Adjust the code

Figure 9: Strenghts and weaknesses of DONG's code Own construction

6.1.1 Why should the code be adjusted?

Although corrective action plans are implemented and DONG has managed to improve some conditions in the supply chain, the results are limited and there are obvious issues that need to be addressed. By reversing weaknesses into strengths, the code may contribute to improve the coal suppliers‟ social responsible behaviour even further. Currently, the code of conduct strategy is active and practised according to the traditional compliance model, which has produced limited results. At first sight, the code appears to be instrumental as it is risk-aversive and targeted

Strengths Weaknesses

Code of conduct

- Improves working conditions in the coal supply chain even though effect is limited.

- Contributes to a process of

continuous improvements and a „race to the top‟.

- Increases suppliers‟ awareness of social responsible behaviour.

- Instrumental and normative.

- Encourages state participation due to ownership.

- Independent monitoring not stated.

- Critical issues within mining are not addressed: indigenous peoples‟ rights, forcefully relocation and security forces.

- Does not address rights of subcontractors‟

workers and casual labourers such as proper remuneration and employment conditions.

- Gives the impression of being targeted stakeholders in home-country rather than stakeholders in host-countries.

- Lack enforcement mechanisms.

Monitoring

- Continuously evolving and improving.

- Corrective actions are implemented.

- Provides information about specific suppliers‟ compliance with code requirements.

- Great influence despite low bargaining power.

- Risk- and self-assessment to select suppliers.

- Moving towards „regulated self-regulation‟ as different stakeholders are involved in developing a common auditing system.

- Minimising monitoring fatigue.

- External monitoring agency vulnerable to corporate manipulation.

- Non-disclosure agreement spur scepticism, criticism, lack of credibility and transparency.

- Currently no collaboration with local NGOs or trade unions.

- Difficult to monitor and measure compliance due to huge mine sites and thousands of workers.

- Practically impossible to conduct unannounced audits.

- Labour persecution and disciplinary measures in the Cerrejón-mine influence workers‟ willingness to speak freely and lead to biased information.

- Code requirements violated: Freedom of association and the right to collective bargaining; Harassment and disciplinary measures; Discrimination; and Corruption and bribery.

Traditional compliance

vs.

Commitment-oriented

- Moving towards commitment-oriented approach due to Better Coal initiative that involves different key stakeholders to enhance social responsible practices.

- Does not contribute with expertise or assistance regarding compliance with the code and in implementing corrective actions.

- Dialogue with suppliers is barely two-way as demands of corrective actions are placed upon suppliers without joint problem solving or capacity building.

stakeholders in Denmark; however, due to DONG‟s efforts to achieve a responsible supply chain, the normative perspective is included as well, especially in regard to Better Coal. It could be argued that DONG should focus solely on the normative perspective; however, this would not be very realistic. Therefore, with a mixed perspective DONG may achieve both strenghts of self-interest as well as target its social obligation to society. By adjusting the code, some of the weaknesses may be reversed to strengths and thereby enhance instrumental and normative factors. Five issues in particular call for an adjustment of the code:

6.1.2 How can the code be adjusted?

Ruggie argues that some human rights may be at greater risk than others in certain contexts and should therefore be focus of heightened attention (2011:13); thus, companies may need to consider additional standards (ibid:14). Due to the violations of DONG‟s code requirements in relation to Cerrejón, Ruggie‟s argument applies to DONG‟s context. Consequently, DONG‟s code should include independent monitoring and principles highly relevant to DONG‟s stakeholders in host-countries as this has proven to be an issue. Independent monitoring should be included to clearly state that compliance is monitored, and, why and how, especially since DONG already has a monitoring system in place and is monitoring compliance. Due to the situation in Cerrejón, and since DONG is operating in high-risk areas and within mining it is imperative that the code addresses indigenous peoples’ rights, forcefully relocation and security forces. Also, even though freedom of association is already included, this principle 1. Continuous public criticism about DONG not living up to its own code.

2. Politicians are questioning the code.

3. Suppliers violate code requirements and host-country stakeholders plea for better conditions.

4. DONG strives to achieve a social responsible supply chain but the results are currently limited.

5. As a state-owned company DONG is likely to be targeted future NGO campaigns and stakeholder attention when Ruggie‟s Framework has become more known and common together with the new OECD Guidelines for MNCs (OECD 2011), and the European Commission's renewed CSR strategy (Communication from...25.10.11).

must receive more attention since Cerrejón is not complying with this principle. It could also be suspected that other high-risk countries may ignore this matter as well. Louise Münter states that freedom of association is very important to DONG (p.164); then why does DONG not emphasise this by encouraging suppliers and sub-suppliers to improve conditions in connection with this principle? As long as DONG does not indicate dissatisfaction with suppliers who do not ensure workers‟ possibilities and rights to associate, the conditions will not change – like the quotation by Igor Diaz argued. According to Jesper Nielsen, one of the most important indicators of whether or not labour and human rights are enforced is the presence of trade unions together with a safe environment without persecution or threats (p.135). He also argues that requirements of compliance with freedom of association should be more stringent, especially in Colombia as some of the most violent methods are used there (p.141). An incentive to encourage Cerrejón‟s compliance with this code requirement could be like Jesper Nielsen suggests (p.137) that sub-contractors‟ workers who want to associate but are not allowed to must be employed directly by Cerrejón and accepted as a member of Sintracarbon. Another incentive could be to provide training and expertise for Cerrejón, the sub-suppliers, and workers. Denmark and Colombia has ratified the ILO Convension C87 which among other things states: “Each Member of the International Labour Organisation for which this Convention is in force undertakes to take all necessary and appropriate measures to ensure that workers and employers may exercise freely the right to organise” (C87 Freedom of...N/A). Nevertheless, as violations of this convention still prevail in Colombia and the state seems to be unable or unwilling to reverse this trend, DONG must take an active position on this matter to ensure compliance. Clearly, it is not sufficient to state that Cerrejón is already enforced to comply by national law and regulations.

In relation to the problems with sub-contractors‟ workers in the Cerrejón-mine, which suspectedly could occur elsewhere too, DONG‟s code should specifically address remuneration and employment for subcontractors’ workers and casual workers as well, especially since this type of employement is increasing in Colombia (p.141) and is causing violations of labour and human rights. These workers must be ensured the same rights and working conditions as directly employed workers. This could possibly be included in the code‟s first specific code requirement, Remuneration and Employment conditions.

A practical example of these suggestions is provided in figure 10:

Figure 10: A proposal of initiatives to be included in DONG's code Based on ILO Conventions

Own construction

•In order to promote these code requirements through continuous engagement and dialogue, DONG will participate in third party audits on-site to assess the supplier's performance in meeting these standards together with self-assessment evaluations. Sub-suppliers' performance may be included in the audits as well. Relevant documentation may be requested for inspection, such as list of workers, timecards, payroll, overtime payments, chemical use, statistics of accidents, etc.

Independent monitoring

•The supplier and sub-suppliers must ensure that no form of coercion is used in violations of human rights and fundamental freedom of indigenous peoples and other members of the local community. The rights of ownership and possession over lands shall be recognised. Indigenous peoples and other members of local community shall not be removed from the lands they occupy. Relocation shall take place only with free and informed consent and persons relocated shall be fully compensated for any resulting loss or injury. Whenever possible, these persons shall have the right to return to their traditional lands, as soon as the grounds for relocation cease to exist.

Indigenous peoples' rights and relocation

•The supplier and sub-suppliers must ensure that private security forces do not lay violent hands on any individual's freedom or safety. Security forces must not contribute to or participate in violations of human rights or national law and regulations. Private security forces shall receive training to ensure they act in accordance with human rights standards.

Security forces

•The supplier must actively ensure that all workers and sub-suppliers‟ workers have the opportunity to associate freely and bargain with any lawful workers‟ association or collective bargaining association of workers‟ choice. The supplier must ensure that no worker faces any kind of discrimination or persecution in relation to association and collective bargaining. Likewise, the supplier commits to contribute to a safe environment wherein association can take place.

Freedom of association

and the right to collective bargaining

•The supplier must not be dependent on part-time workers, casual labourers or day labourers to reduce expenditure on wages. Casual labourers must not be worse off than permanent workers. All workers must receive proper employment contracts and be informed about about the hazards and health risks associated with the work, as well as preventive and protective measures prior to employment.

(Added to) Remuneration and employment conditions

Due diligence

Dialogue

Indepen-dent

monitor-ing

Root-cause analysis Joint

problem solving &

Capacity building Follow-up audit