied by the following acknowledgment: “Marian Ingrams

and Katharine Booth, ‘Hardening soft law: strategic use of the OECD Guidelines to achieve meaningful outcomes’

Columbia FDI Perspectives, no. 351, February 20, 2023. Reprinted with permission from the Columbia Center on

Sustainable Investment (http://ccsi.columbia.edu).” A copy should kindly be sent to the Columbia Center on

Sustainable Investment at [email protected]ia.edu.

For further information, including information regarding submission to the Perspectives, please contact: Columbia

Center on Sustainable Investment, Matthew Conte, at msc2236@columbia.edu.

The Columbia Center on Sustainable Investment (CCSI), a joint center of Columbia Law School and Columbia

Climate School at Columbia University, is a leading applied research center and forum dedicated to the study, practice

and discussion of sustainable international investment. Our mission is to develop and disseminate practical approaches

and solutions, as well as to analyze topical policy-oriented issues, in order to maximize the impact of international

investment for sustainable development. The Center undertakes its mission through interdisciplinary research,

advisory projects, multi-stakeholder dialogue, educational programs, and the development of resources and tools. For

more information, visit us at http://www.ccsi.columbia.edu.

Most recent Columbia FDI Perspectives

• No. 350, Riccardo Crescenzi, Roberto Ganau and Michael Storper, “Outward FDI and home country

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• No. 348, Gary Gereffi, “How to make global supply chains more resilient,” Columbia FDI Perspectives, January

9, 2023

• No. 347, Bernard M. Hoekman and Petros C. Mavroidis, “Investment facilitation in the WTO: The case for early

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• No. 346, Yulia Levashova, “The way forward in reforming the legitimate expectations test,” Columbia FDI

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All previous FDI Perspectives are available at https://ccsi.columbia.edu/content/columbia-fdi-perspectives.