DONG‟s code of conduct strategy

According to van Tulder et al., compliance of codes is generally enhanced by clear monitoring systems in place combined with an independent position of the monitoring agency and the agency‟s possibility to formulate and implement sanctions (2009:402). Other than; “in cases of gross or repeated violations we reserve the right to consider the termination of the business relationship” DONG‟s code does not mention monitoring or sanctions, thus it appears uncertain whether compliance is measured or not, by whom, and how. Therefore, both compliance and implementation likelihood is low, which is in line with a re-active strategy (ibid:399). However, based on the interview with Heydenreich (pp.113-122) and the explanatory notes (Appendix 2, Notat 15.06.11) it is obvious that DONG does have a monitoring system in place wherein the monitoring agency Specialized Technology Resources (STR) conducts on-site audits with DONG employees as observers (ibid). Therefore, based on O‟Rourke‟s theoretical assumption (2003:11), the monitoring agency does not have an independent position and STR is therefore vulnerable to manipulation by DONG¹³. Neither do the auditors implement sanctions; instead, the auditors make corrective action plans that DONG presents to the relevant supplier who then agrees or set forth a proposal of other possible corrective actions (p.109). Nevertheless, according to the statement by Heyedenreich, compliance is high: “In the audits we carry out […]

it is evident that the continuous improvements we seek are in fact implemented” (ibid). In other words, the code and the monitoring system point towards low compliance while Heydenreich‟s statement, on the other hand, points toward high compliance. This could indicate that DONG describes the monitoring system to the suppliers individually when they sign the code.

Nevertheless, compliance and implementation are higher than first anticipated, but before the code strategy is established specificity must be analysed.

As mentioned, specificity indicates how elaborated a code is; how many issues it covers, how focused it is, the extent to which it refers to international standards, and to what extent aspects of the code are measured (van Tulder et al. 2009:402). This is analysed combined with the theory by Pearson and Seyfang. Figure 8 lists the principles described by Pearson and Seyfang and whether or not each principle is included in DONG‟s code, marked with + for yes and – for no.

In addition, Vattenfall, Energi Danmark, and Nordjysk Elhandel are included to gain a rich understanding of DONG‟s code. A reference to each of these companies‟ codes can be found in the bibliography.

Figure 8: Codes of conduct principles Adopted from Pearson and Seyfang 2001 and modified

The media friendly issue child labour is included in all four codes, which is in accordance with theory (Pearson & Seyfang 2001:55-56, Haufler 2001:76-77, Vogel 2008:269). However, Vattenfall and Nordjysk Elhandel do not state a minimum age. DONG and Energi Danmark are very specific on age, and DONG states that if the supplier is found having a child working, the supplier “must act in the best interest of the child” while Energi Danmark is even more specific and states that the child must be enrolled in a relevant support programme instead of being

Principles

Energy¹

Vattenfall

Danmark¹ Elhandel¹

Refers to ILO/UN Global Compact -/+ +/+ +/+ -/+

Child labour/Minimum age +/+ +/- +/+ +/-

Freedom of association and collective bargaining + + + +

Health and safety + + + -

No forced labour + + + +

Minimum wages + + + -

Living wages - - + -

No discrimination + + + +

Equal remuneration + + + -

Hours of work + + + -

Independent monitoring - + + -

Information on standards - - + -

No physical abuse + + + -

Proper employment contracts - - + -

No sexual harassment + + + -

Non-wage benefits legally due + + - -

Reproductive rights - - - -

Other non-wage benefits - - + -

Maternity leave - - + -

Sick leave + - + -

Health services - - - -

Parental leave - - + -

Other principles

Protect the environment + + + +

Obey national law and regulations + + + -

Corruption and bribery + + + +

Indigenous peoples‟ rights - - + -

Business relationship terminated if non-compliance + + + -

Security forces - - + -

Number of principles included 18 18 27 7

discharged. All companies include issues which have recently received more attention from NGOs and workers‟ organisations: freedom of association, right to collective bargaining, no forced labour, and no discrimination. Sanne Borges at Amnesty International confirms this tendency: “[...] the fundamental labour rights companies understand that they have to address:

child labour, discrimination, freedom of association, forced labour etc. – that they need to relate to it” (p.120). The three largest companies (DONG, Vattenfall, and Energi Danmark) also include health and safety, minimum wages, and working hours. They also include some issues which, according to Pearson and Seyfang (2001:62-63), receive less attention: no physical abuse, no sexual harassment, and non-wage benefits legally due wherein DONG specifically mentions overtime wages, sick leave, piece rates, “and other elements of compensation”. DONG does not mention: paid holiday, parental leave, proper employment contracts, suitable living standard that allow suitable disposable income, and wages paid regularly and in legal tender like Energi Danmark does. Nor does DONG explicitly address workers‟ rights if they are injured, disabled, ill, etc. from working in the mines – although this is relevant within mining. Carlos Hernández, a former mine worker who got ill from working in the Cerrejón-mine, confirms the relevance: ”At the moment I have to take medication that worsen my immune defence system and I risk getting addtional illnesses because I don‟t get the treatment I need in time” (p.143). However, Heranández and other workers might never get the treatment they need based on the statement by Igor Diaz, President of Cerrejón‟s trade union, Sintracarbon: ”[Cerrejón] does everything it can to prevent workers from getting injuries or illnesses acknowledged as caused by working in the mine […]” (p.154). According to the Head of Cerrejón‟s Medical Clinic, there has only been one case diagnosed as black lungs in Cerrejón and that case is still questioned (p.147). However, a study carried out by Sintracarbon in 2002 showed that 150 out of 600 workers, every fourth worker, have problems with their lungs (p.146).

Contrary to Energi Danmark, DONG‟s code does not require that suppliers must not be dependent on casual labourers to reduce labour expenses, and that these workers must not be worse off than workers directly employed. This is a major issue in the Cerrejón-mine because approximately 4,000 workers employed by 300 different subcontractors are not employed on the same conditions as permanent workers since they, among other things, receive up to 70% less in wages (p.145, The curse...2010). Igor Diaz, President of Sintracarbon, states: “Trade unions are not accepted, [subcontractors‟ workers] are not supplied with personal safety equipment, and all

their rights are violated with [Cerrejón‟s] silent consent. They work over 25 day shifts and they receive Colombian minimum wages. In other words, major violations of these workers‟ rights are taking place [...]. The conditions will never change.” (p.156). In relation to employment methods in Colombia, 3F‟s International advisor, Jesper Nielsen, with expertise in labour conditions in Latin America, states: “In the big companies fewer and fewer are employed and fewer and fewer [workers] they have a legal responsibility for, and more and more [workers]

are outsourced and contracted as casual labourers which end up in informalities” (p.138). In other words, this type of employment is common and increasing in Colombia and therefore necessary to address to ensure social responsible behaviour.

Other requirements included in all four codes that are not mentioned by Pearson and Seyfang are: protect environment, corruption and bribery, and obey national law and regulations.

Contrary to Vattenfall and Energi Danmark, DONG does not mention independent monitoring or how the requirements are measured (like described above). Neither DONG nor Vattenfall mention security forces or rights of indigenous peoples, although both are highly relevant in relation to mining, and both companies source coal from Cerrejón (p.143) which has forcefully relocated and isolated local population, including indigenous Wayüu Indians, and left them in poverty without compensation for deprived land, livelihood, and possessions with assistance from security forces (p.148,149, The curse…2010). Women‟s rights are not included in any of the codes, which is most likely due to the lack of women within mining. However, Cerrejón states: “In recent years, the presence of women has grown¹⁴, not only in administrative areas, but also in operational areas and in all levels” (Sustainability Report 2008:55).

The lack of requirements highly relevant within mining and high-risk countries in DONG‟s code gives an impression of targeting stakeholders in home-country rather than host-countries and therefore appears as window-dressing. This is however rejected by Heydenreich: “No, it‟s not window-dressing when we go out and make audits and continuous improvements. Hence, we actually follow up on it” (p.111).

Based on the number of requirements in DONG‟s code compared to the other companies‟ codes, Heydenreich‟s statement about high compliance (despite violations), and that the code refers to

14 The number of women was 284 (5.6%) in 2008 and 291 (5.7%) in 2009 (Sustainability Report 2009:18).

the UN Global Compact, it can be concluded that both specificity and compliance is medium.

Therefore, the code strategy is active with medium to high implementation likelihood (van Tulder et al. 2009:403). However, if Better Coal establishes a joint codification initiative, like the intention is (Better Coal 2011), this will lead to a pro/inter-active strategy because it will be developed in dialogue with different stakeholders, including NGOs, which will better ensure high specificity, high compliance and the highest implementation likelihood (van Tulder et al.

2009:403).

Another relevant dimension to specificity that van Tulder et al. do not include is the depth of the code of conduct, i.e. how far down the supply chain does the code require compliance? Which also means: how far down the supply chain does the company undertake responsibility?

Specificity increases the further down the tiers of suppliers it goes which of course decreases implementation likelihood, but high compliance enhanced with clear monitoring systems in place combined with sanctions could reverse that.