The OECD Guidelines For Multinational Enterprises

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The OECD Guidelines forMultinational EnterprisesRecommendations for ResponsibleBusiness Conduct in a Global ContextTRADE UNION GUIDETHE OECD GUIDELINES FOR MULTINATIONAL ENTERPRISESTRADE UNION GUIDE1

TUACThe Trade Union Advisory Committee to the OECD (TUAC) is the official voice of labour at the OECD.TUAC leads the trade union movement’s work on the OECD Guidelines for Multinational Enterprises. TUAC’s members consist of fifty-nine national trade union centres together representingsixty million workers in OECD member eguidelines.orgOECDThe Organisation for Economic Cooperation and Development (OECD) is an inter-governmentalorganisation that provides a forum for governments to work together in an array of public policyareas ranging from economic policy, job markets and skills to investment and responsible business conduct. Founded in 1961, its membership today stands at thirty-five.http://www.oecd.org/OECD GuidelinesThe OECD Guidelines for Multinational Enterprises set out the expectations of governments onresponsible business conduct. The Guidelines are unique in having a government-backed complaints mechanism for addressing the actions of multinational enterprises. Trade unions haveused this mechanism successfully. The Guidelines form part of the OECD Investment Declaration, under which adhering governments commit to improving their investment climate andencouraging the positive contribution that multinational enterprises can make to economicand social progress.http://mneguidelines.oecd.org2011 UpdateThe OECD Guidelines, first adopted in 1976, were significantly improved in the most recent update in 2011: reference to internationally-recognised standards; inclusion of a new human rightschapter; adoption of a general recommendation to conduct due diligence to avoid and addressadverse impacts; clarification that the Guidelines apply to supply chains and other business relationships; broadening of the scope of the employment chapter to include workers in indirectemployment relationships, as well as employees; and strengthening the government-backedcomplaints 00/08/E7/document doc.phtmlThis Trade Union Guide to the OECD Guidelines forMultinational Enterprises has been published withthe financial support of the Friedrich-Ebert-Stiftung.TUAC 2016

IntroductionTrade unions have long worked to ensure that thefruits of foreign direct investment are more equallyshared – between and within countries and betweenlabour and capital – and that multinational enterprises (MNEs) comply with international labour standardsthroughout their global production chains. Foreigndirect investment and MNEs can make an importantcontribution to sustainable development. All too often, however, MNEs are involved in breaches of international standards that leave millions of women andmen around the world working in conditions of hardship, insecurity and poverty, denied access to their human rights.The OECD Guidelines for Multinational Enterprises(the Guidelines) are one of the few international instruments available to trade unions to help securerespect by MNEs of international labour standardsand decent work. The Guidelines, which are signedby governments, make recommendations to MNEs inareas ranging from employment, industrial relationsand human rights, to transparency, the environmentand anti-corruption.Governments that sign the Guidelines are requiredto set up National Contact Points (NCPs), which havea responsibility to help resolve complaints of allegedbreaches of the Guidelines. To date, trade unions havesubmitted 184 complaints to NCPs. These have mainlyconcerned violations of the rights to freedom of association and collective bargaining, but also a range ofother issues including precarious work, disclosure ofinformation, forced labour, discrimination, health andsafety, the environment, and corruption.The trade union experience of using the Guidelineshas been mixed. At their best, NCPs have provideda forum for problem-solving that has helped tostrengthen trade union organising and collectivebargaining. One landmark case involving UNI GlobalUnion and the private security MNE G4S led to thesigning of a Global Framework Agreement. But alltoo often, NCPs have failed to meet their obligationsunder the Guidelines, thereby failing in their responsibility to help ensure that MNEs contribute to decent work and sustainable development.The Guidelines were considerably strengthened in the2011 Update, including by incorporating key elementsof the UN’s work on business and human rights and further aligning the chapter on employment and industrial relations with the ILO MNE Declaration. As a result,the Guidelines clearly apply to workers in indirect employment relationships and in the supply chain. Thegovernment-backed complaints mechanism, however,was not sufficiently improved.Overall, TUAC considers the OECD Guidelines today tobe more fit-for-purpose and more relevant for workersaround the world. TUAC’s aim in publishing this Guide isto help trade unions to use the 2011 Guidelines in theirworkplaces and in their campaigns to defend workers’rights and improve living and working conditions.TUAC is grateful to the Friedrich-Ebert-Stiftung for its support, which has enabled the publication of this Guide.John Evans, General Secretary, Trade Union AdvisoryCommittee to the OECDTHE OECD GUIDELINES FOR MULTINATIONAL ENTERPRISESTRADE UNION GUIDEi

ContentsTerms and Concepts. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . iiiPart 1: Quick Guide . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 1Part 2: Understanding the Responsibility of Multinational Enterprises . . . . . . . . . . . . . . . . . . . . . . . . . . . . 152.1 Responsibility for Complying with the Guidelines. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 162.2 Responsibility for Adverse Impacts. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 162.3 Responsibility for Workers . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 25Part 3: Using the OECD Guidelines . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 293.1 Trade Union Rights . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 303.2 Restructuring/Closures. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 323.3 Health and Safety. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 343.4 Precarious Work. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 363.5 Migrant Workers. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 38Part 4: Using the Complaints Mechanism . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 414.1 The NCP Complaints Process. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 424.2 Submitting a Complaint . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 49Part 5: Resources . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 535.1 OECD Guidelines for Multinational Enterprises . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 545.2 ILO Tripartite Declaration of Principles concerning Multinational Enterprises and Social Policy. . . . . . . . . 545.3 UN Guiding Principles on Business and Human Rights. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 555.4 International/Global Framework Agreements. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 555.5 Trade Union Partners. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 565.6 Trade Union Networks. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 56

Terms and ConceptsTERM/CONCEPTDEFINITIONActual adverse human rightsimpact (see “adverse humanrights impact”)An adverse human rights impact that has already occurred or is occurring.1Adverse human rights impactOccurs when an action removes or reduces the ability of an individual to enjoy hisor her human rights.2Business relationships(see “supply chain”)Includes relationships with business partners, entities in the supply chain, andany other non-State or State entities directly linked to its business operations,products or services.3ConciliationA non-binding dispute resolution procedure in which a conciliator plays arelatively direct role in the actual resolution of a dispute and even advises theparties on certain solutions by making proposals for settlement.4Due diligence (see “humanrights due diligence”)The process through which enterprises can identify, prevent, mitigate and accountfor how they address their actual and potential adverse impacts as an integralpart of business decision-making and risk management systems.5Good faithIn the context of participating in the complaints procedure means responding ina timely fashion, maintaining confidentiality where appropriate, refraining frommisrepresenting the process and from threatening or taking reprisals againstparties involved in the procedure, and genuinely engaging in the procedures witha view to finding a solution to the issues raised.6Human rights due diligence(see “due diligence”)Assessing actual and potential human rights impacts, integrating and actingupon the findings, tracking responses as well as communicating how impactsare addressed.7Human rights risks (see“potential adverse humanrights impact”)Risks that a company’s operations may lead to one or more adverse human rightsimpacts. They relate to potential human rights impacts and are distinct from therisks to the company that may arise from its involvement in adverse human rightsimpacts.8LeverageThe ability of an enterprise to effect change in the wrongful practices of the entitythat causes the harm (i.e., adverse impacts).9MediationA voluntary and guided process in which a skilled mediator helps the parties tonegotiate the settlement of a dispute. The process is not binding unless or untilthe parties reach agreement.10THE OECD GUIDELINES FOR MULTINATIONAL ENTERPRISESTRADE UNION GUIDEiii

TERM/CONCEPTDEFINITIONMitigation of adverse (humanrights) impactActions taken to reduce the extent of an adverse (human rights) impact, withany residual impact then requiring remediation. The mitigation of (humanrights) risks refers to actions taken to reduce the likelihood of a certainadverse impact occurring.11National Contact Points (NCPs)Structures established by signatory governments to the Guidelines to further theeffectiveness of the Guidelines, including by handling complaints.Potential adverse impactAn adverse impact that may occur on matters covered by the Guidelines but hasnot yet done so.Potential adverse humanrights impactAn adverse human rights impact that may occur, but has not yet done so.12Problem-solving approachA quality improvement approach that involves identifying the causes of aproblem and proposing potential, often creative, solutions agreeable to multipleparties or individuals.13Procedural GuidanceThe rules in the Guidelines that govern the functioning of the NCPs.RemediationivRefers to both the processes of providing remedy for an adverse impact andthe substantive outcomes that can counteract, or make good, the adverseimpact, including apologies, restitution, rehabilitation, financial or non-financialcompensation and punitive sanctions (whether criminal or administrative, suchas fines), as well as the prevention of harm through, for example, injunctions orguarantees of non-repetition.14Soft LawRules that are neither strictly law nor completely lacking legal significance (e.g.,governmental Guidelines, Declarations or Recommendations).Specific InstanceThe term used in the Guidelines to mean a case or complaint relating to an allegedbreach of the Guidelines. This Guide uses the term case or complaint.Specific Instance Procedure(see “specific instance”)The term used in the Guidelines to describe the rules governing the handling of acase or complaint by the National Contact Points (NCPs) under the Guidelines.Supply Chain (see“business relationships”)Includes relationships that take a variety of forms including, for example,franchising, licensing or subcontracting.15THE OECD GUIDELINES FOR MULTINATIONAL ENTERPRISESTRADE UNION GUIDE

PART 1. Quick GuidePart 1 summarises the Guidelines and highlights of the 2011Update and provides answers to key questionsTHE OECD GUIDELINES FOR MULTINATIONAL ENTERPRISESTRADE UNION GUIDE1

FIGURE 1.1 The OECD Guidelines – Chapter By ChapterCHAPTERWHAT DOES IT SAY?I. Concepts andPrinciplesThe Guidelines comprise principles and standards consistent withapplicable laws and internationally-recognised standards. They applyto multinational enterprises (MNEs) in all sectors wherever theyoperate. Enterprises should obey domestic laws. In countries wheredomestic laws conflict with the Guidelines, enterprises should seekways to honour the Guidelines to the fullest extent, which does notplace them in violation of domestic law.aII. General PoliciesEnterprises should contribute to sustainable development, respect human rights, abstain from improper involvement in local political activities and refrain from retaliating against workers who report practicesthat contravene the law, the Guidelines or the enterprise’s policies.Enterprises should conduct due diligence to avoid being involved in adverse impacts on matters covered by the Guidelines, including throughtheir supply chain and business relationships, and to address such impacts when they occur, including using their leverage so that businesspartners address their adverse impacts. Enterprises should engage withstakeholders to provide meaningful opportunities for their views to betaken into account in relation to planning and decision making on activities that may significantly impact local communities.aIII. DisclosureEnterprises should disclose information on material matters regardingtheir activities, structure, financial situation, performance, ownershipand governance and workers, and should apply high quality standardsto financial and non-financial reporting.aIV. Human RightsEnterprises should respect human rights, which means they shouldavoid infringing on the rights of others, through their own activitiesand relationships, and address such impacts when they occur, includingusing their leverage so that business partners address their adversehuman rights impacts. Enterprises should have a human rights policy,conduct human rights due diligence and have legitimate processes inplace for remedying actual adverse impacts where they have caused orcontributed to those impacts.aV. Employment andIndustrial RelationsEnterprises should respect the right to form or join a trade unionand to bargain collectively, contribute to the effective abolition ofchild labour and the elimination of all forms of forced or compulsorylabour, and respect the right to non-discrimination in employmentand occupation. Enterprises should provide information to workers’representatives, which is needed for meaningful negotiations onconditions of employment and provide information to workers andtheir representatives which enables them to obtain a true and fairview of the performance of the entity, or the enterprise as a whole.Enterprises should provide the best possible wages (which at aminimum should meet the basic needs of workers and their families),ensure occupational health and safety, provide reasonable noticeto workers of restructuring or closures and not threaten to transferoperations in response to negotiations on employment conditions, orworkers forming or joining a union.acomThe general reChapter IImendation ines shouldthat enterprisligencediedutuccondapterschlaltoappliesd Techanencexcept Scietitionpemnology (IX), Con (XI).tioxaTadan(X)2THE OECD GUIDELINES FOR MULTINATIONAL ENTERPRISESUSED BY TRADEUNIONS?TRADE UNION GUIDE

CHAPTERWHAT DOES IT SAY?VI. EnvironmentEnterprises should maintain environmental management systemsto collect and evaluate information on their environmental, healthand safety impacts, provide timely information to the public andworkers on potential impacts, communicate and consult with affectedcommunities, and provide adequate education and training to workersin environmental health and safety.aVII. CombatingBribery, BribeSolicitation andExtortionEnterprises should not offer, give or demand a bribe to or from apublic or private official, to obtain or retain an improper advantage,nor use intermediaries, such as agents, for this purpose. Enterprisesshould prohibit or discourage the payment of facilitation paymentsand should ensure that political contributions comply fully with publicdisclosure requirements and are reported to senior management.aVIII. ConsumerInterestsEnterprises should meet all legally required health and safety standards,provide consumers with sufficient information to make informeddecisions, provide access to non-judicial dispute resolution and redressmechanisms, not make misrepresentations or omissions nor otherwiseengage in misleading, fraudulent or unfair practices, and shouldcooperate with public authorities to address serious threats to publichealth and safety or to the environment with which they are involved.aIX. Science andTechnologyEnterprises should adopt practices to support technology transfer in away that contributes to sustainable development and, where relevant,develop ties with local public research institutions.X. CompetitionEnterprises should carry out their activities in a way that is consistentwith applicable competition laws and regulations and refrain fromprice fixing, bid rigging, or dividing up markets.XI. TaxationEnterprises should contribute to the public finances of host countriesby making timely payment of their tax liabilities, complying withboth the letter and the spirit of the tax laws and regulations of hostcountries, providing timely information to public authorities, includingin the context of requests from other countries, and applying the arm’slength principle in transfer pricing practices to avoid shifting of profitsor losses to reduce the tax burden.THE OECD GUIDELINES FOR MULTINATIONAL ENTERPRISESUSED BY TRADEUNIONS?aTRADE UNION GUIDE3

FIGURE 1.2: National Contact Points – Promoting and Implementing the OECD Guidelines164NCPWEB SITEArgentinaEnglish: http://www.cancilleria.gov.ar/en/ancpSpanish: www.ausncp.gov.au/content/content.aspx?doc rade/Investment spBrazilEnglish: tuguese: http://www.pcn.fazenda.gov.br/CanadaEnglish: cords-commerciaux/ncp-pcn/index.aspx?lang eng&menu id 1&menu RFrench: cords-commerciaux/ncp-pcn/index.aspx?lang mincomercioexterior/publicaciones.php?id 2241Costa ales.aspxCzech khttp://businessconduct.dk/EgyptEgypt does not currently have a web site for its .economie.gouv.fr/pcnGermanyEnglish: erprises,did 430522.htmlGerman: rnationale-Gremien/oecdleitsaetze,did tinational-Enterprises/IsraelIsrael does not currently have a web site for its NCP.ItalyEnglish: n: ordanJordan does not currently have a web site for its NCP.THE OECD GUIDELINES FOR MULTINATIONAL ENTERPRISESTRADE UNION GUIDE

NCPWEB SITEKazakstanKazakstan does not currently have a web site for its NCP.Koreahttp://www.ncp.or.kr/jsp/kcab ncp/intro Arabic: http://www.invest.gov.ma/?Id 34527&lang arEnglish: http://www.invest.gov.ma/?Id 34527&lang enFrench: http://www.invest.gov.ma/?lang fr&Id 34527Netherlandshttp://www.oecdguidelines.nl/New s-formulti-national-enterprisesNorwayEnglish: lantillaStandard.aspx?are 0&prf 0&jer 8006&sec inas/outros-aspetos-relevantes.aspxRomaniaEnglish: http://dpiis.gov.ro/new nt/Romanian: http://dpiis.gov.ro/new ontact/Slovak RepublicThe Slovak Republic does not currently have a web site for its NCP.Sloveniahttp://www.mgrt.gov.si/si/delovna podrocja/trgovinska politika/sodelovanje z oecd/nacionalnakontaktna tocka nkt za izvajanje smernic za vecnacionalne ineasdirectrices/Paginas/El s://www.seco.admin.ch/ncpTunisiaTunisia does not currently have a web site for its ome/yatirim/yurtdisinaYatirim/OECD?adf.ctrl-state d4jl0meip 4& afrLoop 776182328983685& afrWindowMode 0&afrWindowId null#!%40%40%3F afrWindowId%3Dnull%26 afrLoop%3D776182328983685%26afrWindowMode%3D0%26 adf.ctrl-state%3Dwdt6ywa4e lcontact-pointUnited tmTHE OECD GUIDELINES FOR MULTINATIONAL ENTERPRISESTRADE UNION GUIDE5

THE 2011 UPDATEAn Upgrade In Corporate ResponsiblitySince their adoption in 1976, the OECD Guidelineshave been subject to periodic update and review, most recently in 2011. Highlights of the2011 Update include:vide the “best possible wages, benefits andconditions of work” that should be “at leastadequate to satisfy the basic needs of theworkers and their families”;23 Internationally-recognised standards: incorpo- Parallel proceedings: guidance that NCPsration of reference to internationally recognisedstandards17, alongside domestic law, and therecommendation that in countries where thereis conflict between the standards of the Guidelines and domestic law, enterprises should seekto honour the Guidelines unless doing so wouldresult in violating domestic law;18 Responsibility determined by impact: adoption of the principle that the responsibilityof an enterprise is determined by its adverseimpacts, in line with the UN Guiding Principleson Business and Human Rights (UNGPs); Supply chains and business relationships: clarification that MNEs are responsible for avoiding adverse impacts and addressing those withwhich they are involved through their supplychains and business relationships;19 Due diligence: inclusion of a general recommendation that enterprises should conductdue diligence to avoid and address adverse impacts on matters covered by the Guidelines;20should not reject or suspend cases for the solereason that there are other (legal) proceedings, unless handling the case would createserious prejudice for the parties involved;24 Strengthened complaints mechanism: incorporation of new principles requiring NCPs tobe impartial, predictable and equitable whenhandling complaints25, improved procedures(including timeframes)26 and provision for NCPcapacity-building and monitoring (voluntarypeer review); Proactive agenda: introduction of a new proactive agenda as a complement to the complaintsmechanism, under which governments shouldwork on a multi-stakeholder basis to addressrisks of adverse impacts associated with particular products, regions, sectors or industries, to promote the effective observance ofthe Guidelines.27 Human rights: introduction of a new chaptersetting out the corporate responsibility to respect human rights, based on the UNGPs;21 Employees and workers: broadening thescope of the Guidelines to cover workers inindirect employment relationships and in thesupply chain;22 Wages to meet basic needs: inclusion of anew recommendation that MNEs should pro-6THE OECD GUIDELINES FOR MULTINATIONAL ENTERPRISESTRADE UNION GUIDEte increasedThe 2011 Updaye responsibilitsignificantly th.esinr the Guidelof MNEs undetonkesteps taHowever, thee complaintsthenthstrengll far short ofmechanism fed NGO deantrade unionthe majoraswismands. Th2011 Update.failing of the

1.1 What are the OECD Guidelines for Multinational Enterprises?The OECD Guidelines for Multinational Enterprises (the Guidelines) are recommendations of governments on the standard of business behaviour that is expected of multinational enterprises (MNEs) throughout their global operations.The Guidelines set out principles and standards in areas ranging from humanrights, employment and industrial relations, to information disclosure, environment and taxation (see FIGURE 1.1).1.2 Do MNEs sign up to the Guidelines?No. Governments sign the Guidelines, not MNEs. This makes the Guidelines qualitatively different from company codes of conduct. So far 47 governments havesigned: 35 OECD member countries and 12 non-members. Governments that signthe Guidelines make a binding commitment to implement them.The governmentbacked complaintsmechanism is a uniquecharacteristic of theGuidelines.1.3 How do the Guidelines apply to Multinational Enterprises?The Guidelines apply to all MNEs which are headquartered in the 47 countries thathave signed the Guidelines wherever these MNEs operate, including abroad. Theyalso apply to MNEs operating in the terrritories of countries that have signed theGuidelines. The Guidelines apply irrespective of ownership (state-owned, publicor private) or sector, including to the financial sector.1.4 What about suppliers and other business partners?The Guidelines apply to the full range of business relationships of MNEs: subsidiaries, suppliers, sub-contractors, franchises, licensees and other business partners.This is discussed further in Part 2.21.5 Are the Guidelines optional for MNEs?No. The Guidelines are not optional. The Guidelines are an example of a “soft law”instrument. This means that they are neither strictly legally binding in nature,nor completely lacking legal significance. As they are not “hard law”, the Guidelines cannot be enforced through the courts. But because 47 governments havemade a legal commitment to implement the Guidelines, MNEs are expected tocomply with the Guidelines.BOX 1.1: Signatories to the OECD GuidelinesOECD MEMBERSAustralia, Austria, Belgium, Canada, Chile, Czech Republic, Denmark, E

Guidelines are unique in having a government-backed com- plaints mechanism for addressing the actions of multinational enterprises. Trade unions have used this mechanism successfully. The Guidelines form part of the OECD Investment Declara- tion, under which adhering governments commit to improving their investment climate and

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