The Hague, Monday, August 31, 2009
Dutch NCP publishes final statement concerning Pandacan oil depot Manila, Philippines
Within the non-legal grievance procedure of the Guidelines for Multinational Enterprises of the Organisation for Economic Cooperation and Development (OECD) the Dutch NCP issued its final statement with regard to a notification concerning Pilipinas Shell Petroleum Corporation (PSPC), a full subsidiary of Royal Dutch Shell. The OECD guidelines are recommendations from the governments of its 30 member states and 11 adhering countries regarding responsible corporate conduct of their internationally operating enterprises. They are not legally binding, but provide for a grievance mechanism that enhances implementation and resolution of issues. For that purpose, every OECD or adhering country established a National Contact Point (NCP) that deals with notifications. In the Netherlands, the NCP acts independent from the government. The composition of its board reflects broadly defined societal interests.
The notifiers alleged that PSPC violated the Guidelines by manipulating local government and withholding information on health and safety aspects of the depot. In its Final Statement, the Dutch NCP makes clear that:
- it cannot conclude that PSPC was improperly involved in local political decision making;
- the health and safety situation around the PSPC perimeters is currently in conformity with international standards;
- it calls for transparent information and timely communication with local parties from a multinational enterprise such as Royal Dutch Shell.
The notification concerning PSPC was brought before the NCP in June 2006 by the Philippine Fenceline Community for Human Safety and Environmental Protection and Friends of the Earth International. They alleged that PSPC did not make any serious attempts to comply with Ordinance No. 8027 of the City of Manila which implied that the oil depot should be relocated. Instead, PSPC allegedly manipulated local government in order to prolong the latter’s consent for its operations in the densely populated Pandacan area. Also, PSPC would neither share essential information regarding health and safety aspects of its operations at the depot, nor would it take sufficient measures to mitigate potential risks.
Following from these allegations, the notifiers argued that PSPC acted in defiance of the OECD Guidelines for Multinational Enterprises with respect to health, safety and environmental provisions, involvement in local political activities, and the disclosure of health and safety risks to local stakeholders.
After its decision that the notification merited further consideration, the NCP established the facts by conducting local research, and, within the OECD Guidelines framework, it tried to initiate a dialogue that would lead to a future oriented solution. In February 2008, the Philippine Supreme Court ordered execution of the above mentioned ordinance by the Manila City Council. Given the main objective of the notifiers – relocation of the oil depot – this decision finally promised to provide for a common basis for a solution, as PSPC openly stated that it recognised “that an indefinite and permanent stay in Pandacan is no longer possible given the current urban developments in the area”. When however the City Council of Manila repealed this ordinance by issuing a new ordinance allowing the oil depot to stay, PSPC no longer wished to mediate on the basis of relocation. At that point notifiers did not see any options for a successful outcome of the process, after which the NCP was obliged to issue this final statement.
The NCP does not conclude that PSPC had sought improper exemption from the regulatory framework. The NCP involved the environmental protection agency DCMR for an independent expert review. DCMR is a Netherlands based, independent agency responsible for environmental protection, mainly of the Rotterdam harbour area in which also large oil depots and refineries are located. The DCMR review showed that the current situation at the PSPC part of the Pandacan oil terminal is not unsafe or unhealthy according to international standards.
However, the NCP is of the view that the high standards for disclosure of non-financial information, including environmental reporting, as encouraged by the OECD Guidelines, have not been met in this specific instance. The NCP concludes that PSPC should communicate more proactively and openly with all its stakeholders about its motives, strategy, and considerations, in order to strengthen mutual confidence in the depot with the society in which it operates.