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Nordea’s derived liability for part-financing activities of a foreign company that had allegedly violated the Guidelines;
Nordea’s independent liability under the Guidelines (with no direct link to Botnia). According to CEDHA, Nordea had breached:
- Chapter II (General policies: §1, 2, 5 and 7 – to contribute to economic, social and environmental progress, sustainable development, human rights etc.);
- Chapter III (Disclosure: §1 and 2); and,
- Chapter V (Environment: introduction, commentary, and §1–6 - broadly reflecting the content of the Rio Declaration on Environment and Development, including Agenda 21, and various conventions and ISO Standards on Environmental Management Systems).
Note: CEDHA also relied on Argentina’s complaint against Uruguay before the ICJ alleging irreversible and immediate threat to the environment from the construction of the two pulp mills.
On 12 July 2006, the Swedish NCP received a complaint concerning the part-financing by Nordea (headquartered in Stockholm) of the Finnish company Botnia’s pulp mill project in Uruguay. The complaint was submitted by CEDHA (Center for Human Rights and Environment – an Argentinean environmental and human rights NGO), and co-signed by the Norwegian environmental organization Bellona. The same complaint was also sent to the Norwegian NCP.
CEDHA’s complaint alleged that Botnia’s Orion pulp mill project would impact local communities’ economic livelihoods and human rights. The Complainants maintained that the project was plagued with environmental problems, including the company’s failure to collect and provide reliable information about the project’s real and foreseeable impacts. The complaint also stated that the project was straining regional diplomatic relations between Argentina and Uruguay.
Nordea was acting as an “arranging bank,” responsible for ensuring that the construction project would receive financing from other banks. Nordea was also directly responsible for part-financing the project in the amount of US$300-million. The International Finance Corporation (IFC – a body of the World Bank) approved a US$170-million loan to Botnia, while the Multinational Investment Guarantee Agency (MIGA) approved a guarantee of up to US$350-million.
The Botnia case was filed with the Finnish NCP, while the Nordea case was submitted to the Swedish and Norwegian NCPs.
Swedish-Norwegian NCP Procedure:
The Swedish and Norwegian NCPs processed the Nordea complaint in joint consultation and decided to take it up on 15 November 2006 (finding applicability of the Guidelines to financial institutions under Chapter II.10). The Swedish NCP assumed the primary responsibility given the location of Nordea’s head office. The Norwegian NCP endorsed the comments and conclusions expressed in the Swedish NCP’s statement. A copy of the complaint was sent to Argentina’s NCP (for information only).
The process included a series of meetings between the parties involved (including a meeting between CEDHA, Botnia, and the Finnish NCP, attended by the Swedish and Norwegian NCP, and meetings between Nordea and CEDHA, chaired by the Swedish NCP and attended by the Norwegian NCP). The dialogue was accompanied by the submission of written questions and answers.
Contact and information-gathering - There was the following contact between the parties:
The Swedish and Norwegian NCP chairs took part in a meeting in Helsinki where CEDHA met Botnia and the Finnish NCP on 30 August 2006.
The Swedish and Norwegian NCPs jointly met representatives of Nordea’s management, including officers responsible for CSR, in Stockholm on 11 October 2006. At this meeting, Nordea was able to air its views on CEDHA’s complaint.
The Swedish NCP invited Nordea and CEDHA to a dialogue meeting in Stockholm on 23 March 2007. The Norwegian NCP also took part in the meeting. The parties agreed that dialogue was important for the further handling of the matter and that CEDHA should put in writing the questions it wanted Nordea to answer. The NCP would then discuss the issues with Nordea prior to Nordea formulating its response. A written summary of the dialogue meeting has been published in accordance with the parties’ wishes.
Following the dialogue between the NCP and CEDHA, five questions were submitted by CEDHA in June 2007 for Nordea to answer. A meeting between Nordea and the Swedish and Norwegian NCP chairs took place in Oslo on 12 October 2007. Nordea’s answers were forwarded to the complainant, CEDHA, on 31 October 2007, together with an invitation to react to Nordea’s answers by 15 November 2007 at the latest.
A preliminary and informal response from CEDHA was received by the Swedish NCP on 15 November 2007 (but was not forwarded to Nordea at CEDHA’s request). CEDHA has not yet submitted an official reaction.
Note on Parallel Proceedings:
Finnish NCP: CEDHA submitted a complaint against Botnia to the Finnish NCP, claiming the same violations of the Guidelines as in its complaint to the Swedish NCP. CEDHA further alleged that Botnia’s partners (e.g. Nordea) had also violated the Guidelines. The Finnish NCP issued a statement on 20 December 2006, finding that Botnia did not violate the Guidelines. The statement relied, inter alia, on an IFC study of the issue. (The IFC and MIGA subsequently approved Botnia’s financing loan and guarantee).
International Court of Justice: The Government of Argentina had brought a complaint against Uruguay before the ICJ concerning the construction of two pulp mills. The ICJ issued its first ruling in July 2006 that Argentina had not presented sufficient evidence to show that the pulp mill would represent an immediate or irreversible threat to the environment. A final decision was due in two to three years’ time.
Additional Info: http://oecdwatch.org/cases/Case_123
Other NCPs Involved:
NCP Finland, NCP Norway
On 24 January 2008, the Swedish NCP, responding for both Norway and Sweden, concluded the Nordea case by stating that the NCP found no “indications to support the complaints made about Nordea having violated the OECD Guidelines in its part-financing of Botnia’s pulp mill in Uruguay.” This conclusion was largely based on the dismissal of the Botnia specific instance by the Finnish NCP and on the IFC's decision to finance the Botnia project, but the Swedish NCP made efforts to gather information by maintaining contact with the parties throughout the process and facilitating dialogue meetings and information exchanges.
Specifically, the NCP examined the applicability of the Guidelines to the financial sector to determine whether Nordea had independent liability as part-financer and supplier of financial services to Botnia. The annual NCP meeting in June 2007 had established that the Guidelines could apply to the financial sector, as well as to other multinational enterprises. The Final Statement thus stated that "the Guidelines can and should be applied to the financial sector as well as to other multinational enterprises... [including], where practicable, business partners, including their suppliers and subcontractors, [and] to apply principles of corporate conduct compatible with the Guidelines".
Furthermore, citing Chapter II.10 of the Guidelines (“Encourage, where practicable, business partners, including suppliers and subcontractors, to apply principles of corporate conduct compatible with the Guidelines”), the Swedish NCP encouraged Nordea and other actors in the financial sector to act in a transparent manner and respond to the public’s increasing demands for information. The NCP pointed in particular to Chapters II (General policies: II.7) and III (Disclosure: 4e–f and 5b–c). OECD Watch reports that the NGOs did not feel that this stance was strong enough.
Another interesting aspect of the NCP’s statement is the affirmation that NCPs should treat other CSR norms as applicable to companies if those norms are in the “spirit” of the OECD Guidelines.
In the course of proceedings, Nordea has adopted the Equator Principles (February 2007) and acceded to the UN Principles for Responsible Investments (effective: 1 November 2007).
OECD Watch case story page: http://oecdwatch.org/cases/Case_123