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Category: OECD Guidelines for MNEs

No longer an option - Coverage of the UN Guiding Principles in the financial sector

Posted: December 06, 2013   By: Pierre Habbard Category: OECD Guidelines for MNEs,

Coverage of the UN Guiding Principles in the financial sector should allow for no exemption and help ensure responsible investment behaviour becomes mainstreamed

CWC took part in the second edition of the United Nations Forum on Business and Human Rights held 2-4 December in Geneva to call on asset owners – and pension funds in particular – to take a leading role in supporting effective application of the UN Guiding Principles on Business and Human Rights to the financial sector. Represented by Pierre Habbard (TUAC & ITUC), CWC contributed to a panel session chaired by Calvert with inputs from the OECD, UBS and BankTrack. For CWC the application of the UN Guiding Principles should suffer no exemption. In particular, all forms and levels of shareownership, including minority ownerships, should qualify as a “business relationship” which is a central concept in the UN framework in determining whether an external party is “linked” to an adverse impact caused by a company – and  one that was put at a test in a recent case brought under the OECD Guidelines for Multinational Enterprises (case of Korean company POSCO raising the potential shareholder responsibilities of APG and of the Norwegian Government Pension Fund).

While the intensity of risk management and due diligence procedures may vary, all within the investment chain should be to be covered. Asset owners in particular need to hold asset managers to account regarding the UN framework, using to that end the full spectrum of tools for responsible active ownership, inter alia: screening the portfolio for companies at risk of violating the UN Principles or the OECD Guidelines, engage with the management of companies at risk, ensure effective exercise of proxy voting, where needed ensure access to the agenda of the AGM and/or team up with other responsible shareholder groups.

CWC also called upon deepening guidance on the application to other parts of the financial sector, including to project finance and to banks, as well as intensifying joint UN-OECD work around the UN Guiding Principles, the OECD Guidelines and the UN Principles for Responsible Investment. To end the CWC highlighted the recent Investor brief on the MNE Guidelines (www.workerscapital.org/images/uploads/CWC_OECD_Guidelines.pdf) which includes a checklist for pension funds to take on board during a complaints process and when considering human rights due diligence of invested companies as well as a comparison with the UN PRI.

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