OECD Guidelines Case Against adidas Settled
In late December 2002, the charge raised by the India Committee of the Netherlands (ICN) that adidas had violated the OECD Guidelines in the production of its footballs in India was settled.
The Dutch National Contact Point (NCP) for the OECD Guidelines concluded that with regard to the production of footballs in India "adidas encourages its suppliers to operate in a socially responsible manner." However, it was also noted that "there has not yet been external monitoring, verification and disclosure by FLA [Fair labor Association] that corroborates adidas own monitoring."
Background on the ICN charge
In June 2000 ICN, a member of the Dutch CCC coalition, published its report "The Dark Side of Football: Child and adult labour in India's football industry and the role of FIFA". This report was based on field research carried out in November 1999 and April 2000, which also built on more elaborate research carried out in 1998 by the National Labour Institute.
The report provided evidence that the Indian football industry in and around Jalandhar and Batala, including adidas'
supplier Mayor & Company (referred to as Z in the NCP's report) violated the OECD Guidelines for Multinational Companies on several
counts: local legal minimum wages, child labor, freedom to organize, the right to collective bargaining, and adequate health and safety standards. The report was sent to adidas but they never reacted. Despite numerous requests, no comment on the reports' content
was received either from the Sports Goods Foundation of India (SGFI: representing a large part of the India sporting goods industry) or the World Federation of Sporting Goods Industry (WFSGI).
Just after its publication, FIFA wrote to the ICN saying "this appears to be a comprehensive report" and promised further study and follow-up. Nothing further was heard trom FIFA. Only after the ICN filed a case on adidas with the Dutch NCP did they receive a reaction to their report from the SGFI, which did not deal with many of the issues raised in the report, as was explained by the ICN to adidas and the NCP.
In July 2001, the ICN decided to put the case before the Dutch NCP. However, it was not until March 2002 that the NCP organized a meeting between adidas and the ICN. Adidas informed the ICN that football production by their Indian supplier Mayor & Co was concentrated in two factories with 400 employees in total, that the OECD Guidelines were adhered to, and that this was monitored by their own inspectors. During ICN's visit to Mayor in April 2000 there was only one factory with approximately 150 employees partly producing for adidas, while Mayor & Co. were also subcontracting large-scale production to households in the town of Batala under conditions violating a number of OECD
Guidelines (To read more about working conditions reported
on by the ICN, read "The Dark Side of Football" (www.indianet.nl/iv.html)).
"Looking back it now seems that adidas has been in the process of shifting its production to factories between 1999 and 2001, improving labor conditions to at least minimum standards with regard to wages,
health and safety and absence of child labor," noted Gerard Oonk, coordinator of the ICN. "As adidas did not react to 'The Dark Side of
Football', information was lacking on this process, while also no additional information was received from our local partner organization in India."
Using the OECD Guidelines for Multinational Enterprises
Toolkits for NGOs and Trade Unions|
The Organization for Economic Cooperation and Development (OECD), set up in 1961, has a stated aim of building strong economies in its member countries, improving efficiency and market systems, expanding free trade and contributing to development in industrialized and developing countries. In 1976 the OECD adopted a set of voluntary guidelines for companies. These guidelines are basically a set of recommendations on standards for responsible corporate behavior. They have been reviewed periodically (most recently in 2000) and cover a broad range of issues (ex. employment and industrial relations, the environment, bribery, taxation, consumer interests). The governments of the 30 OECD member countries are supposed to encourage companies in their countries to observe this code of conduct, officially known as the "OECD Guidelines for Multinational Enterprises", anywhere they operate.
Each member country is supposed to set up a "national contact point" (a government official, government office, a body that includes representatives of several government agencies or even a body that includes representatives of employee organizations, the business community and other interested parties) to make the Guidelines more effective. Any "interested party" can file a complaint regarding alleged violations of the OECD Guidelines with the national contact
points. Who should file the complaint and with which contact point depends on the specific circumstances of the case.
Friends of the Earth Netherlands (Milieudefensie) has put together a toolkit that presents the advantages and disadvantages of the OECD Guidelines and explains how the complaint procedure connected with the Guidelines can be used. Useful appendices include the full text of the Guidelines and a listing of all the national contact points.
This clearly-written publication is a valuable resource for any NGO, trade union, or others interested in exploring the
possibilities for using the OECD Guidelines to push for more responsible corporate behavior. Because the Guidelines are a code endorsed by 30 countries, they do seem to have some potential to be a tool in pressuring multinational corporations. However, the language used in the code is weak, as are the implementation mechanisms. The Friends of the Earth publication highlights these and other important issues connected with the Guidelines and their strategic importance to those seeking to hold corporations accountable to strong labor and environmental standards.
The toolkit (available in English, Spanish, or French) can be downloaded from the Internet (http://www.milieudefensie.nl/accountability). To order a free hard copy of this publication please contact:Friends of the Earth Netherlands
P.O. Box 19199
1000 GD Amsterdam
The Trade Union Advisory Committee (TUAC) has also
published "A Users' Guide For Trade Unionists to the OECD Guidelines tor Multinational Enterprises". The TUAC Users' Guide has been translated into 16 languages: French, Spanish, Portuguese, Italian, Hungarian, Czech, Russian, Estonian, Latvian, Lithuanian, Croatian, Romanian, Georgian, Korean, Japanese, and Thai by TUAC affiliates and partners. The guide can be ordered from TUAC or downloaded from their website (http://www.tuac.org/publicat/cpublica.htm).
26, Avenue de la Grande Armée
Tel. (+33) 155 37 37 37
Fax: (+33) 147 54 98 28
Questions still remain
Even though sufficient evidence that adidas violated the
OECD Guidelines in India could not be given for the reasons stated above, there are a number of outstanding issues in
relation to this matter which the ICN believes still need to be followed up on. These include the issues of wages;
unionization and worker representation, as well as the
management system at the company in question (ICN found their answers in relation to these questions evasive and lacking in substance); the transparency (reports are not accessible to the public) and quality of monitoring done by SGS (the monitoring company that implements FIFA-supported external monitoring for most of the Indian football industry on child labor and health and safety), and other concerns.
ICN reports that while adidas first seemed to imply that the Fair Labor Association had done the external monitoring of their supplier's football production in India ("The FLA monitors our global supply chain SOE systems, including our work in India"), they later admitted (after ICN checked their statement with FLA) that no actual monitoring in India had taken place.
ICN also reports that the statement, made by adidas in March 2002 that FIFA together with 'the industry' (represented by the WFSGI) will communicate the facts "about the significant progress that has been made in India, Pakistan, and China" as soon as possible within three months, did not materialize.
Usefulness of the OECD process
Oonk said that the "ICN will use the agreement with adidas and the NCP on transparency, disclosure, verification, and strengthening of communication as well as the willingness of the NCP to step in when communication breaks down to get more information on these issues."
"Despite shortcomings, also with regard to presenting hard enough evidence from our side, we feel that this NCP procedure has been
worthwhile," Oonk concluded, explaining that this process compelled adidas to react to evidence being presented and to present their own evidence. This procedure can be used as a stepping stone for further communication in the future (the ICN was invited to adidas' stakeholders meeting on its latest social and environmental report), he
said, and as part of the ongoing efforts of the CCC and the Global March Against Child Labour to put pressure on FIFA and the World Federation of Sporting Goods Industry (WFSGI) to implement their codes of conduct and establish an independent system of monitoring, verification and disclosure.
This was also an important step in testing the NCP procedure in the Netherlands and as a leaming experience on how to use the NCP procedure, said Oonk. The ICN will be publishing an evaluation of their experience in testing the NCP procedure later this year.
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