Embedding Human Rights into Business Practice

A joint publication of the United Nations Global Compact and the Office of the High Commissioner of Human Rights

Cover Photo: The Universal Declaration on Human Rights – Article 1 Article 2 3 Disclaimer

Editor's Note: The views expressed in this publication are the authors' own and do not necessarily represent the views of the Global Compact or the Office of the High Commissioner for Human Rights. The Global Compact and the Office of the High Commissioner for Human Rights make no representation concerning, and do not guarantee, the source, originality, accuracy, completeness or reliability of any statement, information, data, finding, interpretation, advice or opinion contained within the publication.

This report is intended strictly as a learning document and should not be interpreted to indicate either effective or ineffective practices.

The inclusion of case studies on company experiences does not in any way constitute an endorsement of the individual companies nor their human rights policies by the Global Compact and/or the OHCHR. Article 3 Table of Contents Case Studies

02 Disclaimer 01 The BTC Pipeline Case Study: Following through on Global Compact Commitments Gare Smith, Foley Hoag LLC

01 Foreword 01 BHP Billiton South Africa: Mr. Dzidek Kedzia Standards as a Human Rights tool Chief, Research and Right to Development Branch Patricia B. Lawrence Office of the High Commissioner for Human Rights Unisa Foundation and Centre for Corporate Citizenship University of South Africa

01 Foreword 01 Human rights and supply chain management Mr. Georg Kell in the Pharmaceutical sector Executive Head, The United Nations Global Compact John Morrison, TwentyFifty Annette Stube, Novo Nordisk

01 Introduction 01 Business and Human Rights: Ursula Wynhoven, Global Compact Office The Case of Hewlett-Packard Lene Wendland, Office of the High Commissioner Kellie A. McElhaney and Natalie Hill for Human Rights University of California, Berkeley

01 OHCHR Briefing Paper The Global Compact and Human Rights: Policy Studies Understanding Sphere of Influence and Complicity 01 The Global Compact Policy Dialogue “The Role of the Private Sector in Zones of Conflict” 01 Understanding the Global Compact Denise O'Brien and Melissa Powell Human Rights Principles Global Compact Office Anthony P. Ewing Columbia University 01 Second Field Visit Report Yadana Gas Transportation Project 01 Corporate Fallout Detectors and Moattama Gas Transportation Company Operator: Fifth Amendment Capitalists: Total in Myanmar/Burma Corporate Complicity in Human Rights Abuse Doug Fraser, Independent Consultant Mark B. Taylor Luc Zandvliet, Project Director, Fafo Institute for Applied International Studies Corporate Engagement Project

01 Resources and Further Information 01 Business and Human Rights Universal Declaration on Human Rights Klaus M. Leisinger Business and Human Rights Resource Centre Novartis Foundation for Sustainable Development The Human Rights Compliance Assessment (HRCA) and University of Basel 01 Endnotes

01 Implementing the Global Compact Human Rights Principles Anthony P. Ewing Columbia University Article 4 When the Universal Declaration of Human The present book, published jointly by the Foreword Rights was adopted more than 50 years Global Compact Office and the Office of the ago, States were the principal actors in High Commissioner for Human Rights, aims the international arena. States continue to to provide information to companies to help Mr. Dzidek Kedzia have the primary responsibility for with the human rights challenges they face Chief, Research and Right to protecting the human rights of their and give informative and useful examples Development Branch citizens, but there are growing of how companies from different sectors expectations from the public and civil and in different political and geographic Office of the High Commissioner society organisations that corporations contexts have tried to address some of for Human Rights should do everything they can to promote these challenges. True to the Global and respect universally agreed standards. Compact's multi-stakeholder approach, the The parameters, however, are still being contributors to the book offer a broad range defined, and uncertainties remain about of perspectives on the issues at hand. what is expected from corporations with regards to human rights. While this book does not offer any easy solutions to the myriad of complex issues While discussions are underway in the facing companies in their efforts to United Nations human rights system to implement the human rights principles of address the role of the private sector with the Global Compact it is my hope that it regards to human rights, the Global may inspire practical actions in support of Compact offers an important vehicle for human rights. corporations to voluntarily engage in discussions about human rights and to develop practical solutions to address difficult human rights issues within their sphere of influence. In the words of the late High Commissioner for Human Rights, Sergio Vieira de Mello:

“Business leaders don't have to wait — indeed, increasingly they can't afford to wait — for governments to pass and enforce legislation before they pursue “good practices” in support of international human rights standards within their own operations and in the societies of which they are part.” Without a doubt, the primary responsibility role of government and business in the Foreword for human rights promotion and support and protection of human rights. protection rests with governments. Most Voluntary initiatives are meant to provide of the dilemmas we face at the a means of engaging business in an effort Mr. Georg Kell intersection of business and human rights to support those that governmental Executive Head arise from governments' inability or failures hit hardest - the marginalized. unwillingness to meet their human rights The United Nations Global Compact obligations. One of the most visible, but When the Compact began its work, only a not the only, area where governments are handful of companies had human rights not living up to their human rights practice on their radar screen. Today the responsibilities is in the conflict zones of executive offices and board rooms of over the dozen or so countries across almost 1,700 companies have seen discussion of all regions of the world where armed human rights practice and policy for the conflicts are currently being waged. first time. Admittedly, this number is small compared to the over 60,000 multi-national Voluntary initiatives are not a panacea to companies working in the world today and this problem. They are primarily an effort far more companies need to get off the to fill the gap and therefore must be fence. However, it is an excellent start. formed and fashioned in such a way as to simulate improvement in public policy so When tackling corporate social that the root causes of the problem are responsibility issues we must remain tackled. Enhancing the contribution of mindful of the root causes. What can business to sustainable development is a business do given that most of the root complex goal that requires a range of problem lies in the hands of the states? The different methodologies. In this context, Global Compact calls on companies not to both regulatory and voluntary approaches wait for all governments to get it right. But play an important role. The Global rather to heed the call and focus their Compact is designed to complement, and societal impact in such a way as to create not substitute, regulatory frameworks by social innovation and higher standards. encouraging voluntary, innovative corporate practices. This course towards private and public policy improvement must be based on Through a growing web of trade and dialogue, constructive engagement in investment people are tied ever closer learning and the courage to experiment. together. However, while business and We hope this publication does just this and civil society have become global, politics that the lessons contained herein married has not. As power and responsibility walk with a commitment to action might help a parallel path there is now an urgent prompt the social innovation necessary to need to advance our understanding of the create a better tomorrow for all. Article 5 The Ten Principles Introduction

Human Rights Ursula Wynhoven Global Compact Office1 Principle 1 | Businesses should support and respect the protection of Lene Wendland international human rights within Office of the High Commissioner for Human Rights their sphere of influence; and Principle 2 | make sure they are not complicit This publication grew out of the human rights in human rights abuses. sessions that formed part of the Third Annual International Global Compact Learning Forum Labour conference in Belo Horizonte, Brazil, in December Principle 3 | Businesses should uphold the freedom 2003. These sessions sought to shed light on the theoretical and practical meaning of the Global of association and the effective Compact's two human rights principles, as well as recognition of the right to collective to offer guidance to companies on how to bargaining; implement them. Principle 4 | the elimination of all forms of forced and compulsory labour; This publication has the same aim. In it, you will find five case studies of how companies in Principle 5 | the effective abolition of child labour; different sectors are trying to implement the and human rights principles. Also included are a Principle 6 | the elimination of discrimination in number of papers offering different perspectives on respect of employment and occupation. what the human rights principles mean in practice and what are the key human rights challenges that companies face. We are also very pleased to Environment present a new paper by the Office of the High Principle 7 | Businesses should support a Commissioner for Human Rights that poses and precautionary approach to responds to frequently asked questions on the environmental challenges; topic of the Global Compact and human rights. In appendices, we have added the Universal Principle 8 | undertake initiatives to promote greater Declaration of Human Rights and included environmental responsibility; and information about two human rights tools that Principle 9 | encourage the development and were presented at the conference. diffusion of environmentally friendly technologies. Elaborating the human rights principles The human rights sessions at the Learning Forum Anti-Corruption conference included both plenary and breakout Principle 10 | Businesses should work against sessions, which were well attended by Global corruption in all its forms, including Compact participants from around the world representing all of the Global Compact's different extortion and bribery. stakeholder groups. The plenary session focused on the second Global Compact principle and the sometimes difficult question of how to avoid being complicit in human rights abuses. It also offered perspectives on what the key human rights Article 6 12 Introduction challenges are in a diverse range of industry the feedback received and finalize the Business for Social Responsibility, sectors — mining, technology, energy and case study. In the interests of European Foundation for Quality pharmaceuticals. A paper based on the transparency, each case study presented Management, and Ethos, along with UN keynote presentation that Mark Taylor in this publication discloses how it was agencies (the International Labour delivered on the concept of corporate funded and whether it was peer reviewed Organization, the United Nations Industrial complicity is included in this volume, and by whom. Once the case study has Development Organization, and the United along with other papers, contributed by been completed and the company has Nations Environment Programme) and Professors Klaus Leisinger and Anthony signed the release form, the case study is Amnesty International. It also offers a Ewing, elaborating the Global Compact published on the Global Compact website. helpful framework — called the Global human rights principles. Important aspects You are welcome to comment on the case Compact Performance Model — for of the human rights principles are also studies and other submissions published embedding the Global Compact principles explored in a question and answer format there using the comment facility provided within company operations. in the FAQ document that the Office of the on the website. High Commissioner for Human Rights The Global Compact and the Office of the has provided. Other companies interested in being the High Commissioner for Human Rights are subject of a Global Compact case study on currently working with partners on the Human rights case studies their efforts to address human rights issues development of other tools to help with In the breakout sessions at the within their own operations and/or sphere implementation of the human rights conference, a number of case studies on of influence are encouraged to contact principles. business and human rights topics were Ursula Wynhoven (+1-212-963-5705; presented about company efforts to tackle [email protected]) at the Global Compact Acknowledgements the human rights issues they face in their Office. Case authors with proposals for Both the human right sessions at the own operations and sphere of influence. case studies are also welcome to contact conference and this publication are the The case studies are about activities the Global Compact Office. product of close collaboration between undertaken by BP, Hewlett Packard, BHP the Office of the High Commissioner for Billiton, Novo Nordisk and Total. The Human rights tools Human Rights and the Global Compact activities discussed include efforts to The tools described in the appendices to Office. In addition, there are a number of address human rights and labour issues this publication were presented to individuals that we need to thank: the in the supply chain, stakeholder relations, participants at the conference. They were authors of the cases and papers included human rights policies and their developed by the Business and Human in this publication, the company implementation, and operating in a Rights Resource Centre and the Danish representatives who worked with the country where there is a serious lack of Institute for Human Rights, respectively. case authors, the peer reviewers (who are respect for human rights. Each case study Both tools — a comprehensive, introduced by name at the beginning each discusses elements such as what efforts information rich business and human case study), the organizers of the are working, what has not worked, rights website, and a human rights Learning Forum conference in Brazil, John lessons learned, and ongoing challenges. compliance assessment tool — are Morrison of Respect Europe and the excellent resources to help companies Business Leaders Initiative for Human Global Compact case study research improve and assess their own human Rights for chairing some of the breakout guidelines have been developed to rights impact and performance. sessions at the conference, and Salil enhance the learning opportunities that Tripathi of Amnesty International and the case studies offer. They provide the For descriptions of other tools, Klaus Leisinger of Novartis Foundation framework for the preparation of Global techniques, case studies, information and who made very helpful suggestions in Compact case studies.2 Ideally, case resources available to help with connection with the design of the human studies should be independently funded implementation of the human rights rights sessions at the conference. and prepared by an individual that is not principles, the Global Compact publication related to the company whose activities Raising the Bar — Creating Value with We hope that this publication will be are the subject of the case study. This has the United Nations Global Compact is an used to promote learning and better not always been possible. Global Compact important reference document. It was awareness and implementation of the case studies should also be peer developed in conjunction with major Global Compact human rights principles. reviewed by a person that is not corporate social responsibility connected with the company. The case organizations, like the World Business author is then expected to take on board Council for Sustainable Development, Article 7 14 OHCHR Briefing Paper on The Global Compact and Human Rights: Understanding Sphere of Influence and Complicity

15 Introduction 21 Assessing Risks Making Decisions

15 Human Rights and Is a company expected to react the Global Compact to everything/anything that occurs in its sphere of influence? How are business practices and human rights linked? How much influence does a company have? How does the Global Compact fit into existing human rights Is it possible to do business in frameworks? countries with known human rights abuses without OHCHR Briefing Paper What is the scope of corporate becoming complicit? responsibility for human rights? The Global Compact and Human Rights: 17 Working within Spheres 23 Taking Action Understanding Sphere of of Influence What can a firm do to avoid Influence and Complicity What defines a company’s complicity in human rights sphere of influence? abuses? Office of the High Commissioner for Human Rights Who is in the sphere of influence? How can companies support and respect human rights in Which human rights issues may their sphere of influence? arise within a company’s sphere of influence? 25 Concluding comments

18 Defining Complicity

What is “complicity”? 26 Further Reading on “Sphere of Influence” Does a firm always know and Tools on the Issue of if it is complicit Corporate Complicity in in human rights abuses? Human Rights Violations

19 Emerging Legal Norms 00 Annex I: The Universal Declaration What does international law of Human Rights say about corporate complicity?

In which situations have 00 Annex II: companies been accused of Commentary on the responsibilities corporate complicity? of trans-national corporations and other business enterprises with regard to human rights (E/CN.4/Sub.2/2003/38/Rev.1) OHCHR Briefing Paper on The Global Compact and Human Rights: Understanding Sphere of Influence and Complicity 15

Introduction Human Rights and the Global Compact

The United Nations’ Global Compact is a voluntary initiative asking participating How are business practices and companies to embrace, support and ?human rights linked? enact, within their sphere of influence, 10 principles concerning human rights, While governments have the primary labour rights, environment protection, and responsibility to promote, protect and fulfil anti-corruption.3 The first two principles human rights, the Universal Declaration of are focused on human rights. Human Rights (UDHR) calls on ‘every individual and every organ of society’ to The concept of “sphere of influence” strive to promote and respect the rights qualifies the scope of all 10 Global and freedoms it contains and to secure Compact principles, including the second their effective recognition and observance. human rights principle asking companies The concept of ‘every organ of society’ to ensure that they are not complicit in covers private entities such as companies. human rights abuses. However, sphere of influence is not defined in international Companies are supporting and respecting human rights law. Instead, understanding human rights in their spheres of influence UN Global Compact Principle 1: is evolving from company practices, the in a wide variety of ways, including by Businesses should support and work of international organisations, non- adhering to national laws that have been governmental organisations (NGOs), adopted as a result of a States’ respect the protection of academics and national jurisprudence of international human rights obligations and internationally proclaimed what constitutes a company’s sphere of commitments. The commitment made by human rights. influence in relation to complicity and companies in the Global Compact to how it affects the scope and content of support and respect human rights in their the commitment made by companies sphere of influence includes policies that UN Global Compact Principle 2: participating in the Global Compact. many companies are already Businesses should make sure implementing, either as a result of legal that they are not complicit in This briefing paper is for companies and requirements or voluntary initiatives. human rights abuses. other stakeholders already in the Global Provision of health insurance to workers, Compact, as well as for companies implementation of worker safety considering signing on to the Compact, regulations, stakeholder advisory fora, who may be uncertain about the nature of positive involvement in communities in the human rights commitments involved. which they operate, and Corporate Social It provides a broad overview of the Responsibility (CSR) codes of conduct current understanding of what sphere of compliant with international human rights influence and complicity mean in the standards are examples of how many context of the Global Compact’s human companies are already supporting human rights principles. This briefing paper is rights in their operational activities. also intended to facilitate further discussion of how to translate these To date, much of the public criticism of commitments into practical and multinational corporations in the context measurable action in support of human of human rights has focused on rights. A list of further reading and tools is companies that are perceived to be provided at the end of the document.4 associated with gross and systematic violations of rights. These have often taken the form of claims that a particular company has colluded, conspired or acquiesced in a pattern of abuse committed by State forces that would not 16 OHCHR Briefing Paper on The Global Compact and Human Rights: Understanding Sphere of Influence and Complicity

have happened had it not been for the corresponding duties to protect those u Personal and political rights and presence or support of the company. In rights. The rights laid down in the UDHR freedoms, including freedom of most cases, it is the silence or failure to have been further elaborated in seven movement and rights protecting a act on the part of companies that brings international treaties, including the person’s privacy in matters concerning censure rather than their active International Covenant on Economic, family, home and correspondence; the involvement in the violations. However, Social and Cultural Rights (ICESCR) and right to take part in government; the both have the potential to attract the International Covenant on Civil and right to vote; the right to equal access allegations of complicity in the abuses of Political Rights (ICCPR). The UDHR and the to public service; the right to own the authorities.5 two covenants are together referred to as property, and the prohibition of arbitrary the International Bill of Human Rights. All deprivation of property; and the right to the rights in the International Bill of freedom of expression, religion, How does the Global Compact fit into Human Rights are universal, interrelated, peaceful assembly and association. ?existing human rights frameworks? interdependent and indivisible.7 The rights enshrined in international human rights treaties are, in many cases, incorporated What is the scope of corporate The Global Compact human in national laws when they are ratified by “ responsibility for human rights? rights principles derive from governments. ? the Universal Declaration of The UDHR defines human rights, Human Rights (UDHR) The draft Norms on the adopted by the General embracing three critical areas: “ 6 Responsibilities of Assembly in 1948. The u Rights protecting life and security of Transnational Corporations UDHR, defining itself as ‘a the person, developed through, inter and Other Business common standard of alia, the right to life, liberty and Enterprises with regard to achievement for all peoples security; the right to be free from Human Rights9 focus on and all nations’, both slavery, servitude, torture, and cruel, the right to equal proclaims a set of inhuman or degrading treatment or opportunity and non- punishment; the right to equal fundamental values shared discriminatory treatment; by the international protection of the law; the right to be free from arbitrary arrest; and the right the right to security of community, and sets persons; the rights of standards recognizing rights to judicial remedy against human rights violations before a court. workers; consumer and the corresponding protection; environmental duties to protect those protection; and economic, rights. u Economic, social and cultural ” rights, encompassing, inter alia, the social and cultural rights.” right to a standard of living adequate for health and well-being that includes To be able to take effective measures to food, clothing, housing, medical care avoid complicity in human rights abuses While the UDHR applies to all “organs of and access to social services and society”, the exact nature of company in its sphere of influence, a company social security; the right to education; needs to have a clear understanding of responsibility for human rights is subject the right to just and favourable to continuing discussion. The Sub- the human rights standards underpinning remuneration ensuring the worker and the Global Compact. The Global Compact Commission on the Promotion and the worker’s family an existence worthy 8 human rights principles derive from the Protection of Human Rights has adopted of human dignity; the right to form and Universal Declaration of Human Rights a set of draft norms, based on existing join trade unions; and the right to rest (UDHR) adopted by the General Assembly international standards that seek to in 1948.6 The UDHR, defining itself as ‘a and leisure. These rights are to be identify which human rights apply directly common standard of achievement for all realized through national efforts and to companies within their respective peoples and all nations’, both proclaims a international cooperation in accordance sphere of activity and influence.The draft set of fundamental values shared by the with conditions in each State. Norms on the Responsibilities of international community, and sets Transnational Corporations and Other standards recognizing rights and the Business Enterprises with regard to Human Rights9 focus on the right to equal OHCHR Briefing Paper on The Global Compact and Human Rights: Understanding Sphere of Influence and Complicity 17 opportunity and non-discriminatory As various academic studies have Beyond its employees, a company has treatment; the right to security of persons; observed, current trends in the relationships with a broader range of the rights of workers; consumer globalization of business are marked by actors over whom it may have the ability protection; environmental protection; and the emergence of core firms at the to exert influence to varying degrees with economic, social and cultural rights. The centre of large networks of business regard to human rights. For example, draft Norms are not legally binding, but relationships. This network is made up of communities living near its they may provide illustration to companies a firm’s global value chain and its operations or who are otherwise wishing to better understand human rights relationships with possible joint venture dependent on the company12 are also and the content of the human rights partners and government authorities in close to the centre of a company’s sphere commitment they have undertaken by different regions where it operates. The of influence, as are business partners signing on to the Global Compact. core firm plays a key role as the driver of such as suppliers, contractors and joint change within its global value chain. It has venture partners. Where companies substantial influence not only on its own produce goods, they also have a employees, but also on upstream suppliers connection with consumers, even though Working within and downstream customers. The concept the latter may not be physically Spheres of Influence of “sphere of influence” encompasses proximate. Companies may also have this combination of relationships, and direct and close connections with the the core firm’s central position as the companies’ host or home What defines a company’s leader of its global value chain. Governments, or with armed groups ?sphere of influence? that control the territory in which they operate. Through the advocacy and Who is in the sphere of influence? lobbying activities of sectoral, national or “The concept of sphere of ? international business associations of influence is not defined in which a company is a member, its sphere detail by international of influence may furthermore extend to human rights standards, it “The relationship a governmental and inter-governmental will tend to include the company has with its policy-making bodies. individuals to whom the employees lies at the company has a certain centre of its sphere of political, contractual, influence. Which human rights issues may ” arise within a company’s sphere of economic or geographic ? influence? proximity.” A company’s commitment to respect and support human rights and to avoid The scope of the commitment made by complicity in human rights abuses “Some commentators have companies in the Global Compact to extends to all those who are in its suggested that a support and respect human rights and to sphere of influence. However, the company’s duty to respect avoid complicity in human rights abuses extent of a company’s ability to act on its and protect the human is limited to the company’s own sphere of human rights commitment may vary rights of its employees influence. While the concept is not depending on the human rights issues in defined in detail by international human implies taking reasonable question, the size of the company, and the rights standards, it will tend to include the steps to protect workers proximity between the company and the individuals to whom the company has a from violations committed (potential) victims and (potential) by the State, or to seek certain political, contractual, economic or 11 geographic proximity.10 Every company, perpetrators of human rights violations. legal redress for their both large and small, has a sphere of employees if violations influence, though obviously the larger or The relationship a company has with its have been committed.”15 more strategically significant the employees lies at the centre of its sphere company, the larger that company’s of influence. Indeed, most corporate human rights programmes begin by sphere of influence is likely to be. The specific human rights issues that assessing the enjoyment of human rights companies may face vary considerably by the company’s own workers. 18 OHCHR Briefing Paper on The Global Compact and Human Rights: Understanding Sphere of Influence and Complicity between sectors, geographic locations There are several examples of companies and a company’s specific business being confronted with human rights issues “Human rights issues may functions (e.g. marketing, supply chain, arising from their security procedures and confront a company as a investment, human resources etc). While from the actions of security officials result of the actions of one human rights are interrelated and employed or contracted by the company. or more of its business indivisible, some companies might find partners, including joint that certain rights are more relevant Important human rights issues may arise venture partners, suppliers, within their sphere of influence, for from the way a core firm exercises its example labour rights in the supply chain, influence over issues like the price and contractors, sub- the focus on security issues particularly quality of a product. At the most basic contractors, licensees or by the extractive sector, and the emerging level, core firms are able to influence others with whom the focus on the right to health by the price, simply through the process of company has a working pharmaceutical sector.13 supply and demand and price relationship” negotiations. Pressing a supplier too hard The following section provides examples on the price of the product may have a of some of the human rights issues that negative impact on the labour Depending on their degree of control over companies may face within their sphere standards enjoyed by the supplier’s and knowledge (or imputed knowledge) of of influence. employees, including their right to their business partners, companies may receive fair wages (if the price paid to the be seen to be complicit in abuses that Within its core operations, a company is supplier by the core firm does not allow the partners commit where the confronted most directly with human the supplier to pay fair wages), the right to company concerned does not try to rights issues in its labour relations and safe and healthy working conditions (if the prevent or stop those abuses. The human resources management. The price paid by the core firm does not take clothing and footwear industries have UDHR guarantees a range of basic labour into consideration the cost of ensuring been particularly vulnerable to allegations rights, including the right to just and safe and healthy working conditions), and that they have permitted workers to suffer favourable conditions of work, the right to the right to reasonable limitation of sweatshop conditions in the factories of just and favourable remuneration, and the working hours (if the employees have to sub-contractors across the world.17 right to form and to join trade unions. work excessive hours to make a living These and other fundamental labour wage due to the low price paid by the rights have been further developed in the core firm to the supplier). International Labour Organization’s seven Defining Complicity core conventions,14 including the right to Human rights issues arising in relation to a healthy and safe working conditions, fair company’s host communities could include wages, equal pay for equal work, no issues relating to the right to health, if the “The Global Compact is forced or bonded labour, no exploitative operations of the company have an focused on inspiring child labour, no discrimination based on environmental impact. If the company’s practical action rather than race, gender, religion, or ethnic group, and operations require relocation of the original legal definitions. the right to freedom of assembly, inhabitants, a number of procedural rights ” association and collective bargaining. issues may also arise, as may issues relating to the right to adequate housing. Particular The Global Compact is focused on Some commentators have suggested that human rights issues may also arise in inspiring practical action rather than legal a company’s duty to respect and protect relation to indigenous peoples, many of definitions. However, attempts to explain the human rights of its employees implies whom are especially vulnerable to human and explore the scope of principle 2 of the taking reasonable steps to protect workers rights abuse.16 Global Compact, are important and are from violations committed by the State, or enhanced by taking into account the legal to seek legal redress for their employees if Human rights issues may confront a standards of corporate complicity as they violations have been committed.”15 company as a result of the actions of one are evolving in international and national or more of its business partners, including jurisprudence. A basic overview of steps Ensuring the safety and security of its joint venture partners, suppliers, companies may take to avoid complicity operations is an issue falling within the contractors, sub-contractors, licensees or in human rights abuses is provided by the core operations of a company and therefore others with whom the company has a Section Taking Action. is squarely within its sphere of influence. working relationship. OHCHR Briefing Paper on The Global Compact and Human Rights: Understanding Sphere of Influence and Complicity 19

What is “complicity”? complicit in human rights violations indeed organised and facilitated by the ? committed by others. Different branches company in question. In these cases, the of law — public international law, corporation either knows, or should know, “A company is complicit in domestic criminal law, tort law, contract that it is complicit in human rights human rights abuses if it law, consumer law or company law — violations. However, with the spread of authorises, tolerates, or apply different tests. Furthermore, global value chains throughout the world, knowingly ignores human complicity includes notions of political or and the increasingly wider category of ‘dual rights abuses committed moral responsibility. Even where legal use’ products, (i.e. products that can serve by an entity associated complicity cannot be proved, public both a legitimate civilian purpose as well as opinion may attach blame.19 an illegitimate military or paramilitary with it, or if the company purpose), there can be incidences of knowingly provides One commentator has suggested that companies becoming involved in human practical assistance or there are four different situations in which rights abuses without any intent or encouragement that has a the charge of complicity is made:20 knowledge. This presents a serious substantial effect on the challenge to all companies that seek to perpetration of human u A company actively assists, directly or observe legitimate business practices, rights abuse.” indirectly, in human rights violations including the respect for human rights, in committed by others. In this scenario all their dealings, at all times, worldwide. the company’s assistance helps to cause or bring about human rights Broadly speaking, corporate complicity in violations. There is a causal link and human rights abuses means that a the company knows, or should know, Emerging Legal Norms company is participating in or facilitating the consequences of its actions. A human rights abuses committed by positive action or active participation by others, whether it is a state, a rebel the company is involved; What does international law say group, another company or an individual. ?about corporate complicity? A company is complicit in human rights u Complicity in case of Joint venture. The abuses if it authorises, tolerates, or company has a common design or Support for the Global Compact does not knowingly ignores human rights abuses purpose with its contractual partner to call for an expression of intent to legally committed by an entity associated with it, fulfil the joint venture. It knew or should bind the company or to create legal duties or if the company knowingly provides have know, of the abuses committed by towards third parties. However, an practical assistance or encouragement the partner; appreciation of the evolving concept of that has a substantial effect on the complicity in international law can be perpetration of human rights abuse. The u A company benefits from the useful to companies in developing participation of the company need not opportunities or environment created by appropriate strategies and policies in actually cause the abuse. Rather, the human rights violations, even if it does support of principle 2. company’s assistance or encouragement not positively assist or cause the has to be to a degree that, without such perpetrator to commit the violations; and Under the UDHR, as “organs of society,” participation, the abuses most probably companies are expected to strive to would not have occurred to the same u A company is silent/inactive in the fact protect and respect human rights in all of extent or in the same way.18 of human rights violations. A company their operations. Furthermore, through is aware that human rights violations their interactions with various states, Whether a company is a principal actor or are occurring, but does not intervene companies can be legally considered state accomplice in the human rights abuse with the authorities to try and prevent actors under certain circumstances.21 might depend on such factors as the or stop the violations. Additionally, throughout the 1990s, there company’s knowledge of the abuse, its have been more than a dozen cases intentions, whether its actions helped to initiated in the United States and cause the abuse, and the relationship Does a firm always know if it is elsewhere relating to human rights between the company and the victims or ?complicit in human rights abuses? violations in other countries. perpetrators. As yet, international legal rules have not been elaborated to In some instances, the activities of the One legal expert has summarized determine specifically when a company is human rights abusers are known and corporate complicity in human rights 20 OHCHR Briefing Paper on The Global Compact and Human Rights: Understanding Sphere of Influence and Complicity abuses under international law in the in the Universal Declaration of partnerships with South African para- following way: Human Rights.22 statal organizations”; u Where a corporation assists another u A report by the UN Panel of Experts on entity, whether it be a state, a rebel In which situations have companies the Illegal Exploitation of Natural group, another company or an individual ?been accused of corporate complicity? Resources from the Democratic to commit an international crime, the Republic of Congo (DRC) found in 2003 rules for determining responsibility that the exploitation of natural under international law will be the rules “Companies should avoid resources by international corporations developed in international criminal law. situations of complicity for had fueled a bloody civil war The corporation will be responsible as reasons of principle. characterised by widespread human an accomplice, whether or not it ” rights violations. Corporations that had intended for a crime to be committed, if obtained, traded or purchased lucrative it can be shown that natural resources in the DRC were said The following list gives a few examples of to have financed the groups who a) The corporation carries out acts situations where companies have faced carried out these violations. specifically directed to assist, accusations of complicity in human rights encourage or lend moral support to abuses: Companies should avoid situations of the perpetration of a certain specific complicity for reasons of principle. international crime and this support u An oil company is being sued in the However, it is to be noted that such has a substantial effect upon the USA for alleged complicity in serious accusations of corporate complicity, perpetration of the crime. abuses committed by foreign whether or not upheld by courts or other government forces in the building of a official bodies do have an impact on b) The corporation had the knowledge natural gas pipeline. The list of alleged corporate reputation and brand value. that its acts would assist the abuses include rape and forced labour; Even where legal complicity cannot be commission of a specific crime by proven, public opinion may attach blame. the principal. u complaint has been filed in a US court The risk of these types of accusations against a company for allegedly hiring should be taken into account at the risk u Where a corporation is alleged to have or otherwise directing paramilitary assessment pre-investment stage, as assisted a government in violating security forces that used extreme discussed further below. customary international law, including violence and murdered, tortured, some human rights, in circumstances unlawfully detained or otherwise which do not amount to international silenced trade union leaders of the crimes, but rather to international union representing workers at the Assessing Risks delicts or torts, the international rules company’s facilities in a third country; Making Decisions for responsibility suggest that the corporations must be u Banks have been sued in the US with respect to the dormant bank accounts Is a company expected to react to a) aware of the circumstances making of Holocaust victims and their heirs. It ?everything/anything that occurs in the activity of the assisted state a was alleged that the banks facilitated its sphere of influence? violation of international human the Nazis’ looting and retention of rights law; wealth. The banks were portrayed as “fences” for the Nazi regime; “Having signed the Global b) the assistance must be given with a Compact, a company is view to facilitating the commission of u South Africa’s Truth and Reconciliation expected to support such a violation and actually Commission concluded that companies and respect human contribute significantly to the violation; had been “willing collaborators” with rights in all its business the apartheid regime since the early relationships. c) the company itself should have an 1960s. It said certain corporations had ” obligation not to violate the right in had a “direct interest in maintaining the question, such obligations stem status quo.” They bypassed attempts to A company’s human rights commitment, for example from the principles impose sanctions by “forming as a participant in the Global Compact, OHCHR Briefing Paper on The Global Compact and Human Rights: Understanding Sphere of Influence and Complicity 21 extends as far as its reasonable capability minimized. As a major investor and employer to promote human rights throughout their to influence events. A company is in a developing country, a large company common supply chains. responsible for its own behaviour, including may have considerable economic leverage any decision to do business with a known with the Government, and thus be in a human rights violator. Having signed the position to raise concerns about human rights Is it possible to do business in Global Compact, a company is expected to abuses that adversely affect its reputation or ?countries with known human rights support and respect human rights in all its the business environment. abuses without becoming complicit? business relationships. However, a company does not have complete control Yes. However, the particular circumstances over every business partner, and cannot be Individual companies may (e.g. the country, the industry and the held responsible for the actions of partners “have a substantial nature of the human rights violations in over which it has little influence. influence on policy issues question) will determine exactly how impacting on human rights feasible this is in reality. Unfortunately, The closer a company is to actual or through the advocacy countries where the greatest number of potential victims of human rights activities of their human rights violations occur are also violations, the greater will be its control respective business those countries that have the greatest and authority over their lives. This implies associations before need for foreign direct investment and that a company is expected to support policy-making bodies. commercial development. This raises an and respect more strongly the human ” important ongoing question: is it better for rights of proximate populations. Similarly, companies to operate in such countries, the closeness of a company’s relationship Individual companies may have limited while encouraging respect for human with authorities who may abuse human influence over individual policy issues rights in their operations, and thus bring rights may also determine the extent to decided at the national, regional or economic and other benefits to the local which a company is expected to react to international level. However, they may have a population; or is it better to avoid such such abuse by supporting human rights in substantial influence on policy issues states all together in order to bring 23 its sphere of influence. impacting on human rights through the attention to the actions of the offending advocacy activities of their respective government, even though this may impose business associations before policy- more economic hardship and human How much influence does a making bodies. rights violations on the local population? ?company have? The degree of influence a company has is Companies wishing to do business in Large companies typically have a very not static, but evolves dependently and such countries may want to follow the wide sphere of influence, covering a range independently of the sector and the national steps outlined below and in the section of partners, issues, and operations. economy. In situations where companies Taking Action to understand the specific However, the degree of influence a have little influence over the behaviour of circumstances of the country and which company has may vary significantly from some of their partners, they may want to of the firm’s functions might be most at partner to partner, issue to issue, and consider taking steps to increase their risk of becoming involved in human operation to operation. The largest degree influence, for example through the formation rights violations. of influence is clearly within a company’s of industry associations and the formation of core operations. In other situations, a partnerships with other stakeholders. For A company should determine whether the company may have a substantial degree instance, in 2002, the global chocolate and country is the subject of international of influence over certain partners and may cocoa industry, in partnership with organized sanctions; is accused of committing acts of use this influence to promote respect for labour unions and NGOs, established the genocide, war crimes and/or crimes against human rights. Large firms, for example, International Cocoa Initiative — Working humanity; or refuses access to a neutral may have greater influence over suppliers. Towards Responsible Standards for Cocoa body such as the International Committee Growing. This initiative had one primary goal; of the Red Cross (ICRC) or to UN Large firms may also have a significant the elimination of abusive child labour humanitarian aid agencies. Companies degree of influence over some local and practices in cocoa cultivation and wishing to avoid complicity should seriously national governments, especially those keen processing.24 This is one of many consider the risks of investing in such to attract new investment. While the influence examples of how, by pooling their resources, countries. Dealings with such states have of a large company over a host Government and by including other stakeholders, the core the potential to legitimize the government should not be overstated, neither should it be firms of the industry stand a better chance and its human rights violations. In many 22 OHCHR Briefing Paper on The Global Compact and Human Rights: Understanding Sphere of Influence and Complicity

Deciding to do business in states Government Proximity to human rights abuses with poor human 25 Possess insufficient resources for addressing rights records Actively committing abuses abuses

Activities intersect with AVOID Proceed with Caution Company abuses Proximity to human rights abuses Activities do not intersect Proceed with Caution OK with abuses cases, the precarious legal and political always easy and companies should seek known to significantly aid in the violation situation found in such states also makes advice from relevant agencies within their of human rights, then this would also be a them poor locations for business. home government (for example, the cause for concern. Either through a Ministry of Foreign Affairs), relevant UN geographic or industry intersection with Beyond such minimum standards, a agencies and non-governmental human rights abuses, the firm could find company should consider the nature of the organisations. In general, however, itself involved in human rights abuses to a human rights abuses being committed in countries where human rights abuses are degree that constitutes complicity. the country and how the company’s more the product of ineffective law activities would relate to those abuses. enforcement, rather than an active program There are two questions here: first, the of oppression, are less likely to produce question of the proximity of the host incidences of corporate complicity in state Taking Action government to the human rights violations, violations of human rights. and second, the question of the proximity of the company to human rights abuses. This does not eliminate the risk of What can a firm do to avoid Concerning the first question, it is possible complicity, however, and companies ?complicity in human rights abuses? to make a distinction between governments should also consider the proximity of the actively violating human rights and company to the human rights abuses in ‘ineffective’ governments (those that question. It is often possible to determine “The most effective way to acknowledge and officially respect human if the pattern of human rights violations in avoid corporate complicity rights, but are incapable of effectively the country is going to intersect with is to have appropriate protecting them). Racial discrimination, for some aspect of the firm’s operations. For human rights assurance example, may be found in many countries; example, if the human rights abuses are mechanisms and practices however, one can make a distinction located in a specific province or region of in place that are both between the practices of Apartheid era the country and that is where the firm is, transparent and properly South Africa, where racial discrimination or would be, located, then this is cause enforced.” was reinforced by official state laws and for concern. In addition to a geographic actions, and other countries where racial intersection, there could be an discrimination is embedded in the culture intersection based on the industry itself: if The most effective way to avoid corporate despite official state laws and actions to the the firm is producing dual use products, complicity is to have appropriate human contrary. Making these distinctions is not and these types of products have been rights assurance mechanisms and OHCHR Briefing Paper on The Global Compact and Human Rights: Understanding Sphere of Influence and Complicity 23

Creating a Functional Risk Map: some sample questions to get started

Purchasing Sales Board Level Management

u Are suppliers committing human u Are dealers selling products to be u Is the company making its commitment to respect for rights violations, including used for illegitimate purposes? human rights clear to all joint venture partners? violations of economic, social and u Is the company engaging in sufficient due diligence cultural rights, to lower the price Logistics regarding new investments, locations, and JV of materials sold to the firm? u Are company assets such as aircraft, partners? u In the case of raw materials (e.g. ships or trucks being used by third u Is the company ensuring appropriate independent minerals, timber, etc.), are the parties to support HR violations? oversight of its operations and partners to assure suppliers in possession of legality? legitimate permits to extract the Marketing resource? Are they observing u Are marketers providing truthful, Human Resources legal requirements vis-à-vis the contextual and complete information u Is the company sticking to the letter and spirit of anti- rights of local communities and about their products, especially as discrimination rules? environment? regards health and safety? u Is the company respecting host country ethnic u Are suppliers committing human sensitivities in its hiring practices? rights violations which are funded Product Management by the sales of products to the u Does the company deal in “strategic” Security company? (e.g. cases of products, such as key natural u Is plant security outsourced? military/rebel groups engaged in resources, which may be the subject u Does the security provider maintain adequate commerce to fund conflicts and of internal host country power standards of legality? or other human rights violations) struggles? u Is respect for human rights an integral part of the security practices in place that are both the firm has its own operations, or deals more reliable information for making transparent and properly enforced.As closely with partner companies such as crucial business decisions. mentioned above, it is not always easy to suppliers. Creating a ‘risk map’26 of know when a company is at risk of being known human rights issues in those The Global Compact Business Guide complicit in human rights abuses. countries where the firm does business to Conflict Impact Assessment and Informed judgements by management on can help to identify possible areas where Risk Management in Zones of Conflict measures to avoid complicity require the firm might be, or might become, has identified a number of important ongoing and continuous consultation complicit in human rights abuses. questions which could form part of a within and outside the company with human rights impact assessment. The relevant stakeholders during both pre- A further key step is to identify those questions are also relevant for companies investment and post-investment stages. functions within the firm that are most operating outside zones of conflict. They This includes unions and employee at risk of becoming linked to human include the following: organisations, civil society groups, and rights abuses. Companies, especially relevant government bodies, such as those in capital-intensive industries, may u Is the company familiar with the departments of human resources, and consider identifying potential human international human rights obligations, national and regional human rights rights risks even at the pre- including specific human rights treaty commissions. investment/project exploration and obligations, of the country where it planning stage. A human rights impact operates/intends to operate? Another important measure to avoid assessment consists of an analysis of complicity is to raise awareness within the functions of a proposed investment u Does the company systematically and the company of known human rights and the possible human rights impacts regularly collect qualitative and issues within the company’s sphere of (intended and unintended) they may quantitative data and information on influence. This would include an have on the community or region. the country’s human rights situation increased awareness of the human rights Understanding how a proposed investment (from the UN, NGOs, academia, and situation in each of the countries in which can affect human rights gives companies other sources)? 24 OHCHR Briefing Paper on The Global Compact and Human Rights: Understanding Sphere of Influence and Complicity

u Has the company developed an How can companies support and ensure that mechanisms are in place to understanding of possible sources of ?respect human rights in their sphere protect the rights of interested and conflict in areas where it plans to of influence? affected parties prior to proceeding with operate or is currently operating? the project. When it comes to asset protection, a company can ensure that u Has the company consulted with local “Yet another way of measures taken to safeguard the community leaders about the proposed supporting human rights in company’s installations and employees do project? their sphere of influence is not result in human rights violations.30 for companies in different u Has the company put policies in place business sectors to Larger companies, or core firms, generally to ensure responsible management of engage in multi- have a much greater opportunity to its security arrangements consistent support human rights throughout their with international human rights stakeholder dialogue with value chains. In recent years, for example, standards? Have specific measures both Governments and civil it has become common for many core been put in place concerning relations society groups to firms to support human rights through a with government security forces?27 proactively address human company code of conduct; increasingly rights issues of particular these codes of conduct are being applied u Has the company taken steps to ensure concern to these sectors.” to suppliers, dealers, and other members that any community investment of the value chain. Since core firms often programs are not sustaining groups have tremendous purchasing power, responsible for human rights abuses? In addition to observing national laws, making supplier contracts conditional on companies of any size can support human respect for human rights may be an u Has the company established internal rights by making respect for human rights a effective way to support international law or/and external monitoring mechanisms key theme of the company’s relations with in the firm’s sphere of influence. By to assess the actual impact of its employees, local communities and business agreeing from the outset with business investments and operation on human partners, and by communicating clearly the partners mechanisms for regular rights standards? reasons for applying its human rights independent monitoring and verification of policies. For example, in relation to its own compliance with contractual The process of identifying internal employees, a company can ensure that commitments to respect human rights, ‘functional risks’ in the post-investment labour rights are fully respected and these the company gives business partners situation might look at such functions as rights are fully communicated throughout some ownership over the process.31 purchasing, logistics, government relations, the organization. The company could set human resource management, HSE (health, procedures for regular independent Beyond codes of conduct, firms may also safety and environment), sales and monitoring and verification of compliance make use of various certification programs. marketing. In the case of purchasing with its commitment to uphold human In the development of quality management functions, for example, firms may become rights standards. This may be done by an in the 1990s, certification programs such complicit in human rights abuses if they are independent NGO or NGO consortium, as the QS 9000 series,32 became purchasing materials from human rights accredited social auditor or other widespread as a direct result of core firms’ violators. By doing so, the firm is possibly independent body.29 The findings of any demanding that suppliers become certified. providing indirect aid and/or encouragement such independent audit can also be shared As newer standards are developed that to the human rights violators. Concrete throughout the stakeholder community. relate to social and environmental examples might include firms purchasing so practices, core firms have the opportunity called ‘conflict diamonds’ or firms It is over the concrete details of product to promote these issues by requiring their purchasing coltan from conflict zones in the development, manufacture and delivery suppliers or dealers to be certified. Congo (DRC).28 Indeed, human rights that a company often has the most control, violations in supply chains have become whether these processes are conducted Many firms also maintain a dialogue with issues of concern in a wide range of “in-house” by the company itself, or government officials. While respecting the businesses, including the apparel, chocolate contracted out to a partner. For example, at limits of the appropriate role of business and the electronics industries. Companies the initial project design stage, a company in politics, firms may nevertheless make may also want to put in place some can consider the human rights context in their support of human rights clear to the measures of external verification of systems which the project will be operating. At the authorities in their host country. For large in order to deal with functional risks. project approval stage, the company can global firms in small developing countries, OHCHR Briefing Paper on The Global Compact and Human Rights: Understanding Sphere of Influence and Complicity 25 the simple act of publicly stating support Yet another way of supporting human rights human rights and the environment within for human rights, or condemning human in their sphere of influence is for their sphere of influence. rights abuses, can have a significant companies in different business sectors to impact. Whether through quiet diplomacy engage in multi-stakeholder dialogue with with relevant government officials, public both Governments and civil society groups Concluding comments condemnation of human rights abuses, or to proactively address human rights issues advocacy for respect for human rights, The key steps outlined in this document of particular concern to these sectors. large companies may be in a position to are starting points in clarifying how Through such multi-stakeholder dialogue, raise concerns about human rights issues companies can support human rights and that adversely affect their reputation or companies in the extractive and energy avoid being complicit in human rights the business environment.33 sectors, the Governments of the United abuses within their sphere of influence. States and the United Kingdom, and civil They also provide a gateway to Beyond that, firms can ensure that regional society groups developed, in 2000, the developing new management practices or international trade agreements that they Voluntary Principles on Security and Human that include human rights impact actively support do not have negative Rights. This is a set of voluntary principles assessments as part of sound corporate implications for human rights. Equally intended to guide extractive and energy stewardship. Firms wishing to avoid important, firms can warrant that the companies maintain the safety and security complicity in human rights abuses may lobbying efforts carried out by the firms or of their operations within an operating want to integrate these steps into on their behalf do not hold up agreements framework that ensures respect for human management systems as an ongoing 34 that can safeguard human rights. In this rights. Another such voluntary initiative is process of corporate self awareness. regard, firms can pay close attention to the Simply put, the firm can maintain the Extractive Industries Transparency operations of their industry associations accurate up-to-date information about Initiative, developed by a multi-stakeholder and clearly communicate their support for exactly what it is doing, where and with human rights to such trade groups. group, including Governments, oil, gas and whom. This may sound straightforward mining companies, industry bodies, enough, but in large, globally active, Some large corporations may also be able international institutions, investors and decentralised, multi-divisional firms, it is a to cooperate with governments with regard NGOs. The objective of the initiative is to process which requires the active support to the development and application of increase transparency with respect to and attention of senior management, international human rights law. Legal payments and revenues in the extractive along with all of the professional agreements reached between companies sector in countries heavily dependent on management skills at the disposal of a and governments (known as host these resources. modern company. The readings and tools government agreements) may have in the attached list provide further considerable implications for the protection A further example of a sector-specific avenues for addressing this issue and for of human rights.35 Where companies are in initiative aimed at pre-empting potential identifying and adapting useful a position to encourage respect for human human rights issues within its sphere of management practices. rights in these agreements, it is within their influence comes from the banking sector. sphere of influence to work to ensure that Under the auspices of the International the host government agreement is Finance Corporation (the private sector consistent with universal human rights lending arm of the World Bank Group), norms and standards. over 25 leading banks have voluntarily adopted common environmental and In addition to communicating with social standards in their financing projects government officials, companies can around the world. By adopting the Equator benefit from maintaining a dialogue with Principles, these banks have agreed to civil society groups where possible. Such use clear, responsible and consistent rules groups can often provide a company with for environmental and social risk valuable information about potential human management in project finance lending.36 rights problems in its area of operation, While the human rights component of the and ongoing dialogue with stakeholder Equator Principles is not very strong, the groups can play a crucial role in identifying initiative is an example of a particular appropriate remedies in cases where sector identifying how companies in the human rights violations have occurred. sector can collectively limit the risks to 26 OHCHR Briefing Paper on The Global Compact and Human Rights: Understanding Sphere of Influence and Complicity

Deciding Whether to do Business in Annex I: Further Readings and Tools States with Bad Governments The Universal Declaration of on the Issue of Corporate The Confederation of Danish Industries, The Human Rights Danish Centre for Human Rights, The Danish Complicity in Industrialization Fund for Developing Countries. Annex II: Human Rights Violations 2001 Commentary on the responsibilities of http://www.humanrights.dk transnational corporations and other business enterprises with regard to Defining the Scope of Business human rights (E/CN.4/Sub.2/2003/38/Rev.1) Banks and Human Rights: Should Responsibility for Human Rights Abroad Swiss Banks Be Liable for Lending To Margaret Jungk South Africa’s Apartheid Government? The Confederation of Danish Industries, the Anita Ramasastry Danish Institute for Human Rights, the Danish 2002 Industrialization Fund for Developing Countries. http://writ.findlaw.com/ramasastry/20020703.html http://www.humanrights.dk Beyond Voluntarism: Human Rights Human Rights: Is it any of your and the Developing Legal Obligations business? of Companies Amnesty International, The Prince of Wales International Council on Human Rights Policy Business Leaders Forum 2002 2000 http://www.ichrp.org/ http://www.amnesty.org/business Business & Human Rights: Legal Issues in Corporate Citizenship A Geography of Corporate Risk International Institute for Environment and Amnesty International, The Prince of Wales Development International Business Leaders Forum 2003 2002 http://www.iied.org http://www.amnesty.org/business Raising the Bar — Creating value Business Guide to Conflict Impact with the United Nations Global Assessment and Risk management in Compact Zones of Conflict Fussler, Cramer, van der Vegt (eds) UN Global Compact Greenleaf Publishing 2000 2004 http://www.unglobalcompact.org Transnational Corporations in Conflict Corporate Complicity in Violations of Prone Zones: Public Policy Responses International Law: Beyond Unocal and a Framework for Action Andrew Clapham in W.P Heere (ed) “From International Alert government to governance: the growing 2003 impact on non-State actors on the http://www.international-alert.org international and European legal system”, Proceedings of the Sixth Hague Joint Voluntary Principles on Security Conference held in the Hague, The and Human Rights Netherlands, 3-5 2003. TMC Asser Press, The Fact Sheet of the Bureau of Democracy, Hague, 2004, pp. 227-38. Human Rights, and Labour U.S. Department of State 2001 http://www.state.gov Article 8 28 Understanding the Global Compact Human Rights Principles

and describe how these principles should Introduction guide business practices. A growing number of companies face human rights issues in their operations and many are “Human rights are a central beginning to develop and implement element, arguably the core corporate human rights programs, despite concern, of the United the absence of well-established best Nations Global Compact. practices in the emerging field of ” business and human rights.

This paper addresses the human rights Human rights are a central element, issues raised by the UN Global Compact arguably the core concern, of the United in an attempt to help companies, and all Nations (UN) Global Compact. Proposed by actors at the intersection of business and Understanding the UN Secretary-General Kofi Annan in 1999 human rights, better understand the Global Compact and formally launched in July 2000, the Global Compact human rights principles UN Global Compact is a voluntary and how they can guide corporate Human Rights Principles corporate citizenship initiative that calls decision-making. The discussion that on companies to integrate into their core follows draws upon case studies business operations ten principles on Anthony P. Ewing submitted by companies that have signed human rights, labor rights, environmental Columbia University on to the Global Compact describing protection, and anti-corruption. By corporate efforts to implement Principles adopting the Global Compact, companies Anthony P. Ewing is a lawyer and management 1 and 2, as well as presentations, commit to make the Global Compact consultant based in New York. A member of the discussion and debate at the December principles part of their “strategy, culture Global Compact Learning Forum Academic 2003 Third International Global Compact and day-to-day operations,” support Network, Mr. Ewing is a Lecturer in Law and Learning Forum Meeting in Nova Lima, public accountability and transparency, Business at Columbia University, where he Brazil. The opinions expressed and and report publicly on their progress. teaches the graduate seminar, “Transnational conclusions drawn are solely those of the While “not a regulatory instrument, a code Business and Human Rights.” author and do not represent the views of of conduct or a legally-binding 37 the UN Global Compact or the Executive standard,” each of the Global Compact Office of the UN Secretary-General. This principles is derived from widely accepted synthesis of the human rights principles international agreements on universal of the Global Compact necessarily raises standards. The Universal Declaration of more questions than it answers, but, by Human Rights is the source for the Global 38 doing so, flags many of the issues Compact human rights principles. companies will encounter if they make Principle 1 of the Global Compact calls on the Global Compact human rights businesses to: principles part of their business strategy. “support and respect the protection of internationally proclaimed human rights.”39

Principle 2 calls on businesses to: Business and Human Rights Over the past fifteen years, business and “make sure that they are not complicit in human rights has emerged as a distinct human rights abuses.” 40 field within the broader corporate Corporate human rights compliance citizenship or corporate social presents both conceptual and practical responsibility movement.41 challenges. Few human rights experts, and even fewer corporate leaders, can The convergence of three trends — the easily explain the precise meaning of the globalization of human rights, the Global Compact human rights principles globalization of trade and investment, and Understanding the Global Compact Human Rights Principles 29 the globalization of communications — and codifying international human rights growing recognition that private has led to growing pressure on standards, including standards relating to corporations have duties under companies to address human rights civil and political rights; economic, social international human rights law, though the issues.42 and cultural rights; the rights of children, extent of these duties — and the women and others. These standards mechanisms to enforce them — are not impose obligations on governments to yet clearly defined.49 “The convergence of three respect, promote, and protect trends — the globalization internationally proclaimed human rights. During the same period, the globalization of human rights, the of international trade and investment has globalization of trade and A community of nongovernmental weakened the relative economic power of investment, and the advocates — religious leaders, lawyers, governments and dramatically increased globalization of trade unionists, political activists and the geographic scope and economic communications — has others — has advanced the international power of transnational companies. Over led to growing pressure on human rights movement by challenging the past twenty-five years, an elaborate companies to address repressive practices and abuse wherever global financial architecture has evolved human rights issues. 42 they occur. Governments can no longer to promote greater economic integration ” hide behind the claim that human rights between countries and reduce national conditions in a country are purely restrictions on trade and investment. Countries, or sovereign states, are the domestic concerns. Businesses have become global principal subject and authors of enterprises in order to expand and protect international law. For centuries, a their markets and to lower their costs. fundamental doctrine of international law “Today, alongside held that how a government treated its governments, companies own citizens was a matter shielded by often are viewed as a “An estimated 65,000 national sovereignty, and was not a source or cause of human transnational corporations legitimate concern of any other rights abuse, as well as an operate with more than government.43 World War II shattered that international actor with the 850,000 foreign doctrine and led to the globalization of capacity to promote subsidiaries and international human rights standards. human rights. 48 millions of suppliers. 50 How a government treats its own citizens ” ” — or permits its citizens to be treated by others — became an appropriate subject of inquiry by other governments and the Over the past twenty years, the human An estimated 65,000 transnational international community.44 The United rights movement has increased its corporations operate with more than Nations Charter (1945) clarified the scrutiny of private actors and their 850,000 foreign subsidiaries and millions commitment of the world’s governments responsibilities under international law.47 of suppliers.50 A transnational firm to promote and protect human rights45 Beginning with the issue of Apartheid in typically has direct investments in and the Universal Declaration of Human the 1970s, expanding in the 1980s to multiple countries, customers and Rights (1948) enumerated the individual business operations in countries with poor suppliers around the world, and investors rights and freedoms recognized by the human rights records, and exploding with access to the company’s securities international community. The Nuremberg around labor conditions in the 1990s, in at least one international capital military tribunal affirmed individual human rights activists have placed the market. As a result, the private sector responsibility for international crimes by private sector at the center of their often has substantially greater economic charging individuals, including German advocacy efforts. Today, alongside influence over the economic performance industrialists, with crimes against governments, companies often are viewed of emerging markets than do national humanity under international law. The as a source or cause of human rights governments or inter-governmental United Nations system,46 regional abuse, as well as an international actor organizations. intergovernmental organizations such as with the capacity to promote human the Council of Europe and the rights.48 The role of business promoting The growing importance of private Organization of American States, and UN human rights is particularly important in economic relations has propelled a public member states have expended countries with limited state capacity to debate about the benefits of economic considerable energy since 1948 defining ensure human rights. There is also a globalization. Does greater economic 30 Understanding the Global Compact Human Rights Principles integration fuel a “race to the bottom” shined a spotlight on human rights codes of conduct to guide corporate where companies force developing nations conditions in a wide range of conduct, and human rights criteria are to lower social standards, including human transnational industries, including the oil increasingly included in these corporate rights standards, to attract trade and and mining industries; the apparel, codes.54 More than 1,600 companies have investment? Or does it encourage a “race carpet, footwear, sporting goods, and toy signed on to the Global Compact, to the top” where trade and investment are industries; and the pharmaceutical and including seventy-nine of the world’s 500 correlated with greater respect for social other high technology sectors. More largest corporations.55 Despite the standards as companies seek out the most recently, human rights activists have increasing attention to human rights productive workforce and the most stable focused attention on human rights issues by business, few companies have business and political climates?51 conditions in agriculture on farms that responded to calls for the private sector Globalization fuels both trends produce coffee, tea, cocoa and bananas to promote human rights beyond their simultaneously. Globalization links more for global markets. The activities of own operations or the operations of their people’s economic livelihoods to the global transnational companies in foreign suppliers and business partners. marketplace than ever before while markets are no longer invisible to creating profound economic dislocations stakeholders at home. The nature of corporate human rights and exploitation. The result is growing initiatives has changed over time and is pressure on business to play an active role The convergence of these trends has led shaped by a company’s competitive and promoting social objectives formerly the to growing pressure on companies to financial position, industrial structure, responsibility of national governments address human rights. Companies have corporate leadership and culture, and the alone.52 The Global Compact was conceived responded to increased scrutiny of particular human rights conditions at as one way to address the inequities of business practices, allegations of issue. Corporate human rights programs globalization and make the global economy corporate responsibility for human rights generally include some combination of more sustainable and inclusive. abuses, and calls for corporate action to due diligence, standard setting, standard promote human rights in many different implementation, evaluation and reporting. Finally, the globalization of communications ways, ranging from hostility, denial and Whereas initial corporate efforts to has eliminated the ability of governments inaction to acknowledgement, address human rights issues commonly and businesses to control the information engagement and the transformation of took the form of written policy statements others receive about the consequences business strategy and practices. The vast or codes of conduct, the most advanced of their policies and practices. majority of transnational corporations corporate human rights programs today Revolutionary improvements in the speed have not taken any steps to address are implemented comprehensively and quality of communication have human rights issues. The companies that throughout a company’s operations, can transformed human rights reporting and have acted on human rights tend to be extend to a company’s entire supply magnified its impact. Similar reductions transnational companies operating in the chain, and may comprise independent in the cost of communication have industries or sourcing markets targeted monitoring, multi-stakeholder expanded the number of human rights by human rights advocates, and/or partnerships and robust public reporting. monitors and the scope of their reporting. companies with well-known, valuable As a result, dramatic images of abuse or brands in global markets. exploitation now cross national borders “While many corporate with the touch of a button. Just as Most corporate human rights initiatives efforts to address human information technology has permitted the address human rights conditions within rights issues are purely globalization of production, so also has it the company’s own operations. defensive measures or opened the window for scrutiny of human International concern over Apartheid in public relations exercises rights conditions wherever production South Africa, infant health in developing in response to specific takes place. countries, discrimination in Northern allegations, a small but Ireland, and the repression of political growing number of Business practices have emerged as a dissent in China prompted some of the companies are beginning particular source of scrutiny, not simply in first private initiatives to set human rights to make the affirmative human rights “hot spots” such as standards for business operations.53 Since business case for previously Apartheid South Africa or the mid-1990s, many companies have substantive corporate present day Burma, but in every corner of begun to address human rights conditions human rights programs. the globe. Since the mid 1990s, human in their supply chains. The past ten years ” rights advocates and the media have have witnessed an explosion of voluntary Understanding the Global Compact Human Rights Principles 31

While many corporate efforts to address national governments, this has become an confidence of the society in which we are human rights issues are purely defensive increasingly important issue for business.” 59 operating.” 63 — John Browne, Chief measures or public relations exercises in Executive, BP response to specific allegations, a small but The companies that presented human growing number of companies are rights cases at the GC Learning Forum beginning to make the affirmative business Meeting in Nova Lima, Brazil have made “Social responsibility is a case for substantive corporate human rights human rights a business issue.60 matter of hard-headed programs. The notion that human rights are According to a recent survey of corporate business logic. It’s about a legitimate concern of business has gained leaders, the business case for responsible performance and profits, broader acceptance in the business corporate practices in general includes: and attracting the best community over the past decade.56 CEOs people to work for you. . . . have begun to identify human rights as a u protecting and enhancing reputation, To work effectively we corporate responsibility. Some major brand equity and trust; need trust and the international brands now have vice u attracting, motivating and retaining confidence of the society presidents for “human rights,” even human talent; in which we are rights departments, and the Universal u managing and mitigating risk; operating. 63 Declaration of Human Rights is no longer u improving operational and cost- ” efficiency; –John Browne, altogether unknown to business managers. Chief Executive, BP u ensuring a license to operate; “BP supports the belief that human rights u developing new business opportunities; are universal. They are enshrined in the and Universal Declaration of Human Rights, u creating a more secure and prosperous which we support....It is the responsibility operating environment.61 Effective human rights policies can of States to defend the human rights of manage or mitigate legal and investment their population. As a company, we have a The same arguments support the business risk. Victims of human rights violations responsibility to contribute to the promotion case for corporate human rights programs. are turning to courts in the United States of human rights in society and to consider and Europe to hold transnational the impact of our operations. We will ensure Allegations of human rights abuse damage companies accountable for complicity in that we adhere to the principles of human corporate reputation, particularly for human rights abuse.64 In a survey of the rights within our operations and in those companies with the best-known brands. five hundred largest companies areas that are under our control.” 57 worldwide, thirty-six percent reported “The mere accusation that a company is abandoning a proposed investment “Novo Nordisk is committed to support the using child labour in its operations, either project and nineteen percent reported Universal Declaration of Human Rights as directly or indirectly, can lead to an disinvesting entirely from a country due to part of our social responsibility.... immediate blow to its reputation and the human rights issues.65 Many voluntary Respecting, protecting, fulfilling and threat of consumer boycotts.” 62 corporate human rights programs have promoting Human Rights globally will been prompted by a regulatory threat, or contribute to a more sustainable world in Companies that fail to take allegations of have averted government regulation. social terms, thereby . . . increasing our corporate human rights abuse seriously, Human rights criteria are used to screen potential markets. The human rights do so at the risk of substantial damage to or identify companies by an increasing standards are the only set of standards on their company’s reputation among key number of investors. the treatment of people that are globally stakeholders, including customers, recognized and accepted, thus preventing investors, shareholders, and current and The most efficient corporate human rights undue “cultural imperialism” when prospective employees. Allegations of programs improve human rights conditions operating internationally.” 58 human rights abuse can imperil a while cutting costs or increasing revenues. company’s license to operate. Collective programs to address human “Human rights are the standards of treatment rights issues in the apparel, toy and to which all people are entitled. The most “Social responsibility is a matter of hard- sporting goods industries have set widely recognized definition is the Universal headed business logic. It's about industry-wide standards while reducing Declaration of Human Rights, adopted by the performance and profits, and attracting the costs and improving operational efficiency United Nations in 1948. Although human best people to work for you.... for program participants.66 A few rights are principally the responsibility of To work effectively we need trust and the companies have created a market niche by 32 Understanding the Global Compact Human Rights Principles closely associating their brands with the The Universal Declaration of Human Rights rights through regional human rights promotion of human rights.67 There is a is the most widely accepted and long- mechanisms. growing body of evidence that standing international proclamation of strengthening respect for human rights in human rights.69 Adopted by the UN Some human rights are so widely a particular market also strengthens General Assembly in 1948, the Universal accepted that they have become part of respect for the rule of law, creates a stable Declaration asserts the fundamental rights customary international law, or the political and social environment, and and freedoms to which everyone is international law that binds all states ultimately, provides a more prosperous entitled “without distinction of any kind.”70 regardless of whether states have ratified operating environment for business.68 The Declaration’s thirty articles address particular international treaties.74 life and security, equality before the law, Customary international law, also known personal freedom, and economic, social as peremptory norms or jus cogens,is “We believe that the and cultural rights. The Declaration generally understood to prohibit genocide, winning companies of this prohibits slavery, torture, arbitrary arrest or slavery, disappearances, torture, murder, century will be those that arbitrary interference with privacy. Under prolonged arbitrary detention, systematic not only increase the Declaration, everyone has the right to racial, religious or gender discrimination, shareholder value, but own property, legal recognition, effective war crimes,75 crimes against humanity,76 increase social and remedies before national tribunals, and the denial of the right to self- environmental value.” due process. Everyone has the right to determination, the unjustified use of force – Carly Fiorina freedom of thought, religion, expression, by one state against another, and any CEO, Hewlett Packard peaceful assembly and association. The consistent pattern of gross violations of Declaration also proclaims rights other human rights. The Universal particularly relevant for employers, Declaration is considered by some including the right to work, to free choice commentators to be so widely accepted The Global Compact human rights principles of employment, to just and favorable that it has become part of customary can guide companies as they decide how to conditions of work, to equal pay for equal international law.77 address the business challenges and work, to just and favorable remuneration opportunities that arise at the intersection of and to form and join trade unions. business and human rights. Everyone has the right to rest and leisure, “Internationally proclaimed to a standard of living adequate for health human rights are universal and well-being, and to education. The — they do not change rights contained in the Universal based on geography, Declaration are rights of individuals and nationality, religion or constitute claims upon society.71 culture.” Principle 1 The rights in the Universal Declaration are Businesses are asked to support detailed in two widely ratified treaties, the and respect the protection of International Covenant on Civil and Internationally proclaimed human rights internationally proclaimed Political Rights (1966) (ICCPR) and the are universal — they do not change human rights. International Covenant on Economic, based on geography, nationality, religion Social and Cultural Rights (1966) or culture. Human rights are fundamental, (ICESCR).72 Subsequent international but not absolute. Some rights contained in human rights instruments have international instruments may be The Global Compact elaborated certain rights, such as the restricted under certain circumstances, Human Rights Principles rights of the child, and defined new for example for reasons of national categories of human rights violations, security. Those rights that can never be including genocide, discrimination against restricted — the right to life, to freedom What are internationally proclaimed women, trafficking in persons and the from torture and slavery, to freedom of ?human rights? worst forms of child labor.73 The European thought, conscience and religion — are Convention for the Protection of Human considered basic human rights. Internationally proclaimed human rights Rights and Fundamental Freedoms (1950) are rights defined and widely accepted by and the American Convention on Human It is important to note that international the international community of states. Rights (1969) define and apply similar human rights evolve and new rights can Understanding the Global Compact Human Rights Principles 33 emerge over time. Within the past twenty “measures to encourage and promote international law for failing to adequately years, for example, rape and other forms voluntary negotiation to regulate terms prevent and punish human rights abuses of sexual violence have been added to the and conditions of employment by means committed by private actors.82 The list of internationally recognized war of collective agreements.”81 ICESCR allows states to achieve rights crimes and crimes against humanity. progressively, acknowledging that certain rights, including the right to work and the Who is responsible right to an adequate standard of living, Are labor rights human rights? ?for protecting human rights? can only be ensured to the extent of ? available resources.83 Notably, the Governments established human rights prohibition of slavery (or forced labor) and The short answer is yes: labor rights are standards to regulate how states treat the right to freedom of association — human rights.78 One can argue that the their own citizens. The Universal human rights issues that arise frequently Global Compact principles on labor Declaration, ILO conventions and at the intersection of business and human standards are, by definition, incorporated subsequent international human rights rights — are contained in the ICCPR, in the Global Compact’s human rights treaties place the primary responsibility where their protection is not conditioned principles. The Global Compact calls on for protecting human rights on on available resources. companies to uphold freedom of governments. association, the right to collective National governments are the principal bargaining, and the elimination of forced International human rights trigger negative mechanism for enforcing human rights. and compulsory labor, child labor and and positive duties. States may not violate Most widely recognized international discrimination in employment. Member rights through their own actions. The human rights are guaranteed under states of the International Labour rights to life, to freedom from torture, and national laws and violations are Organization (ILO) have identified these to freedom of religion, for example, require prosecuted by local governments. A labor standards as fundamental labor states not to act — to refrain from factory that uses forced labor, for rights that all ILO members must violating these rights. Other rights trigger example, is likely to be in violation of local promote, whether or not a state has positive obligations. States must act to law and responsibility for ensuring ratified the specific ILO conventions.79 provide effective remedies and due compliance falls to the local government. With the exception of the right to bargain process before the law, for example. The International human rights enforcement collectively, each of these labor rights can rights to education and to an adequate can only take place when local law does be found in the Universal Declaration or standard of living require state action to not meet international standards or when subsequent widely accepted human rights provide resources for education and to local governments fail to enforce local law treaties. The rights to freedom of assist individuals who are unable to consistent with international human rights association and freedom from provide for their own basic needs. standards. International mechanisms to discrimination, and the prohibition of enforce human rights include the slavery, and forced or compulsory labor,80 States also have the positive duty to European Court of Human Rights, the are contained explicitly in the Universal prevent non-state actors, including Inter-American Court of Human Rights, Declaration and the ICCPR. The companies, from abusing human rights. various UN treaty bodies and the newly Convention on the Rights of the Child State parties to the ICCPR undertake to formed International Criminal Court establishes the rights of children to “respect and ensure” the rights in the (ICC).84 Each of these international bodies freedom from economic exploitation and treaty, implying duties both to refrain from requires the exhaustion of domestic the ILO Convention on the Worst Forms of violating the rights in the treaty, as well remedies before it can act to address Child Labor calls for the immediate as to take measures to protect individuals human rights violations. With the elimination of all forms of child slavery, from violations committed by others. The exception of the ICC, the only remedies the use of children in illicit activities, and language of the ICCPR and the ICESCR available — typically calls by the any work that harms the health safety or distinguishes the civil and political rights international body for a government to morals of children. The Universal states must “respect and ensure” take appropriate measures to end or Declaration and the ICESCR contain the unconditionally, from the economic, social change practices that violate human right to form and join trade unions, but and cultural rights states may fulfill rights, or to prevent future violations — not the explicit right to bargain progressively depending on available are aimed at states, not individuals or collectively. The right to collective resources. Based on the their obligations other organs of society.85 bargaining is found in ILO Convention 98, to respect and ensure human rights, which commits signatories to adopt states have been held responsible under 34 Understanding the Global Compact Human Rights Principles

responsibilities are another source of familiar with human rights provisions, and Human rights corporate human rights standards. to take responsibility in some cases for standards for business International statements that contain acting in ways that do not violate them.” 91 corporate human rights standards include The Universal Declaration the Organization for Economic According to some commentators, itself is a potential source of Cooperation and Development (OECD) voluntary business codes of conduct corporate human rights Guidelines for Multinational Enterprises, “reflect the gradual emergence of obligations. The Universal the ILO Tripartite Declaration of Principles commitments that could form a basis for Concerning Multinational Enterprises and legitimate, agreed international Declaration, in its preamble, 92 states, Social Policy, the World Bank policy standards.” guidelines, and the UN Human Rights “every individual and every Norms for Business. Like the UN Global The UN Norms, adopted in 2003 by the organ of society, keeping Compact, each of these international UN Sub-Commission on the Promotion this Declaration constantly instruments sets out voluntary standards and Protection of Human Rights, is the in mind, shall strive by and guidelines for business. most comprehensive international teaching and education to statement to date of human right promote respect for these The OECD Guidelines, revised in 2000, standards for business. rights and freedoms and address child and forced labor and by progressive measures, workers’ rights, among other issues. The “The UN Norms provide clarity and national and international, OECD Guidelines state that: credibility amidst many competing voluntary to secure their universal codes that too often lack international and effective recognition “Enterprises should respect the human legitimacy, and provide for less detail on 86 and observance . . .” rights of those affected by their activities human right issues.” 93 consistent with the host government’s international obligations and commitments.” Unlike the OECD Guidelines and the ILO Corporate human rights obligations can be Tripartite Declaration, the UN Norms are derived from international human rights Notably, the OECD Guidelines include a intended to regulate corporate conduct as instruments, as well as internationally “specific instances” procedure that allows mandatory standards.94 According to the proclaimed corporate responsibilities. interested parties, including any person or UN Norms, business enterprises, as organization, to bring instances of alleged organs of society, are responsible for The Universal Declaration itself is a non-observance of the Guidelines to the “promoting and securing the human potential source of corporate human attention of National Contact Points that are rights set forth in the Universal rights obligations. The Universal then expected to help resolve issues relating Declaration” and obligated to respect Declaration, in its preamble, states, to specific instances of business conduct.88 “generally recognized responsibilities and norms contained in UN treaties and other “every individual and every organ of society, The ILO Tripartite Declaration, endorsed by international instruments.” The UN Norms keeping this Declaration constantly in mind, governments, employer organizations and place the primary responsibility on states shall strive by teaching and education to trade union organizations, addresses labor to “promote, secure the fulfillment of, promote respect for these rights and freedoms rights. The Tripartite Declaration calls on respect, ensure respect of and protect” and by progressive measures, national and all parties to “respect the Universal human rights, and to ensure that international, to secure their universal and Declaration of Human Rights and the businesses respect human rights. The UN effective recognition and observance . . .” 86 corresponding International Covenants.”89 Norms place the same obligations on companies “within their respective Companies are organs of society and, The International Finance Corporation spheres of activity and influence.” The according to the Universal Declaration, (IFC) Safeguard Polices for World Bank Norms appear to equate a company’s must “promote respect” for human rights funded projects incorporate international sphere of activity and influence with “the and take “progressive measures” to human rights standards on involuntary human rights impact” of all its activities. secure their recognition and observance. resettlement, indigenous peoples, and child and forced labor.90 The Norms require companies to exercise “The Preamble to the Universal Declaration due diligence to do no harm, and not is, in effect, a fundamental affirmation by 87 “The [World Bank] Guidelines have forced benefit from human rights violations. states of corporate responsibilities.” multinational companies to become more International declarations of corporate Understanding the Global Compact Human Rights Principles 35

“Transnational corporations and other rule of law as well as governmental and and the human rights clause of the OECD business enterprises shall have the other efforts to promote and ensure respect Guidelines.96 responsibility to use due diligence in for human rights, and shall use their ensuring that their activities do not influence in order to help promote and The Office of the Global Compact has contribute directly or indirectly to human ensure respect for human rights. taken the position that the Global Compact abuses, and that they do not directly or Transnational corporations and other and the UN Norms complement one indirectly benefit from abuses of which they business enterprises shall inform another, and that regulatory authority lies were aware or ought to have been aware.” themselves of the human rights impact of entirely with governments and their principal activities and major proposed governments will have to make decisions Additionally, companies shall not “engage activities so that they can further avoid on the Norms as adopted by the Sub- in nor benefit from” war crimes, crimes complicity in human rights abuses.” 95 commission of Human Rights. The UN against humanity, genocide, torture, Human Rights Commission declined to forced disappearance, forced or The Norms detail the responsibilities of adopt or implement the Norms at its April compulsory labor, hostage-taking, extra- business with respect to non- 2004 meeting, instead requesting the judicial, summary or arbitrary executions” discrimination, security of persons, Office of the High Commissioner for or the violation of international criminal or worker rights, national sovereignty, Human Rights to continue to study the humanitarian law. consumer protection and environmental issues raised by the Norms and to report protection. The Norms identify rights on the scope and legal standing of existing contained in international instruments standards for transnational corporations.97 “The Norms require that relevant for business, requiring companies shall not companies to recognize the right to “engage in nor benefit collective bargaining, to provide a safe “The Norms can serve as a from” war crimes, crimes and healthy working environment and to useful tool for business against humanity, protect children from economic and for activists.” genocide, torture, forced exploitation. The provision of the UN disappearance, forced or Norms likely to trigger the most compulsory labor, hostage- resistance from business and the greatest Even if not adopted, the Norms can serve taking, extra-judicial, debate over whether the standard is a as a useful tool for business and for summary or arbitrary widely-accepted international human right activists. Indeed, a group of private executions” or the violation is the requirement that companies pay companies and NGOs have announced an of international criminal or wages that “ensure an adequate standard initiative to test the Norms as a guide for humanitarian law. of living” for workers and their families. corporate behavior.98 Some human rights ” advocates view the Norms as having The Norms call on all transnational more credibility than voluntary corporate companies to incorporate the Norms in codes of conduct. The Norms require that companies shall their business practices and report on not “engage in nor benefit from” war their implementation, give the United International norms like the Universal crimes, crimes against humanity, Nations a monitoring and verification role, Declaration and other human rights genocide, torture, forced disappearance, and urge states to ensure Norm treaties, and statements of the OECD, ILO forced or compulsory labor, hostage- implementation and corporate and World Bank, while less influential with taking, extra-judicial, summary or accountability through national law. companies than national laws, contribute arbitrary executions” or the violation of to growing awareness by business leaders international criminal or humanitarian law. and investors of the strategic importance What is the relationship between of responsible business practices.99 The Norms call on companies to go ?the Global Compact Principles and beyond human rights compliance within the UN Human Rights Norms for Business? their own operations to promote respect “ There is growing for human rights generally. Amnesty International has called on the recognition that companies Global Compact and the OECD to formally have obligations under “Transnational corporations and other indicate that the UN Norms are an international law. business enterprises shall further refrain authoritative guide for understanding the ” from activities that would undermine the scope of the GC human rights principles 36 Understanding the Global Compact Human Rights Principles

Do companies have duties under standards, there is a growing consensus corporate obligations not simply to ?international human rights law? on the human rights issues that arise in respect human rights through a business operations. And there is ongoing company’s own actions, but to promote There is growing recognition that pressure on companies to voluntarily the protection of human rights by others companies have obligations under assume some of the same obligations where the company can exert influence. international law. Many human rights traditionally placed on governments — to Conversely, this language implies that advocates take the position that respect and ensure, to promote and to companies should not be held responsible companies can and should be held progressively achieve international human for the actions of parties over which the accountable for violations of international rights. The clear trend is the elaboration of company has little influence. Assessing a human rights standards.100 Other specific corporate human rights standards. company’s sphere of influence in relation advocates argue that under international to human rights issues is a function of the law only states can violate international company’s relationship both with human human rights.101 What is a company’s rights victims and with human rights ?“sphere of influence”? violators. Defining a company’s sphere of Both sides in the legal debate influence also involves examining the acknowledge the primary responsibility of connection between company activities states to ensure and secure the fulfillment “Clearly, the closer the and the specific human rights at issue. of human rights for their own citizens, and company’s connection to accept that human rights responsibilities the victims of rights Human rights victims that have a direct of companies and governments are not violations, the greater its relationship with a company are within identical. Many international human rights duty to protect. Employees, that company’s sphere of influence. There can only be protected by governments. consumers, and the is little debate that a company’s sphere of The private sector, for example, is not in a communities in which the influence extends to its own workers and position to ensure fair trials or the right of company operates would facilities. Most corporate human rights individuals to a nationality. Companies do, be within a first line of programs begin by assessing human however, play a central role protecting the responsibility. rights conditions of the company’s own human rights of their employees at work, ” workers. Companies have a duty not only and may be in a position to protect the –Mary Robinson toward employees whose human rights human rights of employees in their supply Former UN High are affected by company actions, but also chains, members of the communities Commissioner for employees whose rights are threatened where they operate, and even of Human Rights by others. If a company’s employees are customers in some cases. arrested for expressing political opinions, for example, it is within the company’s The limited extent of corporate human The Global Compact principles ask sphere of influence to advocate with the rights responsibilities is reflected in the companies to “embrace, support and enact, government on their behalf. A company’s GC human rights principles. The Global within their sphere of influence, a set of core sphere of influence may also extend to Compact calls on businesses to “support values in the areas of human rights, labour victims of human rights abuse who are and respect” the protection of human standards, the environment and anti- targeted because of their relationship to rights, but does not call on companies to corruption (emphasis added).” In the company activities. Individuals persecuted “protect” human rights, to “ensure” context of GC Principle 1, the “sphere of for objecting to company activities fall human rights, or to guarantee that all influence” concept defines the limits of into this category. A company’s sphere of human rights are respected. The Global corporate responsibility for human rights influence may extend beyond the Compact principles suggest limits on conditions. Similarly, the OECD Guidelines workplace to its suppliers, the corporate human rights obligations by suggest companies should respect the communities where it operates, the calling on companies to act only within human rights of “those affected by their government or even its customers or their “sphere of influence.” activities” and the UN Norms limit corporate those who use its products. Companies human rights duties to their “respective gradually are accepting responsibility for While the extent of corporate duties under spheres of activity and influence.” the human rights conditions of their own international human rights law is unclear, employees, of the employees of their whether or not one believes companies Sphere of influence is a potentially principle suppliers and business partners, have direct or indirect legal obligations to broader formulation than sphere of and in the communities and markets meet international human rights activity. Sphere of influence suggests where they operate.102 Understanding the Global Compact Human Rights Principles 37

“Clearly, the closer the company's operations in a particular community or incorporating into company policies connection to the victims of rights with close relationships, financial or internationally proclaimed human rights violations, the greater its duty to protect. otherwise, with host governments may as defined in the Universal Declaration of Employees, consumers, and the have a broad sphere of influence over Human Rights and subsequent communities in which the company human rights conditions otherwise international instruments; assessing the operates would be within a first line of unrelated to company operations. human rights situation in countries where responsibility.” –Mary Robinson, former UN Companies that account for a large the company does, or intends to do, High Commissioner for Human Rights percentage of a factory’s production exert business; adopting explicit policies that more influence than smaller customers. protect the human rights of the Human rights violators in direct Companies that sell products that are company’s employees and workers relationship with a company are within potential instruments of human rights throughout its supply chain; implementing that company’s sphere of influence. Those abuse have correspondingly broad a monitoring system to ensure that abusing human rights may include a spheres of influence. One technology human rights policies are being company’s own employees, business company posed the question, “When the implemented; and adopting explicit partners, suppliers, host governments or internet is your marketplace, how should policies to ensure that the company’s customers. A factory manager that abuses a company define the ‘community where security arrangements do not contribute workers making a company’s products is it operates’? How should technology to human rights violations. within that company’s sphere of companies who have no business influence. So is a business partner that relationship with the end-users of their Determining the appropriate compliance confiscates the identity documents of products, address the use of their standard is an important element of a contract workers. To support the products to commit human rights corporate human rights program. No single protection of human rights, companies violations or by repressive regimes?” compliance standard is realistic or may have a duty to publicize any human appropriate for all human rights issues that rights abuse the company discovers Companies need to constantly reassess arise in business operations. Compliance within its sphere of influence, not simply their sphere of influence and test its levels may correspond to legal liability to avoid complicity under Principle 2. The boundaries. A pharmaceutical company standards. Violations of the most question becomes more difficult when a representative noted that five years ago, fundamental rights usually trigger strict host government is the human rights access to healthcare was not widely liability under national and international abuser. The government that licenses a accepted to be within company’s sphere law, i.e. the actor is held responsible company to extract natural gas reserves, of influence, but today it is a key regardless of intent. The absence of intent and bans independent political parties or corporate concern. is not a legal defense. Companies involved imprisons political opponents, presents a in torture, genocide, or slavery would be typical case. It is not clear whether The way a company defines its sphere of held strictly liable under international law companies must avoid doing business influence will determine the appropriate — no instance of these violations is with known human rights violators if the scope for any corporate human rights acceptable. Effective corporate human company is unable to influence its partner compliance program. rights programs will seek to protect against to change its behavior. any corporate involvement in these kinds of human rights violations. Other human rights The nature of the rights at issue is How can companies respect the violations, however, trigger a due diligence relevant for defining a company’s sphere ?protection of human rights? standard. Notably, the achievement of many of influence. Labor rights may be economic, social and cultural rights defined substantially influenced by a company’s Companies respect human rights by not in international conventions are closely policies and operations, whereas civil abusing human rights themselves. At a related to a country’s level of economic rights are most appropriately protected by minimum, companies should not abuse development, and are to be enforced the government. A single company, for internationally proclaimed human rights. progressively. Translating this standard for example, has little influence over the right Companies must not physically abuse companies: companies found to be to a fair trial. The degree of influence may employees nor use forced or exploitative employing children between fifteen and shift, however, if the company’s own child labor, for example. eighteen years old or exceeding local wage employees are the victims of unfair trials. and hour standards are to be expected to Elements of a corporate human rights take reasonable measures to achieve A company’s activities also determine its program that effectively respects the compliance, but not to ensure one hundred sphere of influence. Companies with large promotion of human rights may include: percent compliance in all instances. 38 Understanding the Global Compact Human Rights Principles

How can companies support Companies can identify and publicize human Companies can educate employees and ?the protection of human rights? rights problems. Through their regular other stakeholders on international human operations, or in the course of responding to rights standards. specific human rights issues, transnational “Businesses can no longer companies are often in a position to gather In 1996, Daimler Chrysler, South Africa be willfully ignorant of the reliable information on human rights abuse. (DCSA) adopted a workplace policy on circumstances in which Surveys of human rights conditions funded HIV/AIDS to prevent new infections in the they operate; they must by industry groups, often in partnership with workplace and provide care for employees become much more aware other stakeholders, have helped to define the and dependents living with HIV/AIDS. In of and sensitive to those nature and magnitude of particular human partnership with the German Agency for circumstances, and much rights issues, such as child labor in the Technical Cooperation, South African more engaged in taking production of soccer balls in Pakistan and government agencies, UNAIDS and trade actions to influence human the trafficking of children in the West African unions, DCSA developed HIV/AIDS programs rights positively. 103 cocoa sector. that provide voluntary anonymous testing, ” education and treatment. By 2002, 1,750 Companies can initiate stakeholder employees had been anonymously tested, Obviously, companies support the dialogues and communicate openly with 180 had been trained as peer educators, protection of human rights by not abusing human rights organizations. Companies and 137 employees and family members human rights through their own actions. with robust corporate human rights were receiving treatment. The DCSA The more difficult question is not what programs have found that relationships HIV/AIDS program is a way for the companies are required to refrain from with credible and well-respected human company, within its sphere of influence, to doing, but what companies can do on their rights advocates can alert companies to support and respect the protection of the own initiative to support the protection of potential problems, provide access to rights to the highest attainable standard of human rights. Companies, by virtue of expertise and information unavailable physical and mental health, to information their skills, resources, and political within the company, help establish trust and education, to privacy, and to freedom influence, are in a position to promote and credibility, and minimize damage from workplace discrimination.107 human rights wherever they operate. when issues arise. The Italian clothing retailer Benetton “Businesses can no longer be willfully Companies can become human rights conducted a public advertising campaign to ignorant of the circumstances in which t advocates. Some companies argue that mark the 50th Anniversary of the Universal hey operate; they must become much more the private sector can add value by taking Declaration of Human Rights in 1998. aware of and sensitive to those up human rights issues with governments. circumstances, and much more engaged One company, for example, acknowledges Finally, companies can help build the in taking actions to influence human its “responsibility to express support for capacity of governments and others to rights positively.” 103 fundamental human rights in line with the effectively respect, ensure and promote legitimate role of business.”105 The private human rights. Wherever the private sector Companies should not interfere with or sector, through the efforts of corporate strengthens the rule of law, for example, it oppose government efforts to protect leaders, individual companies, trade and strengthens the national mechanisms human rights. A main criticism of a business associations, lobbying initiatives necessary for effective human rights pipeline project led by BP was that the and other interventions routinely makes its protection and enforcement. If companies legal regime governing the pipeline could positions known to governments on issues are able to strengthen governmental have the effect of penalizing the ranging from taxation, trade and human rights protection, they can reduce participating governments for adhering to investment to labor and environmental pressure on the private sector to assume international human rights standards.104 policy. Human rights issues are also these functions. BP responded by incorporating legitimate matters for corporate international human standards into the advocacy.106 A company that advocates legal agreements governing the pipeline publicly or privately for free election or a project. Another example would be a free press in a particular country is company that interferes with government supporting the protection of human rights. efforts to enforce labor standards, Companies should condemn, both such as the rights to organize and privately and publicly, systematic and bargain effectively. continuous human rights abuses. Understanding the Global Compact Human Rights Principles 39

Principle 2 they knowingly assist or encourage A company is beneficially complicit if it Businesses should make sure human rights abuse by others. If tolerates or knowingly ignores the human their own corporations are not contractors, joint venture partners, the rights violations of one of its business complicit in human rights abuse host government, or other independent partners, committed in furtherance of actors abuse human rights on behalf of, their common business objectives. or with the active aid and encouragement Violations committed by security forces, What triggers corporate complicity? of, a company, the company is directly such as the suppression of a peaceful ? complicit in the human rights abuse. The protest against business activity or the legal definition of this standard, known as use of repressive measures while aiding or abetting, requires a company to guarding company facilities are often “The first step in provide substantial or material assistance cited as examples of beneficial complicity. understanding complicity in the commission of human rights Examples of beneficial complicity could is to distinguish complicity abuses and to have knowledge of the also include a company that receives in human rights abuse likely effects of its assistance. A company financial incentives in an Export from the direct violation of that pays state security forces to harass Processing Zone where the government human rights. local activists is directly complicit in their prohibits unions; a company that ” activities. A company that provides purchases materials from a supplier that equipment used by security forces to is committing gross human rights Understanding complicity is a challenge abuse human rights is complicit in the violations; and a company that tolerates for business. Allegations of corporate human rights abuse if the company knew working conditions detrimental to worker complicity in human rights abuse appear the likely use of its equipment. health in its supply chain. with increasing frequency and pressure for corporate human rights accountability The legal source of this complicity standard The third category — silent complicity — is growing.108 is international criminal law.111 One forum occurs when companies remain silent in for prosecuting international crimes is the the face of human rights abuse “On the one extreme are those who feel newly formed International Criminal Court committed by others that is of no corporations operating in the presence of (ICC). In drafting the treaty that defines the particular benefit to the company. human rights abuse are by definition ICC’s jurisdiction, state parties to the ICC complicit and, on the other extreme, the explicitly excluded corporations. The ICC “The notion of silent complicity reflects the sense among companies that complicity is prosecutor cannot bring cases against expectation on companies that they raise a concept that will be used to hunt companies alleging international crimes. systematic or continuous human rights multinationals as a kind of anti-neo-liberal The ICC prosecutor can, however, charge abuses with the appropriate authorities.” 114 blood sport....In the absence of a good individuals, and the court’s Prosecutor, Luis understanding of what complicity really is, Moreno Ocampo, has already announced Silent complicity is the case of a company’s consumer markets and shareholders will act his intention to investigate economic actors simple presence where human rights abuse, on whatever information they do have, be it complicit in war crimes in the Democratic unrelated to the company’s business well founded or not.” –Mark B. Taylor, Fafo Republic of the Congo.112 operations, is taking place. Inaction or Institute for Applied International Studies acceptance by companies of systematic (Oslo, Norway) 109 Companies are beneficially, or indirectly, discrimination in employment law on the complicit if the company benefits from grounds of ethnicity or gender could trigger The first step in understanding complicity human rights abuses committed by accusation of silent complicity, as could the is to distinguish complicity in human someone else, even if the company did failure of companies to raise human rights rights abuse from the direct violation of not authorize, direct or have prior concerns with government authorities where human rights. Human rights abuse by knowledge of the activities. As with direct they operate. Under international law, companies is not complicity. An enterprise complicity, the company must know the individuals have been found to be complicit that uses slave labor or prohibited child human rights abuses are taking place. in human rights abuse through their labor violates human rights directly. presence alone, when their moral authority A company’s “knowledge of ongoing human was such that it encouraged the Corporate complicity in human rights rights violations, plus acceptance of direct violations.115 Silent complicity does not abuse has been described as taking three economic benefit arising from violations, and yet trigger international legal responsibility forms: direct, beneficial or silent.110 continued partnership with the host government for companies, but is considered by many to Companies are directly complicit when should give rise to accomplice liability.” 113 be a moral obligation of the private sector.116 40 Understanding the Global Compact Human Rights Principles

“Silent complicity remains a moral principle, human rights violations by leaving the slavery, and as a “joint actor” with states albeit one with the potential to have market altogether. that violate human rights under significant impact on corporate reputation international law.121 While the controlling or brand value.” 117 There is also no consensus on what legal interpretation of the ATCA under U.S. company actions can overcome law is still unsettled and likely to be Can a company do business in a country allegations of silent complicity, particularly decided by the U.S. Supreme Court, the with known human rights violations in cases where no company action can appeals court most recently considering without becoming complicit? Current prevent the human rights abuse from Unocal’s alleged complicity in human international standards for corporate taking place. In this respect, the Global rights abuses by the Burmese military complicity in human rights abuse hold Compact principle on complicity begins to initially adopted the complicity standard that companies are not automatically have a practical meaning similar to from international criminal law and found complicit in human rights abuse simply by Principle 1’s call for companies to support that Unocal could be held liable for aiding virtue of their presence in a country, or the protection of human rights — where and abetting the military’s actions.122 The even a local area, where human rights are the risk of silent complicity is high, same decision also contemplated other being violated by others, though this companies would be wise to act on their possible theories of third-party liability, principle is hotly debated by human rights own initiative to do whatever they can to including joint venture, agency, negligence advocates. The current standard, however, promote human rights. and recklessness.123 is not a blanket exemption from complicity for companies with no direct “There is not yet a consensus on how While most human rights violations are connection to (and deriving no economic companies should approach countries with not attributed to companies, and many benefit from) human rights abuse. An broad human rights violations.” 118 corporate activities that have a human allegation of silent complicity is rights impact may trigger no legal duties strengthened if the company’s economic According to company representatives, under national or international law, the activity inevitably benefits known human complicity is the most difficult human absence of clear legal responsibility in rights abuse. One example is Burma, rights concept for local managers to specific cases does not preclude calls for where the control of the military regime is understand and causes the most concern corporate accountability. so pervasive that all economic activity among executives. One company arguably benefits the Burmese military. representative at the GC Leaning Forum ““On the one hand we find it absurd that Meeting in Brazil, for example, expressed there is no mechanism through which While there is no consensus yet on the concern that silent complicity in companies can be held accountable for exactly what conditions trigger silent particular “feels different” than other participation in human rights abuse. On the complicity, the emerging definition begins human rights concepts. There is also other hand, it seems ridiculous that with systemic or continuous human rights concern that national judicial systems, companies should be held to account for abuse. Companies operating in states e.g. a U.S. judge deciding a case against violations that have always been the widely known or subject to international a company under the Alien Tort Claims Act responsibility of governments to control and sanctions for gross and systematic (ATCA), may define complicity for all that have been, therefore, none of their human rights violations are at high risk of jurisdictions by default. business....Until we deal with this lack of silent complicity human rights abuse. accountability, the corporate responsibility There is a point, not clearly defined and Corporate complicity is at the heart of goalposts will keep shifting and companies subject to particular circumstances, recent litigation against companies will not have much clarity for their decision where known human rights abuse brought by victims of human rights abuse. making in relation to human rights. In the becomes so pervasive that a responsible The ATCA gives U.S. federal courts absence of regulation, they will not know company must act. jurisdiction over civil cases brought by what not to do, what to avoid. And the non-U.S. citizens alleging torts, or communities affected by human rights Factors to consider when assessing silent “harms,” in violation of international abuse will not know against what standards complicity include whether a company’s law.119 Recent ATCA jurisprudence has they should be trying to hold those operations lend legitimacy to a opened the door to ATCA claims against companies — and their governments — government that violates human rights, corporations for alleged complicity in to account, or where they can take their whether a company has the power to human rights violations.120 U.S. courts complaints of corporate complicity.” 124 reduce or eliminate violations if it applies have held that companies can be directly appropriate influence, and whether liable for violations of international law company could reduce or eliminate that do not require state action, such as Understanding the Global Compact Human Rights Principles 41

against local law, it is inconsistent with complicity. Participants in the GC Learning “On the one hand we find it international antidiscrimination standards Forum cited examples of multi-stakeholder absurd that there is no and Novartis required its subcontractor to initiatives in the extractive, pharmaceutical, mechanism through which eliminate the practice. technology and financial sectors. companies can be held accountable for Companies can conduct a human rights Extractive companies frequently do participation in human impact assessment of their operations to business where democracies are not rights abuse. On the other identify areas of possible complicity and well-established and fundamental human hand, it seems ridiculous take actions to address these areas. Some rights are not well protected. Extractive that companies should be companies have created a “risk map” of industry initiatives to define human rights held to account for human rights issues in countries where standards for business include the violations that have always they do business.126 BP, for example, views Voluntary Principles on Security and been the responsibility of its human rights policy as part of its highly Human Rights and the Kimberley Process governments to control developed risk management capacity. To to certify diamonds.131 The World Bank and that have been, reduce the company’s complicity risk, BP Guidelines on Involuntary Resettlement therefore, none of their conducts human rights impact are also a source of relevant standards. business. 124 assessments, is a signatory to the ” Voluntary Principles on Security and Pharmaceutical companies often sell Human Rights,127 has adopted the Global directly to government customers, How can companies avoid complicity Compact, and engages in an open creating a dilemma when the customer is ?in human rights abuse? dialogue with human rights organizations a government with a poor human rights and local communities. Other companies record. In these cases, companies must “There is an international norm emerging are beginning to use newly developed often balance the human rights record of which views private sector complicity in compliance assessment tools, such as the its customer with the nature of its product human rights abuse as unacceptable.” 125 tool developed by the Danish Institute for (a life-saving drug, e.g.) and its intended Human Rights.128 Companies operating in use (benefiting the local population). To avoid complicity in human rights abuse, zones of conflict need to pay particular Pharmaceutical companies may also help companies must invest time and energy attention to human rights risks.129 the government build critical understanding the human rights infrastructure, train medical professionals, environment where they operate. Wherever a government fails to meet its and educate patients. In these cases, Ignorance of a government’s human rights human rights obligations, companies are according to one pharmaceutical record, the nature of common violations, open to allegations of complicity.130 The executive, “You can’t just pull out.” the likely perpetrators and victims, the closer a company’s relationship to an rights at issue, or the places where oppressive regime or a targeted Technology companies face potential violations occur exposes companies to a population the greater risk of complicity in complicity in human rights abuse not just significant complicity risk. According to BP, government abuses. Once a company in their supply chain, but also if their for example, its approach to address appreciates potential human rights issues, products are used by repressive complicity in human rights abuse includes it can avoid complicity in human rights governments. A classic case was the use research, education, prevention and abuse by carefully managing its by the Apartheid regime in South Africa of partnership. The risk of complicity is a real relationships both with potential human Polaroid photographic film to make one not just for extractive companies with rights abusers (e.g. security forces, identity cards for Black South Africans. In significant fixed investments, but for any governments and armed groups, suppliers 1977, the Polaroid Corporation chose to company operating where local practices that exploit workers) and potential victims cut all business ties with South Africa in fail to meet international standards. The (e.g. targeted individuals and populations.) order to avoid complicity with the regime Swiss pharmaceutical company, Novartis, and its practices. for example, in the course of auditing its Industry characteristics also shape efforts subcontractors for human rights to avoid complicity. Industry-wide Financial institutions play an important compliance, discovered one that was initiatives in partnership with role financing government projects and administering a mandatory pregnancy test intergovernmental organizations, civil foreign investment. As an industry, to all female job applicants and denying society and other stakeholders can help financial firms have begun to set common employment to pregnant women. While companies address human rights issues standards for assessing social risk in undisclosed pregnancy testing was not and reduce the risk of corporate project financing, including policies on 42 Understanding the Global Compact Human Rights Principles indigenous peoples, involuntary address human rights conditions in their resettlement and child and forced labor.132 operations.133 According to an oil industry executive, international financial institutions like the World Bank’s International Finance “If companies make the Corporation and the European Bank for Global Compact human Redevelopment provide companies rights principles part of considering investments with a “sense of their business strategy, assurance through recently developed they are better equipped to policies and guidelines, even though effectively manage the compliance with these standards can be human rights issues that time consuming.” arise in the course of their business operations and can make a strong case that business objectives Conclusion and the protection of internationally proclaimed Pressure for corporate human rights human rights are compliance is growing. Advocates of complimentary goals. corporate human rights accountability, ” who in the 1990s focused on labor conditions in labor-intensive, low wage industries like apparel, footwear, sporting goods and toy production, are now examining labor conditions in the production of agricultural commodities like coffee, tea, bananas and cocoa. The extractive industries remain a focus of scrutiny for complicity in state human rights violations, but similar allegations are being leveled against companies in the consumer products, technology and financial services sectors. New industries will continue to come under the media, stakeholder and regulator spotlight for their human rights practices.

The Global Compact human rights principles capture the key human rights issues facing business: how to avoid corporate involvement in human rights abuse and how to appropriately promote human rights. Companies developing corporate human rights programs consistent with the Global Compact human rights principles have made human rights a business issue. Their experience sheds light on the practical challenges of corporate human rights compliance and provides a roadmap for the vast majority of transnational companies that have yet to meaningfully Article 9 44 Corporate Fallout Detectors and Fifth Amendment Capitalists: Corporate Complicity in Human Rights Abuse

Principle two of the Global Compact distinguish between what are licit and illicit human rights principles with regards to commodities and implies an increasing corporate complicity asks business to importance to supply chain monitoring. make sure their actions do not make them complicit in human rights abuses. In order to shed light on the meaning of the complicity principle, this paper “Fifth amendment capitalists” draws on research undertaken by the Fafo Institute for Applied International Studies concerning private sector Harvard economist John activity in zones of conflict. Kenneth Galbraith reacted to use of the Fifth Amendment Corporate Fallout before Congress by the former officers of Enron and Detectors and Framing the discussion Andersen Consulting by Fifth Amendment noting, Three general points are germane to the “I entered politics at a time Capitalists: discussion of complicity and what it when there were Fifth means to ensure that your business is not Amendment communists Corporate complicit in human rights abuses. and I’ve reached the age Complicity in of ninety-four when there First, in order to grasp the links between are Fifth Amendment Human Rights Abuse market-based activity and conflict, it is capitalists. imperative to understand the means ” through which economic opportunities are Mark B. Taylor exploited. In terms of human rights Fafo Institute for abuses, companies should focus on the Complicity is always bad news, particularly Applied International Studies extent to which coercion is integrated to when occurring among the grisliest end of economic activity: when the use of force the human rights continuum-genocide, Mark Taylor is the Deputy Managing Director of becomes a factor of production, crimes against humanity, and during the Fafo Institute for Applied International companies must recognize the potential armed conflict — which has been the Studies, a Norwegian think tank based in Oslo. for human rights abuse. primary focus of Fafo’s research into Fafo AIS works on social and economic economies of conflict. For companies development planning with local partners in a Second, understanding the role of the operating in states at war or in areas of number of countries, with a core focus on private sector in relation to human rights conflict, the concept of complicity raises generating data and information useful in the abuses requires an understanding of real risks to personnel, reputation and, management of transition economies and in zones of conflict as, among other things, increasingly, the risk of litigation. transitions from conflict. Mark Taylor has also areas of social and economic activity. This been the principle researcher on the Fafo AIS perspective focuses on activities, rather In the United States, when someone is policy research project The Economies of than actors, and encourages the asked tough or incriminating questions Conflict — Private Sector Activity in Armed examination of what actors are doing on under oath, they can “plead the Fifth Conflict and chief editor of the Economies of the ground in a way that does not pre- Amendment” — that is, exercise their Conflict report series. judge their effects because of who or constitutionally guaranteed right not to what they are (civil/military, state/rebel, answer. “Pleading the fifth” has a dual local or multinational). connotation. It implies guilt — but it also connotes persecution, owing to the use of Finally, it is important to recognize that, in the Fifth Amendment by the victims of the zones of conflict, what are actually anti-communist witch hunts of Senator informal economies are well integrated into Joseph McCarthy in the 1950s. Harvard the global markets, often via several steps economist John Kenneth Galbraith involving criminal or abusive behaviour. reacted to use of the Fifth Amendment This integration makes it difficult to before Congress by the former officers of Corporate Fallout Detectors and Fifth Amendment Capitalists: Corporate Complicity in Human Rights Abuse 45

Enron and Andersen Consulting by noting, depends upon the nature of company occurs when an individual, group, or “I entered politics at a time when there participation in the violations. company aids or abets — that is, helps or were Fifth Amendment communists and encourages — the actual perpetrator in I've reached the age of ninety-four when A recent case illustrates this point. In the carrying out of the abuse or violation. there are Fifth Amendment capitalists.” March 2003, a Canadian oil exploration Here we must endure some legal company announced that its drilling definitions (see, e.g., Beyond Volunteerism, The notion of “Fifth Amendment operations had turned up “a new world International Council on Human Rights capitalists” is a good one to keep in mind class basin” in the Lake Albert region of Policy). In most legal traditions, complicity because it captures the extreme attitudes Western Uganda, just across the border usually takes the form of substantial or that frame the discussion on complicity. At with the Democratic Republic of the material assistance to the perpetration of one end of the spectrum, there are those Congo (DRC) and about 150 km from the the abuse: there must be knowledge of who feel that corporations operating in the town of Bunia. A year earlier, the same the violation or in some cases simply presence of human rights abuse are, by company had signed a deal with the good evidence that the participant should definition, complicit; at the other, there is Kinshasa government to explore the basin have known, particularly if the violations the sense among companies that on the DRC side of the border, in effect were happening over a period of time. complicity is a concept that will be used to giving it control of concessions in the Complicity can also take the form of hunt multinationals as a kind of anti- middle of a war zone. At the same time encouragement, or abetting. This is what neoliberal blood sport. This may be why that the company was announcing its the material on the Global Compact companies often do not want to talk about find, the UN Security Council declared the website refers to as “direct complicity.” complicity, and why they claim that situation in eastern Congo a threat to complicity is notoriously hard to define. international peace and security. Ugandan Indirect complicity, called “beneficial” troops were withdrawing from the DRC complicity by the Global Compact website Yet complicity is not that hard to define, at under international pressure, all the while (also sometimes called “beneficiary”), least in theory. Below I will outline some proxy militias for the DRC and Ugandan involves a company that supports of the clarity to be found in law. governments were committing atrocities perpetrators of human rights violations and and forcing people to flee. The European receives a benefit from that support and To get a better grip on what complicity is, Union (EU) sent a force to lead the United those abuses. For example, companies we can first describe what complicity is Nations in stabilising the situation. As the may be in joint ventures with government not. Corporate complicity is not human refugees emerged from the war zone, it agencies or others in projects that involve rights abuse by companies. In public was alleged that the fighting was an the perpetration of human rights abuses. discourse, the word “complicity” is often attempt by the Kinshasa government to Although the company is not committing used to describe company wrongdoing as ensure control over the region’s oil. the abuses, nor is it directly helping if it were synonymous with the abuse specific abuses to be committed, its itself. But complicity is not the act or In principle, the presence of that oil support to the perpetrators of the abuse commission of an abuse of a human right. company in proximity to human rights results in benefits to the company. A company is not complicit if it uses violations should not be sufficient grounds forced labour, or directly plunders a for allegations of complicity in wrongdoing. Finally, a word on what the Global natural resource; the company is actually Such a charge would depend on any Compact website has called “silent perpetrating or committing a human rights number of things, including the way and complicity.” This is explained, rather violation or a crime. Complicity is not extent to which the company supports or delicately, as the view of human rights direct commission — it is participation in benefits from the fighting factions on the advocates that companies that remain a violation carried out by another. ground and the scope and character of the silent in the face of obvious human rights human rights abuses (such as whether it is violations are in some way complicit. If This may seem like a semantic point, but widespread and systematic).134 In the companies have a responsibility to report it is important because company above case, the mere presence of the human rights abuse, then silent complicity participation in crimes or violations Canadian company is not normally enough may be a good way to oblige them to do perpetrated by others can take many to establish complicity. Thus, each case so. However, the law in most countries forms. It may seem from afar that the needs to be evaluated individually. has not yet reached that stage. Silent presence of a company in the vicinity of complicity is thus a moral rather than human rights abuse is enough to If complicity is neither the direct violation legal principle, albeit one with the constitute complicity. But for legal of human rights, nor mere company potential to have significant impact on definitions of complicity, everything presence, then what is it? Complicity corporate reputation and brand value. 46 Corporate Fallout Detectors and Fifth Amendment Capitalists: Corporate Complicity in Human Rights Abuse

So, complicity is not too hard to define in Congo which may be connected with the But even if ATCA is reformed or dropped theory. Why is it so hard to avoid in atrocities,” as well as “[alleged] links from the statute books, resort to the practice? The first part of an answer has between the activities of some African, courts will continue. Fafo research to do with the law, particularly European and Middle Eastern companies indicates that, in many jurisdictions, there international law governing crimes against and the atrocities taking place in the are criminal law and civil law states humanity. The core characteristic of Democratic Republic of Congo. The presently on the books in a number of crimes against humanity is their massive alleged involvement of organized crime countries which create similar kinds of and systematic nature. Any company that groups from Eastern Europe [has also liabilities, but that these are simply operates in situations of crimes against been mentioned. Their] activities unused, untested, and largely unknown. humanity, or has a financial relationship allegedly include gold mining, the illegal with the perpetrators, governments or exploitation of oil, and the arms trade. nonstate actors, is going to find it difficult There is general concern that the to extricate itself from the systematic atrocities allegedly committed in the Filling the Knowledge Gap aspect of the violations, particularly if the country may be fuelled by the company does nothing once the crimes exploitation of natural resources there become known. For this reason, and in and the arms trade, which are enabled “Information about apparent (though not real) contradiction to through the international banking company activities and what I said above, a company that obtains system.” (Press conference of the potential complicity for permission to operate from the effective Prosecutor — Communications, The abuses is often available, authority in a conflict zone may indeed Hague, 24 July 2003). but it can be difficult to have created a relationship of complicity. find and act upon. This would be so mainly in situations The same logic driving the ICC ” where the violations in question are investigation in DRC has prompted resort widespread enough to rise to the level of to the civil courts in a number of Information about company activities and crimes against humanity. This is one jurisdictions. In the United States, the potential complicity for abuses is often sense in which complicity is hard to avoid. Alien Tort Claims Act (ATCA) permits civil available, but it can be difficult to find and action in U.S. courts for violations of act upon. An innovative example of this This may be why Luis Ocampo, the Chief international law committed abroad. In problem is that of an artist in the United Prosecutor of the International Criminal these cases — such as Doe vs. Unocal, States who developed a “Corporate Court (ICC), announced in 2003 that he will involving forced labour in Fallout Detector” — a handheld bar code look into alleged complicity of economic Burma/Myanmar — the principles of scanning device, of the kind used in actors in the DRC. The ICC cannot private sector complicity established by supermarkets, which clicks or beeps prosecute companies (legal persons) but it the post-World War II trials of Nazi and when scrolled past a bar code. However, can prosecute individuals acting on behalf Japanese industrialists are being applied. this device responds to products of companies. And complicity is a violation As with the work of the ICC, this will go a produced by a company with a “dodgy of international law. long way toward clarifying potential record” on environmental issues or liabilities for companies. Of course, the human rights. A switch on the detector But such law has rarely been tested in fallout from the recent spurt of ATCA lets you flip between the two. To stock the relation to corporations. In the unlikely cases in the United States has been the Corporate Fallout Detector with data, the event that the Chief Prosecutor moves demonization of the legislation in artist (a PhD Student at the Media Lab at forward in this areas, he would be business circles as a tool for hunting MIT) used a data set that consisted of a looking at the officers or personnel of multinational corporations. The result has list of companies he compiled from bar companies that may have engaged in been a political backlash against ATCA, code databases available on the web, transactions that may have aided and and attempts — led by the Bush cross-referencing those names with two abetted — that is, been complicit — in administration — to undermine and other online resources. He ranked the the perpetration of war crimes and possibly repeal the Act. This would be companies, giving each a percentile score crimes against humanity by members of unfortunate because the principles for social and environmental various combatant groups since July 1, established by such court actions — in transgressions. When asked about his 2002. On this point, Mr Ocampo the United States and other domestic invention, the artist said something that specifically mentioned the “money- jurisdictions — will help companies avoid goes to the heart of the notion of laundering and other crimes committed complicity in the future and build the complicity: “As I was doing it, I learned a outside the Democratic Republic of foundations for global norms in this area. lot of the information you can gather is Corporate Fallout Detectors and Fifth Amendment Capitalists: Corporate Complicity in Human Rights Abuse 47 subjective… It’s really hard to collect a framework for foreign investment involved They state business “shall not engage in bunch of data about a company and come the laws of the host state — which are nor benefit from” the full range of human up with an objective assessment…With often not as rigorous, or as rigorously rights abuses and, further, companies increasing globalisation it becomes more applied, as those in the companies’ home “shall refrain from activity which and more difficult to trace accountability states. Today, there is an international supports, solicits, or encourages States or to specific companies (Adbusters, Jan- norm emerging that views private sector any other entities to abuse human rights.” Feb 2004, No. 51).” complicity in human rights abuse as The norms conclude with an attempt to unacceptable. Companies operating in suggest an administrative framework for Thus, there is a real problem of evidence contravention of this norm, or implementation, via reporting, monitoring and knowledge about the fact pattern commodities produced in contravention of of violations, and including input from all concerning the kinds of activities that this norm, run the risk of being labelled sides. But it remains preliminary. would create complicity. Attempting to fill rogue companies or conflict commodities. the knowledge gap is important work In short, while the use of the OECD because of a fact most companies realize, It is true that the Global Compact and Guidelines by the UN Expert Panel may a fact illustrated by the story of the other initiatives are trying to clarify what have come as a shock it was a perfectly Corporate Fallout Detector: in the absence normative development means in practice. logical use of the Guidelines: there was of a good understanding of what Notions of benchmarking, voluntary no other mechanism which concerned complicity really is, consumer markets measures, peer review, et cetera, are all, itself with corporate behaviour in relation and shareholders will act on whatever in their own ways, attempting to bring to human rights. information they do have, be it well operational clarity. The application of the founded or not. principle of corporate complicity — by Put yourself in the shoes of the UN panel legal action and by ethical consumerism experts: You know the people of the DRC The problem of knowledge points to the — is also part of this effort. are dying in massive numbers; you have fact that there is also an administrative clear evidence that the elite networks gap. The law creates liabilities and defines running the wars in the DRC are complicity. But short of legal recourse The UN Norms on the plundering the country’s natural (which should be a last resort), there is no Responsibilities of resources and stripping assets from way to raise the problem of corporate Transnational Companies state companies; you know these elite complicity in human rights abuse. and other businesses with networks are well integrated into the regard to human rights, are global economy and that this is often This is what happened in 2002 and 2003, clear on the issue of made possible by trade and services when the UN Panel on Illegal Exploitation complicity, both direct and provided by companies based in OECD in the Democratic Republic of the Congo beneficiary. They state countries; and you see that the law of the referred to the OECD Guidelines for business “shall not engage land is ineffectual in large parts of the Multinational Enterprises when it listed 85 in nor benefit from” the full country and that there is little effective companies that, it contended, were range of human rights exercise of state sovereignty. somehow complicit in the wars in that abuses and, further, country. This move came as a shock both companies “shall refrain Which points to a gap just as important as to the officers of the companies listed and from activity which the lack of normative clarity: there is no to the OECD officials who never imagined supports, solicits, or administrative or regulatory mechanism the Guidelines would be used in such a encourages States or any that can deal with the problem. There is no way — especially the National Contact other entities to abuse body, no institution that has responsibility Points that exist in each OECD country as human rights.” for these kinds of issues — no way to focal points for implementation of the even facilitate asking the right questions. Guidelines. It was a shock, in part, because the Guidelines say nothing about Take, for example, the UN Norms on the If you are a member of the UN expert conflict and little about human rights. Responsibilities of Transnational panel, what do you do? Companies (TNCs) and other businesses In fact, there is little in the way of with regard to human rights, adopted by I think the MIT artist had it right: you standards — or norms — against which the Sub-Commission in August 2003. The improvise a way to ensure that complicity to measure the behaviour of companies. norms are clear on the issue of does not go unnoticed. By referring to the Until recently, the basic decision-making complicity, both direct and beneficiary. Guidelines, the UN Panel effectively 48 Corporate Fallout Detectors and Fifth Amendment Capitalists: Corporate Complicity in Human Rights Abuse sought to turn the National Contact Points of the OECD Guidelines into the bureaucratic equivalent of a Corporate Fallout Detector.

The issue of corporate accountability for human rights or international crimes, of which complicity is a large part, is a relatively young political problem (see Leiv Lunde and Mark Taylor, Commerce or Crime? Regulating Economies of Conflict, Fafo 2003). Its relative youth as a political problem determines much of the debate around these issues. On the one hand, we find it absurd that there are few norms and no mechanism through which companies can be held accountable for participation in human rights abuse. On the other hand, it seems ridiculous that companies should be held to account for violations that have always been the responsibility of governments to control and that have thus been none of their business.

In the context of this lack of policy or regulation, companies can probably be forgiven for feeling as though complicity is in the eye of the beholder. But the policy debate is evolving quickly. Indeed, we should be outraged by the notion that that three million people in the DRC can die in four years, yet the companies that participated in the economies that were a key part of that conflict cannot be held to account. That is a problem. It is called impunity, and it is a direct result of the lack of a regulatory or administrative framework that is mandated to take up these issues. Until we deal with this lack of accountability, the corporate responsibility goalposts will keep shifting and companies will not have much clarity for their decision-making in relation to human rights. In the absence of regulation, they will not know what not do or what to avoid. And the communities affected by human rights abuse will not know against what standards they should try to hold those companies — and their governments — to account, or where they can take their complaints of corporate complicity. Article 10 received attention in the Human “Companies cannot and should Development Report 2000, which observed not be the moral arbiters of the that “global corporations” have an world. They cannot usurp the “enormous impact on human rights — in role of governments, nor solve their employment practices, in their all the social problems they environmental impact, in their support for confront. But their influence on corrupt regimes or their advocacy for policy the global economy is growing changes,” and called for corporate human and their presence increasingly rights standards, implementation measures, 137 affects the societies in which and independent audits.” A reference to they operate. With this reality human rights was also added to the OECD comes the need to recognize Guidelines for Multinational Enterprises when they were revised in 2000.138 What is new, that their ability to continue to though, is the dynamic increase over the Business and provide goods and services and last three years or so in the breadth and Human Rights create financial wealth — in depth of the general business-related which the private sector has human rights debate.139 proved uniquely successful — Klaus M. Leisinger will depend on their The intensity of the debate should not Novartis Foundation for Sustainable acceptability to an international pose a problem for companies competing Development and University of Basel society which increasingly with integrity.140 Today, all actors in civil regards protection of human society perceive a responsibility for Klaus M. Leisinger is President and CEO of the rights as a condition of the human development and thus respect the Novartis Foundation for Sustainable Development corporate license to operate.” equal and inalienable rights of all people (www.novartisfoundation.com) and Professor of –Sir Geoffrey Chandler 135 enshrined in the Universal Declaration of Sociology at the University of Basel, Switzerland. Human Rights (UDHR) adopted by the This article is the author’s personal opinion and United Nations General Assembly on 10 does not reflect the opinion of the Novartis December 1948. “Good” corporations and corporation or its directors, officers, or staff. Human Rights: A Business Duty? those responsible for their corporate conduct will therefore see a duty to support and respect human rights and do “Whatever the tone of the their utmost to ensure that the spirit of debate, the fact remains the Universal Declaration is upheld in their that business enterprises sphere of activity and influence. At a have a moral obligation to minimum, they will refrain from actions respect human rights. that obstruct the realization of those ” rights. Where, then, are the problems?

Largely unnoticed by the management of The current business and human rights most companies, an intense debate has debate is highly charged. On the one hand, arisen in recent years on the topic of there is a tendency for some human rights “business and human rights.” The topic is activists to create the impression that, to a not new, however. Specialist human rights significant degree, the troubles of people in groups in the 1980s were linking developing countries can be attributed to multinational companies in the extractive human rights abuses by multinational sector — oil, diamonds, gold, precious companies.141 At the other extreme, some metals — with human rights abuses at institutions with close ties to business have their local mining sites.136 Then in 1999, publicly stated that there are no business- United Nations Secretary-General Kofi specific human rights concerns because the Annan challenged business to support a set Universal Declaration is directed exclusively of principles in the areas of human rights, at governments.142 Human rights demands labor, and the environment. The topic also being made of other actors in society, Business and Human Rights 51 including business enterprises, they say, principles, however, led them into territory divert attention from the actual perpetrators that was new and unfamiliar to the Entrepreneurial Options — widely known despots and their management of most companies. entourage who abuse basic human rights. At about the same time, the Sub- The tenor of the human rights debate has Commission of the Human Rights “In the context of the become increasingly critical of Commission started developing a set of human rights debate, the “transnational corporations” due to a U.N. Norms on the Responsibilities of management of a company deep-seated disquiet about globalization. Transnational Corporations and other has, in principle, three Opinion polls show that nine out of ten Businesses on Human Rights.145 One of the options for action: respondents interested in development central aims of this body of experts was u defend the perceived policy and work within nongovernmental to strengthen and put into operation the status quo or even organizations (NGOs) or who otherwise two human rights principles of the UNGC. actively resist change; have close ties to that work see too much The norms were adopted by the Sub- u duck, wait, and hope for emphasis on trade and investment and far Commission in Geneva on 13 August the best; or too little attention being paid to human 2003 and were transmitted to the U.N. u see the human rights rights or other non-financial issues.143 Human Rights Commission for consideration. On 20 April 2004, the debate as an opportunity Against this background, the Secretary- Commission affirmed that the norms, as a for corporate citizenship General’s Global Compact (UNGC) initiative draft proposal, had no legal standing and leadership.” continues to be of major importance.144 It requested that the U.N. Office of the High takes up this disquiet and aims to Commissioner for Human Rights compile counteract it by encouraging companies to a report setting out the scope and legal Companies respond in different ways to commit themselves publicly to compliance status of existing initiatives and standards political challenges, depending on with certain minimum standards of a relating to the responsibility of corporate culture, historical experiences, political, social, and ecological nature. transnational corporations and related or the philosophy of top management. In Convinced that weaving universal values business enterprises regarding human the context of the human rights debate, into the fabric of global markets and rights, including the norms. The report is the management of a company has, in corporate practices would help advance due to be presented at the next Human principle, three options for action: broad societal goals while securing open Rights Commission meeting, in April/May markets, Kofi Annan challenged world 2005. The Commission also made clear u defend the perceived status quo or business leaders to “embrace and enact” that the Sub-Commission should not even actively resist change; the Global Compact, in their individual perform any monitoring function in u duck, wait, and hope for the best; or corporate practices, and to support relation to the norms. While the norms are u see the human rights debate as an appropriate public policies and promote a welcome strengthening of the two opportunity for corporate citizenship fair business practices. “Fair business UNGC principles in terms of their content, leadership. practices” include good labor standards they are unclear — at least in their and enlightened protection of the present form — on a number of environment, as well as corporate efforts important procedural issues.146 Defend the perceived status quo: human to “support and respect the protection of rights are not “the business of business” the international human rights within their Whatever the tone of the debate, the fact | sphere of influence” and “make sure their remains that business enterprises have a own corporations are not complicit in moral obligation to respect human rights. There are a number of credible reasons human rights abuses.” If they do not observe these most why managers of companies would not essential elements of their social feel that demands on human rights have The Global Compact principles relating to responsibility, they surely risk their anything to do with them. First, they social and ecological issues were not a societal (if not legal) license to operate. usually associate “human rights” with problem for companies working Thus, the management of enlightened civil and political rights only (Articles 1-21 responsibly, because they correspond to companies is confronted with the of the UDHR) and not with economic, state-of-the-art practices of “good question of how to respond to the social, and cultural rights (Articles 22-29). corporate citizenship” or “corporate social increasing importance of human rights Second, they see governments and their responsibility.” The two human rights demands on business enterprises. institutions, not private companies, as the primary bearers of duties. Third, even 52 Business and Human Rights

managers sympathetic to human rights u lack of access to basic services such behave responsibly, face up to the concerns are surprised that business is as education, health care, energy, water company-related human rights debate, receiving so much attention for its and sanitation, and telecommunications; and take an active part in it with conduct when human rights abuse is still arguments of their own. The more so rampant among state actors.147 Last, u strict press controls; and prominent a company, it seems, the more but not least: a considerable portion of the likely it is to be a target for critics — debate on “human rights and business” u existing or potential civil conflict with regardless of the severity of the issue for consists of indiscriminate and generalized politically or ethnically motivated which they are being criticized. Because charges against businesses, and this human rights violations. of this, a crucial element of makes many concerned people from the management’s decision to deliver private sector hesitant to engage in a Lack of good governance gives rise to a corporate performance standards beyond dialogue that could turn out to be too vacuum that has to be responsibly filled the legal minima must be its conviction politicized to yield constructive results.148 by other actors in society, including that it is “the right thing to do.” companies: only in this way can they The way out of human rights deficits minimize the risk of becoming part of the The situation is different for companies primarily calls for the implementation of problem themselves. that have signed up to the U.N. Global national and international law through Compact — by doing so, they have responsible government. In the absence already expressed their support for the of an effective national legal framework, two human rights principles and their no sustainable and essential progress can Duck, wait, and hope for the best commitment to work toward their be achieved for those whose horrific | implementation. Since the principles are stories are described in the reports of relatively open in their wording, these Amnesty International and other human Most multinational corporations have not companies have the choice of either rights NGOs. But regulatory approaches yet responded to the human rights defining for themselves the commitments do not preclude other approaches: the debate, at least not visibly or audibly.151 It they believe they have entered into or commitment of governments and their seems as if they are waiting until the leaving this interpretation to other actors agencies does not exclude the “discussion caravan” has moved on and of civil society and then perhaps finding assumption of responsibility by “other the globalization debate has turned its themselves confronted with demands that organs of society.”149 On the contrary, attention to other issues. On the other they either have to or want to reject. As their duty arises precisely when the hand, if the debate ultimately results in this would be a strategically poor choice, holders of state power are not able or new national legislation, then a company the right thing to do is to take an active willing to protect citizens from violation of will no longer be able to avoid dealing part in the “human rights and business” their rights. Looking at the annual reports with the issue. Nevertheless, some debate and to perceive this as an of Amnesty International, it is exactly in company inaction might be motivated by opportunity for leadership in corporate places where the state fails to meet its a fear similar to James Duesenberry’s citizenship practices. primary responsibilities that the potential “ratchet effect”: Corporate performance vulnerability for companies is particularly within the framework of a corporate high. In such situations, companies are citizenship policy — that is, beyond what See the human rights debate as an faced with an extremely difficult socio- is stipulated by law — could, by virtue of opportunity for corporate citizenship political environment:150 the normative force of what has become |leadership fact, establish a performance level below u inadequate legal frameworks and which it is no longer acceptable to fall Successful business enterprises are governance structures to ensure fair and become the baseline for additional organized for constant change and and equitable administration of justice (including legal) demands.152 innovation — and the current focus on and regulations; human rights is just one of those changes. Companies that opt for the duck-and-wait As Peter Drucker observed many years ago, u weak, authoritarian, or failing public- strategy unfortunately have a good successful companies are those that focus sector institutions with thriving corruption; chance of success. In many cases, the on responsibility rather than power, on long- attention of the critical public is focused term success and societal reputation rather u high levels of poverty and inequality in not so much on companies that use local than piling short-term results one on top of 153 the distribution of resources and deficits of the law and refuse to engage in the other. Getting the human rights livelihood opportunities; debate, but instead on companies that dimension right — right in the sense of an Business and Human Rights 53 enlightened balance between the common policy discourses, the expectations of human rights assessment, if not audit, of good and enlightened corporate self-interest companies remain unclear.”156 current corporate practices might be — is no longer only a question of moral recommended if a rough assessment choice; it is increasingly an important asset Indeed, few companies had any clear idea reveals unexpected negative surprises. on the reputation market created by a before signing the U.N. Global Compact growing part of global civil society. Good what it meant for them, “within their The intense search for answers to these managers realize that it will be very difficult sphere of influence,” “to support and complex questions triggers important to be a world-class company with a second- respect the protection of international sensitizing effects within the company, class human rights record — and they act human rights” as well as “to make sure especially for managers whose area of upon this.154 their own corporations are not complicit in responsibility is confined to day-to-day human rights abuses.” In normal cases — routine purely business or financial that is, when companies operate within functions or, depending on the field of work, “As Peter Drucker observed the law and are committed to basic ethical to biological, chemical, or other matters. The many years ago, values — there seems to be an intuitive very fact that human rights issues are successful companies are assumption that there are no human rights discussed internally on the company’s own those that focus on violations occurring through their own initiative — not out of a defensive responsibility rather than activities and therefore no problems were compulsion — and that critical questions power, on long-term expected. This assumption largely are posed increases the corporate social success and societal corresponds to my experience. Much of sensibility and hence competence. reputation rather than the action that is demanded today in the piling short-term results human rights debate already forms part of one on top of the other. ”153 the social and ecological management “Best practices are always processes of enlightened companies. anticipatory — a proactive approach, however, It is nevertheless inadvisable to carry on presupposes appropriate Companies that signed up to the as if nothing had happened without any reflection on different fact- principles of the U.N. Global Compact will further reflection; a deeper consideration and-value scenarios. set in motion an internal process of of the problems is called for. On the one ” definition and implementation with regard hand, the issues in the human rights and to all commitments entered into, including business debate are defined substantially those on human rights.155 A process of more broadly by many stakeholders than In internal and external consultation this kind has three different phases: most managers assume. On the other processes, the broadest possible hand, as far as actual human rights spectrum of opinion needs to be obtained. u reflection and consultation, performance is concerned, it is not wise Managers whose workplace is located in u discussion and decision-making, and to operate with assumptions when countries with a poor human rights u implementation empirical knowledge can be gained. The performance can make hugely important more facts that can be ascertained on contributions to the discussion that are of sensitive issues and the more insight relevance to day-to-day practice. Reflect and consult there is on the existing pluralism of Procurement managers have a view of Rory Sullivan describes the intersection values with regard to the facts, the better things that differs from that of between human rights and business as the decision-making basis for informed communications officers and of the legal “chaotic and contested: on the one hand, policy choices. What needs to be department: “General Counsels are paid there are those who see companies as ‘the answered first and foremost are questions to worry about possible threats of source of all evil’. On the other, are those such as “What could be potentially litigation, however remote,” as noted in who have a touching faith in the abilities of sensitive aspects of our business the Harvard Business Review.157 The legal companies, economic growth and ‘the activity?,” “Where do stakeholders outside view of things is becoming increasingly market’ to resolve all of these human the company see potential or actual important if only by virtue of the way U.S. rights problems. Yet the truth, if there is issues of relevance to human rights in the courts currently interpret the Alien Tort such a thing, is far more complex and context of our business activity?,” and Statute of 1789. A serious analysis of indeterminate than either of these extreme “Are there vulnerabilities that arise potential vulnerabilities and corresponding perspectives allows. Despite the increasing through cooperation with others and, if so, guidelines for corporate activities in use of human rights language in public how do we cope with these?” A conscious sensitive areas is a credible first “good 54 Business and Human Rights faith effort.” Best practices are always best able to present the relevant portfolio debate and thus enhances the quality of anticipatory — a proactive approach, of values, to articulate special interests, the decision-making. however, presupposes appropriate and to show ways to preserve them. reflection on different fact-and-value The consultation process must also be scenarios. Discuss and decide used to clarify ambiguous terms (such as “sphere of influence,” “complicity”). Internal consultation processes are also “Sphere of influence,” in the context of necessary to broaden ownership of what “Clearly, the closer the the Global Compact, is relatively clearly are, at least initially, “non-mainstream” company’s connection to understood as core operations, business positions: anyone who wants to change the victims of rights partners, and host communities.158 The paradigms of corporate policy must violations, the greater is its former High Commissioner for Human mobilize the required support within the duty to protect. Employees, Rights, Mary Robinson, refined this company, using powers of persuasion. consumers, and the concept with the remark “clearly, the Experience shows that something communities in which the closer the company’s connection to the perceived as being imposed “from above” company operates would victims of rights violations, the greater is will have little effect in daily practice. If a be within a first line of its duty to protect. Employees, policy change is seen as a threat (to responsibility. 159 consumers, and the communities in which investment plans, marketing policy, ” the company operates would be within a –Mary Robinson 159 customer relations, and so on), it may — Former High first line of responsibility.” despite the decision being taken at the Commissioner for level of corporate policy — lead to Human Rights Analyzing the wide variety of possibilities passive resistance, cover-up practices, for the definition of “complicity,” it seems and refurbishment of some Potemkin much more difficult to come to an façades. All this makes it more difficult to accepted corporate understanding of this retain a dispassionate grasp of the After a good decision-making basis has concept.160 And yet differentiations are essentials — and thus to make a rational been developed through broad consultation possible: With a small number of known analysis of the status quo. and deep reflection, an intensive internal corporate common sense measures, it discussion process must follow. Weighing should be possible to rule out “direct Since intra-institutional analyses always the pros and cons of different options and complicity” in the sense of consciously involve the risk of being self-referential wrestling with them to come up with what assisting a third party in violating human and therefore leaving out important will be the corporate position to be rights. A well-informed and sensitive aspects from the analysis, external implemented contributes to a further management should also be able to avoid consultations provide a better basis for sensitization within the company. This, in “beneficial corporate complicity” — decision-making. This is especially true in turn, increases the capacity to understand defined as benefiting directly from human the case of complex political judgments, corporate responsibilities and their limits. rights violations of a third party. such as those required in connection with The fact that differing views are presented company-specific human rights issues. not only between outside stakeholders and Staying clear of “silent complicity” is a Not only is it wise to use the knowledge the management but also within bigger challenge, as this notion reflects and experience of specialized NGOs in a management itself should be seen as an the expectation that companies will alert company’s own decision-making opportunity to improve mutual the appropriate authorities about human processes, society’s pluralism of interests understanding and as a chance for better rights violations of a certain character. To also creates opportunities. Potentially fatal solutions. Precisely in the case of politically speak out about human rights, whether in deficits of perception arise when people prestructured questions, it would be corporate management development or institutions confuse their view of things dangerous for a company to reach a courses, contract negotiations with third with the things themselves. Sustainable concluding judgment too early based on parties, or other occasions, helps create a solutions to complex problems normally the personal preferences of individuals. business environment that supports the transcend the initial preferences of Here, too, consultation of people with protection of human rights. Individuals corporate management, taking into different personal inclinations or working in corporations may raise human account differing life experiences, value professional or cultural backgrounds, rights issues at private meetings with premises, and constellation of interests to different value judgments and experiences higher-ranking officials, politicians, or improve the quality of the eventual of life, or other characteristics that ministers — even there, diplomatic decision. Specialized interest groups are influence their judgment enriches the suggestions may achieve better results Business and Human Rights 55 than overt criticism. Many companies, roll-out campaign in different languages can usually only contribute to solutions — however, do not encourage their to enhance interest in the issues. on their own, they would be overtaxed. managers to adopt a highly political role while on corporate duty. They see no u Provide internal training of key personnel corporate mandate to act as a vehicle for worldwide, using case studies of global diplomacy. As public perceptions of relevance to corporate business and a Open Issues for Discussion in a corporate behavior might differ tool box (including dilemma sharing); Learning Forum significantly from corporate perception involving relevant NGOs to provide an regarding “silent complicity,” a position “out of the box view” adds to the quality paper on this topic is advisable. of such endeavors. The human rights and business debate has progressed a great deal. There are, As a result of the discussion processes, u Develop “measurables” — qualitative however, a number of outstanding open the company will have a better and quantitative benchmarks that are issues that need further debate in good understanding of all human-rights-related relevant to the human rights debate of faith among different stakeholders. Four aspects of its activities and will be in a the sector the company belongs to. will be touched on here: better position to decide the matter. u How far does the corporate arm reach? Different issues will have a different u Set performance targets for sensitive weight and importance for different responsibility areas (such as security u What is an appropriate verification sectors (such as oil, textile, banking, data and human resources) and link process of corporate human rights processing, or pharmaceutical industries). achievement to the remuneration of the performance? Even within a specific sector (in the managers responsible. pharmaceutical industry, for example, between research-based and generics u What are useful indicators? u Ensure compliance monitoring companies), different problems will lead throughout the corporation, with special u How can we develop a human rights- to different decisions regarding corporate emphasis on potential vulnerabilities of related “Richter Scale”? human rights policy. For companies corporations in that sector. competing with integrity in all sectors, however, it should be possible to develop u Develop and implement external a relatively broad basic corridor for their verification mechanisms. human rights performance. How far does the corporate arm reach? u Report on the success and failure of | performance as well as other activities Implement according to sector of activity.161 No reasonable person would dispute that Once a company has self-regulated the corporate activities must be conducted in details of its corporate human rights As such a complex implementation a manner that upholds the rights of endeavors, a “normal” management process will take some time, employees and workers as well as the process has to be implemented — that management should set milestones to local communities they are active in. The is, compliance with the human rights keep track. If this is done, the promise “to issue at stake is to define reasonable guidelines becomes part and parcel of support and respect the protection of boundaries for the human rights normal business activities. The usual international human rights” as well as “to responsibilities of business enterprises. It process parameters for this are the make sure their own corporations are not is relatively easy to determine where it following: complicit in human rights abuses” begins: A company should adopt explicit becomes a self-evident part of normal corporate guidelines on human rights and u Appoint a senior manager to be in business activity. establish procedures to ensure that all charge of the human rights business activities are examined for the responsibility, including mainstreaming The concrete effects of all corporate good content relevant to human rights. and supervising the human rights faith efforts depend, however, not only on Wherever a company has direct control strategy throughout the business. the company itself, but also on what other (that is, predominantly in its own actors in civil society do. The challenges operations), it can be held accountable for u Initiate an interactive communication of respecting and supporting, if not its human rights record. This includes the strategy for all employees (not only fulfilling, human rights are so huge and moral duty to protect the rights of management) and develop an attractive complex that individual societal actors employees against the illegitimate 56 Business and Human Rights interference of local authorities, for change of government from a legitimate repent in this generation, not so much for example by providing them with legal one to a human-rights-abusive regime? the evil deeds of the wicked people, but for assistance in cases of them suffering from How would someone balance the value of the appalling silence of the good people.” violations of their civil and political rights. such a human-rights-affirmative “gesture” against the personal losses of It gets a bit more difficult to exert indirect employment and income? Would you have What constitutes an appropriate control — to influence suppliers, to ask the workers who are direct victims verification process for corporate subcontractors, and business partners to of a boycott decision — mostly poor |human rights performance? adhere to the spirit of someone else’s people, who usually suffer most from corporate responsibility standards, such regimes — whether they accept a Christopher Avery reminds us that twenty including human rights. Yet there are ways deterioration of their personal life years ago most people probably would (processes) and means (carrots and conditions as the price of an external have given business the benefit of the sticks) to correct deficits and initiate policy pressure that could lead in the long run to doubt in a human rights controversy, but changes that prevent them in future. an improvement of the human rights that this is no longer the case: “In the record of their nation? past two decades they have been But what are the limits? What ought to be disappointed too many times by the nature and extent of corporate It is obvious that tolerance of other disclosures about the human rights record contributions to the creation of an enabling cultural and political systems must stop of particular companies. While they environment for the realization of human short of the violation of absolute moral welcome news that a company has rights in countries whose human rights norms — as a consequence, a violation adopted a human rights policy, they now performance attracts justified criticism and of human rights (such as apartheid) withhold judgment to see whether the where local standards conflict with should not be tolerated with the pretext of company follows through with action and international norms? In contrast to the cultural or ethical relativism. As a private whether the results have been verified by long-standing162 disapproval of individual, I share Sir Geoffrey Chandler’s an organization truly independent of the transnational corporations interfering in belief that the days when companies company and without any motive to domestic political affairs, recent thinking could remain silent about human rights sugar-coat the findings.”166 from advocacy groups and well-intentioned issues are over: “Silence or inaction will NGOs seems to call for corporate be seen to provide comfort to oppression For this reason, companies propose involvement in human-rights-related and may be adjudged complicity.… verification processes by external auditors political activities in “difficult” countries. Silence is not neutrality. To do nothing is along the same lines as done to audit the not an option.”164 I am also aware of the companies’ books. Following the scandals It is relatively easy to declare that, at the dilemma that on the one hand industry of Enron and others, NGO representatives very minimum, corporations have a moral associations or chambers of commerce are skeptical of such solutions. They see obligation to ensure they do not are stronger because they are collective a risk that auditors who are profitably undermine elected governments or the voices for corporate human rights associated with the company in other democratic process, but it is much more lobbying, while on the other hand business areas are not “credible third difficult to draw the line between associations “too often adopt a lowest- parties.” For human rights verifications, acceptable direct interference in the common-denominator approach to human for instance, the outside companies are political process — such as against rights issues, doing as much in the human probably not prepared to jeopardize their repression of religious, ethnic, or political rights sphere as their least courageous main business (auditing of the books) opposition groups — and inappropriate members (i.e. often nothing at all).”165 through a critical reporting on possible interference. Should a multinational deviations from the path of virtue. corporation working in a country that It would be an encouraging first step if does not allow or that severely restricts managers would give the right signals to The “general overall principles of unions contravene local laws? Should human rights violators at non-official independent monitoring” for claims of good General Motors contribute to the events by refusing to rationalize what employer practices developed by Elaine fulfillment of Article 18 of the UDHR (the cannot be rationalized, by refusing to level Bernard, Director of the Harvard Trade Union right to freedom of thought, conscience, down what should not be leveled down, Program, offer a good base of reference for and religion) by permitting Falun Gong and by not trivializing what is not at all external verification of a corporate human meetings at its Shanghai plant?163 Is a trivial to the victims of the human rights rights performance.167 Credible human “good” company expected to close down violations. Martin Luther King Jr. left us rights verifications must be: its plants in a country after an undesirable with the legacy that “we shall have to Business and Human Rights 57

u Independent from the business So who would be suitable candidates as services — but the dislike is probably enterprise being monitored. This monitors? Theoretically, it would be ideal reciprocal. With institutions on record for independence, however, should not be if specialized institutions that enjoy high activism, there is at least a risk that there defined so restrictively that the levels of authority and credibility, such as is a self-imposed compulsion to detect corporation monitored is not allowed to Amnesty International or Human Rights some form of misconduct in order to pay for it — this is not sustainable for Watch, could take on this role. To do this retain credibility with their own any monitoring institution. with any sustainable success, however, it constituency — and then perhaps to would have to be possible for companies make the “molehill” of individual laxness u Ongoing — that is, according to a plan to pay for these services, as is the case into a “mountain” of a business policy being announced on a relatively short- with financial auditing, and it would have that violates human rights. term basis and not simply a superficial to be ensured that a verification process “celebrity” visit. All parties affected by takes place in a way that both parties a human-rights-relevant business could consent to. activity must be able to talk with What are useful indicators? monitors in complete confidentiality A company that systematically puts | and without reprisals. publicly proclaimed values into practice in the form of corporate citizenship guidelines An important step toward the acceptance u Institutional, in the sense that the and lives up to these in the form of of verification processes is a broad-based monitoring agency must have independent consistent business practices has little to agreement on practicable human rights authority and sufficient resources. fear from external verification. However, it indicators — for example, in collaboration is in the nature of human beings that they with the Global Reporting Initiative (GRI). u Indigenous — where indigenous people tend to commit individual lapses, make Indicators help a company translate their are affected, the monitoring process stupid mistakes, or get priorities wrong. commitment to human rights into tangible must include people who speak the Every company with more than 1,000 and concrete human rights “deliverables.” language and live in the country where employees must expect a normal At the same time, they communicate to the human rights performance is being distribution of individual virtues, social the outside world and to NGOs the monitored. competence, and other elements of the responsibilities the company is willing to collective profile of strengths and fulfill and in what way. There are no weaknesses — and thus also individual harmonized expectations and thus there u Trusted — that is, with a track record misconduct. Where corresponding will not be consensus among human within the area of competence. management processes are implemented rights stakeholders on all indicators, and and such misconduct can be uncovered so the debate will continue — but on a u Knowledgeable about the business and corrected as a result, it can at least be higher and better-informed level. activities under review and with an shown that individual problem cases by no appreciation of what is common means represent “company policy.” In this The general human rights indicators practice and what is not. respect, too, the presumption of innocence proposed by the GRI (see Table) should apply — or at least there should be encompass all essential problems of u Transparent — that is, as open as a certain “power sharing.” It cannot be that relevance to business and therefore offer possible and — after giving the the functions of “police,” “prosecutor,” and a good approach to gaining a general monitored corporation an opportunity to “judge” are all in the hands of those doing picture of a company’s human rights comment on and, if necessary, initiate the external verification. performance. action to correct deficits — with the right to communicate information without Where a deviation from the rule is the To prevent unnecessary and high corporate pre-screening or control. exception and not the norm, but external administrative costs, duplication of effort verification reports fail to make this must be avoided. Rather than creating The monitoring system developed and transparent, even best-practice new indicators to assess performance on implemented in the context of the Mattel companies will seek alternative labor standards and the environment, toy company by S. Prakash Sethi’s processes. Activist groups who engage in existing indicators (the GRI, for example) Monitoring Council, in which the claims naming and shaming based on can be used. After reaching agreement on that a company has made voluntarily and generalized preconceptions are a selection of these indicators (HR 5, 6, publicly are the focus of monitoring, holds understandably not at the top of the wish and 7 might be taken care of by labor a lot of promise for serious companies list of companies seeking verification standards, while HR 11 and 14 might not who “walk as they talk.”168 58 Business and Human Rights

Indicators for general human rights performance

Core Indicators Additional Indicators

HR 1 Description of policies, guidelines, corporate structure, and HR 8 Employee training on policies and practices concerning all procedures to deal with all aspects of human rights relevant to aspects of human rights relevant to operations. operations, including monitoring mechanisms and results. HR 2 Evidence of consideration of human rights impacts as part of HR 9 Description of appeal practices, including but not limited to investment and procurement decisions, including selection of suppliers/ human rights issues. contractors. HR 3 Description of policies and procedures to evaluate and address HR 10 Description of non-retaliation policy and effective, confidential human rights performance within the supply chain and contractors, employee grievance system (including but not limited to its impact on including monitoring systems and results of monitoring. human rights). HR 4 Description of global policy and procedure and programs HR 11 Human rights training for security personnel. preventing all forms of discrimination in operations, including monitoring systems and results of monitoring. HR 5 Description of freedom of association policy and extent to which HR 12 Description of policies, guidelines, and procedures to address this policy is universally applied independent of local laws, as well as the needs of indigenous people. description of procedures and programs to address this issue. HR 6 Description of policy excluding child labor as defined by ILO HR 13 Description of jointly managed community grievance Convention 138 and the extent to which this policy is visibly stated and mechanisms or authority. applied, as well as description of procedures and programs to address this issue, including monitoring systems and results of monitoring. HR 7 Description of policy to prevent forced and compulsory labor and HR 14 Share of operating revenues from the area of operations that is the extent to which this policy is visibly stated and applied, as well as distributed to local communities. description of procedures and programs to address this issue, including monitoring systems and results of monitoring.

Source: Global Reporting Initiative: Sustainability Reporting Guidelines. Boston 2002, pp. 53-54. be relevant to all sectors), a deeper the sense of preventing violations by UDHR, and specifically to the “right to sector-specific workup is needed, other actors. But they can only to a medical care.” To measure individual because factors of importance for limited degree fulfill, for example, corporate human rights performance in the different industries vary. economic, social, and cultural rights when pharmaceuticals industry, the following and where the primary bearer of duty — indicators could be useful: Due to the dimension of human rights the government — is not able or willing deficits and the characteristics of the to do that. Philanthropic efforts, as u generics as a proportion of total different generations of rights (“freedom laudable as they may be in fulfilling production or business volume; from torture” is a first-generation right, economic, social, or cultural rights, will for instance, while “right to medical care” not compensate for non-compliance with u the use of intellectual property rights in is a second-generation right), it is also human rights essentials in normal least developed countries; advisable to differentiate the indicators business activities (such as benefiting into rights that should be “respected,” from child labor). u willingness to offer differential pricing “protected,” and “fulfilled.”169 Companies with life-saving medicines for special must respect human rights in the sense For pharmaceutical companies, it has to be patient groups; of refraining from interfering with people’s expected that in the context of economic, pursuit of their rights. They must also — social, and cultural rights particular u pro bono research activities for tropical, to the best of their abilities — protect in importance is attached to Article 25 of the neglected, or poverty-related diseases; Business and Human Rights 59

u specific policies in place for the regulation pharmaceutical company, then it becomes u “Code Green,” which refers to lesser of clinical trials in countries with no local necessary to differentiate between sins of omission that can be easily laws to ensure protection from abuse (or varying degrees of human rights remedied — for instance, pregnancy at least no enforced laws); violations. tests among women working in production (Article 12, “interference u donations of medicines for needy A good analogy for what is sought here is with privacy”) or regular overtime patients in developing countries and in the “Richter scale.” Earthquakes are among members of management emergencies brought on by wars or measured on the Richter scale, which (Article 24, “right to leisure”); natural disasters; and enables even people untrained in seismology to estimate the severity of an u “Code Orange,” such as unknowingly u further activities in the health care earthquake. But what about human rights violating but not making efforts to find sector of poor countries (such as abuses? Are we talking here about out; and through corporate philanthropy). research with embryonic stem cells, to which people attribute the whole u “Code Red,” the systematic violation of potentiality of a human being on the basis human rights within corporate activities of their religious beliefs or value systems, How can we develop a human rights- or direct benefit from violations by and thus also rights and a dignity that are related “Richter Scale”? subcontractors or subsidiaries. | capable of being abused? Or are we talking about contempt for humanity as In his first lecture series in Germany When the media report on the “human manifest, for example, in child labor in gold following the end of Nazi power, in the rights abuses” of a company, the and diamond mines of poor countries? winter term of 1945-46, German concerned public will typically think of very Does the severity of the violation in the philosopher Karl Jaspers reflected on severe cases such as “complicity in the various cases not differ enormously, and “The Question of German Guilt.” And he abuses of foreign governments related to should this not be taken into account with identified four types of guilt, which are genocide, war crimes, slavery, torture, an appropriate weighting? Even accepting also of relevance for the present execution, crimes against humanity or the “universality, indivisibility, discussion — the following is quoted unlawful detention,” as Mary Robinson interdependence, and interrelatedness of from the English version:174 notes.170 In reality, however, it may be that all human rights,” it is clear that, at the the facts in question are an “abuse of level of socioeconomic development, u Criminal guilt: Crimes are acts capable human rights” only from the point of view of different rights carry different degrees of of objective proof and violate specific, individual preferences. Human weight. For example, there can be no unequivocal laws. Jurisdiction rests rights violations can be in the eye of the justification for “torture” or “political with the court, which in formal beholder, and the public debate reflects murder” at any level of development (a proceedings can be relied upon to find different views, all of them with merit. But if “10” on my human rights measurement the facts and apply the law. the critical view is situated well away from scale), but the “right to rest and leisure, the mainstream of the debate, it will not including reasonable limitations of working u Political guilt: This, involving the deeds of represent a relevant benchmark for a hours and periodic holidays with pay” statesmen and of the citizenry of a state, company. Still, the damage to reputation (UDHR Article 24), on the other hand — results in my having to bear the is done. while important — comes under a less consequences of the deeds of the state essential category (a “2” on my scale). whose power governs me and under The current spectrum of the discussion on whose order I live. Everybody is co- human rights and business is extremely Through general indicators, such as those responsible for the way he is governed. of the GRI, as well as sector-specific broad, covering questions from free trade Jurisdiction rests with the power and the 171 indicators it should be possible to take and investment to bioethical issues will of the victor, in both domestic and 172 the political heat out of human rights concerning the human genome and foreign politics. Success decides. Political reporting and to de-politicize the research priorities of the pharmaceutical prudence, which takes the more distant 173 verification process. Through grouping industry. If we assume that violations of consequences into account, and the and weighting of different indicators, it the right to life, slave labor, or child labor acknowledgement of norms, which are then becomes possible to draw are a different “quality” of human rights applied as natural and international law, distinctions, such as: abuses compared with, for example, the serves to mitigate arbitrary power. profit focus rather than the poverty focus of the research priorities of a 60 Business and Human Rights

u Moral guilt: I, who cannot act otherwise is the only substance and the true factor for Preliminary Conclusions than as an individual, am morally what becomes of humanness.”177 responsible for all my deeds, including the execution of political and military orders. Change — even corporate change — is It is never simply true that “orders are “The Universal Declaration always initiated by minorities, by intellectual orders.” Rather — as crimes even though of Human Rights elites who take the risk upon themselves of ordered (although, depending on the represents the most being pioneers in uncharted territory; “the degree of danger, blackmail and important value catalogue big values always remain closely tied to the terrorism, there may be mitigating for human beings in all small number.”178 All those who are making circumstances) — so every deed remains cultures and at all times.” their contribution to the world they would subject to moral judgment. Jurisdiction like to see for their children should be rests with my conscience and in confident, for as Margaret Mead once reminded us, “Never doubt that a small communication with my friends and The Universal Declaration of Human Rights intimates who are lovingly concerned group of thoughtful, committed citizens can represents the most important value change the world; indeed it’s the only thing about my soul. catalogue for human beings in all cultures that ever has.”179 and at all times. This declaration affirms that u Metaphysical guilt: There exists a solidarity there are certain non-negotiable rights that among men as human beings that makes are enjoyed by all people in all places at all What kind of a world do each co-responsible for every wrong and times based simply on the fact that they are “ every injustice in the world, especially for human beings. It is precisely in the context of we wish for ourselves and crimes committed in his presence or with globalization, where different cultures, social our children? And what his knowledge. If I fail to do whatever I constitutions, and socio-economic conditions duties are we prepared to can to prevent them, I too am guilty. If I meet, that this common denominator is also assume to ensure that our was present at the murder of others of utmost importance to companies. Business vision of an “ideal” world without risking my life to prevent it, I feel enterprises need to do their respective as we see it can be achieved? guilty in a way not adequately conceivable “homework” and act consistently in order to ” either legally, politically or morally.... adjust the corporate social responsibility jurisdiction rests with God alone. concept to the changed socio-political framework of a globalizing world.176 With these distinctions between different types of guilt, Jaspers sought to “preserve us Beyond the day-to-day responsibilities of from the superficiality of talk about guilt that business, one of the most important flattens everything out on a single plane, questions for managers of global companies there to assess it with all the crudeness and is, What kind of a world do we wish for lack of discrimination of a bad judge.”175 ourselves and our children? Whatever the Enlightened corporations, under all individual value-based preferences may be circumstances, will shy away from criminal regarding a right to life in dignity, justice, guilt; they will create a corporate governance equality of opportunity, and fairness, it structure to avoid the political guilt of not cannot be a world in which human rights making the corporate “dos” and the “don’ts” are not respected. And what duties are we unmistakably clear; and last but not least, prepared to assume to ensure that our they will strive for a management who feels vision of an “ideal” world as we see it can also morally accountable for actions and be achieved? This is something that has to omissions. As to Jaspers’ fourth category, as be decided by every individual, in their long as Amnesty International annual reports families, in their jobs, and in their role as have more than 20 pages, we will all have to citizen. Karl Jaspers notes that as in the live with metaphysical guilt. context of elections, anyone can say “that if he does not vote, it will not change the election result, but he will vote anyway because he knows that all individuals together make up the result. So the moral force of the seemingly vanishing individual Article 11 62 Implementing the Global Compact Human Rights Principles

companies constructing a thousand mile Introduction oil and gas pipeline that will carry up to a million barrels of oil a day from the Caspian Sea in Azerbeijan through “Understanding key human Georgia to the southeastern Turkish port rights concepts is only the of Ceyhan on the Mediterranean. HP first step toward presents its efforts implementing a implementing an effective Human Rights and Labor Policy based on corporate human rights 180 the Universal Declaration. BHP Billiton program.” provided a leading human rights advocate with open access to its South African facilities to assess corporate human rights compliance. In the final case, Novo Understanding key human rights concepts Nordisk outlines its own efforts to Implementing the is only the first step toward implementing implement a human rights compliance an effective corporate human rights program in its supply chain. Global Compact program.180 The experience of companies Human Rights Principles making the GC principles part of their The general applicability of the lessons corporate strategy, culture and day-to-day drawn from the four case studies included operations illustrates the practical in this publication is necessarily limited. Anthony P. Ewing challenges of corporate human rights One clear lesson is that no two Columbia University compliance. companies will implement a corporate human rights program in exactly the The companies that presented human Anthony P. Ewing is a lawyer and management same way. The cases do, however, serve rights cases at the GC Learning Forum consultant based in New York. A member of the to highlight key issues facing companies Meeting in Nova Lima, Brazil represent Global Compact Learning Forum Academic seeking to implement the GC human different industries, geographies and Network, Mr. Ewing is a Lecturer in Law and rights principles. Common elements of stages of human rights engagement.181 Business at Columbia University, where he their experience include 1) making the BP p.l.c., headquartered in London, is the teaches the graduate seminar, “Transnational business case for a corporate human world’s largest integrated oil company Business and Human Rights.” rights program, 2) assessing human rights with 2003 revenues of $236 billion, over issues and vulnerabilities, 3) identifying 115,000 employees, and operations in relevant standards, 4) determining the more than 100 countries on five appropriate scope for the human rights continents. Hewlett Packard (HP), the program, 5) making the program U.S.-based technology company, recorded operational, and 6) measuring and $73 billion in sales in 2003, employs reporting results. 142,000 people and operates in 178 countries. BHP Billiton is an oil and mining company based in Australia and the United Kingdom with $15.6 billion in sales The business case and 34,000 employees in 20 countries. Denmark’s Novo Nordisk is one of the world’s leading producers of insulin, with “Open markets, steady 2003 revenues of $4.5 billion, 18,000 economic development and employees, production in seven countries an open society are the and affiliates in 68 countries. All are best conditions in which public companies listed on at least one we can pursue our major stock exchange. business.” BP’s case study describes the human –Sir John Browne rights compliance regime surrounding the CEO, BP Baku-Tbilisi-Ceyhan (BTC) pipeline project. BP leads a consortium of Implementing the Global Compact Human Rights Principles 63

The decision to make human rights standard-setting or monitoring programs. respectful treatment of all employees.183 compliance a business issue is driven by Technology companies face privacy issues HP then began to assess human rights industry structure, corporate culture, related to the collection of customer issues in its supply chain, prompted by external and internal pressure, and in information. The use or acquisition of the concerns of HP’s own procurement some cases, business strategy. technology by government customers managers. HP became one of the first with poor human rights records raises major U.S. companies to sign on to the Industry structure and experience shapes questions of the appropriate extent of the Global Compact in 2002. A year later, HP corporate human rights programs. company’s influence and responsibility. adopted its Human Rights and Labor Companies in the extractive industries, Policy, which explicitly incorporates the with large fixed capital investments, Like the technology and manufacturing language of the GC human rights difficult operating environments and close sectors, pharmaceutical companies rely principles and addresses forced and child financial relationships with host on global supply chains. Like the labor, minimum wages, working hours, governments, face a different set of extractive sector, market access nondiscrimination, inhumane treatment human rights issues than companies frequently requires pharmaceutical and freedom of association.184 sourcing labor-intensive, low wage goods. companies to develop close relationships Technology and pharmaceutical with local governments. Pharmaceutical In its Health, Safety, Environment and companies face distinct issues of companies also have been the subject of Community Policy adopted in 2002, BHP government customers and accountability allegations of human rights abuse Billiton declares its commitment to for the end use of their products. concerning the conduct of clinical trials in “support the fundamental human rights of developing countries and are at the center employees, contractors and the BP, and the extractive industry generally, of the global debate over equitable access communities in which we operate.” BHP’s has had much more experience with to life saving drugs. mandatory Management Standards for all human rights issues, both as the subject company operations and activities include of allegations of direct human rights Corporate culture shapes any attempt to performance requirements for human violations and complicity in state human develop a human rights policy. rights compliance. These standards rights abuse, and in developing responsive require systems to ensure that corporate human rights policies. “employees and contractors are familiar “Corporate culture shapes with and abide by the Articles of the “Open markets, steady economic any attempt to develop a Universal Declaration of Human Rights.” development and an open society are the human rights policy. best conditions in which we can pursue our ” According to Novo Nordisk, core company business. This is contrary to the common values, the company’s vision of belief that companies find it easier to At HP, the principles adopted by founders sustainability and the acknowledgement [support] the apparent stability of regimes Bill Hewlett and Dave Packard more than of potential risks led to company efforts to than to manage the uncertainties of forty years ago serve as a basis for the improve human rights standards democracy. Stability built on repression is company’s current human rights systematically across its business. The always false. Sooner or later the waters break initiatives. Danish insulin maker also took up human the dam.” –Sir John Browne, CEO, BP 182 rights issues relatively recently — “Good citizenship is good business. We live launching a human rights review in 1999. Leading companies are under a spotlight. In up to our responsibility to society by being The company’s approach placed human the words of one energy executive: an economic, intellectual and social asset to rights at the center of a company-wide “Governments pay attention to what we do.” each country and community in which we effort to “specify values and set do business.” –HP Corporate Objectives priorities.” Novo adopted the Universal In the technology sector, human rights (1957) Declaration of Human Rights as its issues are not yet clearly on the industry’s benchmark in 1999 and joined the Global radar screen. The technology sector HP’s human rights programs began in Compact in 2001. For Novo, human rights shares many of the same supply chain 2002 when the company adopted a compliance is a way to express company issues with industries like apparel and “Global Citizenship Policy,” in which HP values as well as manage risk. According sporting goods, but technology companies pledges to uphold and respect human to company representatives, the are taking only their first steps to rights as reflected in the Universal knowledge Novo gathers through the implement codes of conduct, and do not Declaration of Human Rights, and process helps the company to understand contemplate collective industry-wide commits to fair labor practices and the its human rights sphere of responsibility. 64 Implementing the Global Compact Human Rights Principles

Employee perceptions that human rights independent of the public relations and “Impetus for corporate are not an issue for their company can be communications function. A key question human rights programs an obstacle when making the business for Novo Nordisk was, “How do you find comes from both the top case for a human rights program. In the out what you don’t know?” Novo and the bottom of an case of Hewlett-Packard, many HP conducted an initial supplier survey of 289 organization. employees expressed the belief that the suppliers representing eighty percent of ” “HP way” sufficiently addressed human the value of the company’s purchasing. rights issues. Treating employees fairly, Novo returned to those suppliers and not engaging in age or race asked, “What do you think we should do?” Impetus for corporate human rights discrimination, not using suppliers who do programs comes from both the top and not comply with HP’s supplier code of the bottom of an organization. conduct was viewed simply as good business, or the “HP way.” Standard setting Corporate leaders can make the case for a corporate human rights program. The Finally, the cases indicate that language Every company that adopts the Global commitment of a company’s chief plays an important role making the Compact commits to incorporate the GC executive can lead to the adoption of business case for corporate human rights human rights principles in its operations. corporate human rights programs, and compliance. Terminology is important. Internationally proclaimed human rights the support of senior management is Companies already may be addressing standards become the relevant international critical for the successful implementation human rights issues without using or standards for GC companies. of company human rights initiatives. BP’s understanding human rights language. HP, chief executive, for example, led efforts to when it began to develop a human rights One political obstacle to standard setting position the company at the forefront of program, found that HP employees were that emerges from the cases is corporate the corporate responsibility movement. unfamiliar with human rights terminology. pressure not to offend particular ”Business should be a force for good,” is Using common language is important for governments by adopting international a frequent refrain of BP’s Chairman, John beginning conversations about business human rights standards that exceed local Browne. BP’s decision to implement the and human rights. In the BHP Billiton standards or practice. GC human rights principles in its BTC case, human rights language served to pipeline project was driven by the bring the company and the human rights Based on its human rights assessment, company’s public commitments to community together. each company identified the international corporate responsibility and BP’s human rights standards particularly experience with earlier projects, such as relevant for its operations. BP, Novo, and in Angola, as well as the momentum HP explicitly reference the Universal generated by the process of stakeholder Assessment Declaration of Human Rights in their engagement throughout the planning, corporate codes of conduct. negotiation and construction of the In each case, the company gathered project. In 1998, BP had adopted an information to assess the company’s BP’s BTC pipeline project is noteworthy Ethical Conduct Policy that explicitly potential human rights issues and for the extent to which international supports the principles set forth in the vulnerabilities. Companies collected standards are incorporated explicitly in Universal Declaration and the ILO information through internal and external the legal framework of the project. BP Tripartite Declaration. research, interviews and surveys; and incorporated in core Project documents a dialogue with external stakeholders. BP commitment to respect applicable human Frontline managers can also generate included a human rights assessment as rights standards under European Union internal pressure for improved human part of its extensive due diligence for the law, in the Universal Declaration, the ILO rights compliance and explicit human BTC Project. BHP has developed a Self- Tripartite Declaration and the OECD rights standards. HP’s foreign procurement Assessment Toolkit for its operations that Guidelines. In response to concerns raised managers were an early voice for a includes a graduated risk assessment for by nongovernmental human rights human right policy for the company’s defined human rights issues. HP and Novo organizations, BP drafted and orchestrated suppliers. A local BP project manager was sought to identify human rights issues in the signing of a Joint Statement by the a driving force behind the human rights their supply chains through interviews three host governments guaranteeing provisions of the BTC pipeline. and surveys. Twenty-six people work in adherence to internationally recognized Novo’s stakeholder relations department, human rights standards, including a Implementing the Global Compact Human Rights Principles 65 commitment to the standards contained in to international standards promulgated by asked to make assurances to Novo about the Voluntary Principles on Security and the World Health Organization. improvements. To date, no supplier has Human Rights. The joint statement was been dropped by Novo for noncompliance. the first legally binding commitment to the Under the South African Constitution, Voluntary Principles. BP also executed a international human rights, including social An individual company’s efforts to assess Human Rights Undertaking that protects and economic rights, are explicitly human rights conditions in its supply chain government rights to regulate human incorporated in national law. The advocate can raise human rights awareness at other rights without triggering financial assessing BHP’s human rights compliance companies. Novo’s human rights penalties, and the rights of injured parties with its Company Charter and Guide to questionnaire, according to one of its to bring claims against the BTC Project in Business Conduct identified HIV/AIDS German suppliers, made that company domestic courts. education, remuneration and employment realize that it must examine the same policies as key human rights issues for BHP. issues in its own supply chain. Novo has For HP, key compliance issues are privacy, She found that the company standards encouraged this “cascading effect” to human conditions in the supply chain and needed to be better communicated and second and third tier suppliers. According labor conditions. After extensive integrated throughout the company. to HP, some U.S. based chip makers benchmarking and research, HP addressed human rights issues for the first developed its own code of conduct — time when they received a human rights HP’s Human Rights and Labor Policy. The questionnaire from HP asking about human most common default standard for Scope rights practices among its suppliers. corporate codes of conduct is compliance with local law. Where local standards A company must determine the appropriate The way a company defines its sphere of differ from home country or widely scope for its human rights program. Will influence and assesses complicity risk will accepted international standards, human rights compliance efforts focus on determine the appropriate scope for its companies must choose an appropriate the company’s own employees or extend to corporate human rights program.An standard. An important question for HP suppliers and business partners? How far investment such as the BTC pipeline gives was whether company policies should down the supply chain should a company BP a wide sphere of influence and default to local legal standards. HP found seek to enforce human rights standards? substantial complicity risk. BP’s human that its U.S. managers were generally rights compliance efforts for the project comfortable with local standards, while its BHP employs company audits determine have been correspondingly local managers outside the United States whether company sites have identified comprehensive. Other companies are still expressed a preference for adhering to the Universal Declaration articles relevant defining the appropriate scope for their international standards that exceed local to the business and communicated them human rights compliance efforts. One law. In some instances, such as HP’s to employees, contractors and business question facing HP, for example, is, “When designation of sexual orientation as a partners. the internet is your marketplace, how prohibited basis for discrimination, HP’s should a company define the ‘community own policies were stricter than local law. With more than 40,000 suppliers, HP where it operates’?” How should In Malaysia, for example, it is common for began by asking its top forty suppliers, technology companies who have no local temporary employment agencies to representing eighty percent of HP business relationship with the end-users base hiring decisions on age and race. HP purchasing, to conduct a compliance self- of their products, address the use of their Malaysia instead uses global temporary assessment. If problems are identified, HP products to commit human rights agencies that comply with HP’s Human works with the supplier to remediate the violations or by repressive regimes, for Rights and Labor Policy, despite the problem. HP has incorporated these example? HP is exploring ways to go higher cost. HP has also engaged the standards as contractual obligations for beyond legal compliance it its policies on Malaysian government on the issue of its top forty suppliers, and aims eventually customer uses of its products. improving local labor laws. to include them in all supplier contracts.

Novo identified three priority areas on Novo completed a second social and human rights: the right to health, the right environmental evaluation of ninety percent of non-discrimination and the right to of the company’s key suppliers in 2003, privacy. Supply chain standards also finding approximately two percent self- emerged internally as an important issue. reported unsatisfactory performance. All To define the right to health, Novo looked non-compliant suppliers are audited and 66 Implementing the Global Compact Human Rights Principles

program of workshops and training for Novo’s next steps include encouraging Implementation supply chain managers before distributing suppliers to require the same standards of its human rights compliance their suppliers, and mapping the questionnaire to suppliers. Managers company’s sphere of influence, and “You should not initially expressed concerns that the developing its Human Rights Management underestimate the questionnaire could harm relationships System. BHP Billiton views the human capacity of workers to 186 with suppliers or be overly time- rights audit as an opportunity to improve absorb new values.” consuming. Over time, Novo has noted a business performance, since addressing correlation between the level of learning employee health issues requires building and the level of human rights integration trust with employees. within the company. Effectively implementing a corporate “You should not underestimate the capacity human rights program may require Companies must create incentives for of workers to absorb new values.” 186 launching new policies and procedures, implementing a human rights program. An developing monitoring mechanisms, HP goal is to incorporate human rights educating and training employees, creating into its performance evaluation systems. Reporting incentives for corporate compliance, and Novo employs individual incentives for engaging outside stakeholders. implementing its human rights program. Every company that implements a human rights compliance program faces the issue “Developing an internal policy is important Companies employ internal and external of whether, and how, to make public the for four main reasons: 1) policy helps to monitoring to ensure compliance. Novo’s program and its results. The benefits of define the company’s own commitments, 2) program includes screening for high risk transparency and disclosure include it guides company relationships with and high business impact issues, a self- greater credibility with stakeholders and business partners and host governments, 3) assessment questionnaire and targeted critics, continuous improvement, and the it provides the basis for assessing company audits. Novo audited ninety percent of its adoption of best practices by others. The performance, and 4) it can serve as the key suppliers. The BTC project downside for companies are the risks of vehicle for demonstrating its commitment to 185 incorporates nine levels of internal and disclosing information that could benefit external stakeholders.” external monitoring for the life of the competitors, becoming a target of critics, project. or damaging corporate reputation. An Programs often begin with a code of obstacle to greater corporate conduct defining relevant standards for No corporate human rights program can be transparency is the general reluctance of corporate conduct. A code, of course, is effective if it remains static or lacks the the private sector to publicize failures or only the first step toward an effective capacity to evolve. Each of the cases initiatives under development. program. A challenge for companies is included here make the point that how to internalize international principles. implementing the GC human rights According to BP, the BTC project is the The BP case illustrates the value of principles is an ongoing process. The BTC first extractive project of this magnitude institutionalizing multi-stakeholder Project, still under construction and to embrace transparency — 11,000 standards in the legal regime. BP expected to be operational for at least pages of project documents are publicly engaged stakeholders in conversations at forty years, foresees the further available, including host government every stage of the project, and worked to development of human rights monitoring agreements signed with each country, address criticisms. Based on input from instruments and grievance mechanisms in production sharing agreements and stakeholders, BTC routed the pipeline to collaboration with Amnesty International environmental and social compliance avoid areas of conflict and to minimize its and other nongovernmental organizations. reports.187 How the governments impact on local communities. According ¬HP’s next steps include better integrating subsequently use those funds is not to BP, no people have been displaced and its four major human rights-related publicly disclosed.188 Novo publishes a no structures have been torn down in the policies into existing practices, making corporate Sustainability Report featuring construction of the pipeline. human rights criteria explicit, identifying triple bottom line reporting on the Companies must then train the relevant and prioritizing the human rights issues company’s financial, social and stakeholders, including their own employees HP is most likely to face, educating environmental performance. and suppliers, on the practical aspects of employees and management to identify Dialogue with stakeholders on corporate the corporate human rights program and these issues, and developing a framework human rights issues is one element of build (or purchase) the capacity to to deal with the issues they identify. transparency. When criticized, companies implement it. Novo conducted a two-year Implementing the Global Compact Human Rights Principles 67 can ignore their critics, respond and/or to share experiences implementing the GC act on the criticisms. Amnesty principles in the emerging field of business International UK issued a report arguing and human rights. that the legal agreements between the BP consortium and the host governments governing the BTC pipeline undercut the governments’ ability to ensure human rights and that the pipeline was at risk of “contributing indirectly to human rights violations.”189 Specifically, Amnesty International objected to the potential conflict between the legal framework for the pipeline and Turkey’s international human rights obligations, and expressed concern over the delegation of all pipeline security to Turkish authorities with a record of unlawful suppression of peaceful protest. BP took the extraordinary steps, following intensive negotiations with AI, of modifying the project revenue agreements, issuing a joint statement with the local governments on human rights standards, and binding themselves legally to address the human rights concerns raised by AI.190 According to one BP executive, “Our work with Amnesty International was an eye- opener, they viewed things in a way we never would have.”191

“The impact of the dialogue — while only representing a beginning — was immediate and broad, providing Amnesty with new credibility as a guide and interlocutor with the business community, and BP/BTC with diminished reputational and legal risks with respect to the Project and enhanced brand equity.”192

Novo is a member of the cross- sector Business Leaders Initiative on Human Rights.193

Sharing results is not easy for companies, however. According to BP, for extractive projects it finances, the World Bank holds the key for disseminating lessons effectively.

Finally, these cases highlight the need to create mechanisms for sharing best practices. The learning network model of the Global Compact is one mechanism for companies Article 12 * Peer review of this case study was provided by Professor Errol P. Mendes, University of Ottawa. Funding for this case study was provided jointly by BP p.l.c. and Foley Hoag.

**Gare A. Smith chairs the corporate social responsibility and risk management practice at the law firm Foley Hoag LLP. Prior to joining 70 Case Abstract Foley Hoag, he was a Vice President at Levi Strauss & Co. where his responsibilities included supervising global implementation of the company’s code of conduct. During the 70 Company Profile Clinton Administration, Mr. Smith served as Principal Deputy Assistant Secretary in the The BTC Pipeline U.S. Department of State’s Bureau of Case Study: Democracy, Human Rights & Labor. In that 71 The BTC Pipeline Project capacity, he was a U.S. representative to the Scope and History of Project Following through on U.N. Human Rights Commission, the Consultations with Stakeholders International Labor Organization, and the U.N. Transparency Global Compact Working Group on the Rights of Indigenous Human Rights and Environmental Commitments* Peoples. He also helped to launch the Concerns in Designing the Pipeline President’s Model Business Principles and Legal Framework Gare Smith advise the Apparel Industry Partnership in Foley Hoag LLC** creating a code of conduct and an independent monitoring system. Previously, he served as Senior Foreign Policy Advisor & 75 Concerns Raised Counsel to Senator Edward M. Kennedy. Mr. by External Stakeholders Smith serves on the boards of a number of Amnesty International human and labor rights organizations. Mr. Other Stakeholder Concerns Smith and Foley Hoag were retained to provide corporate social responsibility advice, particularly with respect to human rights, security, and labor rights issues, to BTC Co 75 BTC Co Response with respect to the BTC Project. In that to NGO Concerns capacity, Mr. Smith was provided access to a Joint Statement wide array of material and worked closely with Project Security executives at BP and BTC Co. and the leaders The Deed Poll of non-governmental organizations interested in the BTC Project.

78 Conclusion: Issues for the Future Response of the IFIs Monitoring and Compliance Continued Relationships with Stakeholders and Communities

79 Sources 70 The BTC Pipeline Case Study: Following through on Global Compact Commitments

within their spheres of influence, the Case Abstract protection of international human rights Company Profile and adopt a precautionary approach in This case study focuses on the Baku- addressing environmental challenges. The BTC Project is owned by BTC Co and Tbilisi-Ceyhan (“BTC”) oil and gas pipeline its shareholders — a group of eleven project which, when completed, will carry After these concerns were raised by the petroleum companies with upstream up to a million barrels of oil a day over a NGOs early in 2003, BP guided BTC Co in interests in the Caspian region. BP holds thousand miles across the Caspian region addressing the issues in several ways. In the largest ownership share in BTC Co, and provide the first direct transportation the most far-reaching response, the and will act as the operator of the Project. link between the Caspian and company drafted and orchestrated the Mediterranean Seas. In designing the BTC signing of a “Joint Statement” on May 16, BP is the holding company of one of the Project, BP p.l.c. (“BP”), the Project 2003 by the three host governments, world’s largest petroleum and operator, on behalf of itself and the other guaranteeing adherence to internationally petrochemical groups. Its main activities shareholders (collectively, “BTC Co”), recognized human rights, labor rights, and include the exploration and production of sought to establish a new benchmark for a environmental standards, including a crude oil and natural gas; the refining, major infrastructure project with respect to commitment to the standards espoused in marketing, supply, and transportation of the promotion of internationally recognized the Voluntary Principles on Security and those products; and the manufacturing human rights and environmental Human Rights (“Voluntary Principles”). and marketing of petrochemicals. BP is standards. To this effect, BP incorporated Additionally, BP engaged Amnesty also active in exploring renewable into core Project documents a International (“Amnesty”) in an open sources of energy generation, including commitment to respect applicable dialogue about Amnesty’s concerns solar power. It has operations in over 100 standards articulated in the U.N. Universal regarding the Project. As a result of this countries in Europe, North and South Declaration of Human Rights (“UDHR”), the dialogue, BTC Co took steps to address America, Asia, and Africa. Tripartite Declaration of Principles Amnesty’s chief concern by drafting and established by the International Labor signing a Deed Poll, a legally binding BP is one of the three largest integrated Organization (“ILO”), and the Guidelines contract designed to protect the rights of energy companies and has one of the top for Multinational Enterprises promulgated the three host governments to promote three reserves in the global oil and gas by the Organization for Economic and regulate human rights and industry. Each day BP generates Cooperation and Development (“OECD”). environmental issues. approximately three million barrels of oil Early initiatives to implement such equivalent production. With revenues of standards included efforts to avoid a Although the BTC Project continues to $179 billion, market capitalization of $152 significant environmental and safety face opposition from a group of NGOs that billion, and over 115,000 employees, BP hazard, adopt a precedent-setting level of sought to halt funding for the Project from is among the world’s most significant transparency, and comprehensively the International Finance Corporation multinationals. During the past decade it engage local populations. (“IFC”) and the European Bank for merged with Amoco and acquired other Reconstruction and Development companies, including ARCO. Although BP Despite these commitments and BP’s (“EBRD”), Amnesty, without endorsing the maintains a diversified portfolio, the BTC initial efforts to implement them, several Project per se, has welcomed the Project is of great importance to the non-governmental organizations (“NGOs”) company’s commitment to promote the company and is the largest cross-border raised environmental and human rights highest human rights standards. BP may project in the world. concerns about the Project. In particular, have been able to avert some of the these organizations contended that the NGOs’ concerns by undertaking a Human During the past decade, BP developed a pipeline could undermine the human Rights Assessment and proactively reputation for adopting progressive rights of local residents, endanger the engaging with these stakeholders at an policies, which are also closely associated environment, and spark further conflict in earlier juncture. In light of the Project’s with its chief executive, Lord John a region that suffers from ethnic tension. anticipated lifespan of forty years, the Browne. Lord Browne’s introduction to This case study is primarily relevant to primary challenge facing BP at this BP’s website states, “A good business concerns raised in conjunction with juncture will be to effectively should be competitive, progressive and a Principles 1, 2, and 7 of the U.N. Global operationalize and implement the force for good. In everything we do, we Compact regarding broad human rights standards it has set. seek to make a constructive contribution and environmental principles, including to the world’s increasing requirements for the overarching objective that businesses energy and materials.” are expected to support and respect, The BTC Pipeline Case Study: Following through on Global Compact Commitments 71

BP’s business principles were adopted by The pipeline will be the primary conduit all of BTC Co’s shareholders for the BTC for oil produced from the Azeri-Chirag- Consultations With Stakeholders Project. To this effect, BTC Co Gunashli (“ACG”) oil field, which is about | shareholders are committed to 100 kilometers off the coast of Baku and “respecting the rule of law, conducting has an estimated 5.4 billion barrels of According to BTC Co, the Project was [their] businesses with integrity, and recoverable resources. Oil exports from designed to “demonstrate that business showing respect for human dignity and the development of ACG are expected to can be conducted in a way that makes a the rights of the individual wherever [they] increase to more than one million barrels positive commitment to human rights.” It do business; creating mutual advantage a day by 2009 and this production could was also intended to be “a model for in all [their] relationships so that people meet up to 10% of incremental global oil good corporate governance, and …not will trust [them] and want to do business requirements over the next decade. The become a catalyst for conflict in the with [them]; demonstrating respect for pipeline will stretch for 1,760 kilometers region.”195 As the Project’s operator, BP the natural environment and work from Baku, through Georgia, to the port states that it is committed to “ensuring towards [their] goals of no accidents, no city of Ceyhan in southeast Turkey. From that the project results in real benefits for harm to people and no damage to the Ceyhan, the oil will be loaded onto the countries through which the pipeline environment; and managing [their] tankers and transported to international passes — from the seats of government, financial performance to maximize long- markets. The estimated cost of the to local villages and farmers living along term value for [their] shareholders.”194 pipeline’s construction is $2.95 billion. the pipeline route.”196

When it is completed in 2005, the Pipeline In an early effort to implement that and the associated ACG, Shah Deniz, and commitment, BP undertook steps to The BTC Pipeline Project South Caucuses Pipeline (“SCP”) projects ensure that the more than 450 will have generated more than $20 billion communities and 30,000 landowners and in investment. This investment is land users affected by the pipeline were expected to enable the Azerbaijan consulted over a 20-month period. BP Scope and History of Project Republic to realize between $30 and $65 publicly emphasized that it was critical to | billion in revenues from the sale of its oil. the Project’s success that communities Additionally, Georgia and the Republic of along the pipeline route and those directly The BTC Project is of great regional Turkey will together realize approximately affected by construction were actively significance because it represents the $2.4 billion in transit revenues during the involved in project planning. Community- first direct transportation link between the first twenty years of operation and the level consultation occurred at every Caspian and the Mediterranean Seas, Shah Deniz and SCP gas Projects will settlement within two kilometers of either thereby avoiding the environmentally deliver energy throughout the region. side of the pipeline right of way, within sensitive Turkish Straits (including the Approximately 10,000 jobs will be created two kilometers of potential locations for Bosphorus, which flows through the during the construction of the pipeline pipe yards, and within five kilometers of center of the World Heritage City of and approximately 850 permanent potential sites of major construction Istanbul). The Caspian region has the positions will be established during its 40 camps. The objective behind such potential to become one of the major oil years of anticipated operation. extensive consultation was to secure and gas producing areas in the world; its significant community involvement and oil and gas reserves are estimated to be The oil and gas production facilities and support at the outset of the Project by similar in size to those in the North Sea pipelines in Azerbaijan, the pipelines in dealing with concerns proactively and and the Gulf of Mexico. The landlocked Georgia, and the pipelines and terminal in supporting sustainable community nature of the Caspian Sea, however, Turkey represent the largest single foreign development. combined with the limited capacity of direct investment in each country. This pipeline and rail networks serving the presents both opportunities and challenges BTC’s consultation process was based on region and the reliance of the existing for the Project and the host governments. the IFC’s policy on Disclosure of networks on export via the Turkish Straits, Information. The consultation and have posed particular challenges for the disclosure process carried out for the BTC long-term development and export of Project was designed to comply with Azerbaijan’s petroleum resources. international best practices and was unprecedented in scope. BP based this process on the IFC’s guidelines for 72 The BTC Pipeline Case Study: Following through on Global Compact Commitments managing a public consultation process: constructive dialogue and incorporating feedback questionnaires, and project plan ahead; test the program; invest time them into the business process. Within the information leaflets. Cultural and gender- and money; involve operations managers business teams, there was also specific mechanisms were developed in directly; hire and train the right people; agreement that the Project should use an effort to maximize the consultation’s maintain overall responsibility; coordinate best international practices and standards. effectiveness, including female-to-female all consultation; build dialogue and trust; Broadly speaking, the issues addressed by meetings, venues chosen to ensure manage expectations; work with the Review can be divided into three maximum access, and transportation governments; and work with NGOs and categories: economic (oil and gas assistance. Local libraries, government community-based organizations. revenues; employment, and procurement; and local authority offices, community community/social investment; and centers, schools, NGO offices, and BP Key stakeholders for the Project were domestic energy), social (ethical offices in Baku, Tbilisi, and Ankara were identified at an early stage: local performance; human rights; and conflict); used to disclose and receive comments authorities; national and local NGOs with and environmental (biodiversity; oil spill on the draft ESIAs. Draft ESIAs were also an interest in the project and useful data response; and greenhouse gas emissions). translated into local languages to or insight into local and national facilitate the consultation process. challenges; broad-based interest groups, Perhaps most important with respect to such as the media, academics, community engagement, the most In conducting the ESIA for Georgia alone, foundations, and community detailed consultation regarding the 74 meetings were held with local organizations; residents of communities pipeline route was done as part of the communities; 6 environmental workshops adjacent to the pipeline corridor and integrated Environmental and Social were hosted; 27,500 disclosure above-ground installations; landowners Impact Assessments (“ESIAs”). A separate documents were distributed to 26 and land users, including migratory ESIA was conducted for each of the three locations around the country; and herders who would be affected by the nations, as required under the Host advertisements were run in 20 Project and fishermen near the marine Government Agreements (“HGAs”) signed newspapers. Feedback from all of these terminal; international financial by BTC Co with each sovereign initiatives was factored into the ESIA, institutions (“IFIs”), including the IFC and government. The ESIAs examined the along with more than 3,000 public the EBRD; and BTC partner organizations. potential environmental and social comments that were individually impacts of the projects on the biological, answered. In Turkey, 450 copies of the Several projects were commissioned by physical, and human environment. The draft ESIA were distributed to BTC Co prior to commencement of the ESIA process culminated in the production stakeholders along the route, and 10,000 Project to communicate the Project of a draft ESIA report for each country, non-technical summaries and 22,000 sponsors’ goals and expectations to which was followed by a 60-day public community pamphlets were distributed. In affected communities. One of these was consultation, disclosure, and review addition, BP hosted more than 100 the “Regional Review,” which was period. Comments received during the community meetings, 10 meetings with prepared to stimulate dialogue between review stage were incorporated into a regional NGOs, and three major the Project sponsors and the relevant final ESIA report, which was submitted to conferences with international NGOs and stakeholders, as well as to increase the the host government for review and the press. As a result of these flow of information about the Project. The approval. Management and monitoring engagement efforts, 1,652 comments Regional Review reflects 18 months of plans were developed as part of an effort were incorporated into the final ESIA consultation and evaluation and serves as to ensure that the commitments made in submitted to the Turkish government.197 a comprehensive socio- and macro- the ESIAs will be delivered and acted economic assessment of the BTC upon throughout the life of the Project. In keeping with the HGAs and IFIs Project’s impact on the region. No other requirements, part of the consultation extractive sector project has undertaken a During the preparation of the ESIAs, a process with the local communities also broader or more extensive multi- range of participatory consultation included developing a comprehensive dimensional assessment of its impact on mechanisms were employed, including Public Consultation and Disclosure Plan surrounding communities. one-on-one interviews with members of (“PCDP”) for each of the three countries. the local communities along the pipeline Each PCDP was translated and appended One of the Regional Review’s principal corridor, workshops with local and to the country-specific ESIAs. Each PCDP findings is that the BTC Project can serve international NGOs, workshops and articulates the following elements: roles as an example and as a positive influence meetings with regulatory authorities, and responsibilities, project description, by engaging with stakeholders in meetings with scientists and experts, regulatory context, stakeholders consulted, The BTC Pipeline Case Study: Following through on Global Compact Commitments 73 plans for document disclosure, Projects’ investments could provide a communities, and incorporating long-term questionnaires used, and leaflets and other model for other foreign investment in the security arrangements. supporting information disseminated. region and help to facilitate the development of local enterprise. Ultimately, BTC Co was able to design a The continuous nature of the contact that pipeline route that avoided the permanent BTC Co maintains with stakeholders has To this end, BP took steps to ensure that dislocation of any people and the been essential for understanding concerns the BTC Project set a new industry destruction of any buildings. The BTC about the Project and expectations of the benchmark for transparency. Over 11,000 pipeline, as well as the affiliated SCP local communities. This dialogue has pages of project documents were made pipeline, will be buried, with land enabled BTC Co to identify potential available to the public on the BTC reinstated for use following construction. problems at an early stage and propose website, Economically displaced landowners and solutions to such issues. www.caspianexportanddevelopment.com. users are to be compensated using a The publication of this information transparent and consultative process that Traditionally, large projects are provided stakeholders with a broad provides opportunities for economic accompanied by philanthropic understanding of the Project and its enhancement. Procedures and contributions to local communities. BTC implications. Included on the website are mechanisms associated with the land Co reports that it intends to go beyond the HGAs signed with each country and acquisition and compensation process are this approach by establishing a multi- the ESIAs and PCDPs regarding each reported in the Resettlement Action Plans million dollar community investment country, as well as core project (“RAPs”), which were publicly released to program with the objective of supporting documents such as the Production the communities and to the general public local social infrastructure and stimulating Sharing Agreements (“PSAs”) and the on the Project website. economic opportunities. The program is Inter Governmental Agreement (“IGA”). intended to use the BTC investment as a The Regional Review is also located on Security considerations were another catalyst for building sustainable economic the website. Readers are invited to submit integral factor in the decision-making and and community capacity, including for comments regarding their questions and design of the Project. The Pipeline was education, local enterprise development, concerns with respect to the Project. routed as far as possible away from and other activities that extend associated conflict zones and areas with known benefits to the wider population. The BTC Project is the first extractive security concerns in order to minimize the sector project undertaken to make this need for security interventions. The The program is to be based on best amount of material publicly available. pipelines avoid, for example, passing practices developed by donor and through areas of unrest in Georgia and development agencies and involve NGOs provinces in Turkey that were under a and other organizations as implementing state of emergency during the last decade. Human Rights and Environmental partners. BP is exploring ways to create Concerns in Designing the Pipeline partnerships between BTC Co and other | Environmental concerns were also organizations, including the IFIs. In fundamental in the design of the pipeline. Oil October 2002, for example, several In its Regional Review, BTC Co commits to spills from onshore and offshore exploration, projects were jointly funded with the ensuring that “respect for culture, production, and transportation represent Eurasia Foundation to support business individual dignity and human rights,” will potentially significant environmental ethics, commercial law, and accounting “dominate all interactions.”198 hazards. The independent Environmental courses in Azerbaijan. Implementation of this commitment in a Risk Assessment concluded that the pipeline manner deemed satisfactory to all presented the lowest risk of an oil spill and, stakeholders may not be possible and will therefore, was the environmentally optimal Transparency certainly not be easy. mode of transporting oil from the Caspian | region to world markets. Perhaps most One of the first human rights issues the significantly, the creation of a pipeline BP publicly recognized at an early stage Project confronted was the selection of the avoids additional tanker traffic in the already that transparency with respect to the BTC pipeline route. BTC Co sought a congested and narrow Turkish Straits. Project could play a significant role in commercially viable option that would Construction of the BTC pipeline eliminates ensuring the Project’s success. It also deliver the oil to an appropriate location approximately 29,000 ship movements recognized that establishing a stable and for sale to world markets while minimizing through the Turkish Straits over the course transparent legal and fiscal regime for the risk, avoiding the displacement of of the 40-year lifetime of the Project. 74 The BTC Pipeline Case Study: Following through on Global Compact Commitments

During the pipeline route selection and The three Host Government Agreements facilities siting process, both BP and Legal Framework (HGAs), which are between the host NGOs agreed that a particular emphasis | countries and BTC Co, enable the needed to be placed on avoiding sensitive development of the Project. The HGAs are and protected environmental areas. As a Legal regimes must provide clarity, substantially similar for each of the result of numerous re-routings and route certainty, and high international standards countries and set out in greater detail the refinements, the pipeline was able to to attract complex and long-term technical, legal, and fiscal regime under circumvent internationally or nationally- infrastructure projects like the BTC which BTC Co undertakes the Project and designated protected areas, including the pipeline. In this instance, the transitional the mutual rights and obligations of each Borjormi-Kharagauli National Park, the economic and political natures of the government and BTC Co. The HGAs contain Ardahan Forest in Turkey, Lake Jandar on three host governments, in particular, rights and guarantees from the respective the Azerbaijani/Georgian border, the those of Azerbaijan and Georgia, countries to BTC Co with respect to nationally designated Gorchay and presented obstacles to BTC Co and the matters necessary to ensure the success Shamkir Reserves in Azerbaijan, and the international investment community. To of the Project, including land rights for the Kelkit Wildlife Protection Area in Turkey. ensure that the highest possible construction and operation of the Project, Some environmental NGOs, however, standards were maintained, the parties rights to import and export goods and oppose the current routing. One of their created a Prevailing Legal Regime services, rights to transfer and convert chief concerns is that it poses an (“PLR”), a specially designed legal currency, and guarantees of economic unacceptable risk to the Borjomi region in framework, for the Project. The creation of stabilization. The HGAs also set out the the event of a leak in the pipeline. such a legal framework is not unusual, terms of the direct financial compensation According to BP, measures will be taken and has been used by extractive projects for each of the host countries. to minimize the number of potential leak even in nations with highly developed sources, including optimizing pipeline legal systems, such as Canada and The HGAs also set out a process for land block valve locations, designing adequate Australia. The PLR is designed to acquisition and compensation that is tied corrosion protection and secondary supplement the existing framework, to the legal requirements and preferences containment systems, and instituting rather than replace existing laws or of the host countries. The Project procedural measures to prevent and regulations. Its implementation enabled participants are committed to ensuring that minimize spillages. investors to obtain the necessary comfort land acquisition and compensation is required for investment in the Project and based on an open and fair process Mitigation measures are also to be will help ensure that the Project is following consultation with affected implemented during the Project’s operated in accordance with best communities and meets the standards execution aimed at the removal or international practices. established by the IFIs. To that end, the reduction of potential adverse impacts on BTC Project complies with a range of natural habitats or their functions. These The Project is to be implemented regulations promulgated by the World Bank measures include restrictions on the according to the terms of the IGA between and the IFC, including World Bank conversion of natural habitats, restoration the three host countries. The IGA was Operational Directive (“O.D.”) 4.30 on of degraded habitats, and retention of signed on November 18, 1999 by the Involuntary Resettlement, World Bank strategic species. A voluntary regional Presidents of the Azerbaijan Republic, Opinion 11.03 on the Management of biodiversity action plan is also being Georgia, and the Republic of Turkey, and Cultural Property, IFC Opinion 4.04 on developed which will include investments memorializes each country’s support for Natural Habitats, and the IFC’s Operational in projects to maintain and enhance the development, construction, and Procedure Opinion 4.01 on Environmental biodiversity. Several such biodiversity operation of the pipeline across its Assessment. initiatives have already been started, territory, along with the transit of including a tortoise breeding project at petroleum liquids. As such, the IGA has The PLR governing the Project ensures Sangachal and a study of fish in the the force of an international treaty and that health, safety, and environment (HSE) Caspian Sea. contains commitments from each and the human rights and labor standards government with respect to the applicable to the BTC Project will in no application of uniform and clearly event be less stringent than the highest of identified technical, safety, and European Union standards (including EU environmental standards; a detailed basis Directives), World Bank Group standards for taxation; and provisions regarding applicable to the Project, and standards security for the Project. under applicable international labor and The BTC Pipeline Case Study: Following through on Global Compact Commitments 75 human rights treaties. BP’s policies on that the land acquisition could have the the interpretation of the IGA and the HGAs ethical conduct, relationships and effect of resettling the 30,000 people who and additional environmental concerns. security, which set out commitments and would be “forced to give up their land These groups targeted their energies responsibilities for all BP employees and rights to make way for the pipeline”; primarily at the IFIs in an attempt to delay their contractors, are also incorporated there could be “inadequate enforcement or halt financing for the Project, including into the PLR. These include explicit of health and safety legislation to protect loans by the IFC and the World Bank Group. support for the principles in the UDHR, the workers and local people”; and there 1977 ILO Tripartite Declaration of could be a “serious risk to the human In addition, FOE wrote to the designated Principles Concerning Multinational rights of any individuals who protest National Contact Points of five OECD Enterprises, and the 2000 OECD against the pipeline.” Amnesty expressed countries alleging five areas of Project Guidelines for Multinational Enterprises. particular concern that the HGAs would non-compliance with the OECD Guidelines create a disincentive for the host for Multinational Enterprises. These countries to protect human rights because allegations are that: (1) BP exerted undue the “governments have agreed to pay influence on the regulatory framework for Concerns Raised by compensation to the BTC consortium if the BTC project; (2) BP sought or External Stakeholders pipeline construction or operation is accepted exemptions related to social, disturbed” pursuant to the HGA clause labor, tax, and environmental laws; (3) BP indicating that host countries are liable for failed to operate in a manner contributing any “disruption to the economic to the wider goal of sustainable Amnesty International equilibrium of the project.” development; (4) BP failed to adequately | consult with project-affected communities Based on the report, Amnesty sought: (1) on pertinent matters; and (5) BP In 2002 and early 2003, Amnesty clauses inserted into the HGAs stating undermined the host government’s ability International UK conducted research and explicitly that no part of the agreements to mitigate serious threats to the analysis on the legal structure shall make it more difficult for the host environment, human health, and safety. In underpinning the BTC pipeline. Amnesty’s governments to comply with their human response, BTC Co maintains that it purpose was to understand “the human rights obligations under national and exceeded the standards set by the OECD rights implications of the commercial international law; (2) the formation of Guidelines. To date, several of the agreements between the oil consortium independent stakeholder committees inquiries are still ongoing. and the host governments in the countries which would be responsible for where the Pipeline would be built.” monitoring standards and hearing Amnesty published its findings in May grievances over the lifetime of the project; 2003 in a report titled, “Human Rights on and (3) the signing of contracts by BTC Co BTC Co Response to NGO the Line: the Baku-Tbilisi-Ceyhan Pipeline with those employed to provide security Concerns199 Project.” The report concluded that the for the pipeline making human rights legal agreements “undermined the obligations explicit and enforceable. In protection of human rights and created essence, Amnesty’s overarching interest Joint Statement disincentives for the three states to fulfill was to create a mechanism to ensure | their current and future human rights that BTC Co’s commitment to construct obligations.” It warned that the and operate the Project in accordance In an effort to respond to concerns that agreements would “effectively create a with “best international practice” was BTC Co needed to clarify its commitment ‘rights-free corridor’ where the human enforceable by the host governments. to international environmental, social, rights of thousands of people in the labor, and human rights standards, the region will not be protected.” Governments of Azerbaijan, Georgia, and Turkey, and BTC Co, issued a landmark The essence of Amnesty’s critique of the Other Stakeholder Concerns “Joint Statement on the BTC Pipeline BTC Project was that the Project | Project” on May 16, 2003. Agreements could have a “chilling effect” on the host governments’ willingness to Other NGOs, including Friends of the Earth The first paragraph of the Joint Statement enforce their human rights, labor rights, (“FOE”), the World Wildlife Fund, Corner notes that the parties “take the concerns and environmental obligations pursuant to House, and the Kurdish Human Rights [of the NGOs] seriously” and are international treaties. Amnesty warned Project, raised similar concerns regarding “determined to make the BTC Project a 76 The BTC Pipeline Case Study: Following through on Global Compact Commitments model project in all respects,” and that understanding that ILO Conventions on between companies and public/private “the environmental, social, and human Forced Labor, Freedom of Association and security include the degree of rights aspects of the project are of the Right to Organize, Collective consultation and advice with fundamental importance.” In paragraph Bargaining, Discrimination, Equal stakeholders, responses to human rights four, the parties state that they are aware Remuneration and Minimum Age, “all as in abuses, compliance with policies, and the of speculation among NGOs that effect from time to time, will apply to the deployment and conduct of personnel. provisions in the project agreements development and operation of the project.” might be interpreted in a manner contrary Although BTC’s “Regional Review” to international human rights, provides that the Voluntary Principles “are environmental, or social and labor norms. embedded into BP’s security management Project Security system,” the Joint Statement was the first The Joint Statement stipulates that BTC | Project Agreement to state that Co and the host governments “considered commitment and ensure that it became each of the provisions identified [by the The Joint Statement is also a landmark part of the PLR governing the Project. NGOs] and have concluded that none of document with respect to the issue of Specifically, it provides that “[t]he parties the speculation included in recent security, inasmuch as it is the first legal confirm to each other their mutual correspondence reflects the intent or commitment to the Voluntary Principles on commitment to the goal of promoting understanding of the parties with respect Security and Human Rights. The U.S. and respect for and compliance with human to their meaning or operation. We are U.K. governments announced the rights principles, including those set forth determined to uphold the highest Voluntary Principles in December 2000, in the Universal Declaration of Human international standards for BTC and we and they have since gained recognition as Rights, the United Nations Basic Principles cannot agree with those speculations.” the emerging international standard on the use of Force and Firearms by Law The parties entered into the Joint addressing the human rights Enforcement Officials, United Nations Statement to “minimize further responsibilities faced by extractive Code of Conduct for Law Enforcement misunderstandings, in particular in relation companies in their global security Officials, the European Convention on to project security and human rights, the arrangements. The BTC Project is the first Human Rights and, in a manner environment, social and labor standards.” time that the Voluntary Principles have consistent with our national laws, the been incorporated into the legal contracts Voluntary Principles.” The Joint Statement then delineates the governing a project. Subsequent to the signing of the Joint international standards to which the parties Security is perhaps the single most Statement, the three host governments are committed within the areas of human important human rights issue to oil and made another important commitment to rights, security, labor, and environmental gas companies due to the reputational security practices that, in effect, helps to standards. It reaffirms that the principles and legal risks related to the actions of operationalize the Voluntary Principles. In and policies set out in the OECD Guidelines security forces assigned to protect accordance with both the IGA and the on Multinational Enterprises “were fully company assets in conflict-prone or HGAs, and “recognizing the need for considered during negotiation of the BTC conflict-ridden countries. transparency and the sharing of Project Agreements” and are reflected in information and experiences in the BTC Project Agreement structure. With The Voluntary Principles address three performing security obligations and regard to the environment, the Joint sets of issues: Risk Assessment; promoting human rights,” the Statement clarifies that the “IGA commits Interactions Between Companies and Governments of Azerbaijan, Georgia, and each State to the application of Public Security; and Interactions Between Turkey signed a “Protocol Relating to the environmental standards and practices that Companies and Private Security. The Risk Provision of Security for the East-West are ‘no less stringent’ than those generally Assessment of the Voluntary Principles Energy Corridor” on July 23, 2003. In the applied within member states of the identifies key human rights “factors” to be first chapter of the Protocol, the European Union from time to time. The taken into account as security governments agree to cooperate in HGAs and other BTC Project Agreements arrangements are planned, including: security matters, including identifying and give effect to this commitment, and identification of security risks; potential classifying potential security risks related provide a dynamic benchmark that will for violence; the human rights records of to terrorism or acts of sabotage, sharing evolve as EU standards evolve.” public and private security forces; information that directly impacts the strength of the rule of law; conflict Project, and exchanging information With regard to labor standards, the Joint analysis; and equipment transfers. Key regarding methods to combat acts that Statement confirms the parties’ elements governing the interactions pose security risks to the Project. In The BTC Pipeline Case Study: Following through on Global Compact Commitments 77 addition, the parties agreed to establish a importantly, to set the stage for a In addition to the Deed Poll/Human Rights Joint Pipeline Security Commission and cooperative effort through which to share Undertaking, BP also committed to cooperate in the mutual training of lessons learned more widely and develop publishing a “Citizen’s Guide” to the BTC members of security units involved in best practice guidelines for the protection Project on its website in several of the pipeline security. of human rights within legal frameworks local languages used along the pipeline’s for large projects. route. BP will also seek Amnesty’s The second chapter of the Protocol is continued input with respect to titled the “Human Rights Dimension.” In As an outgrowth of this dialogue, BTC Co operationalizing the Voluntary Principles this chapter, the governments recommit determined that, through the use of a and other security practices in a manner to implementing the Voluntary Principles Deed Poll, it could address both that demonstrates respect for human within the framework of their national Amnesty’s overarching interest in creating rights and monitoring human rights legislation, as well as taking all necessary a mechanism to ensure that BTC Co’s activities with respect to the BTC Project. actions to ensure that individuals who commitment to operate the Project in Both BP and Amnesty agreed to work may have been credibly implicated in accordance with “best international together to proactively address key human rights abuses or criminal activities practice” was enforceable by the host human rights aspects of investment and do not participate in security services. The governments, and Amnesty’s more development, such as the creation of best parties also agree “to take all appropriate specific interest in ensuring that the HGA practices regarding the establishment of actions necessary to fulfill their not have a “chilling effect” on the host HGAs and IGAs, and monitoring obligations related to security in governments’ willingness to enforce their instruments and processes. compliance with” the principles and human rights, labor rights and obligations set forth in a variety of environmental obligations. (A Deed Poll, Notably, without taking a position international treaties and human rights referred to more specifically on the BTC’s regarding the Project as a whole, Amnesty instruments, including the UDHR, the UN Project website as the “Human Rights welcomed the Deed Poll for addressing Convention Against Torture and Other Undertaking,” is a unilaterally binding the concerns noted and establishing a Cruel, Inhuman or Degrading Treatment or contract made under British law.) leadership position on human rights within Punishment, the International Convention the industry. Amnesty also emphasized, on the Elimination of All Forms of Racial Accordingly, on September 22, 2003, a however, that the document was an “after- Discrimination, the UN Code of Conduct legally binding and irrevocable Deed Poll the-fact” effort to correct the HGA and that for Law Enforcement Officials, the UN was signed to achieve the following future Project Agreements of this nature Basic Principles on the Use of Force and goals: (1) protect the rights of the three should address these issues clearly from Firearms by Law Enforcement Officials, host governments to regulate in the areas the start to avoid the need for additional the European Convention for the of human rights, health, safety, and the Deed Polls. In addition, Amnesty believes Protection of Human Rights, and the environment, without fear of claims by that for the Deed Poll to have its intended European Convention for the Prevention of BTC Co that such regulation was a breach effect, the option of local remedies will Torture and Inhuman or Degrading of the HGAs; (2) clarify that the standards need to be communicated to local lawyers Treatment or Punishment. in the HGAs are not “frozen” as of the and relevant civic groups. time the Project Agreements were signed, but are instead dynamic and will change Overall, the BP/BTC-Amnesty dialogue over time as EU directives and standards and the execution of the Deed Poll and The Deed Poll evolve; (3) protect the right of third parties other steps to address human rights | injured by the BTC Project to bring claims concerns represented significant progress in domestic courts without fear that BTC for each of the parties and set a symbiotic Soon after the Amnesty report was Co would argue that domestic courts do precedent for other members of the published, BP and BTC entered into a not have jurisdiction to hear such claims; industry and the NGO community. The dialogue with representatives of Amnesty and (4) protect the host governments impact of the dialogue — while only to address their human rights concerns from fear of having to pay compensation representing a beginning — was and mitigate negative human rights to restore the “economic equilibrium” of immediate and broad, providing Amnesty impacts stemming from the PLR. Over the the Project as a result of legislation or with new credibility as a guide and course of several months, they engaged other action reasonably required by interlocutor with the business community, in a series of discussions regarding how international human rights, labor, and BP/BTC with diminished reputational best to resolve the issues outlined in the health, or safety laws in force in the and legal risks with respect to the Project Amnesty report and, perhaps just as host countries. and enhanced brand equity. 78 The BTC Pipeline Case Study: Following through on Global Compact Commitments

Continued Relationships with Conclusion: Issues for the Future Monitoring and Compliance | |Stakeholders and Communities In the IFC statement regarding the In a similar vein, BTC Co must follow Response of the IFIs approval of the loans, the Director of the through with respect to its comprehensive | World Bank Group’s Oil, Gas, Mining, and stakeholder engagement and consultation Chemicals Department noted that the process, both in the short-term during On November 4, 2003, the IFC’s Board Project includes “nine layers of monitoring construction of the Project as well as in approved loans of up to $250 million for — four internal and five external — that the long-term over the life of the Project. the BTC Project. While acknowledging that will result in seven different reports being the “IFC has heard from a number of made public.” He added, “IFC believes According to the Regional Review’s environmental groups who have raised this level of monitoring and transparency Executive Summary, “As the projects move significant concerns with regard to routing is unprecedented and provides the correct from planning to construction and into options, particularly through the Borjomi balance of internal monitoring verified by operations, there will be follow up area in Georgia,” Rashad Kaldany, external, independent monitoring and consultation and reports tracking the issues Director of the World Bank Group’s Oil, public disclosure for BTC. It also and project activities in the region. In the Gas, Mining and Chemicals Department, demonstrates that the project sponsors projects’ aim to keep dialogue flowing and responded to those concerns by and the lenders will focus on to obtain feedback and suggestions, further observing that “[r]outing options were implementation challenges and results on consultations will be planned over the next carefully assessed by IFC staff…who the ground.”200 several months, and will continue through confirmed that the route chosen was the the life of the projects.” only viable one with the significant Although it appears that the BTC Project mitigation and protection measures is a model for the industry with respect to The onus will be on BP to meet this proposed in this area.” its commitment to human rights, labor commitment. The company must ensure rights, and environmental standards, that it continues its outreach to the The IFC described the Project as construction of the pipeline is only 40% communities including, perhaps, by “break[ing] new ground in transparency, complete, and the Project is expected to facilitating the creation of citizens’ environmental and social safeguards, be operational for at least 40 years. advisory groups to counsel the Project community consultation and involvement, Accordingly, it is imperative that BTC Co regarding ongoing and timely issues. national and international civil society and the host governments quickly put Although the company set numerous engagement, and local economic benefit.” these monitoring programs into place. precedents with regard to community Some of these programs will be more outreach and the incorporation of Regarding consultation with those affected difficult to implement than others, international standards and best practices by the pipeline, the IFC stated that it was particularly those for which monitoring in Project agreements, the challenge now “gratifying to hear directly from local NGOs standards are only now being developed will be to maintain this momentum. BP’s and local communities. It is clear that local — such as security compliance for the ultimate test will be how it puts theory people want the pipeline to be built — but Voluntary Principles. into practice and fulfills these they want it built in a safe, sustainable, commitments in the coming years. and environmentally sound way.” The IFC In developing monitoring and compliance also noted that the compensation mechanisms, BTC Co should continue to packages for land, “which are consistently benefit from the relationships that it above market rates, have been set and are forged with Amnesty and other NGOs. independently monitored.” Indeed, BTC Co and Amnesty are committed to working together to create On November 11, 2003, following the effective human rights monitoring decision of the IFC, the Board of the EBRD instruments and grievance mechanisms approved $250 million in loans for the for people in affected communities. Project. Agreement on the loan followed a two-year analysis of the Project’s environmental and social impact and the EBRD’s own public consultations. The BTC Pipeline Case Study: Following through on Global Compact Commitments 79

New York, Washington, Oslo, and Paris, Sources including the Chair of the Business Group (UK); Director of Finance (UK); Business Group Manager (UK); Legal Advisor (UK); The information and material in this case Business & Human Rights Coordinator study was obtained from a variety of (USA); Political Advisor/IGO Coordinator sources. Many publicly available (Norway); President (France); and corporate documents were used as Commission Enterprises (France). reference, including BTC Co’s “Environmental and Social Overview of The author also conducted first-person the Baku-Tbilisi-Ceyhan Pipeline Project,” research by visiting the project site in published in September 2002; BTC Co’s Azerbaijan and Georgia and participating “Regional Review,” published in February in meetings between BP, BTC Co, and 2003; BP’s 2002 Environmental and Amnesty officials in London, New York, Social Review; BTC Co’s pamphlets on Washington, Oslo, and Paris. “Breaking New Ground” and “Citizen’s Guide to the BTC Project Agreements,” and each of the HGAs and the IGA. In researching the perspectives of a broad range of NGOs, extensive web-based research was performed, and Amnesty International’s report, entitled “Human Rights on the Line,” published in May 2003, was cited frequently.

Additionally, the author was provided access to a number of senior- management officers at both BP and BTC Co, as well as to key NGO leaders. At BP, the author worked closely with staff members in the London, Washington, and Baku offices, including the Group Vice President; Vice President for Reputation and Assurance; Vice President for External Affairs; Director of International Affairs; Director of Government and Public Affairs; Commercial and Reputation Assurance Manager; Government and Community Relations Manager; and Manager of Corporate Communications.

At BTC Co, the author was provided access to a broad spectrum of individuals in both Baku and Tbilisi, including the Chief Executive Officer; Commercial Director; General Counsel; Director of Security; Regional Security Advisor; Communications Director; Environmental Manager; and Project Security Managers for Azerbaijan, Georgia, and Turkey.

The author met with representatives of Amnesty International offices in London, Article 13 Overview Abstract Company Profile BHP Billiton Charter HSEC Policy Management Standards

* Peer review of this case study was provided by Bayside Aluminium, Richards Bay BHP Billiton South Sune Skadegrad Thorsen of Lawhouse.dk. Context Problem Statement Africa: Standards as a ** I am extremely grateful to BHP Billiton for allowing me the opportunity to undertake this The Case Study Human Rights tool* Case Study and for their support; in particular Integrating Human Rights to Mr Andre van der Bergh, Regional Advisor Patricia B. Lawrence** Southern Africa: Health, Safety & Environment for making the project possible and for Standards Application – providing all the necessary contacts. Also to Activities and Operations Unisa Foundation and Mr Marius van Tonder, General Manager: Health Issues Centre for Corporate Citizenship, Bayside Aluminium and to Mr Bongani Remunerations and Employment Equity University of South Africa Mqaise, for setting up the meetings and for Training and Development assisting me with the many interviews at Employment Bayside Aluminium. In all my dealings with Culture BHP Billiton in the development of this Case Community Development Study, they have provided me with Indigenous People unrestricted access to persons and documentation alike. Thank you. I am also Concluding Remarks extremely indebted in Sune Skadegrad Thorsen, the review examiner, for all the comments and suggestions. He has been Recommendations extremely helpful in the development of this Standards Case Study. Thank you. Health Care Remuneration and Employment Equity Employment Culture Community Development Indigenous People

The Global Compact Performance Model

Appendix 1 82 BHP Billiton South Africa: Standards as a Human Rights tool

Social and Cultural Rights (1966) and the This makes the industry a significant role- Overview International Covenant on Civil and player in terms of economic growth in this Political Rights (1966), and their optional country. If industry multiplier effects are protocols. The International Bill of Human added, the contribution to GDP increases Abstract Rights, along with the Vienna Declaration to approximately 12 percent. Since | (1993), enumerate human rights that are transition to legitimate democratic status universal, indivisible, interdependent and in 1994, the Chamber of Mines has This Case Study is based on the premise interrelated. committed the industry to the that if Management Standards are in development of South Africa. South Africa place, systems, activities and operations Within the South African context, the UN in turn expects the mining industry to will follow and employees will understand International Bill of Human Rights forms maintain and expand its corporate social their roles and responsibilities. It examines the basis for the Bill of Rights which is responsibility in terms of socio-economic the Global Compact’s Principle 1 (P1), in enshrined in the Constitution. The human development. The challenge for the the context of measures that BHP Billiton rights in the South African Constitution mining industry in transforming the sector South Africa’s Bayside Aluminium Smelter are not only inherent to all people and is not only to achieve compliance with the has taken to support and respect human citizens alike, they are also justiciable. Charter for the South African Mining rights within their sphere of influence, and Thus, any complicity in human rights Industry and the Balance Scorecard, but Principle 2 (P2), in relation to whether abuses (P2) may be taken up before the also to contribute towards nation building Bayside Aluminium has been complicit in courts. The courts in turn could restrain a by investing in South Africa’s young any abuse of human rights. To give effect perpetrator from continuing the violation democracy and the future of its people. to P1 and P2, the Case Study considers or could order the perpetrator to act in Health, Safety, Environment and compliance with the law. Alternatively, David Wood and Mark Mattson in a recent Community (HSEC) Management offences relating to equality or article: “Beyond the triple bottom line” Standards as a measuring tool for discrimination may be referred to the argue that “change in transformation and human rights compliance assessment. National Director of Public Prosecutions cooperation by the various sectors in The Case Study examines BHP Standards for possible criminal action. society, including the business and the human rights fit with activities and community, requires a positive attitude operations at Bayside Aluminium. The South African Human Rights towards recognising the inherent rights Commission, which is also embedded in (i.e. defined by national and international The concept of human rights is the the Constitution, acts as a human rights legislation) and dignity of people”. It is product of debates that have raged over watchdog and serves to promote, protect against this background that BHP Billiton many years throughout the world. The and ensure the fulfillment of human rights seeks “to support the fundamental human debates relate to the search for moral in South Africa as set out in the Bill of rights of employees, contractors and the standards or imperatives among states, Rights. In addition, legislation was passed communities” in which it operates and across borders and between governments in terms of the Promotion of Access to that Principle 1 (P1) and Principle 2 (P2) and its citizens. A broad consensus has Information Act (2000) and the Promotion are discussed in the Case Study. emerged that seeks to frame human of Equality and Prevention of Unfair rights against a moral code which Discrimination Act (2000) to further prescribes certain benefits and treatments entrench human rights in South Africa. simply because people are human, in The Constitution and the legislation that Company Profile spite of socio-economic, political and flows from it are in broad terms binding | cultural differences. The framework for both between state and citizen (vertical human rights is set out in the universally application), and among citizens BHP Billiton is a Dual Listed Company politically agreed minimum standards for (horizontal application). Similarly, comprising BHP Billiton Limited and BHP how people should be treated. These corporate entities (juristic persons) are Billiton Plc. The two entities continue to minimum standards are found in the bound by both the spirit and letter of the exist as separate companies, but operate United Nations International Bill of Human Constitution. as a combined group known as BHP Rights, which consists of the Universal Billiton. The headquarters of BHP Billiton Declaration of Human Rights (UDHR), its The mining industry in South Africa, in Limited and the global headquarters of two associated Covenants, namely, the which BHP Billiton has interests, accounts the combined BHP Billiton Group are International Covenant on Economic, for slightly more than 8 percent of GDP. located in Melbourne, Australia. BHP Billiton Plc is located in London, UK. Both BHP Billiton South Africa: Standards as a Human Rights tool 83

companies have identical Boards of u took part in the UK Corporate Principles on Security and Human Rights Directors and are run by a unified Responsibility Index and in the Business within its Management Standards. In June management team. However, the laws in in the Environment (BiE) Index. 2003, BHP Billiton reaffirmed its Australia and the UK require BHP Billiton commitment to the United National Global Limited and BHP Billiton Plc to adopt a BHP Billiton defines their business Compact and associated principles. different approach to reporting results. conduct with a set of principles. Among The Annual Report 2003 deals with the the Policies, Standards and Guidelines set affairs of the BHP Billiton Group as a out in the Guide to Business Conduct are: whole, supplemented by the Health, BHP Billiton Charter Safety Environment and Community u Compliance with the Law | (HSEC) Report 2003. u Competition Law u Health, Safety Central to the Company is the BHP Billiton BHP Billiton has seven (7) Customer Sector u Environment and Community Charter, which serves to create an Groups operating around the world, namely, u Equality in employment alignment throughout the organization with Petroleum (Algeria, Pakistan, Australia, u Confidentiality a set of clearly defined values applicable to Europe, North America and South America); u Intellectual Property each employee throughout the Group. BHP Aluminium (South Africa, Mozambique, u Personal Information and Privacy, (the Billiton stresses its overriding commitment Australia, Brazil, and Suriname); Base Metals, right to privacy) Information Systems to health, safety, environmental (Australia, Canada, Chile and Peru); Carbon u Relationships with Government and responsibility and community development Steel Materials (South Africa, Australia and Cultural Sensitivity. as a value driver and a major challenge Brazil); Diamonds and Specialty Products, for the company whose core business is the (South Africa, Australia, Belgium, North The Guide addresses accountability issues extraction of natural resources. However, America and Canada); Energy Coal, (South with regard to Responsibilities of All these organisational values are not framed Africa, Australia, Indonesia, US and Colombia) Employees, Managers and Supervisors in a human rights discourse or and Stainless Steel Materials (South Africa, and the Board of Executives. It also contexualised in a human rights framework. Australia and Colombia). The Company has describes the Global Ethics Panel, and some 35,000 employees across the globe Business Reporting Requirements. The with an annual turnover of US$17,5 billion, Guide applies to all employees and Health, Safety Environment and attributable profit of approximately US$1.9 provides directions and advice on Community Policy (HSEC) billion and an enterprise value of US$35 conducting business internationally, | billion as at June 2003. interacting with government, communities and business partners, business integrity The HSEC Policy sets out BHP Billiton’s For the last financial year, BHP Billiton: and general workplace behaviour. commitment to sustainable development as integral to the way in which they do u maintained their inclusion in the UK For the year ending July 2002-June 2003, business, to continual improvement in FTSE4Good Index, after passing the the HSEC Report was prepared in performance, to efficient use of natural strengthened criteria on human rights accordance with the Global Reporting resources and to their aspiration of zero in the extractive sector Initiative (GRI) Sustainability Reporting harm to people and the environment. In Guidelines. For the reporting period, BHP addition, the HSEC Policy, which defines u maintained their position in the Dow Billiton’s community contributions its basis as value driven, sets out BHP Jones Sustainability Index supporting community programmes and Billiton’s commitment to: capacity building amounted to US$42 u ranked ‘best in class’ for its million, or 1.4 percent of pre-tax profit, u support the fundamental human rights environmental and social performance which exceeded the target of 1 percent. of employees, contractors and the out of 21 metals and mining companies In addition, US$12.5 billion was communities in which we operate covered by Storebrand in Norway contributed to regional economies from expenditure associated with sustaining u respect the traditional rights of u received recognition from UK Financial operations. BHP Billiton sets out its indigenous people Times top 500 Global Index companies commitment to implementing the World u care for the environment and values in the Carbon Disclosure Project Bank Guidelines on Involuntary cultural heritage Resettlement and the US-UK Voluntary 84 BHP Billiton South Africa: Standards as a Human Rights tool

u In terms of scope, the Standards are The Standards: intended to cover all operational aspects and activities that have the potential to Standard 1 affect, positively or negatively, the health Leadership and Accountability and safety of people, the environment or the community. (NB: The scope of the Standard 2 Standards is not defined within a human Management Standards Legal Requirements rights framework in terms of the UDHR. | and Document Control Rather, the scope incorporates the rights that relate only to Business Practices.) The HSEC Policy and BHP Billiton Charter Standard 3 are implemented via detailed HSEC Risk and Change Management u In terms of status, the Charter, HSEC Management Standards and Protocols, Policy and HSEC Management the requirements of which must be met Standard 4 Standards are mandatory to all BHP at all operations on an annual review Planning, Goals and Targets Billiton sites and operations. basis. The Management Standards were revised during the year, resulting in a Standard 5 u Each Standard has a set of consolidated set of 15 Standards. The Awareness, Competence and Behaviour performance requirements which is HSEC Managements Standards form the measured via an auditing process. The basis for the development and Standard 6 performance requirements for Standard application of HSEC management Health and Hygiene 8: Business Conduct, Human Rights systems at all levels of the BHP Billiton and Indigenous Affairs are as follows: Group. The objectives of the Standard 7 Intent Standards are to: Communication, Consultation and Participation Activities and operation are conducted in an ethical manner that supports u Support the implementation of the fundamental human rights, respects the Charter and the HSEC Policy across the Standard 8 traditional rights of indigenous peoples Group (i.e. national and international Business Conduct, Human Rights and values their cultural heritage. standards including UDHR) and Indigenous Affairs

Performance Requirements u Provide a risk-based HSEC Standard 9 8.1 Systems are in place to ensure that management system framework, Design, construction and commissioning employees and contractors are broadly consistent with international familiar with and abide by the standards, such as ISO 14001, OHSAS Standard 10 requirements of the BHP Billiton 18001 and SA 8000 (i.e. labour rights Operations and Maintenance Guide to Business Conduct and environmental processes) Standard 11 8.2 Systems are in place to ensure that u Set out the expectations of the Group Suppliers, Contractors and Partners employees and contractors are for the progressive development and familiar with an abide by the Articles implementation of more specific HSEC Standard 12 of the United National Universal management systems at all levels of Product Stewardship Declaration of Human Rights the Group Standard 13 8.3 Local and indigenous communities, u Provide consistent auditable criteria Incident Reporting and Investigation and their traditional and cultural against which HSEC management heritage values potentially affected systems across the Group can be Standard 14 by BHP Billiton operations, are measured Crisis and Emergency Management identified, and strategies are developed to address their concerns u Provide a basis from which to drive Standard 15 and aspirations continuous improvement Monitoring, Audit and Review BHP Billiton South Africa: Standards as a Human Rights tool 85

Diagramatic representation of the Standards as a tool of measurement.

All the elements within the triangle are driven by BHP Billiton’s values and objectives to form a governance model that is driven from above, i.e. the Charter, and informed from “below” via impact and assessment, hence the two-way directional arrow. The Standards form the basis for the development and application of the HSEC management Charter systems and procedures. As a tool, the Standards provide Objectivesauditable criteria to measure compliance, progressive development, and “change in transformation”. Using Standard 8: Business Conduct, Human Rights HSEC Policy ance Model and Indigenous Affairs as an example, the standard sets out the criteria for support and HSEC Management Standards respect for human rights and provides a Govern measurement by which to ensure that the activities and operations at the Bayside Company-wide Procedures, Protocols and Guidelines Aluminium Smelter are conducted in an ethical manner, and that the company respects the Business-based HSEC Management System traditional rights of indigenous peoples and values their cultural Operational HSEC Procedures heritage.

8.4 Systems are in place to work with Performance Requirement 1: association; Fair remuneration; Non- local communities through project Protocol Questions discrimination in personnel practices; development, operational and No forced or child labour; No forcible closure phases, to identify needs and u Determine whether the BHP Billiton displacement of individuals, groups or prioritise support for sustainable Guide to Business Contact has been communities; Respect for existing community development initiatives communicated to employees and international guidelines and standards contractors, through presentations and for use of security 8.5 Where plant and equipment is group discussions installed as part of community u Verify that the relevant Declaration development programmes, u Determine whether systems are in Articles have been communicated to consideration is given to the provision place to communicate the content of employees, contractors and business of appropriate technology and training the Guide to new employees and partners, and that they abide by the in its use, and the local capacity for contractors principles of the Declaration ongoing care and maintenance u Verify that personnel are aware of the u Determine whether regular reviews The criteria for performance should be an need for, and relevance of the Guide take place to assess performance implementation approach to measuring and the consequences of non- against the relevant Articles of the human rights impact and assessing compliance United Nations Universal Declaration of complicity. This differs from the intent of Human Rights. Verify that systems are the Standard, which is to ensure that the Performance Requirement 2: in place to respond to and manage Protocol Questions activities and operations support a human non-conformances. rights framework, i.e. "supports u Determine whether the site has a copy fundamental human rights, respects the u Determine whether compensation or of the United Nations Universal traditional rights of indigenous peoples benefits have been paid to local land Declaration of Human Rights (UDHR) and values their cultural heritage". owners and the methods used to and has identified which Articles are determine the values. Determine the relevant to the Business, contractors, and The for Standard 8: extent of local land owner involvement auditable criteria business partners, e.g. Safe and healthy Business Conduct, Human Rights and in the process working conditions; Freedom of Indigenous Affairs are as follows: 86 BHP Billiton South Africa: Standards as a Human Rights tool

u Determine whether the site has a copy which led to the restructuring and the Standards and the activities and of the World Bank Guide on Involuntary redesigning of the organisation and 2) the operations at Bayside Aluminium? Are Resettlement building of Hillside Aluminium Smelter next these activities and operations conducted door to Bayside. Hillside was designed to in a manner that respects, protects, fulfills u Verify that, where a resettlement program be a highly technical, low cost/high and supports fundamental human rights, has been carried out after June 2003, the production smelter. Major costs were to be the traditional rights of indigenous peoples site has prepared a resettlement plan in shared with Bayside. Following the and values their cultural heritage? accordance with the World Bank restructuring process, Gencor subsequently Operational Directive on Involuntary bought out the other shareholders, namely Settlement. Determine the extent to which IDC and Eskom. The two smelters, Bayside people affected by involuntary resettlement Aluminium and Hillside Aluminium are The Case Study programs after June 2003 have been situated in close proximity to each other | consulted and involved in resettlement and share a number of management and The Case Study reviews the recently planning and how compensation issues work related practices. completed HSEC Managements Standards have been addressed. Audit covering the period 1 July 2002 to In 1998, Gencor bought Billiton from the 30 June 2003. The Lead Assessor was u Determine whether the site has a copy Royal Dutch Shell Company. This followed Derek Rex, Health, Safety and of the Voluntary Principles on Human the separation of Billiton and Gencor. Environment Manager. He was assisted in Rights and Security, and verify that Precious metals went to Gencor and non- this process by the Team Line Managers relevant employees and contractors precious metals went to Billiton. Billiton outside the sector group as well as the (including security personnel) have thereafter listed on the London Stock HSE Team and Lead Auditors. The Audit been trained in, and abide by, their Exchange with 3 divisions: Aluminium, covered all four occupational categories responsibilities under the Principles. Samancor (manganese chrome) and Ingwe of Bayside ranging from managers to (coal). In September 2001, Billiton merged superintendents, specialists and with BHP (Broken Hill Proprietary Company) administration staff/artisans/operators. Ltd in Australia to become the [world’s] (The previous Audit was completed in Bayside Aluminium, Richards Bay largest diversified resources company with September 2001). seven customer sector groups. In order to facilitate the process across The historical overview of Bayside the Company, BHP Billiton developed a |Context Aluminium provides an insight into the HSEC Human Rights Self-Assessment many socio-economic and political Toolkit which provides a framework that changes that have taken place at the facilitates assessment of an operation’s Alusaf (Aluminum South Africa) was smelter over the past 33 years of its exposure to human rights related risks completed in the early 1970s and was existence. At the same time, Bayside has and identification of areas where initially a border industry created by the developed into a mature organisation, mitigation measures are required. The old apartheid government to propagate the which has shaped company policy and Toolkit assesses BHP Billiton’s impact on separate development policy. The systems to fit its needs. Bayside has some human rights in nine aspects of shareholders at the time were Gencor, 980 employees. Of these, approximately operations at Bayside Aluminium. The Industrial Development Corporation (IDC) 300 employees have 30 years service human rights listed against the operations and Eskom (Electricity Supply with the Company. Most long-service do not cover all the rights set out in the Commission), all three government employees are unskilled workers who UD HR or in the International Bill of subsidised companies. The 1990 political provide the manual labour to operate the Rights, but rather reflect core labour and economic changes in the country led old technology used at the plant. rights and displacements. to the lifting of trade protection and the drying up of government subsides. These are: Criticism leveled at Alusaf at the time was u Country that it was inefficient and badly managed Problem Statement u Community resulting in financial losses to the | u Land Acquisition company. To address these issues, two u Indigenous and Minority Groups initiatives were implemented, namely, 1) Is there a human rights fit between HSEC u Environment the Bayside Reconstruction Programme, Standards and the systems that stem from BHP Billiton South Africa: Standards as a Human Rights tool 87

u Security u Severe or prolonged punishments The HSEC Human Rights Self-Assessment u Employees u Arbitrary arrests Toolkit provides the basis for the protocols to u Contractors and Suppliers u Arbitrary deprivation of property be developed against each standard. The u Systems u Widespread religious discrimination HSEC Management Standard 8 is as follows: u Widespread ethical, racial or sexual The HSEC Human Rights Self-Assessment discrimination (gender discrimination HSEC Management Toolkit is based on the human rights set out not specified). in the UDHR. The rights are divided into Standard 8 “minor human rights incidents” and “more The level of risk is ranked from 1 to 10. STANDARD 8 201 serious human rights incidents” for the The lowest level of risk, 1, occurs when BUSINESS CONDUCT, HUMAN purposes of the operation’s self-assessment. there is no history of human rights RIGHTS AND INDIGENOUS AFFAIRS infringement incidents within BHP Minor human rights incidents include: Billiton’s ‘sphere of influence’ (including Activities and operations are conducted in by government bodies, partners, agents or an ethical manner that supports u Restricted access to basic necessities joint ventures) or the operation has no fundamental human rights, respects the (right to food, water, shelter, clothing, negative impact on the community. That traditional rights of indigenous peoples and medical care) is, when the operation has not: values their cultural heritage u Restricted access to natural resources PERFORMANCE REQUIREMENT 1 (land, air, water — environmental rights) u Restricted access to basic necessities u Inadequate legal protections (right to a (food, water, shelter, clothing, medical Systems are in place to ensure that fair trial and equality before the law) care), education or natural resources employees and contractors are familiar with u Interference with family life (home, (land, air, water) and abide by the requirements of the BHP correspondence, reputation — right to u Interfered with family, cultural, or Billiton Guide to Business Conduct privacy) (right to privacy also applies in religious life, association or assembly Determine whether the BHP Guide to the working place and for customers — u Discriminated [on the basis of?] sex, Business Conduct has been communicated not specified) race, ethnicity, or religion; arbitrarily to employees and contractors, through u Interference with cultural life (customs, deprived life, liberty or property; used presentations and group discussions marriage, ceremonies — cultural rights) forced, slave, bonded or child labour, Determine whether systems are in place to u Interference with religion (teaching, physical violence, disappearances, communicate the content of the Guide to practice and worship — freedom of intimidation; or severe punishments. new employees and contractors religion) Verify that personnel are aware of the need u Interference with association or The level of risk generally increases from: for, and relevance of the Guide and the peaceful assembly (right to collective consequences of non-compliance bargaining — not specified or included) u Isolated (1 or 2) to numerous (3 or PERFORMANCE FINDINGS 1 u Unsafe working conditions (right to more) human rights incidents No Findings recorded collective bargaining — not specified or u Minor to more serious human rights. RECOMMENDATIONS Level 5 (out of 10) risks and above included) No Recommendations recorded u Decreased standards of living (cost, need to be mitigated as a matter of health, housing) (right to health care and priority CORRECTIVE ACTION right to housing) u The operation failing to implement Corrective Action recorded u Limited access to primary education procedures to monitor human rights (right to education includes vocational u The local community protesting against COMMENT 1 training — not specified). the operation The performance requirements relate to u The international community processes only. No impact assessment More serious human rights incidents include implicating BHP Billiton in human rights or human rights indicators are recorded. incidents u Arbitrary deprivation of life or u The international community taking COMMENT 2 disappearances active measures against BHP Billiton for The Findings, Recommendations and u Physical and emotional violence or human rights incidents, such as Corrective Action are not adequately intimidation commencing litigation or striking BHP recorded for analysis, decision/action or u Forced, slave, bonded or child labour from ethical investment portfolios. review. 88 BHP Billiton South Africa: Standards as a Human Rights tool

HSEC Management Standard 8

STANDARD 8 BUSINESS CONDUCT, HUMAN RIGHTS AND INDIGENOUS AFFAIRS

Activities and operations are conducted in an ethical manner that supports fundamental human rights, respects the traditional rights of indigenous peoples and values their cultural heritage

PERFORMANCE REQUIREMENT 2 (1) Determine whether the site has a copy of the United Nations Universal Declaration of Human Rights, and has identified which Articles are relevant to the business, contractors and business partners, e.g. safe and healthy working conditions; freedom of association; fair remuneration; non-discrimination in personnel practices; no forced or child labour; no forcible displacement of individuals, groups or communities; respect for existing international guidelines and standards for the use of security forces (2) Verify that the relevant Declaration Articles have been communicated to employees, contractors and business partners, and that they abide by the Principles of the Declaration (3) Determine whether regular reviews take place to assess performance against the relevant Articles of the United Nations Universal Declaration of Human Rights. Verify that systems are in place to respond to and manage non-conformances (4) Determine whether compensation or benefits have been paid to local land owners and the methods used to determine the values. Determine the extent of local land owner involvement in the process. (5) Determine whether the site has a copy of the World Bank Guidelines on Involuntary Resettlement. (6) Verify that, where a resettlement program has been carried out after June 2003, the site has prepared a resettlement place in accordance with the World Bank Operational Directive on Involuntary Settlement. Determine the extent to which people affected by involuntary resettlement programs after June 2003 have been consulted and involved in resettlement planning and how compensation issues have been addressed. (7) Determine whether the site has a copy of the Voluntary Principles on Human Rights and Security, and verify that relevant employees and contractors (including security personnel) have been trained in, and abide by, their responsibilities under the Principles PERFORMANCE FINDINGS 2 LOW PRIORITY (in terms of risk analysis) 8.2 No copy of UN Declaration on Site (how can human rights be implemented if there is no information — if the first performance finding is negative does this stop further measurement (i.e. requirements 2-7) RECOMMENDATIONS Get copy of Declaration on site and perform a gap analysis in order to mitigate possible shortcomings CORRECTIVE ACTION Get copy of Declaration on site and perform a gap analysis in order to mitigate possible shortcomings Responsible: (person identified) Due date:01/06/04

COMMENT 1 The rights enumerated above do not cover all the rights set out in the UD HR or in the International Bill of Rights, but rather reflect core labour rights and displacements and conduct of security forces — as referred to in the “Case Study” paragraph above.)

COMMENT 2 If there is no information on human rights and the first performance findings is negative, it raises the question as to how further measurement is determined in terms of requirement “Problem Statement” and “Case Study” above. BHP Billiton South Africa: Standards as a Human Rights tool 89

The summary of Significant Findings for Diagrammatically, the impact of the Standards as a tool for measuring the impact of human Business Conduct, Human Rights and rights at BHP Billiton’s Bayside Aluminium Smelter could be represented as follows: Indigenous Affairs for the 2001 Audit is recorded as follows:

Standard 11

Business Conduct, Human Rights and • Policy Development Indigenous Affairs • Strategy 11.3 Through active participation in • Training • Education Standards as HR tools Zululand Chamber of Business Foundation • Best practice Good Governance (ZCBF) and its various committees, the site • Process & Implementation • Mentoring works very well with local communities to • Evaluation identify needs and prioritise support for • Benchmarking sustainable development initiatives. [Note: • Standard Setting Standard 11 in the 2001 audit is now Standard 8 in the 2003 audit]

The 2001 and 2003 audited Findings for activities that have the potential to affect, Business Conduct, Human Rights and positively or negatively, the safety of Integrating Human Rights Indigenous Affairs demonstrates a huge people, the environment or the | gap in organisational management with community. In its broadest application, the Other than Standard 8, Standard 6 (Health respect to the human rights in the UDHR. Standards and the Audit allows for and hygiene) is the only other standard In addition, no impact assessment is constant review and improvement both in that is content rather than process conducted nor human rights indicators terms of Standards Review as well as oriented. Within a human rights framework, used. Moreover, when no basic human Systems Implementation and Operations. Standard 6 falls under the right to a safe rights information was available on site In this way, corrective measures are and healthy working environment. All the (Performance Finding 8.2), the highlighted and implemented and Standards could and should be viewed as measurement stopped. measured against the next auditing interrelated. Moreover, better performance process. The Standards also allow for and assessment could be achieved if the u Overall, the Standards, through their noteworthy achievements at Bayside as Performance Requirements were application and implementation, allow well as for organizational fit between developed within a human rights for constructive engagement at all policy and application. In addition, once framework and discourse, and included the levels within the organisation, which Standards are in place, according to development of human rights indicators, helps promote good business practice policy, the Company has to report on its monitoring and evaluation of standards on and good governance. findings to shareholders. It is also a human rights grid. In this context, the balanced against the Company scorecard. following commentary and/or specific u However, the Standards would be However, in its current state, the Standards suggestions for improvement are offered: significantly improved as a human right fall short in determining a human rights fit tool if human right performance between Standards and Activities and Standard 1 requirements were included as a Operations. Given the gaps on human Leadership and Accountability measurement against each Standard, rights issues in Standard 8, and while and across Standards. This, in turn, u Performance requirements should some human rights issues are addressed, would result in a great human right fit include human rights standards and though not framed in a human rights between Standards and Activities and assessment consistent with the South discourse, there is a weak human rights Operations. African Constitution, the Bill of Rights fit between Standards and Operations and and the UDHR Activities. Coupled with this is the absence of human rights indicators, BHP Billiton’s Standards are used as a u Human Rights Training and Diversity monitoring and evaluation. tool to assess the application of HSEC Training should be compulsory for management systems at Bayside, senior/executive management including all operational aspects and 90 BHP Billiton South Africa: Standards as a Human Rights tool

Standard 2 Standard 6 Standard 9 Legal Requirements and Document Control Health and Hygiene Design, construction and commissioning u It is noteworthy that where local u Health and hygiene risk assessment u Performance requirements should legislation does not have an adequate should include HIV/AIDS/disease include human rights standards and level of HSEC performance, BHP Billiton prevalence, management and assessment consistent with the South has exceeded requirements in putting treatment, future planning, African Constitution, the Bill of Rights protective/human rights measures in benchmarking, indicators and and the UD HR place, especially around the right to monitoring and review health care with particular reference to u Performance requirements should HIV/AIDS include development of human rights Standard 7 indicators, monitoring and evaluation u Documents should include the Communication, Consultation and standards on construction and Constitution, the Bill of Rights and the Participation commissioning on an annual basis UDHR u HSEC initiatives and programmes u Employees should be given a copy of should include the Bill of Rights and a Standard 10 the South African Bill of Rights “know your rights” campaign that Operations and Maintenance could be linked to the “Zero Harm” Campaign u Performance requirements should Standard 3 include human rights standards and Risk and Change Management u All key documents should be assessment consistent with the South communicated to employees in a African Constitution, the Bill of Rights u Risk management processes could be manner that includes open consultation and the UDHR identified as country and and participation on a regular basis region/province specific such as u Performance requirements should health-HIV/AIDS, unemployment and include development of human rights black economic empowerment. In this Standard 8 indicators, monitoring and evaluation respect, Bayside Aluminium Smelter Business Conduct, Human Rights and standards on operation and should contextualize and profile the Indigenous Affairs maintenance on an annual basis province and their working environment u HSEC activities should include human Standard 11 rights monitoring and evaluation across Suppliers, Contractors and Partners Standard 4 the 15 standards. This could be a Planning, Goals and Targets matrix or theme approach such as u Performance requirements should Health-HIV/AIDS, Environment or include human rights standards and u Planning goals and targets should Diversity Training, and should include assessment consistent with the South include human rights benchmarking the development of indicators, African Constitution, the Bill of Rights monitoring and evaluation across and the UDHR standards Standard 5 u Performance requirements should Awareness, Competence and Behaviour u Human rights must be framed in a include development of human rights rights based discourse set against the indicators, monitoring and evaluation u Awareness and behaviour should UDHR standards of suppliers, contractors and include a rights based discourse which partners on an annual basis includes diversity training u Performance requirements should include development of human rights indicators, monitoring and evaluation standards on construction and commissioning on an annual basis BHP Billiton South Africa: Standards as a Human Rights tool 91

Standard 12 Standard 15 time of interview, Bayside was conducting Product Stewardship Monitoring, Audit and Review a voluntary HIV/AIDS “Spit and Go” programme with an uptake of more than u Performance requirements should u Performance requirements should 90% of the workforce. The results will include human rights standards and include human rights standards and determine appropriate action to be taken assessment consistent with the South assessment consistent with the South by Management with regard to levels of African Constitution, the Bill of Rights African Constitution, the Bill of Rights infection. The Employee Wellness and the UDHR and the UDHR Procedure (EWP) policy document is currently in draft form with a view to u Performance requirements should u Performance requirements should implementation in 2004. The objectives of include development of human rights include development of human rights EWP is to establish a holistic, integrated indicators, monitoring and evaluation indicators, monitoring and evaluation employee wellness programme that will standards on product stewardship on standards on an annual basis. support the attainment of knowledge on an annual basis preventing and managing chronic illnesses and diseases, especially, but not exclusively, HIV/AIDS. The programme Standard 13 Standards Application — also encourages employees to adopt and Incident Reporting and Investigation Activities and Operations maintain a healthy lifestyle in order to minimize their risk of exposure to u Performance requirements should In addition to the Standards review, a contracting life threatening diseases (right include human rights standards and number of interviews were conducted at to health). assessment consistent with the South the Bayside Aluminium Smelter, to assess African Constitution, the Bill of Rights the human rights fit. The interviews While Bayside Aluminium has made and the UDHR provided a way of testing for human significant strides to address HIV/AIDS rights indicators at the Operations level. through various programmes, on a risk u Performance requirements should The issues of Health, Remuneration and level, trade union representatives include development of human rights Employment Equity, Training and (relevant stakeholder) indicated that the indicators, monitoring and evaluation Development, Employment, Culture, Plant was not doing enough for their standards on incident reporting and Community Development, and Indigenous employees on the HIV/AIDS issue. While investigation on an annual basis People were examined to analyze for they could not indicate what additional human rights indicators at the Operational measures should be put in place, they did level in the Plant. believe that the EWP programme will go a Standard 14 long way towards addressing employees Crisis and Emergency Management concerns. Health Issues (right to health) u Performance requirements should include human rights standards and | Remuneration and Employment Equity assessment consistent with the South (equal remuneration and the right to African Constitution, the Bill of Rights Bayside Aluminium is situated in the |work) and the U D HR province with the highest HIV/AIDS infection rate in the country. It has an Shireen Pillay, Specialist, Company u Performance requirements should HIV/AIDS Policy in place as well as a Remuneration Policy, is responsible for include development of human rights policy document on Sexual Harassment medical aid, pension plans and benefit indicators, monitoring and evaluation (non-discrimination) Procedures and Ill- schemes. All information is disseminated standards on crisis and emergency Health Procedures (right to a safe and to staff through newsletters, such as the management on an annual basis healthy working environment). In addition, Bayside News, news flashes and various systems have been put introduced presentations in both English and Zulu. to address employees’ health issues. The Employment Equity Forum addresses Currently, a “Voluntary (right to privacy the issue of legislative requirements for related) Counseling and Testing the company, maternity benefit policy, Programme” is in place which has had a pension fund and recruitments. All positive response from employees. At the remuneration benefits for all categories of 92 BHP Billiton South Africa: Standards as a Human Rights tool employees are considered to be equitable To promote equitable access to implementing a training programme, throughout the company (equal employment, , BHP Billiton is involved in a developed in Australia, on Team remuneration and right to equality). This number of community projects. For Excellence. The programme is currently was affirmed by the trade union example, in partnership with other major being piloted at Bayside with the view to representatives. industries in the region, through Zululand implementing it at other sites. The Chamber of Business Forum, BHP Billiton training programme is outcomes based Members of staff as well as trade participates in a number of school and takes all employees through various unionists raised the issue of employment initiatives aimed at providing support learning units such as Team Alignment, equity particularly at senior level. They structures to schools in the region, with Caring for People and the Environment, argue that since the Employment Equity particular emphasis on the fields of Caring for our Customers — Doing Things Act 55 of 1998 was promulgated, there maths, physical science and biology, as Right the first Time; Working in a Team; have been no significant changes in the well as physical school improvements. In Being the Best — Continuous organisation, especially at management addition, BHP Billiton is involved with a Improvement and Self Development. The and senior management level. According number of skills training projects in the training programme serves to ensure that to Ms Pillay, goals for Employment Equity Empangeni region. all employees understand their have been reviewed and updated for contribution to the organization, to each implementation by June 2005. (The Equity other and to the environment — hence Plan with targets is available on request). the “Zero Harm Campaign” against Training and Development (right to education) health, safety and the environment. The Within the South African context, the level | training programme is designed so that of risk relating to employment equity may employees are able to do cross-over be both complex and high, and may Unemployment in the area is very high, learning in their mother-tongue, i.e. influence employee perceptions of the especially among Zulu speakers. The English, Afrikaans or Zulu. As noted in the company at large as not being willing to minimum job requirements at the 2001 Standards Audit, Bayside Aluminium conform to the overall transformation smelters today effectively disqualify the Smelter has accomplished much in the process. An additional risk is that the trade majority of the population in the area, implementation of skills development and unions may lead a challenge on the issue. thus widening the employment and Adult Basic Education (relates to the right economic gap between “black and white” to education and traning). Human rights BHP Billiton’s recruitment policy provides in South Africa. For the 300 unskilled training, education and awareness could an illustration. All candidates must have employees as Bayside, there are a be an integral part of training matric (Grade 12) plus mathematics and number of training programmes to programmes and, in particular, the “Zero science as subjects passed. All upgrade their skills so as to improve their Harm Campaign”. candidates, for whatever position in the technical qualifications and remuneration. company, must pass a medical (Such initiatives are part of the right to examination. Candidates applying for education and are also included in the right Employment (right to work, right to positions at the plant must undergo a to work). To help address possible indirect a safe and healthy working environment number of tests, which include discrimination caused by job |and freedom of association) psychological assessment; medical, requirements that have a disproportionate stamina; hearing; eye sight and lung impact on the Zulu speaking community, Geraldine Fourie, Specialist-Employment function. According to Ms Pillay, the BHP Billiton could consider a community Relations discussed wages and reasons given for the rigorous testing is programme targeted at upgrading basic negotiations and industrial relations. because potential employees need to skills that, in the long term, could also There are two trade unions at Bayside operate heavy machinery in the Plant. On benefit the company by increasing the which deal with issues at the national average, in an intake of 70 candidates, pool of potential employees (with level and agenda rather than at plant only three candidates qualified for particular reference to future candidates level. Of particular concern to the unions employment. Most candidates failed the identified in “Remunerations and were issues such as work related health medical testing due to poor health and Employment Equity” above). problems rendering employees unfit to living standards. The net result, by work in a particular area in the plant. The default, is that the uptake of candidates is Anneke Kleynhans, Specialist, Training position at Bayside is that if the Plant is skewed in favour of people from the and Development, implemented the Adult not able to place employees in other Indian and White communities. Basic Education programme for positions, disability benefits will apply employees. She is in the process of (relates to the right to social security). This BHP Billiton South Africa: Standards as a Human Rights tool 93 was a specific recommendation raised in employees with healthcare problems. Mr priorities of business and profits. the 2001 Audit (9.2 and 20.1). Ms Fourie Mathenjwa’s concern may suggest However, community involvement indicated that there were not sufficient broader healthcare problems than those at initiatives could mitigate the specific risk. positions in the Plant to accommodate the Plant. As a risk factor, this may be Similarly, the retrenchments of staff were everyone is this situation. something that should be further a significant part of the restructuring that investigated as employees may not always had to take place. They both stressed that Another issue raised by the Unions was wish to declare their health status for fear the policy at Bayside is that everyone is the possibility of retrenchments. During of lay-offs. treated equally and that no one religion or 1999, the merger process at Bayside group of people is singled out for any resulted in a number of retrenchments, Mr Mathenjwa raised two further issues favourable measures. However, with the which created a great deal of uncertainty of concern for employees. The first issue high rate of unemployment in the amongst employees. BHP Billiton sought of employment equity was discussed province and in the country overall, to address the issue by implementing a above. The second issue was the ongoing retrenchments are a constant threat to Business Ethics Policy. The policy is aimed concern of employees (which, according employees’ livelihood. at ensuring that all employees are aware to him, included perceptions in the of practices that are regarded as community) that the merger and An employee forum — especially a unethical, to prevent such practices, to downsizing of Bayside caused human rights forum — could help maintain unbiased judgment and retrenchments and many people in the address issues of race and racism, independence of action in the execution community lost their jobs. He expressed gender, religion and employment equality of duties, and to provide employees with the sentiment that BHP Billiton was more and equity. Such a forum could also a formal process to disclose gifts, concerned with “profits than people”, consider training in diversity, coupled with potential or actual conflicts of interest, even though he acknowledged the a mechanism to address the above- alternative employment and other outside extensive community service that BHP mentioned issues and to provide redress. activities (right to a safe and healthy Billiton has undertaken in the community. working environment). In addition, Mr Mathenjwa expressed the concern of the workers that Management Community Development did not care about their workers in the | Culture (workplace culture community and that they did not and cultural rights) | represent the Company or the Plant at the Bayside has a strong social investment funerals of workers or their family portfolio which supports development Bongiswe Mathenjwa, Numsa Union members. Funerals play a significant role programmes and addresses specific Representative, discussed a number of in African culture and have an impact on human rights issues, such as the right to procedures including that of voluntary the social fabric of the community. This education and training, and the right to testing, safety, risk management, has been a particularly trying time for the health care, the right to work (especially environment, health and safety. In all these community given the high incidence of job creation, training and capacity areas, he indicated that Bayside did much HIV/AIDS related deaths in the region building, with a particular focus on the to care for the well-being of its (cultural rights). rights of women and children), cultural employees. Mr Mathenjwa indicated that rights including to heritage and the right the relationship between business and The risk factor to the Plant is that it to a clean and healthy environment. employees had changed over the past involves perceptions that have the years in that the Unions no longer make potential to undermine the community Approximately 80% of Bayside’s corporate demands on the Company, but rather set work and social involvement of the Plant social investment is conducted through out proposals and its own issues for (work place culture). The matter was the Zululand Chamber of Business discussion (This is an example of the raised in a meeting with the CSI Manager Foundation (ZCBF). The Zululand Chamber benefits from recognizing the right to and the General Manger. They indicated of Business Centre, in which the freedom of association, and transparency). that it was difficult to deal with Foundation is housed, was originally the He indicated that there were good medical perceptions and issues of culture that accommodation site of the builders and aid benefits for people living with HIV/AIDS they considered to be groundless. (While contractors of Hillside Aluminium. BHP and those who declared their status. it could be argued that this was not a Billiton purchased the site, which was However, he suggested that not enough very responsive answer — it is legitimate then handed over to the ZBCF to house was being done by the Company for for the Company to focus on its core the NGOs in the area. Louis van Zyl is the 94 BHP Billiton South Africa: Standards as a Human Rights tool

Director of the Centre and manages conditions/rest, leisure and holidays; and Bayside’s projects and community Concluding Remarks the right to social security, including involvement. Bongani Mqaise. BHP | social insurance. Billiton’s Corporate Social Involvement HP Billiton has taken the first very Manager works closely with the ZCBF to important step in its commitment to Human rights within the working ensure alignment with BHP Billiton’s incorporation of human rights within its environment can mean more and be more Business Strategy. A number of BHP organisation. However, now the challenge than a compliance tool. BHP Billiton has Billiton’s projects run by the ZCBF are is implementation. The approach of put in place good initiatives, and best done in partnership with other major integrating human rights into existing practices have been achieved at a companies in the area, as well as local management tools is highly commendable number of levels within the Plant, government. However, as in the case of and provides the basis from which to including the right to life. BHP Billiton, the ZCBF does not work or continue implementation, develop operate within a rights based culture or standards and conduct evaluation and In addition, the right to health care, environment. review. However, the Management unemployment (equal opportunities) and Standards, in their current form, do not retrenchment (right to work) are significant As a risk factor, there is a degree of concern convey a clear sense that the company areas of concern for employees. Bayside about ZCBF managing Bayside’s projects perceives the interrelatedness and Aluminium remains focused on these and community involvement, as the indivisibility of human rights, or the areas to ensure that their employees’ relationship with ZCBF essentially removes advantages of operating within a human needs are addressed within the structures BHP Billiton from visible participation. rights framework and discourse. of the Plant, the Company as a whole and Rather, the perception is that the benefactor the community at large. Bayside is ZCBF. The roles of ZCBF and BHP Billiton Overall, the Bayside Aluminum Smelter Aluminium Smelter, through their are not clearly defined in the community. has significantly aligned their business Management Standards, has set the This recalls Mr Mathenjwa’s comments strategy with their workforce to establish foundations for the development of a about the Company not being represented institutional connectedness with the human rights culture to take hold. in the Community referred to in overall Charter, HSEC Policy and “Employment” above. Management Standards. However, on a basic human rights level, the fundamental documentation, i.e. the UDHR, was not on Recommendations (additional) the premises. Arguably, a clear strategy Indigenous People on human rights is not evident within the Standards | organisation. u It is critical to the successful outcomes of the Standards that the An issue of concern raised during the Yet, the Plant has achieved much by way communication gap be addressed. One interviews was the removal of indigenous of complying or conforming to human suggestion is that the champions people from Bokhulu to Ntambanana in rights norms and standards. As one of the assigned to the various Standards 1966-1967 to make way for industrial oldest of the three smelters with over 300 should “talk” to each other on a regular growth in the area. Following a claim to the unskilled employees, Bayside Aluminium basis to develop a system or structure land by the indigenous people, the has a highly commendable programme in that is able to convey information to Department of Land Affairs allocated a site place to address the Plant’s specific employees and to allow for responses to them, which became known as the needs, especially in terms of the Adult and corrective measure “from the Mandlazini Agri Village. However, the Basic Education Training Programme and ground”. people of the Mandlazini Agri Village still do the Team Excellence Training (right to not feel that they are adequately education and training). No specific issues u Champions need to promote a human compensated for their ancestral land. In were raised on the Environment (right to rights culture across Standards, the interim, Bayside Aluminium, along with the environment), which is benchmarked systems, activities and operations that a number of other companies in the area, as the best in the country. Other issues serve to create an enabling has adopted the community as part of their include the right to health care and environment. The “Zero Harm Corporate Social Investment programme. privacy, particularly with regard to Campaign” currently underway HIV/AIDS; the right to form trade unions addresses the issues of safety and the and operate openly within the company; environment. It is a highly visible the right to safe and healthy working Campaign throughout the Plant. The BHP Billiton South Africa: Standards as a Human Rights tool 95

Campaign could be extended to include differences. Diversity training should be HSEC Policy and Management Standards. and promote human rights issues. The seen as a tool to achieving the common In the process, BHP Billiton has implementation of the findings and value system set out in the BHP Billiton incorporated international human rights recommendations of Standard 8.2 Charter. standards within their sphere of influence could be used as a basis for promoting to ensure that the Company is not human rights awareness within the Employment complicit in human rights abuses. As one Plant and subsequently throughout the u The Business Ethics Policy must be of the oldest of the three smelters, Company. communicated to employees and Bayside Aluminium has addressed Plant monitored against issues of concern specific needs, in terms of processes and u The benchmarking between Standards and perceptions. This should also be operations as these relate to Standard 8: should include human rights discussed as part of diversity training. Business Conduct, Human Rights and compliance benchmarking and the Indigenous Affairs. Bayside Aluminium development of indicators, evaluation Culture operates within the broader structures and review mechanisms. In addition, u Diversity training provides a platform and values of BHP Billiton. Standard 15: Monitoring, Audit and for people to share cultural Review — the performance backgrounds and differences. It also Vision and Leadership requirements should include human creates the opportunity for people to Bayside Aluminium Standards Audit rights standards and assessment participate in the transformation establishes institutional connectedness consistent with the South African process of the company and the with the overall Charter and HSEC Policy. Constitution, the Bill of Rights and the community at large. This institutional connectedness is led by UDHR. senior management through the Community Development implementation of the Standards, the u Audit results should be u A more favourable relationship between Audit and the related activities and supplemented/corroborated by an the ZCBF and BHP Billiton should be operations, and is broadly shared by external auditor. The Audit should found that allows BHP Billiton the role employees, shareholders and the include stakeholder input as well as of the lead agent rather than the support community at large. The overall vision and local human rights knowledge to relate agent to ZCBF. ZCBF is well placed to leadership is led by broad based business to the most important human rights provide human rights training and acumen and leadership principles which issues faced in the community development to the broader community define the framework for governance and especially around socio-economic as well as allow human rights to investor returns. rights, i.e, the right to housing, become an integral part of their Empowerment education, food, water, social security, projects, review and evaluation process The Standards Audit allows both health care, and the environment. and their discourse. employees and trade unions to actively Special emphasis should also be placed engage in the process and to add value to on the rights of the child and women. Indigenous People the process. Empowerment is also u The Mandlanini Agri Village creates an addressed in terms of South African Health Care opportunity for Bayside Aluminium to specific needs and criteria. u The Employee Wellness Procedure take the lead in bringing together other should be implemented as soon as industries in Richards Bay to join forces Resources possible and monitored against and assist the people in community and Resources are made available at employee needs and concerns - participate in sustainable development corporate level to achieve objectives. especially around issues of HIV/AIDS. programmes. Policy and Strategy Remuneration and Employment Equity The Standards cover international u Bayside Aluminium must give effect to standards including the Global Compact the Employment Equity Plans. The Global Compact Reporting Framework and are integrated Performance Model into core business strategy. Compliance is u Diversity training programmes should Bayside Aluminum Standards, Audits and monitored via the Balanced Scorecard be instituted to address human rights business strategy, along with the approach to ensure that policy and issues with specific reference to race workforce, create an institutional strategy is taken down to the floor level. and racism, gender, employment equity, connectedness with the overall Charter, norms, perceptions and cultural 96 BHP Billiton South Africa: Standards as a Human Rights tool

Process and Innovation Company, namely systems, processes and The Company’s policy is that “innovation” performance targets. The reports are also is used as a business imperative to drive aligned with the Global Reporting Initiative the process — innovative systems in turn Framework and are externally verified. are translated into practical application.

Impact on People Processes and systems are in place to deal with issues that may arise as part of the formal structures of the Company. BHP Billiton has an independent Ethics Advice Panel to address individual complaints/community concerns. The Panel reports directly to Head Office. There is also an Independent Risk Management Committee which tracks issues that are recorded by the Ethics Advice Panel. The Ethics Advice Panel also takes up issues and operates in a pro- active manner to deal with issues. In addition, there is an external “whistle blowers” system in place (via auditors) and an internal help line.

Impact on Society The design, evaluation and review of the Standards have the potential to highlight both the positive and negative impact on society, including partnerships with government, non-governmental organisations and with the community.

Value Chain The core business of Bayside Aluminium is mining smelting. The Standards consider the downstream user and how to promote appropriate use of the end product.

Reporting BHP Billiton has received a number of top awards in most categories in terms of reporting procedures. HSEC reporting procedures are directly linked to comprehensive performance audits throughout the Company. Two reports are released together each year: Financial/Business and the HSEC Performance Reports with the one supporting and informing the other. Both reports fit into the total governance of the BHP Billiton South Africa: Standards as a Human Rights tool 97

Appendix 1

BHP Billiton Bayside Aluminium Staffing Compliment as at October 2003

Male Male Male Male Female Female Female Female EE Actual

Occupational Categories African Coloured Indian White African Coloured Indian White April 03

Legislations, senior officials 1 0 1 5 0 0 0 1 & managers (BB 6+7)

Actual as @ October 2003 0 0 1 6 0 0 0 1 2

Professionals (BB8) 4 0 2 13 0 1 0

Actual as @ October 2003 3 0 3 20 0 1 0 3 10

Technicians & associate 33 2 15 75 10 1 7 7 professionals (BB9) Actual as @ October 2003 28 1 13 86 5 1 4 12 64

Clerks (BB10) 8 0 0 11 4 0 3 17

Actual as @ October 2003 6 0 0 5 2 0 0 10 18

Craft and related trades 33 2 10 107 0 0 0 0 workers (Artisan)

Actual as @ October 2003 27 1 4 111 1 0 0 0 33

Plant and machine operators & assemblers 394 5 25 46 24 0 3 15 (operators) Actual as @ October 2003 470 1 7 29 4 0 0 0 482 Article 14 Human rights and supply chain management in the Pharmaceutical sector 99

100 Case Abstract

100 Company Profile

* Peer review of this case study was provided by Human rights and David Allen, Strategy Professor and Area Chair, 100 Human Rights Instituto de Empresa and Nicky Amos, Director at Novo Nordisk supply chain of CSR, Corporate Culture plc. We are pleased management in the to acknowledge that this case study was researched and written with the financial Pharmaceutical support of NoVo Nordisk 101 Method sector*

John Morrison 102 The Sustainable Supply Chain TwentyFifty Management Programme

Annette Stube Novo Nordisk 102 An analysis of the Supplier Responsibility Programme using the Global Compact Performance Model The ‘vanilla’ performance model Vision Leadership Empowerment Policies and strategies The allocation of resources Innovation and processes Impact on value chain Impact on people Impact on society Reporting Managing stakeholder dialogue

01 Final remarks

01 Appendix 1 100 Human rights and supply chain management in the Pharmaceutical sector

This case study captures work in the company to be reflected throughout Case Abstract progress and we hope it will be thought the company’s ownership, and, in March provoking for any company interested in a 2004, the company’s articles of better understanding of the first two association were amended to specify that This case study analyses the way in Global Compact principles. It also shows the company will ‘strive to conduct its which Novo Nordisk has integrated that business approaches to integrating activities in a financially, environmentally human rights (including labour rights) into human rights can be based as much on and socially responsible way’. its supply chain management over the opportunity and vision as on compliance past three years. It should be noted that alone. Novo Nordisk is represented in 69 countries the programme also includes the and its products are sold in 179 countries. environment, but that this case study 99% of its sales are outside Denmark, but focuses on the human rights dimensions production is concentrated in its home of the work. It follows the framework of Company Profile country, with other production sites in the the Global Compact Performance Model US, France, Japan, China, South Africa and and compares the progress made under Novo Nordisk is not the world’s largest, but Brazil. Of the total workforce of 18,800, the Sustainable Supply Chain is one of the most specialised, of the 65% live and work in Denmark. Management Programme with other international pharmaceutical companies. It . human rights activities the company has is a focused health care company with undertaken. The authors have aimed to 47% of the global market in insulin (70% of make the case study as accessible as the company’s business). It also produces Human Rights at Novo Nordisk possible and to highlight possible areas products for haemostasis management, that might be transferable to the thinking growth hormone treatment and hormone Novo Nordisk’s vision of sustainability can of others. replacement therapy. In 2003, the turnover be traced back to the early 1990s and of the company was DKK 26.5 billion (Euros earlier, as will be analysed in the section This case study is particularly relevant to 3.56 billion).202 Split geographically, 44% of on Vision below. In 1999, Novo Nordisk any company that is not yet facing specific the turnover is in Europe, 24% in North embarked on a SWOT analysis for the legal, media or NGO pressure to comply America, 16% in Japan and Oceania, and company based on the full content of the with specific human rights norms in its 16% in the rest of the world. Universal Declaration of Human Rights management of its supply chain. This can across a sample of four countries: Algeria, present perceptual challenges within some The company is registered in Denmark as Brazil, China and India. In parallel with sectors of the company and amongst some a public limited liability company with a this, Novo Nordisk carried out an internal suppliers as to why they have to Board of Directors and Executive review. This enabled Novo Nordisk to be participate in self-evaluation Management. In accordance with Danish one of the first companies to clearly questionnaires, telephone discussions and law, three Board members (out of a total define what it thought its ‘sphere of possibly auditing. Yet any rigorous of nine) are elected by the employees and influence’ was relating to human rights movement towards the promotion of serve for four years.203 Novo Nordisk’s (Global Compact Principle One205) even human rights within a company’s sphere of share capital is DKK 709,388,320, which though Novo Nordisk was not a member influence and guarding against any form of is divided into an A share capital of of the Global Compact at the time. In complicity in the abuse of human rights, nominally DKK 107,487,200 and a B 1999, Novo Nordisk made a formal public requires any sizable company to monitor share capital of nominally DKK commitment to the Universal Declaration its supply chain carefully. This case study 601,901,120. Novo Nordisk’s A shares are of Human Rights and signed on to the presents a model for moving towards non-listed shares and held by Novo A/S, a Global Compact in 2001. human rights-based supply chain private limited Danish company which is management that is as much driven by 100% owned by the Novo Nordisk It has declared that its priority areas broader strategic concerns about good Foundation. Holding 26.7% of the total within human rights are likely to be: corporate governance, as it is about any share capital, Novo A/S controls 70.4% of prior knowledge of labour rights abuses in the total number of votes. The B shares u the right to health (i.e. access to health the supply chain, of which there were are quoted on the Copenhagen and care and medicines)206 none. It is a model which relies more on London Stock Exchanges, and American “pull-factors” within the company than Depository Receipts (ADRs) on the New u the right of non-discrimination “push-factors” from outside, and so from York Stock Exchange.204 This corporate (translated into equal opportunities and this perspective can be seen as pro-active. governance structure helps the values of diversity)207 Human rights and supply chain management in the Pharmaceutical sector 101

u the right to privacy (including protection of the average price in the Global Compact principle (relating to non- of patient information).208 US/Japan/Europe as a benchmark) of complicity in human rights abuses) is one the standard price in the world’s 49 of the priorities for Novo Nordisk.211 This does not mean that Novo Nordisk poorest countries according to the UN. Where does a socially-responsible takes no interest in other human rights — pharmaceutical company set its the Sustainable Supply Chain u Contributing to the World Diabetes boundaries to human rights obligations? Management Programme demonstrates Foundation for humanitarian assistance What level of safeguards can be expected that this is not the case — rather it was in the very poorest of countries. to avoid direct, in-direct (‘beneficial’) and one of the first companies to clarify its silent complicity across the globe? most immediate ‘sphere of influence’ In relation to equal opportunities and relating to human rights, although this is diversity, Novo Nordisk has a long term not a term Novo has used directly. strategy with goals on how to reap the benefits of diversity built upon a Method The company has undertaken a number of foundation of ensuring compliance to programmes in order to help ‘fulfil’ and non-discrimination. Two aspects have This case study is based on a series of ‘promote’ these rights across a range of been identified as significant focus areas interviews conducted in March 2004 will stakeholder groups. Many of these activities within the global company until 2006: key staff and a selection of suppliers to go beyond compliance to international Novo Nordisk. It builds upon earlier work norms and seek to harness business u ’Women in Management’ is a company- conducted by Malcolm Macintosh for the opportunity in the promotion of rights. wide priority for 2004 and Novo company and also draws on a series of Nordisk is working on a series of internal documents, surveys and reports that An important milestone in the development initiatives in partnership with the US- were made available to the authors. The aim of human rights was the emerging profile of based NGO ‘Catalyst’; was to provide a case study that was ‘the right to health’ within the accessible to companies, NGOs, pharmaceutical industry in the context of u ’Ethnic minorities’ will be the focus for governments and trades unions around the HIV/AIDS in southern Africa. Although Novo 2005, not least in Denmark where world whilst adding to the collective Nordisk is not a producer of anti-retroviral increasing the ethnic diversity of the understanding of how the Global Compact drugs, it was engulfed by the larger public workforce is seen as a priority. principles might best be implemented. Given debate about pharmaceutical patents and the time and space available to the case access to life-saving medicines, of which In relation to privacy, Novo Nordisk’s has study, the authors have decided to diabetes care is clearly a part. Rather than just initiated a project on safeguards for concentrate mainly on the first two closing down the issue, or seeing it purely as patients and employees reflecting principles of the Compact relating to human an exercise in risk management, Novo increasing public concern about the way rights. However, as labour rights are also Nordisk engaged in the following five pharmaceutical companies use data, for human rights (i.e. they are in the Universal programmes in relation to the right to health: example the genetic and other data in Declaration and other human rights their research and marketing. Conventions), reference will also be made to u National Diabetes Programmes — Principles Three, Four, Five and Six. It is Novo Nordisk works with national In summary, Novo Nordisk has tried to important to recognise here, that Novo governments and other actors to take a systematic approach to human Nordisk are also committed to the remaining ensure effective national programmes rights across its general business. This is three Global Compact principles (Principles are in place; not without problems and challenges and Seven, Eight and Nine) relating to the the company is aware that mistakes will Environment, and these are also reflected in u The DAWN Programme209 — works on be made in the process. The company is the Sustainable Supply Chain Management the psychosocial aspects of diabetes; currently developing its ‘Human Rights Programme. However, for the purposes of Management System’ as its commitment this case study, it is the first Principles that u World Partner Programme — works to to membership of the Business Leaders shall receive the most attention here. build effective diabetes care in Initiative on Human Rights.210 This Bangladesh, Costa Rica, El Salvador, management system is being built on the Acknowledging that Novo Nordisk has done Malaysia, Tanzania and Zambia; company’s existing analysis of employee, much in this area over recent years, the product and project cycles to ensure a primary focus of the case study is the u Preferential Pricing Policies — holistic approach. Looking forward, the Sustainable Supply Chain Management marketing medicines at one fifth (20% company acknowledges that the second Programme. 102 Human rights and supply chain management in the Pharmaceutical sector

crisis (i.e. their ‘Brent Spar’ or ‘Niger The Sustainable Supply Chain An analysis of the Sustainable Delta’), then for Novo Nordisk it happened Management Programme Supply Chain Management very early. The Novo Nordisk vision was Programme using the Global augmented in the early 1990s through Novo Nordisk’s purchases with external Compact Performance Model environmental and animal welfare issues suppliers were valued at DKK 12.3 billion (enzymes, bioethics and animal testing), in 2002. This covered transactions with forming a broader platform of 5,000 suppliers ranging from flower shops sustainability awareness. By the late The ‘vanilla’ performance model to raw materials suppliers. Less than 200 1990s, issues of human rights had started suppliers delivered 80% of the value | to emerge. At Novo Nordisk, the ethical purchased. Geographically 93% of Novo questions faced by a global Nordisk’s suppliers are located in the EU The Global Compact Performance Model pharmaceutical company are not dodged, or EFTA countries, 5% in North America, makes a distinction between three indeed it remains a stated aim of the Japan, Australia and New Zealand. Only different approaches: ‘cod-liver oil’, 213 company to lose its core business through 2% by number and 0.4% by value are ‘caviar’ and ‘vanilla’. When considering the eradication of diabetes. Of course located outside these regions. human rights in business, these there is no prospect of this in the short to distinctions are intriguing — with the medium term with global diabetes In 2003, Novo Nordisk undertook their ‘cod-liver oil’ being more normative, increasing rapidly in both the developed second social and environmental ‘caviar’ more process driven and the and the developing world. The company evaluation of 90% of their key suppliers, ‘vanilla’ model borrowing from both. This has also some product diversity outside of in the form of a self-evaluation concept of a ‘never ending cycle of diabetes, the NovoSeven anti-bleeding questionnaire. Of this total, 69% (i.e. 322 improvement’ is elaborated by the four agent being a good example where Novo suppliers) were evaluated in 2003:212 stages in the cycle: ‘vision’, ‘enablers’, 214 Nordisk aims ‘to position NovoSeven as ‘results’ and ‘reporting’. This then the world’s first haemostatic agent for u In the first instance, 87.6% showed implies an ongoing interplay between critical bleeds’.216 The growth of this satisfactory environmental and social indicators of good process (vision and performance; product would allow Novo Nordisk to enablers) with tangible impacts on survive commercially should global stakeholders (results) that are in some diabetes ever move into retreat and will u 1.5% showed unsatisfactory way measurable and communicable also raise its own ethical questions. environmental and social performance; (reporting). The learning from this case study will be related to vision, enablers, Yet the Novo Nordisk vision goes beyond u 10.6% showed unsatisfactory impacts and reporting elaborated on in the any particular business case and is environmental performance;. sections below. The last section on inspiring because it allows a glimpse of Managing stakeholder dialogue, although what standard business behaviour might u 0.3% showed unsatisfactory social listed separately in the Global Compact become over the decades ahead. Social performance. Performance Model, might be seen as an and economic values are not just issues issue of ongoing process. of Corporate Social Responsibility but also u The majority of answers are of high Corporate Governance. The 2003 quality, providing quite detailed Sustainability Report re-affirms the responses suggesting that suppliers company’s commitment to triple bottom took the questionnaire seriously. Vision line reporting and covers the following | strategic areas: ‘living our values’, ‘access The self-evaluation questionnaire is an 215 to health’, ‘our employees’, ‘our use of essential part of the Sustainable Supply “An important company in a small country” animals’, ‘eco-efficiency and compliance’ Chain Management Programme. In 2004- and ‘economic contribution’.217 Perhaps 2005, the project will also focus on The Novo Nordisk vision relating to the ultimate statement any publicly listed assurance (audits) and expansion of the society and the environment can be company can make at a strategic level is evaluation programme to R&D, Sales & traced back to the 1970s campaign to integrate social and environmental Marketing. It is this Programme which is against enzymes in laundry detergents by values into the articles of association, the focus of the analysis of this case Ralph Nader and its effects on Novo which the company did in March 2004. study using the Global Compact Nordisk’s business. If it is true that many Performance Model. socially responsible companies have their seminal point of awareness forged out of Human rights and supply chain management in the Pharmaceutical sector 103

The 2003 Report also reports on the chain. Unlike the footwear industry for the sourcing of laboratory equipment extension of some of these values to the example, the pharmaceutical industry has around the world. He had a clear supply chain in the form of results from the faced much less external pressure to perspective on how the ‘supplier risk self-evaluation questionnaires, describing integrate human rights into supplier matrix’ (a tool to be analysed below) these responsibilities as follows: relationships. The fact that Novo Nordisk could be used to identify the appropriate has rolled out a supplier programme over level of engagement and whether an audit “In seeking to promote social responsibility recent years is a testament to its was necessary. and good environmental performance leadership and reflects a belief that any throughout our business we work with approach towards addressing human Given that purchasing managers are likely suppliers and contractors to support human rights has to be holistic and cover all to develop the closest relationship with rights standards and sound environmental operations. The pharmaceutical sector has suppliers in their category, they can take practices in our supply chain. In 2004, we always taken a keen interest in the quality the discussion a lot further than the initial will include auditing of their performance.” 218 of the product that suppliers provide, given self-evaluation questionnaire. This is the considerable risks involved to human especially important when it comes to health if a product is faulty. This second tier suppliers. For example, a Leadership relationship between the management of recent visit to a new second tier supplier | quality in the supply chain and that of in Estonia yielded a series of concerns upholding environmental and social that could be taken up directly with the Leadership is crucial in developing such a standards represents an interesting first tier supplier. In essence, purchasing strong values culture within a company. opportunity for further leadership in this managers are empowered, through There are often a succession of skilful sector. There is a realisation, however, that bespoke training in the company, to see and like-minded people that drive such an the Pharmaceutical sector lags behind that social and environmental management as agenda over years. Mads Øvlisen, of many branded-retailers in supply chain integral to quality management in the formerly the CEO and now the Chair of management generally and that there is supply chain. This is supported by an NOP the Board, is rightly credited in providing much that remains to be learnt from Healthcare Survey of Novo Nordisk leadership in this area through the 1990s initiatives such as the Ethical Trading suppliers in 2003, which indicated that (several of those interviewed in the Initiative in London and the work of NGOs 91% of suppliers agreed or completely company cited the 1997 ‘values in action’ and Trade Unions around the world. agreed with the statement that they ‘had programme as an important milestone) a good dialogue with the contact person but it has continued to rise in prominence at Novo Nordisk.’219 under the current CEO Lars Rebien Empowerment Sørensen. Others often cited in the | The challenges involved in training all process are Lise Kingo, the Executive Vice purchasers in human rights should not be President with direct responsibility for the The Stakeholder Relations team has understated. Few purchasers join any area, Vernon Jennings and Elin Schmidt direct responsibility for facilitating the company with the prospect of human (at Vice President level) for directing the empowerment of Novo Nordisk staff and rights-based supply chain management in operationalisation of these values. suppliers relating to human rights and mind and a significant amount of work Leadership on values is established within other values. In this team, Annette Stube has been invested by Novo Nordisk in the management systems in place (This is the project manager for the Sustainable training and updating these workers. The will be discussed in the next section on Supply Chain Management Programme. strategic purchaser interviewed for this empowerment). It is no longer dependent This is not the same thing as saying that case study was obvious keen and well- on one or two people but is part of the she has had the responsibility for informed, but there is likely to be variance culture and is a clear expectation of many upholding values in the supply chain; this between the ability and commitment of stakeholders. One of the senior managers responsibility has been devolved in great each of these key workers. Any system interviewed for this case study commented part to the people in the company who that places key ethical responsibilities on that one of the most valuable things the manage the commercial supplier front-line staff needs internal systems and company gave her was the trust and relationships: the purchasing managers. monitoring to support them and the quality discretion to interpret the values and show During an interview for this case study, of their work. It was clear from interviews leadership on behalf of the company. one of the strategic purchasers for the that this is the role of the ‘stakeholder company talked eloquently about what it relations’ team, but there was no data Leadership has also been implicit in the meant to uphold social and environmental available as to performance of each of the extension of these values to the supply standards in his area of the supply chain: purchasing managers in this area. 104 Human rights and supply chain management in the Pharmaceutical sector

Another example of empowerment is the pharmaceutical company (Global Compact the industry, but there might be some ‘Supplier Evaluation Committee’ that Principle One) and on the core labour aspects (such as ‘collective bargaining’ in deals with purchasing decisions that may standards that need to be upheld in supply section 10 of the questionnaire) that have a strategic impact on Production. chains of any business sector (Global would lend themselves to different Issues brought to the committee arise Compact Principles Three, Four, Five and interpretations by different stakeholders. from the environmental or social Six). Obviously, the supply chain is part of Global Compact Principle Three infers that evaluation of a supplier. The Supplier this sphere of influence but not as central alternative representative bodies are Evaluation Committee can meet in cases to the business proposition as health itself. acceptable but not if trades unions are of emergency. Issues are brought to the excluded from the bargaining process committee in cases of serious non- Novo Nordisk reports that, for 2003, the against the wishes of workers.221 It is compliance or unsatisfactory performance target was to evaluate (by questionnaire) unclear from the questionnaire whether by suppliers, media exposure, or sourcing suppliers of production materials, all suppliers would read section 10 in this decisions of a strategic nature. services, office equipment and way, despite the stated intention of Novo engineering work, as well as the licence Nordisk to include unions in the process. The empowerment of suppliers themselves manufacturers, covering 31% of the total Similarly, the questions of working hours is also a vital component. This is explored value of purchasing in the company. The in section 6 of the questionnaire do not in the section Impact on value chain below. 90% targeted in these groups were those normally extend to managers for whom that could be characterised as having a limits on working hours are rarely set (at high business impact, being least not in Denmark, the UK or USA). manufacturers of substances or using These shades of grey within the black Policies and strategies environmentally hazardous processes, or and white nature of the questions posed | industries or companies located in in the questionnaire are recognised by the countries known for human rights Novo Nordisk staff interviewed and might Strengths of the self-evaluation violations. Through the use of the be explored in the auditing process (The questionnaire questionnaire, they were, in fact, able to Auditing of suppliers section below). The self-evaluation questionnaire has evaluate 69% of these suppliers during been the first step in implementing the 2003, representing a sample of 322 The suppliers interviewed for this case Sustainable Supply Chain Management suppliers and licence manufacturers.220 As study were surprised that they were Programme (a specimen is attached as an already stated, 87.6% of these asked questions about ‘child labour’222 Appendix). The questionnaire was questionnaires yielded satisfactory and ‘forced and compulsory labour’223 in produced after benchmarking against environmental and social performance, the questionnaire, in sections 8 and 9 other initiatives such as SA8000 and the 10.6% unsatisfactory environmental respectively. As many of these suppliers Ethical Trading Initiative. However, since performance, 1.5% unsatisfactory were based in north-west Europe, some Novo Nordisk was one of the first movers environmental and social performance were shocked to be asked such in the pharmaceutical sector with regard and 0.3% unsatisfactory social questions. However, upon explanation to supplier responsibility, the nature of the performance alone. This means that only from the Novo Nordisk team, most questionnaire’s content was thought 1.8% of suppliers were not regarded as accepted that asking such questions was through from first principles. The social compliant with the social standards in the implicit in the systematic approach the content of the questionnaire focuses questionnaire based on their responses to company was taking and the universality largely on labour standards and the the questions asked. of human rights themselves. A key benefit International Labour Organisation core of including these questions is that the conventions. This is interesting when Weaknesses of the first tier suppliers would in turn use the contrasted with the stated sphere of self-evaluation questionnaire template for asking questions of their own influence of the company for human On closer inspection, this raises a serious suppliers who might well be rights. Whilst the ‘right to privacy’ and question. Although the vast majority of geographically more dispersed. This ‘non-discrimination’ are included in the first tier suppliers are in Europe and North cascading effect of the questionnaire to questionnaire (in sections 13 and 11 America, are 98.2% of them really the second and even third tiers of the respectively), ‘access to health’ is upholding the core labour standards and supply chain is encouraged by Novo represented only in relation to ‘health and protection of privacy as set out in the Nordisk and there is some evidence that safety’ (section 7). This is an interesting self-evaluation questionnaire? Indeed, it is for some suppliers it is having exactly this compromise between focussing on the likely that the vast majority are compliant effect, with 39% commenting that they main sphere of influence of a given the quality standards upheld across believed the evaluation had had a positive Human rights and supply chain management in the Pharmaceutical sector 105 impact on how they operated with their alternative system would be practical for which local employees of Novo Nordisk, own suppliers.224 However, of the 61% of monitoring so many suppliers across the as well as external stakeholders such as those who believed it did not have such a company. It is possible that, with time, local academics or lawyers, are involved. positive effect, a large percentage felt present or new initiatives might eliminate To date, the only major social issues have they were doing it already. some of this duplication. Yet, undoubtedly, related to health and safety in the auditing is a more thorough and workplace, but Novo Nordisk has done It is likely, given the comments during satisfactory method of engagement on some internal thinking about what to do interviews for this case study, that some these issues, resources permitting. should issues such as poor labour others did not see the relevance to their Companies with fewer suppliers, or those conditions be encountered. There is much own operations. Given that some suppliers grouped in closer geographic proximity, that comes out of these audits that goes were identified for their environmental and might find it a better investment to leap- beyond compliance models. Some not their social risk, the limitations in frog the questionnaire stage and invest in licensees and other suppliers provide a having such a generic questionnaire might auditing all suppliers. range of free medical resources such as have compounded this perceptual doctors and dentists to employees. Others problem. However, child labour and forced The auditing of suppliers supply food coupons, still others make labour are by no means absent from In 2002, all purchasers, including available social and recreational facilities. Europe and Novo Nordisk is supporting the purchasers from production sites in In some cases, this is to substitute for indivisibility of human rights, as well as France and USA, as well as some lower wages (although always above the the holistic integrity of the Global auditors, were invited for an information minimum). These policies help fulfil Compact, by taking such an approach. meeting with top management economic, social and cultural rights, such representatives to underline management as the right to health and the right to Another limitation, which is self-imposed, commitment. A one-day training day food, and echo Novo Nordisk’s own stated is a ‘triviality limit’ that excludes suppliers followed. 64 people were trained and main sphere of influence. That these whose purchasing value to Novo Nordisk certified. The training focused on rights are being fulfilled and promoted in is worth less than DKK 250,000 each year environmental and social issues as well the supply chain, and not just through a (approximately US $38,000). It is possible as the practical elements of carrying out compliance framework, demonstrates a that some serving contracts in Denmark the actual evaluation. rich area of information about supply fall into this category, sectors that are chain engagement that partnerships and traditionally underpaid in Europe and often The social auditing of suppliers is still in auditing can provide. really on more vulnerable migrant labour. its initial stages at Novo Nordisk, but is Although these suppliers are likely to be likely to provide a very useful follow-up to Dealing with non-compliance locally based, many in Denmark, some will the questionnaire process, in particular As already mentioned, levels of stated possibly be elsewhere in the world. This is fleshing out some of the answers to the non-compliance from the questionnaire not a practice that is transferable to other questionnaire. Given that Novo Nordisk’s are low: 10.6% unsatisfactory small or medium enterprises, for whom US whole attitude to human rights is to go environmental performance, 1.5% $38,000 might represent a significant beyond compliance, some form of unsatisfactory environmental and social percentage of their total purchasing. auditing is essential to encourage performance and 0.3% unsatisfactory suppliers to be proactive and then to social performance alone. The systematic There are also some more general record the change following the audit. A limitations of a questionnaire-based limitations of a self-evaluation system, the good example of this is the licenced system were discussed above, but it is first being that you can never be manufacturers who are all audited as a important to stress that whenever any absolutely sure that suppliers are telling matter of course and enjoy a close answers are vaguely or incompletely the full truth. Questionnaires also need relationship with the company. stated in response to the questionnaire, it chasing up in very many cases, most is always followed up by a telephone call often by telephone, and this is resource During interviews for this case study, the from the purchaser. This is often the most intensive for the business concerned. authors discussed licence arrangements resource intensive part of the exercise, Suppliers can also complain of in countries such as India, Cuba, South but does make the questionnaire ‘questionnaire fatigue’, asked to complete Korea, Serbia, Mexico, Iran and Hungary. evaluation more rigorous and helps drive a range of different questionnaires sent The supplier questionnaire is introduced down the non-compliance figures to those by different customers. When asked about to new licensees before the final that represent real issues. The next stage this, Novo Nordisk seemed aware of the negotiations are completed. This is is for all non-compliant suppliers to be limitations, but were not satisfied that any followed up in the auditing process in audited and asked to make assurances to 106 Human rights and supply chain management in the Pharmaceutical sector

Novo Nordisk about improvements. 4%; technology will have advanced in IT, Should these improvements fail to The allocation of resources fuel cells, nanotechnology and materialise or if they refuse to do so, in | biotechnologies; a resource consumption the case of a strategic supplier, then it is tax will have replaced income taxes; even referred to the Supplier Evaluation Given the fact that so much responsibility food companies will be selling Committee’ for a decision. within the Sustainable Supply Chain predominantly healthy products and Management Programme is delegated to promoting exercise. All in all, there will At this stage, our analysis becomes purchasers and auditors within the have been a “mind change” towards hypothetical, as Novo Nordisk has not yet company, it is difficult to measure the buying from sustainable companies and had to refer a specific supply chain case precise allocation of resources here. living a healthier more eco-friendly life.225 to the Committee to discuss possible However, the human resources available Within this context, Novo Nordisk wishes disengagement. The practical problems to Lise Kingo, Executive Vice President for to place itself firmly as a company of with this are likely to vary across different People, Reputation and Relations, who innovation and not one that profits from suppliers. The most challenging would be carries the executive level responsibility increasing poor health related to less ‘strategic suppliers’ who produce for all Novo Nordisk’s social and active life-styles. Novo Nordisk’s history of essential, and sometimes unique, environmental programmes, compares stakeholder engagement informs its components and raw materials for favourably with many other companies. thinking here and it encourages others to specific drugs. Some of these suppliers However, social and environmental values challenge its approach and therefore to take one to two years to locate and to are so well integrated into aspects of sharpen its processes. Its membership of pass quality controls. Dropping such a quality and assurance that it is difficult to the Business Leaders Initiative on Human supplier on grounds of social or separate them out. Members of the Rights and its active role in the Global environmental non-compliance would be Stakeholder Relations team are experts, Compact must be seen in this light. a very serious commercial decision and but are also facilitators within the would test Novo Nordisk’s values should company to engender wider ownership. such a circumstance arise. It is possible They feed into a network of 17 Impact on the value chain that as Novo Nordisk extends its ‘facilitators/auditors’ across the whole | programme to all suppliers and a greater company. Other resources are perhaps number of audits are carried out, the less tangible, such as the systematic “Over half of suppliers believed that the number of non-compliant suppliers approach to all problems and challenges evaluation of suppliers on social and identified will increase. across the whole company, that lends environmental issues has had a positive itself to a strategic approach to human impact on the way they operate internally, the Extension of the programme rights and supply chain management. remaining suppliers generally believed that it to other supply chains had had little impact because their standards There are still parts of Novo Nordisk’s Innovation and processes were already sufficient or they saw little need purchasing power that need to be Novo Nordisk has taken Corporate Social to change. Thus, only a small percentage included in the Sustainable Supply Chain Responsibility seriously for at least the believed the evaluation to be negative. The Management Programme. ‘Research & past ten years. This has required constant main change made by suppliers as a result Development’ and ‘Sales and Marketing’ exposure to new ideas as well as the of the evaluation, was to begin to assess each have their own supply chains that consolidation and operationalisation of their own suppliers the same way.”226 differ from the mainstream suppliers of ideas within the company. It is often product and raw materials. ‘Research and stated that businesses prefer toolkits and The research carried out for Novo Nordisk Development’ in particular will utilise management systems to conceptual by NOP Healthcare in 2003, and already smaller amounts of diverse materials ideas, but this has never been the Novo cited in this case study, provides a useful from all over the world in the course of way. Presentations given by managers at measure for starting to understand the developing and trialling new drugs or new the company blend external challenges impact that the company is having on its applications. Both these areas of the and visionary thinking with in-house suppliers. This correlates well with the business will be included in the expertise about turning ideas into comments made by suppliers during programme during 2004. process. For example, in a presentation to interviews for this case study. It is clear the European Academy for Business in that Novo Nordisk is a prestigious Society in Copenhagen in September customer for many suppliers and that the 2003, Lise Kingo proposed a vision for values and reputation of the company are 2020: the global growth rate will be at a key component here. The questionnaire Human rights and supply chain management in the Pharmaceutical sector 107 alone provides the basis for the wider More generally, there can be little doubt However, if the Supplier Programme is relationship with purchasers at the that the values of the company are well- looked at as one facet of Novo Nordisk’s company and the focus on quality. It is known to most staff at Novo Nordisk, overall commitment to human rights and right, therefore, that the NOP survey also whether they actively engage with them other aspects of sustainability, then its asked suppliers about the payment of or not. A pocket size statement on ‘Our leadership role is already having an invoices and quality of overall dialogue Vision’ is available at receptions and in impact on wider society. That the with Novo Nordisk, rather than just coffee spaces, together with generous company has such a vision and reputation questions about environmental and social numbers of the Sustainability Reports. The notwithstanding the serious ethical standards. The practical things matter as 2003 Sustainability Report records a challenges that face pharmaceutical much as the big issues, and the ethical 7.1% turnover of staff. companies, shows other businesses what reputation of a company is quickly negated is possible. One very recent example is if it is inefficient or unresponsive to the The report also records an immigrant Novo Nordisk’s position on the ‘Norms on economic and financial needs of suppliers. workforce (i.e. those of non-EU origin) at the Responsibilities of Trans-national Novo Nordisk in Denmark of 5.9%, below Companies and Other Business The evidence suggests that Novo Nordisk the 7.9% representation in the Danish Enterprises with Regard to Human continues to have a significant impact on population. Likewise, for the other equal Rights’, endorsed by the United Nations the values of its suppliers and that the opportunities priority for the company, Human Rights Sub-Commission in August expansion of the depth and breadth of the women in management, there are 164 men 2003 and presented to the 53 Sustainable Supply Chain Management in senior management compared to 43 Governments of the Commission in March Programme will extend this impact to the women. The figure for middle management 2004. Whilst many industrial groups, second tier of the supply chain and possibly is only slightly less stark, with 608 men including the Danish Confederation of beyond. However, this will be very difficult and 258 women. With Novo Nordisk openly Industries, have criticised these Norms, to measure precisely and most suppliers committed to non-discrimination and Novo Nordisk has been one of only seven are open to a variety of influences that elements of positive action in both these companies globally to publicly state its might nudge them in this direction. areas, it should be possible to track the commitment to test the worth of such a impact on the staff profile over time. framework through practical Another aspect is the ‘Take Action!’ application.229 For Novo Nordisk, it is an employee programme to help engage staff integral part of its systematic approach to Impact on people in sustainable development activities, testing ways of applying human rights in | which includes a three-week programme in its work. Such a leadership position can Tanzania for some employees. The question only open the minds of suppliers, other The fact that 56% of suppliers record that here is: will any of these developments businesses and governments to what is the evaluation of their internal operations transfer to those working in the Novo possible. by Novo Nordisk has had a positive impact Nordisk supply chain? is encouraging.227 As many questions in the supplier questionnaire relate to labour standards, one would expect that it would Reporting be a focus on labour rights that would be Impact on society | transferred down the value chain. What is | less tangible, but fascinating nonetheless, When it comes to reporting, again Novo is the way that Novo Nordisk inspires Perhaps the most difficult to measure is Nordisk is a leader with its commitment suppliers to move beyond compliance how the Sustainable Supply Chain to triple bottom line reporting. However, through the promotion of these and other Management Programme impacts upon the indicators that cover the social and human rights. Health, food and leisure wider society. It would be useful to track environmental responsibilities of suppliers benefits provided by some licensee ways in which benefits made available by are still mainly derived from the self- manufacturers and suppliers are suppliers to their staff were made evaluation questionnaire and therefore are sometimes volunteered under section 5d available to the wider community. Novo not measurable absolutely. Whilst some of of the questionnaire but are more likely to has already undertaken some interesting the core labour standards do lend be discovered through more specific work in this area and more might come themselves to yes/no answers, this is not questions, site visits or auditing. with time with further auditing and the the case for concepts such as ‘sphere of continuing evolution of the Programme.228 influence’ or ‘layers of complicity in human rights abuses’. The 2003 108 Human rights and supply chain management in the Pharmaceutical sector

Sustainability Report is one of the best available and the fact that great efforts Final remarks have been taken to include suppliers in this through both the questionnaires and There is much that is transferable from NOP Healthcare opinion survey is highly what Novo Nordisk has undertaken so far commendable. In the meantime, the that should be of interest to some other problems of reporting 98.2% compliance Global Compact signatories. Novo Nordisk to social standards in the supply chain does not profess to be the global leader in have already been made in the section responsible supply chain management — Policies and Strategies above. other sectors such as clothing retailers have had several years head-start here. Novo Nordisk is however more progressive when it comes to the wider Managing stakeholder dialogue integration of sustainability and human | rights across a whole company. It is because of this systematic approach that NGOs and external experts have never Novo Nordisk is one of first been far from Novo Nordisk’s thinking pharmaceutical companies to engage process and it maintains a close seriously with issues of human rights in relationship to Sustainability, the supply chain, when most of the Accountability, the New Economics ethical pressure in this sector relates Foundation and others. Clearly more to issues of marketing and product stakeholder dialogue, involving NGOs, development. This gives an interesting trades unions and communities, is the insight into how supply chain way Novo Nordisk likes to do things. management can develop to incorporate However, with regard to the Sustainable not just the labour rights implicit in Global Supply Chain Management Programme a Compact Principles Three to Six, but also greater breadth of stakeholder dialogue the more over-arching human rights in might reap some results at this point. Principles One and Two. It is encouraging Obviously suppliers are already involved that Novo Nordisk sees this as much in the process, but trades unions and more than an issue of compliance, but NGOs might offer some interesting also as a question of opportunity and perspectives on issues such as collective identity. This is perhaps the greatest bargaining, living wage or the right to message for other businesses. health that will make the process more complex but more robust. The auditing There is also the need to be realistic about stage might well be the most appropriate the limitations of any supply chain stage to do this but it would also be management system. By the time you have worthwhile getting perspectives from a looked at your second or third tier suppliers wider range of stakeholders as to what (possibly where most of the issues of non- should be included in future compliance might rest) you are on the edge questionnaires and how the feedback of your ‘sphere of influence’ as a company. should be interpreted. This should open There is little that is compliance-driven that up some of the ‘shades of grey’ in what you can do directly in the deeper reaches of can seem to be a set of clear-cut your supply chain, other than to inspire and questions and therefore result in very high support your immediate suppliers to develop levels of apparent compliance. their own systems accordingly and to report publicly on their own supply chains.

Novo Nordisk’s supply chain programme, its tools and thinking, will be available at www.suppliertoolbox.novonordisk.com in September 2004. Human rights and supply chain management in the Pharmaceutical sector 109

Appendix The social information requested in the Novo Nordisk supplier questionnaire

Environmental and social evaluation of suppliers and contractors

Dear Sir/Madam,

As you may be aware The Novo Group has made a public commitment to the Universal Declaration of Human Rights and the ICC Business Charter for Sustainable Development. We are actively seeking to promote social responsibility, and good environmental performance throughout our business. This includes working with our suppliers and contractors to support human rights standards and to promote improvements of the environmental practices in our supply chain.

We believe that there is a strong link between good social and environmental performance and an efficient and successful business. By working together on these standards we will be able to meet current and future expectations of our customers and investors, and this will also be an important factor in managing risk in our supply chain.

Our expectations We expect all of our suppliers and contractors to ensure that their employees are adequately protected according to the UN Universal Declaration of Human Rights, which is considered universally binding by the UN. We also expect that our suppliers and contractors will participate in developing appropriate environmental improvements of their practices to make them consistent with the intentions of the ICC Charter. We consider these a baseline and we will expect suppliers and contractors to demonstrate continuous improvement in the future.

Our aim is to improve performance, not to terminate business. We want to create a climate of trust where suppliers feel free to approach us with a problem. Where possible, we will work with suppliers to find a solution.

The questionnaire Enclosed with this letter you will find a copy of our environmental and social evaluation questionnaire. The part covering social information is based on the UN Universal Declaration of Human Rights. The questionnaire refers to relevant ILO (International Labour Organization) conventions governing labour standards where available. The ILO conventions help clarifying the understanding of the human rights principles. The questionnaire has been developed through a two-year project in consultation with suppliers around the world.

Your answers to the questionnaire will form part of our overall evaluation of you as our supplier or contractor. Data will be compared and evaluated on an annual basis. We are currently building environmental and social considerations into our supplier audits.

Please complete the questionnaire and return it to me by xx-xx-2002. The answers must cover the location where the products we buy, are produced and not e.g. sales agent.

We consider this information confidential and we will not pass it on to any third party. If you have any questions, do not hesitate to contact me.

Yours sincerely

Feedback is welcome

We are still learning how to evaluate our suppliers on environmental and social issues.. If you have any feedback on the questionnaire design, please send it to me along with the questionnaire. 110 Human rights and supply chain management in the Pharmaceutical sector

Environmental and social evaluation of suppliers and contractors Questionnaire

Please observe the following before completing the questionnaire

u If your company is part of a major group, you should answer on behalf of your own operations, not the entire group.

u If the product/s, we buy, are not produced in your country, please answer for the country, where the product/s or the majority of the product/s are produced.

u Please answer each question as fully as possible. This gives you the opportunity to tell us about your initiatives and thereby a higher score. A blank space will be rated “non-satisfactory”.

u The questions are not intended to include apprentices/trainees.

u No documentation is required, but it is recommended that the data are thoroughly commented to increase understanding on our part. The data must be verifiable through an audit.

For more information

The UN Declaration of Human Rights (UDHR) www.unhchr.ch/html/intlinst.htm

The ILO conventions http://www.iccwbo.org/sdcharter/charter/principles/principles.asp

Novo Nordisk www.novonordisk.com Human rights and supply chain management in the Pharmaceutical sector 111

General information

Name of company

Address

Please state the product/s or services we buy, and in which country, the product/s is/are produced Please note that the questionnaire must be filled-in on behalf of this location (i.e. not an intermediary trading agent

Name of parent company (if any)

Contact person and title

Contact person telephone and e-mail

Environmental information 1. Environmental impact We expect our suppliers and contractors to identify and monitor the environmental impacts of their company’s activities. In this context environmental impact covers changes to the environment, wholly or partially resulting from the company’s activities, products or services. We consider it a fact that any activity causes an environmental impact.

a. What are the environmental impacts of your company’s activities?

b. How have these environmental impacts been identified or assessed? c. Has your company established a continuous monitoring of these impacts? If yes, please indicate how. 112 Human rights and supply chain management in the Pharmaceutical sector

2. Environmental management Active management of the environmental impacts related to the company’s activities means, at a minimum, ensuring compliance with local environmental legislation and having an environmental policy or statement. More progressive companies may have an environmental management system (EMS), which may be externally certified under ISO 14001 or EMAS. a. Do you ensure compliance with local environmental regulation? How is this performed? b. Does your company have a documented Environmental Policy? If yes, when was it introduced? c. Does your company have an environmental management system or programme? If yes, which main environmental targets has your company worked towards during the last year?

d. Is your company planning to achieve an ISO14001 certification or EMAS registration?

3. Environmental actions We expect our suppliers and contractors to take action to improve their environmental performance. Actions can include e.g. environmental improvements of production or products, initiatives to increase the employees environmental awareness, improvements of the environmental organisation, sharing of better practices.

a. Which environmental actions has your company introduced or supported within the last year, if any?

4. Environmental dialogue We expect our suppliers and contractors to provide appropriate environmental information to interested parties including authorities, employees, shareholders, neighbours and other stakeholders. This can be voluntary initiative or part of a legal requirement

a. Does your company publish an environmental account or statement?

b. What environmental training has your company given your employees?

c. Please give details of any breaches of environmental regulations within the last year

d. If you have received enquiries during the last year regarding your environmental performance, what practical steps did you take to respond? Human rights and supply chain management in the Pharmaceutical sector 113

Social information

5. Wages and benefits Everyone who works has the right to just and favourable remuneration ensuring for himself and his family an existence worthy of human dignity, and supplemented, if necessary, by other means of social protection. (UDHR)

Wages earned for regular working hours should be sufficient for the worker and his/her dependents to meet their basic needs (UN interpretation)

a. Do you ensure that your employees are adequately protected according to the Universal Declaration of Human Rights regarding wages and benefits?

b. What is the minimum wage as defined by the law in your country or industry average (whichever is higher)?

c. What is the lowest wage paid by you to an employee on a full time basis?

d. Which benefits do you offer to all employees beyond the legal minimum?

6. Working hours Everyone has the right to rest and leisure, including reasonable limitation of working hours and periodic holidays with pay. (UDHR)

Workers shall not on a regular basis be required to work more than 48 hours per week and shall be provided with at least 1 day off for every 7 day period on average. Overtime shall be voluntary and only used when justified. It is recommended that it does not exceed 12 hours per week and shall always be compensated at a higher rate (at least 125%). Employees are entitled to at least 3 weeks annual holidays with pay. (ILO convention)

a. Do you ensure that your employees are adequately protected according to the ILO convention regarding working hours, overtime, time-off and holidays? Rights regarding wages and benefits?

b. How many hours of normal working time and overtime would a full time production worker or the like work in an average week?

c. How many days-off would a full time production worker or the like have in an average week? 114 Human rights and supply chain management in the Pharmaceutical sector

7. Health & Safety Everyone has the right to … just and favourable conditions of work (UDHR)

A safe and hygienic working environment shall be provided. Adequate steps must be taken to prevent accidents and injuries to health arising out of work. The causes of hazards in the working environment must be minimised. Workers shall receive regular and recorded health and safety training. (ILO convention)

a. Do you ensure that your employees are adequately protected according to the ILO convention regarding health and safety?

b. What health and safety training do you provide for your employees?

c. Is responsibility for the working environment clearly defined at all levels in the organisation? Kindly describe

d. Please give details of any breaches of health and safety regulations during the last year

8. Child labour Everyone has the right to education. …Elementary education shall be compulsory. …and childhood [children] are entitled to special care and assistance (UDHR)

The minimum age of an employee in developing countries is 14, and 15 in developed countries. However, in companies with hazardous working conditions the minimum age must be 18 (ILO convention)

a. Do you ensure that your employees are adequately protected according to the ILO convention on child labour?

b. What is the date of birth (year) of your youngest employee?

c. Do you have special procedures for employees under the age of 18?

d. If child workers are identified how would you ensure that the negative consequences of laying them off are reduced to a minimum? Human rights and supply chain management in the Pharmaceutical sector 115

9. Forced labour

No one shall be held in slavery or servitude; slavery and the slave trade shall be prohibited in all their forms. Everyone has the right to work, to free choice of employment…(UDHR)

There is no forced or bonded labour. This covers all work or service that is extracted from any person under the menace of any penalty for which the person has not offered him/herself voluntarily (ILO convention)

a. Do you ensure that your employees are adequately protected according to the ILO convention regarding forced and bonded labour?

b. Are all your employees working in your company of their own free will?

c. Does everybody have employment contracts?

10. Freedom of association and collective bargaining Everyone has the right to freedom of peaceful assembly and association. No one may be compelled to belong to an association. Everyone has the right to form and to join trade unions for the protection of his interests. (UDHR)

Employees have the right to join or form trade unions of their own choosing and to bargain collectively (ILO convention) a. Do you ensure that your employees are adequately protected according to the UDHR and ILO convention regarding freedom of association and to collective bargaining? b. Is there a union or alternative representative body with the right to bargain collectively on behalf of production workers? 116 Human rights and supply chain management in the Pharmaceutical sector

11. Non-discrimination and Equal opportunities Everyone is entitled to all the rights and freedoms set forth in this Declaration, without distinction of any kind. (UDHR)

There is no discrimination in hiring, compensation, access to training, promotion, termination or retirement based on race, caste, national origin, religion, age, disability, gender, marital status, sexual orientation, union membership or political affiliation (ILO convention)

a. Do you ensure that your employees are adequately protected according to the ILO convention regarding discrimination?

b. What policies and procedures do you have on non- discrimination and equal opportunities?

c. What improvements have been made as a result of the policy?

12. Disciplinary measures No one shall be subjected to torture or to cruel, inhuman or degrading treatment or punishment.(UDHR)

Physical abuse, the threat of physical abuse, sexual or other harassment and verbal abuse or other forms of intimidation shall be prohibited (UN interpretation)

a. Do you ensure that your employees are adequately protected according to the UN Universal Declaration of Human Rights regarding disciplinary practices? b. What disciplinary and grievance (e.g. anonymous complaint, whistleblower system) procedures do you have?

c. How many times have the grievance procedures been used during the last year?

13. Privacy No one shall be subjected to arbitrary interference with his privacy, family, home or correspondence, (UDHR)

Everyone has the right to his/her privacy. This covers among others the monitoring of persons and the handling of personal information. Interference with privacy should be guided by rules and should only be used if necessary to achieve a justified aim. (UN Interpretation)

a. Do you ensure that your employees are adequately protected according to the UN Universal Declaration of Human Rights regarding the privacy of employees?

b. Are employees given clear information beforehand when they are being monitored (via computers, telephone, cameras or other) c. What procedures do you have for keeping employees’ personal information confidential? Human rights and supply chain management in the Pharmaceutical sector 117

Your suppliers

1. Does your company evaluate your own suppliers on environmental issues?

2. Does your company evaluate your own suppliers on social issues?

3. What environmental and/or social risks do you anticipate in your supply chain?

Thank you for completing the questionnaire

We ask you kindly for the signature of your General Manager.

______Date Name

______Title

______Signature Article 15 120 Case Abstract

120 Company Profile

120 HP and the UN Global Compact

Business and *Peer review of this case study was provided by Professor David Levine, at Haas School of 121 Human Rights and Business Human Rights: Business, UC Berkeley. No funding was accepted from Hewlett Packard for the The Case of preparation of this case study. Hewlett-Packard* 123 Human Rights at HP

Kellie A. McElhaney and Natalie Hill University of California, Berkeley 125 Recommendations for the UN Global Compact

126 Recommendations and Next Steps for HP 120 Business and Human Rights: The Case of Hewlett-Packard

Case Abstract Table 1: HP’s Core Business Groups

This case study describes how a ESG focuses on providing the key technology technology company developed a Human components of enterprise IT infrastructure to enhance Enterprise Systems Group (ESG) Rights and Labor Policy within their Global business agility, including enterprise storage, servers, Citizenship strategy, and is engaged in the management software and a variety of solutions. complex and unclearly defined issue of HP is the leading provider of printing and imaging human rights within their business. The solutions for both business and consumer use. IPG case also describes ongoing development includes printer hardware, all-in-ones, digital imaging Imaging and Printing Group (IPG) and challenges, and examines how the devices such as cameras and scanners, and company has been implementing the associated supplies and accessories. It also is United Nations Global Compact, specifically expanding into the commercial printing market. the principles that deal with human rights. HP Services is a premier, global IT services team. It offers guidance, know-how and a comprehensive HP Services (HPS) portfolio of services to help customers realize measurable business value from their IT investments. Company profile PSG focuses on supplying simple, reliable and affordable personal-computing solutions and devices Hewlett-Packard (“HP”), headquartered in Personal Systems Group (PSG) for home and business use, including desktop PCs, Palo Alto, California, is a technology notebooks, workstations, thin clients, smart handhelds solutions provider to consumers, and personal devices. businesses, and institutions. It operates in HP is divided into four businesses groups 178 countries and employs approximately 160,000 people across the globe. A reason HP exists is to make a remain as committed to social distinct culture at HP, to be described in contribution…to improve the welfare of responsibility and creating positive social more detail, emanates strongly from humanity...to advance the frontiers of impact today as they did when they within the corporation. Stanford University science…Profit is not the proper end and started in the garage of co-founders classmates Bill Hewlett and Dave Packard aim of management — it is what makes all David Packard and Bill Hewlett. founded HP in 1939 in their Palo Alto of the proper ends and aims possible…” garage. Their first product was an audio oscillator — an electronic test instrument Over 60 years later, current CEO Carly used by sound engineers. One of HP’s first Fiorina restated even more eloquently: HP and the UN Global Compact customers was Walt Disney Studios, which purchased eight oscillators to develop and “We believe that the winning companies of In his address to the World Economic Forum test an innovative sound system for the this century will be those that not only in January of 1999, United Nation Secretary- movie "Fantasia." Employees within HP increase shareholder value but increase General Kofi Annan challenged business claim to share a passion for satisfying social and environmental value… By leaders to join an international initiative — customers, an intense focus on teamwork, developing products and solutions that are the Global Compact — that would bring speed and agility, and a commitment to environmentally sound, by bringing the companies together with UN agencies, labor, trust and respect for all individuals. benefits of information technology to and civil society to support nine principles in emerging markets, by holding our company the areas of human rights, labor, and the Although its annual revenues for fiscal to the highest standards of business environment. The Global Compact’s year ending October 31, 2002 were conduct, and by giving back to the operational phase was launched at UN US$72 billion and its scope and reach communities in which we operate, HP is Headquarters in New York in July of 2000. clearly span the globe, HP still revels in contributing to a more sustainable future the “garage start-up” mentality of a while also making HP a stronger company Through the power of collective action, the company that is innovative, human- and the preferred IT solutions provider.” Global Compact seeks to advance focused, and socially committed. Indeed responsible corporate citizenship so that co-founder David Packard stated in 1942: Through high-speed growth, mergers and business can be part of the solution to the acquisitions, downturns, new products, challenges of globalization. In this way, the “Many assume, wrongly, that a company and new management, HP appears to private sector — in partnership with other exists simply to make money...the real Business and Human Rights: The Case of Hewlett-Packard 121

Compact. This case will focus on HP’s Table 2: HP Corporate Objectives adherence to UN Global Compact principles one and two, which concern human rights. To provide products, services and solutions of the highest quality and Customer Loyalty deliver more value to our customers that earns their respect and loyalty. To achieve sufficient profit to finance our company growth, create Table 3: UN Global Profit value for our shareholders and provide the resources we need to achieve our other corporate objectives. Compact Human To grow by continually providing useful and significant products, Market services and solutions to markets we already serve-and to expand Rights Principles Leadership into new areas that build on our technologies, competencies and Businesses should support customer interests. and respect the protection of Principle 1 To view change in the market as an opportunity to grow; to use our internationally proclaimed Growth profits and our ability to develop and produce innovative products, human rights. services and solutions that satisfy emerging customer needs. Businesses should make To help HP employees share in the company’s success that they sure that they are not Principle 2 make possible; to provide people with employment opportunities complicit in human rights Employee based on performance; to create with them a safe, exciting and abuses Commitment inclusive work environment that values their diversity and recognizes individual contributions; and to help them gain a sense of satisfaction and accomplishment from their work. Human rights, as we know them today, grew out of the reaction against the Leadership To develop leaders at every level who are accountable for achieving Capability business results and exemplifying our values. horrors experienced during the Second World War. At the formation of the United Good citizenship is good business. We live up to our responsibility to Nations in 1945, one of the UN’s stated Global Citizenship society by being an economic, intellectual and social asset to each objectives was to encourage respect for, country and community in which we do business. and realization of, human rights. Not long HP has the above corporate objectives, which were first written down by the co-founders in 1957 after its formation, the UN produced the Universal Declaration of Human Rights, social actors — can help realize the which was adopted by the nations of the Secretary-General’s vision: a more Human Rights and Business world sitting in the General Assembly of sustainable and inclusive global economy. the United Nations. The Declaration was The Global Compact is a voluntary corporate Human rights are rights that individuals adopted without a dissenting vote being citizenship initiative with two objectives: have simply because they are human. cast, signifying an extremely high level of They are designed to respect the dignity commitment to the principles contained in u To mainstream the nine principles in and integrity of the individual. Human the Declaration. Since then, numerous business activities around the world rights are fundamental principles that, if more focused and specific human rights u To catalyze actions in support of UN respected, ensure an individual can live a documents have been drafted and goals life of dignity, free from deprivation and accepted, but the Universal Declaration abuse, free to participate in their remains the foundational document in the The Global Compact is not a regulatory community, and can freely express their human rights field.231 The Universal instrument — it does not “police,” beliefs. Human rights are recognized in Declaration contains a relatively enforce, or measure the behavior or international law. Although the rights are comprehensive set of rights. It covers civil actions of companies. Rather, the best achieved by action within a national and political rights, as well as economic, Global Compact relies on public legal system, such as the passing of laws social and cultural rights. Some of the accountability, transparency, and the and implementation of government main categories of rights covered by the enlightened self-interest of companies, programs, the national government is not Declaration include: labor, and civil society to initiate and the source of a person’s human rights. It share substantive action in pursuing the follows that the government cannot u Physical integrity principles upon which the Global Compact withdraw human rights at will.230 u Fair treatment before the law is based. To this end, it has been largely u Equal protection criticized as “having no teeth” and as HP was one of the earlier US companies to u Freedom of belief, speech, and being fairly innocuous. become a participant in the UN Global association 122 Business and Human Rights: The Case of Hewlett-Packard

u Political participation security forces operating at or around a NGOs have long been involved in the u Access to education company’s location.233 It can be seen from study and connection of human rights u Just and favorable conditions of work the discussion of issues that arise within a responsibilities to global business. For u Adequate standard of living company’s ‘sphere of influence’ that human example, Amnesty International and the u Participation in cultural life rights extends beyond how a company Prince of Wales International Business deals with its own immediate work force, Leaders Forum have been engaged in an A question is often raised concerning the although that remains vitally important. ongoing study that illustrates the scope of a firm’s responsibility for human Human rights are also concerned with the geography of corporate risk within human rights: If a business professes a broader impact that a company has in the rights segmented by industry. For the “IT commitment to human rights, do they communities in which it operates. Hardware and Telecommunications” become responsible for doing something sectors, into which HP falls, they believe about every human rights issue wherever Some examples of the ways in which the following four issues are under the it occurs? The answer is no. Businesses human rights arise in the business human rights spotlight: should think in terms of being responsible context are: Non-discrimination is within their ‘sphere of influence’.232 A required in all dealings. This includes u Freedom of expression company’s sphere of influence can be interactions with employees, customers, u Forced labor divided into four broad areas: suppliers, partners, and contractors. u Links to repression Human rights issues might arise in u Access to knowledge234 1. core operations relation to the behavior of security 2. business partners guards in and around company However, it is not only major NGOs who 3. host communities facilities. Issues include excessive use appear to be interested in corporations’ 4. advocacy/policy dialogue of force by security guards in the human rights performance. In Global performance of their duties, the Issues Monitor, an ongoing large-scale A company’s core operations include issues implication of members of the security study conducted by Environics that many companies are familiar with, forces in human rights abuse in the area, International in 2003, which polled over such as labor rights, the regulation of the and the use of security forces to shut 1,000 citizens in 20 countries, behavior of security forces, and down legitimate forms of protest by respondents cited “human rights” as the independent monitoring, verification and workers or community members against fourth highest priority for business behind reporting of company performance. In the company. In relation to communities, “the rich/ poor gap,” “biodiversity,” and terms of relations with business partners, human rights issues could arise in the “basic education.”235 In another study, companies should ensure that business context of competition between the conducted by Edelman on corporate social partners have an equivalent commitment to company and local populations over land responsibility (CSR), which tracks attitudes human rights and they should have some and other resource use. These issues will towards business, media, government, and sort of monitoring and compliance be particularly acute where indigenous NGOs, the technology industry as a whole verification processes in place. Effects of populations are involved. People may be was viewed as the leading industry in operations on the human rights of host deprived of their means of securing a CSR, ahead of consumer packaged goods, communities should form part of the livelihood (or practicing their religion or retail, manufacturing, pharmaceutical, impact assessment performed by the culture) by the location of, or demand for publishing, automotive, financial services, company, and these communities should local resources by, the new enterprise; and energy/ oil and gas industries.236 Yet regularly be consulted on questions they may be forcibly removed by the respondents were only 38% trustful that concerning human rights. Finally, government to facilitate the new venture; business as a whole was adequately companies should have a commitment to or their health might be adversely addressing human rights issues. Finally, uphold international human rights affected by the activities conducted by the the Reputation Institute at Harris standards in their dialogue with facility. In dealing with employees, fair Interactive found that “Treatment of governments. A company might choose to working conditions, freedom of Human Rights/ Employees” was the most achieve this by quiet diplomacy or association and collective bargaining, essential element of corporate citizenship advocacy, but whatever approach a freedom from forced labour, and health in Europe, the U.S., and Scandinavia. So company chooses should have some and safety need to be ensured in relation while the tech industry as a whole is seen response to abuses such as the arbitrary to workers wherever they are located, as a leader in CSR in general, detention of labour activists, unexplained irrespective of the level of protection stakeholders are becoming increasingly disappearances of workers, or abuse those workers are afforded under scrutinizing of human rights as a committed by government-provided national legislation. component of CSR in business. Business and Human Rights: The Case of Hewlett-Packard 123

UN Global Compact — but none were Commitment to the Universal Declaration Human Rights at HP satisfactory or entirely relevant to HP. So of Human Rights | they developed their own code. They did One senior manager from HP stated a A commitment to upholding and find one company whose code they compelling belief that the term “human respecting human rights, as reflected in modeled and that was British Telecom. The rights” is largely an NGO term, not truly the Universal Declaration of Human BT code was derived from the Ethical one that is used by business, and Rights, has recently been included in HP’s Trading Initiative standard, which HP felt certainly not a term that has been used in Commitment to Global Citizenship. The closely embodied the elements that were the past at HP.237 This was clearly Global Citizenship Commitment goes on to important to them. confirmed in the interview process that set out HP’s "Human Rights and Labor was conducted for this study. A clear and Policy” which focuses heavily on labor The "HP Supplier Code of Conduct" succinct definition of human rights, as rights. The policy addresses forced, professes to focus on compliance with described above, was sent out to all bonded or involuntary prison labor, child local laws in the areas of environment, interview respondents prior to the labor, minimum wages, working hours, worker health and safety, and labor and interviews. Even after that, a significant non-discrimination, harsh or inhuman employment practices, and is intended to portion of each interview was spent treatment, and freedom of association. work in conjunction with management detailing what is meant by the term For the most part, the rights under this systems to measure, improve and “human rights,” and fielding questions policy are expressed in a way that links communicate progress in these areas. about the unbundling of the aspects them to compliance with local laws. The treatment of labor issues is fairly of the term. comprehensive and, despite the use of headings that refer to compliance with That is not to say that there is no local laws, contains standards, for attention paid to areas of human rights Supply Chain example, in relation to non-discrimination within HP; in fact, there is considerable | and prison labor, which may or may not commitment and attention. It is simply be covered by local legislation. The focus that, within HP, treating employees fairly, HP recognizes that this is the area in which on these issues is positive and its not engaging in age or race discrimination they have the most exposure if human effectiveness will be greatly enhanced by or using hiring agencies that do, and not rights are not made a focus; however, their the planned improvements in compliance engaging with suppliers who do not efforts around supply chain and human monitoring. To meet HP’s human rights comply with HP’s Supplier Code of rights are fairly nascent. The company obligations, the supplier code of conduct Conduct is not viewed by HP managers as currently contractually obliges its top 40 should be expanded to cover human paying attention to human rights per se; it suppliers, which includes 100 sites and rights matters beyond labor issues, is simply good business and part of the accounts for 80% of their spend dollars, to matters such as performance and “HP way.” HP has recently publicly commit to HP’s supply chain code of monitoring of security guards by aligned itself to the Universal Declaration conduct. HP is in the process of increasing suppliers; the impact on the local of Human Rights.238 HP is also committed the number of suppliers it requires to make community of supplier operations; and the to fair labor practices and the respectful this commitment and strengthening the penalization of suppliers for corrupt or treatment of all employees, including the means by which it ensures compliance human rights-abusive regimes. protection of workplace health and safety, with the obligation. Eventually, this code of and data-privacy protections. conduct will be explicit in all new supplier Currently, HP monitors its supply chain contracts, so compliance will be a using a self-assessment questionnaire HP has policies that deal with a number precondition for doing business. In completed by HP’s top 40 suppliers. HP of human rights issues relevant to their developing their supply chain code of then works collaboratively with suppliers to operations (eg. privacy, accessibility and conduct, HP did their own extensive achieve the required standards in any area supply chain management) and it is active benchmarking and research, and worked that is identified as falling below HP in terms of developing and supporting with Business for Social Responsibility, a requirements. HP’s Director of Supply Chain community development activities in parts think tank and consultancy around CSR Services reports that HP’s suppliers take of the world in which they operate. based in San Francisco, California. The this process very seriously given the Director of Supply Chain Services stated importance to them of their relationship that they scoured the landscape of supplier and business with HP. HP is moving to codes of conduct, looked at the various expand and strengthen their supply chain international standards, even looked at the monitoring. They are extending self- 124 Business and Human Rights: The Case of Hewlett-Packard assessment beyond the top 40 suppliers to the suppliers HP regards as ‘high risk’. At Figure 1: HP’s Global Citizenship Framework the same time, they are strengthening the monitoring of the top 40 suppliers by utilizing HP’s own procurement auditing capacity to conduct site assessments of supplier performance, moving beyond the self-assessment model. In time, this model will also be extended to the high risk suppliers. Finally, HP is currently researching appropriate entities to conduct third-party ph assessment of supplier performance. s n i Selective third-party assessment will be the lanth privacy final stage in the evolution of supply chain tio 239 monitoring at HP. ica r op ethics and governance y

mmun o community Privacy c engagement

| environment e-inclusion & education HP invests considerable energy in the protection of information privacy for its consumers and its employees. HP has policy leadership long had a policy dealing with employee information privacy stemming from HP’s focus on ‘doing the right thing’ for their certification scheme that awards a privacy commitment to global citizenship, the employees as part of the ‘HP way’. From seal to businesses that have proven to Senior Vice President of Corporate Affairs relatively humble beginnings as a one- meet standards relating to the following: does explicitly speak of human rights, person operation four years ago, the HP posting online privacy notices; completing privacy program has grown considerably a privacy assessment; monitoring and Socially, HP upholds and respects human and now undertakes coordinated strategy review; and participation in the program’s rights as reflected in the ‘Universal on privacy for consumers and employees consumer dispute resolution system. Declaration of Human Rights’. HP is also and conducts training on employee and committed to fair labor practices and the customer data handling. HP adopts the approach of applying a respectful treatment of all employees, consistent global policy for privacy including the protection of workplace health Since January 2001, HP has self-certified protection and complies with that policy or and safety and data-privacy protections. its privacy practices as consistent with local laws, whichever are more stringent. U.S.-E.U. Safe Harbor principles on Notice, HP has four separate policies that address Choice, Onward Transfer, Access and these topics: the Environmental, Health Accuracy, Security, and Oversight/ and Safety Policy; the Human Rights and Enforcement. The Safe Harbor principles CSR Labor Policy, the Privacy Policy, and the were designed in response to the | Supply Chain Commitment Policy. Each prohibition in the European Commission’s policy includes issues of human rights Directive on Data Protection on the transfer As Global Citizenship is one of HP’s seven within them, ranging from employee of personal data to non-European Union core corporate objectives, HP has health and safety to freely chosen countries that do not provide ‘adequate’ developed a well-integrated framework for employment to privacy of personal data. privacy protection. HP also meets the this citizenship strategy (Figure 1). requirements of the Council of Better While there seems to be evidence that Business Bureau’s BBBOnLine Privacy Human rights, per se, is not explicitly one ‘human rights’ as a term has not made it Program. HP is a founding sponsor of the of the facets of this framework, although into the language of HP’s business BBBOnLine Privacy Program, a privacy in language used to describe HP’s managers, when the term is unbundled, Business and Human Rights: The Case of Hewlett-Packard 125 evidence of careful attention to human understanding was that local law is the fewer. In fact, HP, together with Pfizer, has rights is clearly visible. standard, and that documents like the already taken a lead in this direction. They Global Citizenship objectives, which claim organized a meeting in April 2003, to rely on local laws, also include some bringing together North American general standards that may be above the companies, both UNGC signatories and Labor standard of law in some of the countries non-signatories, to discuss the UNGC and | in which they operate. An example of this its usefulness and place within North would be ‘discrimination on grounds of American business. The Global Compact Country human resources managers were sexual orientation’- this is not a widely or seems to serve best as a starting, or entry very aware of human rights issues as globally understood concept, yet HP has it point, for companies who are newer to they relate to employment, and seemed in their Global Citizenship policy. the practices and strategy of corporate confident that HP was duly addressing Ultimately, there was uncertainty on the citizenship and issues therein. human rights issues. For example, in part of some HP managers about the Malaysia, HP’s competitors tend to source of the standards and their employ local indigenous employment relationship to local laws. HP’s Personnel Recommendations and agencies. It is standard in Malaysia for Policy & Guidelines (PPG) is designed to Next Steps for HP these agencies to both collect information provide the basis for decisions affecting on and use in hiring decisions data on HP personnel worldwide. HP’s PPG are The following recommendations are age and race. There is no local law global in their application with some local relevant to HP’s protection of brand against doing so. However HP Malaysia variation based on local law and custom. identity as a leader in global citizenship, has chosen not to use these local temp It supports the decentralized and are consistent with HP’s public, agencies for this reason, and instead uses organizational structure of the company consistent, and historical commitment to global temp agencies which adhere to by allowing local entity decision making, it. At this stage, they are leading the high HP’s Human Rights and Labor Policy. The while still recognizing HP’s dual objective tech industry with their Global Citizenship Human Resources Manager believes that of maintaining consistent treatment for its strategy and policy. The industry has not HP is ahead of the local country laws, and employees and complying with applicable yet been subject to the intense scrutiny while she fully believes in this position legal requirements in the jurisdictions in by NGOs around human rights issues that and the “HP way”, she also admits that which HP operates. the apparel industry has known, but there HP undoubtedly loses business and pays is the belief inside the company that the more for labor than companies who use risks and penalties of poor human rights local employment agencies. HP has Recommendations for the performance are very high, given what engaged with the local government in UN Global Compact Nike and others experienced. There is trying to improve local labor laws, but also scope for HP to enhance its notwithstanding that HP has been in There was a lot of discussion within HP of implementation of the principles of the Malaysia for 25 years and has grown the UN Global Compact as symbolically Global Compact and the UDHR (which HP from eight to 1000 plus employees, the good for HP and fitting with their brand has stated its intention to respect as part manager felt that HP was behind identity and commitment to global of the Global Compact and its Global competitors like Dell and IBM in having citizenship, but beyond that, it has little Citizenship Policy).241 enough presence and leverage to really impact on how HP conducts its business. force the government to change labor The managers interviewed felt that HP HP has a corporate culture that values practices or law.240 was already far beyond what the UNGC ‘doing the right thing’, which can be compels them to do. traced back to the original quote by David There were slightly mixed messages Packard in 1942. While this was received on whether local country laws It seems that the value of the Global mentioned time and time again by each are the standard or whether there exist Compact for this, and perhaps for other and every manager interviewed, this higher and more consistent HP standards. North American companies, remains valuable manner of thinking about the One manager claimed that there is a relatively unclear and largely symbolic. impact of HP’s business cannot be relied global HP approach governing the Perhaps further work, segmented by upon alone to achieve appropriate levels treatment of all employees within their geographical areas, needs to be done to of human rights performance, particularly sphere of influence, with local law being ferret out the clear value of the UNGC for in the context of high-paced growth and relied on for only a few things, like pay segments of signatories, particularly in mergers and acquisitions. It seems and benefits. Yet another manager’s those regions in which the signatories are improbable that newly acquired Compaq 126 Business and Human Rights: The Case of Hewlett-Packard employees could fully embrace the “HP development of company-wide policy The reasons for an absence of adequate way” without more systemic and explicit performance objectives and law at the national level are many and standards and policies. While four major implementation plans. Such a company- may include pressure on governments of policies touching on human rights issues wide approach is presently lacking in HP developing counties to attract and retain do exist within HP, they could be better and is needed to ensure that human international investment, as well as integrated into and aligned with the rights are consistently addressed historical and cultural factors. overall Global Citizenship strategy and throughout the company’s operations. It framework. Across the company there is would also help facilitate awareness- HP is actively implementing internal and a need to: raising within HP and allow the sharing of external monitoring systems for its supply information and good practice among chain systems. In addition to expanding 1. Identify and prioritize the human various parts of HP. Importantly, a the scope of issues considered by the rights issues that are most likely to centralized approach will allow a fast, supplier code of conduct, in order for this arise across the company’s comprehensive, consistent response to system to be effective for monitoring the operations; any human rights incidents that do arise. human rights performance of suppliers, it 2. Educate employees and This next step is crucial to furthering HP’s will need to evolve from the early self- management in the identification of commitment to human rights, as assessment focused model to a model these human rights issues; and embodied in its Global Citizenship policy, based on more effective compliance 3. Work to develop framework into a living part of HP operations. It is monitoring. HP’s efforts in this regard are guidance on how to deal with these imagined that, given HP’s preference for welcome. issues. decentralized structures, this company- wide activity would involve the close co- The HP tradition of ‘doing the right thing’ operation of regional and other managers means that the company already operates as well as employees and would be best with an eye towards the ethical and implemented by those close to the ground responsible dimensions of their work. This with a tangible understanding of the places HP in a perfect position to combine priority issues in their area. that commitment to ethics with education on human rights and guidance on how to HP should investigate how to strengthen handle the issues. This would help its dual objectives of maintaining strengthen their human rights consistent treatment for its employees performance by achieving a greater level and complying with applicable legal of consistency across the various requirements in the jurisdictions in which operations and locations. It is also risky to HP operates. This would include looking rely on the ‘HP way’ in a post-merger at timing and issues where there may be context when 40% of the company are conflicts with local law and custom. This not pre merger HP employees, but rather is already the practice in the privacy field came from Compaq. The ‘HP way’ needs where we understand arguments relating to be made more explicit and systemically to the benefit of consistency and the measured for individual employee ethics of providing the same level of comprehension and performance. protection to all, regardless of their location, were successful.242 While an HP should allocate responsibility for approach based solely on compliance human rights across the company to a with national laws may be valid for other high level manager, or team of managers. considerations, it is not sufficient in More study is needed to understand who achieving an adequate level of human is doing this currently and what the best rights compliance. Many countries have practices of this model might be. This will implemented laws that do not meet the allow a comprehensive assessment to be standards required under international made of HP’s current human rights human rights law for the realization of performance, identifying and prioritizing particular human rights for members of for HP the best way of addressing their population. Other countries have no outstanding issues, and allowing the law at all on some human rights issues. Article 16 128 The Global Compact Policy Dialogue “The Role of the Private Sector in Zones of Conflict”

Private companies operate in many The first policy paper, “Case Studies of conflict-prone countries around the world. Multi-Stakeholder Partnership” illustrates a Their decisions — on investment and number of different types of multi- employment, on relations with local stakeholder partnerships, the process that communities, on protection for local leads to the formation of these partnerships environments, on their own security and lessons learned. These case studies arrangements — can either help a serve to demonstrate that partnerships can country to recover from conflict, or serve be a useful tool in the effort to prevent the to exacerbate the tensions that fuelled outbreak of conflict and to contribute to conflict in the first place. Companies are rebuilding a peaceful society. increasingly recognizing the need to adopt a broader view of the role of the The second paper of the series, “Conflict corporation in society (based on Prevention and Revenue-Sharing reputation assurance, risk management Regimes,” analyzes the essential factors The Global Compact and license to operate) and are beginning for creating functional revenue-sharing Policy Dialogue to incorporate commitments to social regimes to contain socio-economic responsibility and human rights protection tensions that may promote conflict. It “The Role of the Private into their business principles. Within this concludes with examples of current context, collaborative work with all revenue-sharing regimes. Sector in Zones of stakeholders in society is viewed as a key Conflict” factor in order to ensure the potentially The final policy paper developed thus far, negative impacts of business investments “Recommendations on Transparency” are minimized, and that the private sector contains recommendations to all actors in Denise O’Brien and Melissa Powell makes a positive contribution to conflict society regarding how they can contribute Global Compact Office prevention and peace-building. to fight corruption. In many conflict-prone countries of the world where institutional The Global Compact Policy Dialogue on and governance structures are weak, “The Role of the Private Sector in Zones of leaders remain in power through Conflict” launched in 2001, provides a patronage. Foreign investors may dynamic forum where representatives from contribute sizeable amounts to the funding companies, NGOs, trade unions and the of such administrations in the form of United Nations work together to identify taxes, royalties and other fees and when key issues and concrete actions that can these resources are not accountable to the help to mitigate the negative impact of the general public, they can often become private sector and enhance the capacity of vehicles for embezzlement, fraud, companies to contribute to conflict corruption and the funding of conflicts. prevention and peace-building. Building on the recognition that the rule of law and Finally, the “Global Compact Business respect for human rights is a necessary Guide on Conflict Impact Assessment and foundation for business and society to Risk Management” is a practical tool flourish, this dialogue continues to explore developed to aid companies in developing ways and means by which business can strategies that minimize their negative collaborate with other actors in society to effects and maximize their positive effects generate wealth, socio-economic of investing in areas of conflict or development, protect human rights and potential conflict. The ultimate goal of the contribute to peace and stability. Guide is to help companies contribute to conflict prevention and a sustainable This Policy Dialogue began with three business environment in the countries international-level meetings that produced where they operate. The Business Guide a series of policy papers and a tool for addresses the following topics: Human company managers focused on conflict Rights, International Humanitarian Law, impact assessment and risk management. Labour, Environment and Transparency. The Global Compact Policy Dialogue “The Role of the Private Sector in Zones of Conflict” 129

A series of regional policy dialogues (Sub- Action (CDA), in Cambridge, Saharan Africa, November 2002; Central Massachusetts, USA with a focus on Asia, November 2003; Colombia, May Total’s operations in Burma. The Yadana 2004) were then convened to promote the pipeline project, operated by Total, objectives, activities and policy contracted the Corporate Engagement recommendations stemming from the Project to have the impact of its presence international-level. These meetings at the in Myanmar/Burma on the local regional and country-level have served to communities verified by an independent raise the awareness of company organization. As you will note from the managers on-the-ground regarding the preface below, the objective of the options for, and limits of, contributions by Corporate Engagement Project (CEP) is to the private sector to conflict prevention provide managers with clear ideas about and peace building. They have also how their work with communities relates generated practical recommendations and to the broader sociopolitical environment outcomes relevant to the local context and to develop practical management regarding how companies can contribute tools for supporting stable and productive to conflict transformation. Finally they relations in the societies where have been critical in facilitating dialogue corporations work. To this end, CEP field and co-operation between business, visits are undertaken to help corporations labour, civil society and UN Agencies and gain new insight into the positive and an important forum for sharing negative impacts of their daily activities experiences and challenges. on the local and national context.

For the private sector, being operational in In this context, Doug Fraser, Independent “difficult” countries around the world Consultant, and Luc Zandvliet, Project poses a number of dilemmas for which Director of CEP, visited Myanmar from there are no easy answers. In order to April 22 to May 3, 2003 to visit the delve into some of the challenging issues Yadana pipeline project as a follow up to faced by companies with operations in their first visit conducted in October 2002. “conflict-prone” areas of the world, one What follows is their field report session at the GC Learning Forum meeting stemming from that visit. Although the in Brazil focused on the case of Total Total case is context specific, the operating in Burma.243 Questions raised by Myanmar/Burma context offers valuable the case include: What is a company’s lessons for companies working in sphere of influence in Burma? Does conflict-prone regions of the world. responsibility to respect the protection of human rights extend beyond a geographic The following case was not developed limitation of “sphere of influence” in a specifically for the Global Compact Learning country with such pervasive human rights Forum and as such, it does not meet the violations? What actions by a company Global Compact Case Study Guidelines. It could constitute complicity in human has not been through the Global Compact rights abuses? Is there any way for a Learning Forum’s peer review process. company to ensure that its payments to the government do not provide material support for the commission of human rights violations? Where does company responsibility begin and end?

The following case is the second field report of a series developed as part of the Corporate Engagement Project, directed by the Collaborative for Development Article 17 Second Field Visit Report: Yadana Gas Transportation Project 131

April 22 — May 2, 2003 Preface

This field report is one of a series of reports The Corporate Engagement Project (CEP) developed as part of the Corporate is a collaborative effort, involving Engagement Project, directed by the multinational corporations that operate in Corporate Collaborative for Development Action (CDA), areas of socio-political tensions or in Cambridge, Massachusetts, USA. conflict. Its purpose is to help corporate Engagement Project managers better understand the impacts The objective of the Corporate Engagement of corporate activities on the contexts in Project (CEP) is to provide managers with which they work. Based on site visits, CEP clear ideas about how their work with aims to identify and analyze the communities relates to the broader challenges for corporations that recur sociopolitical environment and to develop across companies and across contexts. practical management tools for supporting Based on the patterns that emerge, CEP Second Field Visit Report stable and productive relations in the develops management tools and practical Yadana Gas societies where corporations work. options for management practices that Transportation Project respond to local challenges and address To this end, CEP field visits are undertaken stakeholder issues. Moattama Gas to help corporations gain new insight into Transportation Company the positive and negative impacts of their In this context, Doug Fraser, Independent daily activities on the local and national Consultant, and Luc Zandvliet, Project Operator: Total in context. CEP would like to acknowledge the Director of CEP, visited Myanmar from Myanmar/Burma willingness of the participating corporations April 22 - May 3, 2003 to visit the Yadana to constructively explore their effect on pipeline project, operated by Total, as a surrounding communities in efforts to follow up to our first visit conducted in Doug Fraser improve their daily interactions with, and October 2002. Independent Consultant impacts on, local stakeholders. This visit was the second CEP visit to the Luc Zandvliet For more information on the Corporate Yadana Project in what is planned as a Project Director Engagement Project, see www.cdainc.com series of three visits. To avoid duplication, Corporate Engagement Project this report should be read in combination July 2003 with the first report (available at http://www.cdainc.com/cep/cep- Collaborative for Development Action casestudylist.htm). Our purpose, as in all 130 Prospect Street, Suite 202, CEP field visits, was to examine the Cambridge, MA 02139, USA interaction between corporate operations 1 617 661 6310, Fax 1 617 661 3805 and surrounding communities, as well as the impact of corporate operations on the wider context of conflict.

The CEP team intends to visit Thailand to explore allegations from several international NGOs that people originating from the pipeline area were displaced into Thailand. If people had to leave Myanmar/Burma recently for reasons related to the pipeline or the presence of oil companies, this would be important for CEP to know. The trip will serve the following purposes: 132 Second Field Visit Report: Yadana Gas Transportation Project

u To learn additional information related The point of departure for any CEP visit is to the impact of the pipeline on local what we observe on site and what we hear Introduction civilians. We want to address the that is substantiated both by examples and possibility that we only hear positive by consistent repetition. Although This visit to Myanmar/Burma included five stories about the pipeline from people familiarity with the history of a project and days in the pipeline area and six days in currently residing in the corridor, while region is indispensable for understanding Yangon/Rangoon. Since the first visit in people that were possibly forced to current operations and policies, we neither October 2002 provided detailed leave the corridor might tell of a validate nor invalidate past operational information on the manner in which Total different reality. policies or their impacts, unless we conducts its daily operations, we met with observe these in current dynamics. relatively few Total staff this time. Instead, the CEP team focused its efforts on u To verify why CDA’s observations in the pipeline area differ from the We invite feedback on the observations meeting with civil society organizations observations in some of the reports laid out in this report. We hope, as well, (including staff of international NGOs), produced by international NGOs about that this report will contribute to broader religious leaders, political analysts, the impact of the pipeline on the local discussions within the company and government representatives, a member of contexts. between the company and stakeholders, Parliament, diplomatic missions and other on the options for corporate engagement corporations working in the country. In the pipeline area, we met with local u To explore rumors in the business in the Myanmar/Burma context. community in Thailand and community members, company staff, Myanmar/Burma (and among NGOs After the introduction, in which our contractors, government representatives, themselves) that some NGOs make a methodology is explained, the report is and NGO representatives. “business” of producing allegations divided into two parts. The first section against companies, based on reports on the direct and indirect impacts We concentrated our visits on those testimonies from Myanmar/Burmese of the Yadana project within the pipeline villages located in the so-called “pipeline refugees. This is of concern to CEP area. Direct impacts take place through corridor.” The corridor is the geographical because if CEP is unable to confirm the Socio-Economic Program area approximately 10-15 kilometers allegations that NGOs fabricate implemented by the company. But equally wide and 63 kilometers long. A 36-inch “evidence,” it supports the credibility of important, according to villagers, is the diameter pipeline is buried within this the NGOs that make allegations or indirect impact of Total’s presence on the corridor. The corridor is only visible as advocate on behalf of Myanmar/Burmese human rights situation in general, and drawn on a map; there are no physical refugees. On the other side, if the forced labor in particular, in the delineations of its boundaries on the fabrication of evidence is confirmed, immediate region. ground. The notion that there is a clear this would support sentiments in the corridor with particular boundaries was business community that allegations The second section explores the created by Total, as it uses the corridor to should not be taken seriously. This company’s impact on the broader national determine how some operations are undermines the ability of individuals context. Addressing both the local impacts implemented. For example, different with genuine grievances against as well as the impacts of the pipeline on security measures apply inside and companies to be heard. the national social and political level is a outside the corridor, and company staff challenge for any company working in the does not travel outside the corridor. The We attempted to arrange the trip from country. In order to address these corridor becomes further concretized and Bangkok to Northern Thailand to precede challenges, Total will need to develop a reinforced by the fact that the government this visit, but logistically it was not feasible clear vision and coherent strategy to and the army have been notified which (during the water festival), and therefore support this vision. We will discuss some villages lie within the corridor. People in the trip has been postponed to coincide of the building blocks for such a strategy the area claim that the army behaves in a with the third visit. Because we were and suggest options that could enable the more disciplined manner inside the examining the operations of the Yadana company to constructively address these corridor compared to outside the corridor. project, in this report we consistently refer challenges while continuing its operations. They believe this is because Total has to Total’s role as the operator of the made sure that negative behaviors have project. However, our observations been corrected and that local concern all joint venture partners. commanders have received instructions to act in an acceptable manner. Second Field Visit Report: Yadana Gas Transportation Project 133

The CEP team visited 16 of the 23 (Thingundaw) simply because of time discuss our observations from a visit to a villages located along the pipeline that are constraints on the scheduled day. This village outside the corridor. included in Total’s Socio-Economic village will be visited on our next visit Program, which will be briefly explained in the fall of 2003. later. For comparison, the CEP team also visited one village outside the corridor. u We also insisted on visiting at least one Socio-Economic Program (SEP) Similar to our first trip, visits to the village outside the pipeline corridor. | sixteen villages were carried out under the following circumstances: u In our discussions, we, the CEP team, In the pipeline corridor, Total has introduced ourselves as operating implemented a Socio-Economic Program u CEP hired two independent translators independently from Total. We made it since 1995. Total’s socio-economic skilled at interviewing villagers. The clear that our visit was at the invitation activities provide infrastructure and social translators were hired separately from of the company with the objective to services as well as income-generating Total. observe the impacts of its operations projects. Ongoing “social” components of on local communities. the program consist of an extensive u The CEP team was transported in a primary health care system, implemented Total car. Although it was unmarked, we The Corporate Engagement Project is not through the health centers that are built are sure all villagers knew that this car an audit in the sense that it “endorses” or or renovated, staffed and supplied by belonged to the company. “condemns” certain company policies. Total. Another key activity of the program Therefore, this report will not contain a consists of educational support including u Total staff accompanied us in the checklist of the options that have, or have constructing schools, providing financial pipeline corridor during two out of the not been implemented by Total following support to teachers, providing teaching five days. Upon arrival in the village, our first report. The aim of the visit and the materials, and initiating computer classes they would stay at a teashop or at a options developed are to assist the Joint and a library program. The education clinic while the CEP team conducted Venture partners to better deal with the program also operates a tutoring program interviews in the village. social and political challenges they to prepare children for their high school encounter working in the exams (nationally, fewer than 20% pass u The CEP team specified the Myanmar/Burmese context. Total addressed their exams). requirements for the selection of many of the recommendations that we villages to visit. These requirements made based on our first visit, whereas The “economic” component of the Socio- aimed to gain as broad and diverse a other options require more discussion. We Economic Program consists of perspective as possible, considering the also observed new developments which we development and income-generating village’s ethnic make-up, distance from comment on in this report. activities such as pig farming, chicken the main road and from the pipeline farming, and agricultural activities such as center (PLC), and the duration of the production of palm oil, groundnuts, and participation in the Socio-Economic rubber. The Program also includes Program. We re-visited five villages that Section 1: Impacts on the local microcredit initiatives. The villagers we visited during our first visit in community pipeline corridor themselves, through elected committees, October 2002 and eleven villages that determine who should benefit in the Total we had not visited before. This section will discuss our observations programs based on an annual plan that with regards to both the direct and they design. Infrastructure projects include u During village visits, the CEP team split indirect impacts of Total (and of Premier a wide range of activities varying from the into two groups and moved separately Oil, the operator of the Yetagun pipeline in construction of roads, schools, bridges, and through the villages, conducting the same corridor) on local communities. water supply to market places and clinics. interviews at random. Total staff did not We will first discuss our updated arrange any meetings with community observations regarding Total’s Socio- Formal communication between Total and members or influence the decisions of Economic Program (a direct impact of the the villages occurs via three Village the places we selected. company’s presence) and then discuss Communication Officers (VCO) who are findings regarding forced labor (indirectly part of Total’s SEP team. A major task of u Over two visits, the CEP team has now impacted by Total’s presence). To the VCOs is to travel regularly to each visited 22 out of the 23 project villages. compare the situation both inside and village to hear people’s concerns and to We were unable to visit one village outside the pipeline corridor, we also hold discussions with each of the 23 134 Second Field Visit Report: Yadana Gas Transportation Project

Village Communication Committees. Total loan. In other villages, about one-third of flowers were imported from Dawei, established these committees, which the village is involved in raising pigs. while now they are locally grown due to consist of villagers who are elected by increased demand. their communities to represent the Since our visit six months ago, we noticed interests of their community on a an increase in spending. We were better While this all appears to be good voluntary basis. able to observe this on the second trip by progress, at the same time, people told us means of comparison with a “reference that the local economy is quite fragile, During the visit in the pipeline area, the CEP point” — the previous visit in October and highly dependent on Total’s presence. team attempted to be as inclusive as 2002. We observed a noticeable increase in Many shop owners in Kanbauk talked of possible. We spoke with wealthier, middle building construction. Interestingly, people reduced levels of sales and revenue since class, and poorer people, with individuals as are now constructing houses and shops construction was completed and local well as with groups, with men and women, from more expensive commercially cut employment decreased. Some shop with young and old, with rice farmers, other timber or of brick to replace their traditional owners said that they are going out of farmers (cashew, rubber, beetle nut), wooden structures. Other evidence of business. As well, three people traders, fishermen and with people with a increased spending was the increased complained that they have seen a rise in Dawei, Mon or Karen background (both number of new motortaxi’s on the road. prices as a result of Total’s presence Buddhists and Christians). When we asked, people told us of some because they perceive that Total direct gains from Total’s Socio-Economic employees do not negotiate hard for Overall Impact of the Program Program as well as some spin-off effects: lower prices, and drive up prices. Others During the approximately 70 interviews — the majority — said that the increase that we conducted within the corridor, u Some people have sold their first or in prices is not related to Total’s presence every person we came across had heard second pig for a satisfactory profit. but signals a national trend. about Total, and knew the basic Most have reinvested this money in components of the Socio-Economic raising more pigs. Geographical Reach of the Program Program. All of those we spoke with were These are the observations from villages in favor of Total’s presence; if not for their u Some rice farmers claimed that seeds, located within the corridor. However, the personal benefit, then at least because fertilizer, and technical advice provided benefits of the Socio-Economic Program the community as a whole benefits from by the Socio-Economic Program have reach farther than the boundaries of the Total’s presence. Several times people increased their yield from 50 to 70 corridor only. According to Program staff, acknowledged the wider benefits of the baskets per acre. about one-third of the students attending Socio-Economic Program and the fact the boarding tuition school and about that “Total is good for the village.” In our u Due to improved roads, several new one-third of all people admitted in discussions, not one person advocated public transport routes have been Kanbauk hospital come from outside the that Total should leave the corridor. established, allowing access to villages pipeline corridor. Few people with land previously only accessible by bike or ox outside the corridor move inside the The social program (the health and the cart. According to villagers, this has corridor. The attachment to their land and education components) appears to benefit considerably reduced their the economic security it provides is too nearly everyone. Two villagers with limited transportation costs to markets. high to take the risk of starting a new life means claimed they did not benefit from elsewhere. If people have relatives in the any components of the Socio-Economic u Over the last six months, the number of corridor, they may temporarily move in Program; all other individuals stated that brick factories has risen from one to with them to enjoy the educational or they benefit from at least the social aspects three. In every village we observed medical facilities in the corridor but they of the program. The free medical care is several houses being built or renovated return home afterwards. Total is aware of considered to be the most important aspect with bricks. this and is willing to provide access to of the project, in addition to the educational healthcare and tuition boarding school to support, including the provision of books u One local bus company in Kanbauk has “anyone” who applies. and pencils and a tuition school for high expanded from 5 to 8 buses. Villagers school students who failed their final exams. themselves note the increase in The program’s good reputation reaches The income-generating aspect of the motorcycles in the villages as well. well beyond the corridor. We encountered program has substantial coverage as well. various young men from elsewhere in the In some villages, about one-third of u We met with several women on country who had married women from households have received a micro-credit Kanbauk market who said that before, local villages. Rather than the women Second Field Visit Report: Yadana Gas Transportation Project 135 settling close to the husband’s family, the loan because rumor has it that poorer Socio-Economic Program in villages that wife’s family had convinced these men people would be unable to find a have been part of the Program since its that life was better inside the corridor guarantor to get a loan. While this may commencement, in the villages that (because of the Socio-Economic Program). be true in some villages, we also heard where added to the program in 2001, We also heard that there is a small trickle from a Bank committee member in one about 50% of the interviewed people did of people establishing themselves in the village that they had given a loan to a not know about the existence of the VCC. corridor, largely of retirees without land, poor crab fisher to purchase a fishing Others heard about its existence but did such as retired soldiers. net. In other villages we also heard not know the names of VCC members. examples how some poor people had Still they do know about Total’s program Some people originally from the area obtained loans to start a pig farm. and contact the company if needed moved to other areas such as Shan State through the Total doctor in the clinic or several years ago. They now return to their u In some villages, there is a perception through the Total Village Communication old grounds hoping to make a small among the poorer people that one has Officers who visit each village on a business. There is one case in which a to know the Head of Village (HoV) or regular basis. former KNU soldier surrendered his Village Communications Committee weapons at the border and was allowed by (VCC) member personally to get a loan. The VCC is elected by the community the government to resettle in his old village Four people had the impression that themselves and is open to the candidacy of in the corridor. According to a Total staff “the VCC is only for the rich people.” all. A government appointed Head of Village member, the government spread a message (HoV) could therefore also be a member of to the relatives of KNU soldiers that “it is u Quite a few poorer people were the VCC if the community elects him (all HoV safe to come back now” and used the interested in obtaining a loan, but that we have come across are male). Socio-Economic Program as “evidence” feared that they would not be able to Naturally, in these cases it increases his that life in the corridor is now good. pay the 2% per month interest rate legitimacy and authority within the (which is significantly less than the community and possibly weakens the Relative Winners and Losers inflation rate). They worried they would relative authority of the other members of Within villages, the middle class and lose face if they were unable to fulfill the VCC. For example, we repeatedly asked wealthier people appear to benefit most their obligations. Hence, they did not people who they approach to receive a loan, from the Socio-Economic Program. They want to get a loan. vegetable seeds, or small trees. The majority have the means to invest in pigs or poultry of people mentioned that the Head of Village or have enough collateral to be able to We also observed some positive is the key decision maker. Apparently he obtain micro-credit loans. Other wealthy examples. Some wealthier people allow often signs off as a guarantor on loans or individuals say they do not “need” the those without land to keep a pig in their selects who in the village receives economic program, or, for example, find the smell of backyard until they are able to buy their benefit and who does not. We were not able raising pigs too strong. Some lower- own land. Also, Total has recently to verify if in these occasions the HoV was income villagers expressed frustration introduced a Backyard Vegetable Project part of the VCC or not. about the fact that the wealthy benefit aimed at the poor. The first 43 villagers more from the program than they do. For involved in 7 pilot villages had their first Analysis of the Socio-Economic Program: example, villagers complained that only crop and apparently most made a profit. Challenges and Opportunities three people in their community were able Based on this success the program will be As during our first visit, we are impressed to invest in a cashew nut factory, which is expanded but it is yet too early to evaluate by the manner in which the Socio- supported by the program. People with no the larger impact of this program. Economic Program is directed. Total should land or other assets state they have see it as a significant achievement that we difficulties benefiting from the economic Governance structure of the program were not able to find people who thought it program for the following reasons: The village-based and elected Village would be better if the program were Communication Committee (VCC) is one closed. In fact, the success of the program u Since they have no land or capital, they of the core aspects of the Socio-Economic is reflected in the fact that the types of do not benefit from the availability of Program. The VCC operates on a voluntary observations that we made and discuss seedlings for cash crops, and cannot basis and is designed to serve as a bridge here all deal with the challenges that come buy piglets or start a business. between the company and the local with expanding a successful program. community. This is still a relatively new u Many of the poorer people we spoke concept in some villages. Whereas people with had not attempted to apply for a were well aware of the structure of the 136 Second Field Visit Report: Yadana Gas Transportation Project

a) Risk that the Socio-Economic Program pay the HoV. In one village the HoV c) Risk of increasing discrepancies between could be used for political purposes attracted people that wanted to settle the haves and the have-nots in the village by promising them jobs Total staff has tried to implement the with Total (and received a fee for the Total intends to further increase its Socio-Economic Program strictly on a land he handed out). socio-economic efforts within the humanitarian basis. For example, it pipeline corridor. This poses the question successfully established small civil u Other villagers are fully convinced that about the limits of expansion of the society groups such as the Village they will receive micro-credit loans Socio-Economic Program. It will further Communication Committee and the from Total because the HoV has enhance people’s quality of life. At the Village Banking Committee based on promised them. In reality, the Banking same time, it will also increase the the premise that such groups would Committee is the only group that can discrepancy between those that benefit refrain from being involved in politics. allocate a loan. more from the program and those that benefit less; for example between those Now the Government itself is at the u One member of a VCC complained that, that are able to benefit from micro credit brink of using Total’s program in the supposedly, the local bank committee and seeds programs and those that have corridor for political purposes. We heard keeps 2% of the interest payments for no collateral or land. in one village that the government is their work, instead of the approved 1%. attempting to convince family members Further concentrations of the program of KNU soldiers and others who fled the u Several poorer people in various will also increase the discrepancy in area in the past to return to their original villages are convinced that they can get quality of life between the corridor and villages in the corridor. They allegedly do loans only when they know the HoV, its surroundings. Although we were not this by talking about how good life is in VCC members, or “Total people.” able to extensively visit the area the corridor (largely due to the work of outside the corridor, people generally Total and Premier). If this is indeed true, u Two villagers with little collateral reported that the health, economic, and the program may lose its perceived mentioned that some villagers obtain security indicators are substantially neutrality. The moment that the program Total loans at a 2% interest rate, and higher within the corridor compared to is seen as a tool to bring various groups then loan to their poorer neighbors at a outside the corridor. back to the country, it supports 10% interest rate. arguments that the pipeline and the This poses real challenges both from a company are, unintentionally, being used u In one village the HoV had cleared land moral perspective as well as from a as part of a larger political agenda. for the seeds he expected. He was security perspective. From a moral unclear when these seeds would arrive perspective, some government officials b) Risk that success of the Program but he was convinced that “the VCC as well as some NGOs are concerned is used for personal gains would get the seeds first.” about the concentration of wealth in the corridor. One NGO representative The Socio-Economic Program is visibly Whether or not these stories are true is wondered if Total, in its attempts to do and measurably increasing quality of less relevant than that they signal a good, was unintentionally creating a life for the inhabitants of the pipeline trend that the more successful the “Disneyland” in the corridor. A area. Its success consequently program is, the more people are likely government official was concerned reinforces the authority and legitimacy to try to benefit from its success. The about “balance” in the development of of those individuals in the village that above-mentioned incidents (and based regions and was not in favor of seeing are in the position to allocate loans, on our interviews, these emerged as one region disproportionally more trees, seedlings, or other wanted only occasional incidents) of “abuse” developed than another region. items. In some villages we heard should be balanced against the fact that people speak very positively about the pipeline corridor is one of the very From a security perspective, some their Head of Village and VCC few pockets in Myanmar/Burma where villages within the corridor were members. On the other hand, in some some form of civil society structure is in recently attacked and robbed and an cases, we heard about incidents of place, albeit limited. Villagers’ increasing number of buses coming abuse of position, as follows: experience with any form of public from the corridor are being robbed just administration is extremely limited. In outside the corridor. Although there is u In most villages, in order to get new light of this, the degree of abuse is no proven relationship between the land allocated to them, people have to small but should be addressed early. wealth accumulated in the corridor and Second Field Visit Report: Yadana Gas Transportation Project 137

the increase in security incidents, ensure that a HoV is held accountable learn from each other’s experience. For keeping track of the trend in robberies if he is not part of the (elected) VCC but example, we heard that in some in, or just outside, the corridor uses the Socio-Economic Program for villages, poorer members are more compared to the rest of the country his own agenda. excluded from obtaining loans because will provide the company with a better the bank committee doubts they will be idea if such correlation exists. In other c) Expand on communication able to pay back loans. On the other countries, CEP has observed that within the corridor hand, we also heard that in some increased discrepancies between the villages the bank committee provides haves and the have-nots can lead to We consistently hear that it is difficult loans to poorer people as well, and that intergroup conflict. to get any kind of public information in these people were able to repay the Myanmar/Burma. Total has attempted loans plus interest. Through sharing Options to address this concern by installing a these different experiences, bulletin board in each village. People in communities could learn from each a) Focus on the poorer members various villages mentioned that they other, make more informed choices, of the community visit the bulletin boards regularly. and perhaps expand the impacts of During our visit, Total’s internal their programs. Total is aware that poorer villagers are magazine was posted in each village partly excluded from the benefits of and people said they appreciated the d) Focus on sustainability some income generating programs. information provided in it. This Despite the visible improvement in the observation revealed opportunities for Total intends to stay in the country for quality of life some people have Total to more actively use these bulletin the next few decades. It also intends to experienced due to the program, a boards in relaying information to the maintain its Socio-Economic Program considerable part of the population community. For example, Total could for the foreseeable future. As the (estimated by one teacher to be as post the names of VCC members and program is still expanding, the current high as 50% in her village) does not their “job descriptions” as well as focus is not on designing exit or have their own land or any other cash- procedures for loans, job vacancies, sustainability strategies. On the other generating activity. Total is currently in complaint procedures, procedures to side, staff acknowledges that if the discussion with an international cacao follow in case of a forced labor Socio-Economic Program were to halt, producer who has shown an interest in allegation, etcetera. We tested this idea especially the medical program (which buying cacao from within the pipeline with a number of villagers who all said is the most widely-appreciated part of corridor (as they are attracted by the they were in favor of communicating the program) would not be able to relatively stable conditions within the more directly with the company through continue at its current service level. corridor). There may be opportunities this medium. Taking into consideration the longer- here, for example, to also make some Since our first visit in October 2002, term benefits to the local population, it land available (on a lease basis) to Total organized several “open days” at is sensible to start integrating current landless people, or to a co- it’s pipeline center for VCC members sustainability strategies that ensure operative of the poorer segment of and local teachers from surrounding that a certain service level is society, to help them start a cacao- villages, and will continue to do so, to maintained after Total stops directing growing business. show its transparency and to provide the program. It is opportune to start an impression of life “behind the this process sooner rather than later b) Focus on capacity building of the VCC fence.” The CDA team spoke with two for several reasons. First, at this point and the HoV individuals who had been part of such villagers still do not take the program a visit. They appreciated Total’s for granted and remember their The dominating role of the HoV in gesture,and said they were surprised situation before the start of the some villages and the fact that many by the fact that the company “is run by program well. This will make it easier villagers are simply not aware of the Myanmar people and not by Western now rather than in the future, for them role of the VCC underlines the need to people.” Total intends to invite to “sacrifice” paying some kind of enhance the capacity of both the HoV delegations from each of the project compensation for the services they and the VCC to administer the program villages to their operations. receive. Second, a fair portion of the and ensure fairness and equal population has started to generate distribution among villagers. The VCC It would be useful to bring groups additional cash, thanks to the program. also needs to ensure transparency and together on a more regular basis to This enables them to afford fees for 138 Second Field Visit Report: Yadana Gas Transportation Project

services. It is not our intention here to presence, or absence, of forced labor. In perceived as forced labor but as advocate changing the program our discussions with villagers we were voluntary community service. Still, dramatically. Rather, it is important to also interested in how they themselves villagers explain that they have little start thinking about these issues and perceived “forced labor” and how they choice to refuse such requests. Several introduce user fees for those who can speak about it. people said that a second refusal afford them for medical services or, for results in punishment by the HoV example, for people who have more The Local Definition of Forced Labor although they did not know of anybody than three or four pigs — while taking Villagers define “forced labor” along a on whom punishment was inflicted. It is into account, as discussed above, that continuum, and therefore it is not always quite acceptable for the rich to pay there are many who still cannot afford clear what activity constitutes forced others to do their part. fees, and should be exempted. Total labor, and according to whose definition. could also start training local assistant Total may consider activities as forced u Villagers do not necessarily define all veterinarians or agricultural experts labor that villagers see as voluntary. Given unpaid labor done for the army as that work side by side with Total staff the sensitivity and the seriousness of the forced labor. Some villagers living close and that can be paid by the villagers in issue, Total uses a broad definition of to army camps explained the the future. forced labor in order to leave no space for relationship of mutual dependence they any doubt. have with the local battalion. They e) Focus on improving local people’s explain that the village sells fruit and employment opportunities Overall, in all discussions, we heard four vegetables to the barracks, given that elements that determine the severity of other markets are far. They also state One obstacle for local villagers to forced labor in the eyes of villagers; that the army provides security to the obtain jobs as security guards or as village. Hence, conducting light non- drivers is their limited English 1. the duration of the service, paid labor upon request of the army, language skills, which is a problem 2. the location where forced labor takes such as cleaning the army compound because they have to be able to place for half a day, is not considered as operate the radio. This is one reason 3. the type of labor and forced labor by most people we spoke why, in the past, many staff from 4. whether or not payment takes place. with, but considered to be part of a Yangoon/Rangoon have been hired. The “give- and-take” relationship. Others result is that people in the villages For example, people were unanimous that said that it is, in fact, forced labor. perceive that “only” staff from the unpaid portering duties for the military for capital is hired. Total is already weeks at a time in frontline areas are the Mixed signals from the government providing training and has a facility for most “brutal and unacceptable” form of towards forced labor such efforts. In order to increase the forced labor. The various explanations, interpretations chances for people from the and perceptions of forced labor may surrounding areas to obtain jobs with Villagers discussed several other themes: explain why the different signals from the international companies, Total could government seem confusing and consider providing English language u Villagers themselves define forced labor contradictory. On the one side, we saw courses as a precondition to obtaining in terms of whether they are paid for order I-99, which prohibits the use of such jobs. their labor or not. This is a substantially forced labor, posted by the government on different interpretation of forced labor bulletin boards in various communities. than the internationally accepted On the other side, one senior government definition in which forced labor is representative in Yangon/Rangoon was Forced labor understood as when people have no quite open about the current “need” to | choice to refuse a request for labor. make use of forced labor, and mentioned these words himself. He explained that in One of the main concerns of the u Villagers define, and Total responds to, order to develop the country in the international community (and of the forced labor only in relation with the absence of significant international company itself) is the presence of forced army;cleaning a pagoda at the assistance, the country needed to make labor in the country and particularly in the instruction of a monk or cleaning the use of its resources, specifically labor. area of corporate operations. As in our village or building a road under the This is why, according to him, villagers first report, the CEP team paid careful instruction of the Head of Village (who need to “help” the army build attention to any possible linkages to the is government appointed) is not infrastructure projects. “You cannot stop Second Field Visit Report: Yadana Gas Transportation Project 139 these projects (where forced labor is army, and they were exempted. In corridor as compared to within the corridor. used) overnight, because a lack of retaliation for the complaint, the battalion During this trip, we visited the same village progress could lead to dissatisfaction of told the village that they could not sell outside the pipeline corridor that we had the population which can lead to more their vegetables to the barracks, a visited previously. This village is not support for opposition groups.” situation that lasted for 6 weeks. included in the Socio-Economic Program. As we had to get official permission to visit Observations about forced labor Total’s Procedure in Response the village, the local army battalion, made from within the pipeline corridor to Forced Labor Allegations up of several dozens of soldiers, was We consistently asked villagers about the When Total learns about incidents such as instructed to guarantee the safety of the presence of current forced labor within this (usually through members of the CEP team and although they did not the corridor. Similar to our first visit, we Socio-Economic Program team who live accompany the CEP team, they were did not hear of any systematic forced in the village), a standard investigation visibly present in the village. Their close labor by the army in the pipeline corridor procedure is initiated. On a local level, the presence noticeably affected people’s at present. Sometimes we framed this company sends an investigation team to ability to speak freely. In this village we did question as “When was the last time you the village in question, and if allegations not hear about any allegations of forced had experience with forced labor?” At are substantiated, the company requests labor. However, we observed: least 15 men stated that they had been that the representative of the Ministry of subjected to (what they considered as) Energy (MOGE) who is based at the u People demonstrated a visible fear of forced labor up to 1995; two people pipeline center, liaise with the military and the armed forces. claimed it had occurred as recently as tell them to halt these activities 1998. All of these cases were related to immediately. In addition, the MOGE u People were markedly more reluctant the construction of the Yei-Tavoy railroad, representative requests that the military to talk to us than peers had been in either digging the tracks or dumping pay villagers for the work conducted. At villages within the pipeline corridor. For stones and sand. We heard that only men the same time, in Yangon/Rangoon, Total’s example, we had agreed with the HoV were involved. The duration of the work General Manager documents the case to meet us at a certain time, and he was typically from 4 to 14 days at a time. through a letter to the Minister of Energy never showed up nor left a message. Most people had to provide labor once, who takes necessary action with the Similar behavior did not occur some twice. other authorities. In this particular anywhere else. incident, on a local level, the army No one we spoke with had direct compensated villagers the next day after u One person requested that we “not ask experience working on the construction of the intervention of the MOGE any political questions.” the pipeline, although people were, of representatives, while the local battalion course, familiar with the project. When apparently received a reprimand that u Two people suddenly refused to speak asked when forced labor stopped, all these practices are not tolerated. with us after another person in civilian people we spoke with relate this to the clothes spoke to them in Karen arrival of Total; in three villages people Total is very alert to any allegations of language. explained their understanding that Total had forced labor. During our visit, we verified requested the Army to stop such practices. reports of an incident, treated by Total as In the village, someone who claimed to be “forced labor,” where the military the battalion commander approached us. Despite the unanimous reports by villagers supposedly instructed one village to plant He wanted the CEP team to know how that no forced labor takes place within the teak trees along the road. When we “both the military and civilians had pipeline corridor in a systematic manner, checked, the villagers confirmed that the worked together to build a fence for a sporadic incidents do occur. One villager Department of Forestry had requested local school” (which is currently used as a said that in December 2002, after the that each household plant 20 trees “flying base” for the army). Although the arrival of a new commander, his son was around their houses and that this was a situation was too tense to inquire about requested by the army to level ground and truly voluntary exercise. the conditions under which this cut trees for a helicopter pad. The Head of “partnership” was established, it signals Village (HoV) confirmed that he had been Observations Just Outside the local commander’s desire to be seen asked by the army to “provide” 20 the Pipeline Corridor as working with the community. This was villagers for several hours. Although some In our first visit we noticed a significant underlined by his remarks, “We want to villagers did not perceive this exercise as difference between the situation with work with Total. Together we can develop forced labor, others complained to the regards to forced labor outside the pipeline this village and make peace.” 140 Second Field Visit Report: Yadana Gas Transportation Project

We were unable to verify if some people we demands of external stakeholders who the Ministry of Gas and Energy (MOGE) spoke with during our last visit had are concerned about the impact of and from there the gas is transported in a experienced any repercussions from corporate activities on a national level. At domestic pipeline that was constructed by speaking with us during our first visit. The the same time, there is no simple solution MOGE in the year 2000. This domestic home of one person with whom we spoke for operating in Myanmar/Burma. Total is pipeline is gaining national and on our previous visit seemed abandoned faced with several challenges with international attention for two reasons. (fence down, yard not swept, doors locked regards to its roles and responsibilities. In up). When we asked people about their addition to the challenges identified in our First, the international press reports whereabouts we got answers from “having previous report, this visit highlighted the allegations of negative social and human an afternoon sleep” to “working in the following additional ones: rights impacts of this pipeline on the lives forest.” These answers concern us because of the population in Mon State (through their variation signals that we may not Explore discussions about which the pipeline traverses). While the being told the truth about what happened revenue spending domestic pipeline is technically and to this family. Of the several families we Critics of Total allege that the government legally not Total’s concern, NGOs argue met with and interviewed in our previous uses the revenues that Total helps that Total nonetheless is morally linked to visit, this was the only household that was generate for the purchase of military the pipeline since the gas comes from not now present. However, the lack of hardware. According to a senior Total gas fields. In addition, two Mon consistency in explanation about where government official, who acknowledges political representatives stated that their they had gone raises at least the question that both the government and the constituencies considered the gas flowing of whether they were in any way targeted companies are facing tremendous to the cement factory as “Total gas.” They because of their conversation with us. In pressure over this issue, “hardly any” of were not aware or chose not to this previous conversation, we had the gas revenues is being used for war acknowledge that Total sells the gas at discussed forced labor and the family and purposes. This provides an opening for the pipeline center. Regardless, Total is neighbors who were present confirmed that the company to suggest to the being linked with the allegations it occurs. (In our other conversations in this government that it ensure that all gas associated with this pipeline. This reflects same village, every family we met offered revenues are used for civil purposes. a trend in the corporate social this confirmation and, as noted, all of these Revenue allocation is perceived as one of responsibility movement that, as one still live in the village as before.) Because of the most contested “contributions” of the international observer stated, companies our concern, CEP staff recommends that company to the country. Hence, increased not only bear responsibility for supply- Total staff visit the village periodically to transparency of how such funds are used chain management but increasingly also ensure that our visits do not have any and the possibility for independent for “user-chain” management. negative consequences for the villagers. verification by the international community would allow the tracking of Second, both the government and the these revenues. The challenge for Total is KNU acknowledge that the domestic to constructively achieve this objective pipeline has been subjected to sabotage Section II: Impacts at the without being seen as meddling in by the KNU in December 2002 and in national level government affairs. It is worthy to note April 2003. Both the act of sabotaging that the Myanmar/Burmese government and the fact of acknowledgement are new would not be unique if it decided to developments. More significant for Total is Challenges pursue a more transparent approach. the fact that the KNU in their statement | Countries such as Cameroon and Chad makes a direct link to Total and states have followed such an approach already that the revenues generated by the The previous section dealt with the and several other countries are company allow the government to buy impact of Total’s presence in its local considering it. military hardware “to continue killing and working environment. Obviously, Total’s oppressing Karen people and the presence also has impacts on a national The MOGE Kanbauk-Myaingkalay population in general.”244 Political analysts level that the company acknowledges it pipeline; Total’s responsibility? in Yangon/Rangoon interpret this needs to address, but over which it has In addition to the gas provided to power statement as an attempt on the part of less control. plants in Thailand, the Joint Venture also the KNU to use the presence of foreign sells gas to power a cement factory in companies as a lever to apply Total realizes that the good efforts in the Myaingkalay in Karen State. The gas is international pressure on the government pipeline corridor will not satisfy the sold at the pipeline center in Kanbauk to for political dialogue in Myanmar/Burma Second Field Visit Report: Yadana Gas Transportation Project 141 which is currently, all observers agree, at urging genuine and effective dialogue manager at Total mentioned, “Hiding a stalemate. with the authorities. under the table and waiting until the dark clouds blow over is not going to help us.” Both developments pose the question to Limits to growth of the Socio-Economic Conversely, proactive efforts to engage what extent the domestic pipeline is, or Program in the corridor with the government on non-technical should be, of concern to Total, and what Total is committed to making its program issues may not be effective, or even options the company has to respond to in the pipeline corridor a cornerstone of counter productive, when they are not these new developments. its efforts to fulfill its policy commitment well thought through in their approach. of reaching out to affected communities Refraining from opinions about and developing social and economic The development of a vision, and a the political situation does not mean programs geared to their needs. The strategy to achieve this vision, will help the company is seen as neutral program has increased the quality of life Total take the initiative in being, and being In its Myanmar/Burma Code of for the overwhelming majority of the seen as, working towards achieving a Conduct,Total states its goal to,”Avoid population in the corridor, which is no better future for the country. Without such interfering in relations between local small achievement. Outside critics as well an exercise, all of Total’s other good communities and more generally in as some of Total’s own staff wonder if it is efforts in the pipeline area run the risk of political matters.” Some staff interpret time to maintain the level of attention in being considered “window-dressing,” as this as refraining from any kind of political the corridor and focus more on “getting it one NGO representative described. engagement in the country. The idea right” in dealing with the larger socio- Alternatively, efforts to address the socio- behind this statement is, officials say, an political climate in the country. political situation will likely be less attempt for the company to stay effective if they are not guided by a larger “neutral.” However, the KNU statement The discussion about Total’s role in overall objective. after the domestic pipeline attack Myanmar is challenging. The variety of explicitly links the revenues generated by stakeholders both within and outside the Articulation by Total of a long-term vision Total and their use for warfare. It is a country is great, each with its own will focus internal discussion on what the clear sign that the company is perceived perspective, agenda, and objective. As in company wants to achieve, not only as having an impact on the political all of the contexts where the CEP has financially but also reputationally. Once situation in the country. Remaining silent worked, there are options and choices to created, a focused strategy and action on the political situation in the country is address these challenges. Through plan can then be developed which would not perceived as a neutral stance. On the discussions with the relevant address complex and important issues contrary, it is interpreted as support for stakeholders, interested parties can agree such as what role Total wants to play on a the status quo. For outside critics, silence on benchmarks and explore the socio-political level in the country. It and neutrality are seen as uncritical alternatives available to the company to would also help the company to address compliance with the policies and work towards a presence that satisfies the question of what “success” looks like. practices of the military government. the demands of the key stakeholders: the For example, what are the interim people of Myanmar/Burma, the outcomes that are required to achieve the Should one be public or not regarding government, Total shareholders and long-term objective? Identifying engagement with the government? company employees. recognizable mileposts will assist in The international Joint Venture partners maintaining focus on the program and each have their own approach in managing strategy expectations. engaging with the authorities and in achieving change. Pressure from outside Develop a Vision and Strategy Based on conversations with a variety of groups to “do something” makes it | stakeholders, CEP sees that no outside tempting to publicly speak about groups expect the company to manage achievements or to openly express a The dilemmas that Total and its co- the politics of a host country. As we company’s opinion about certain investors are facing will not disappear by stated in our previous report, it is up to government policies. On the other side, themselves. If the Joint Venture partners the Myanmar/Burmese people themselves given the Myanmar/Burmese context, in do not work on clarifying and pursuing to determine their own future. Still, the which changes are seen to occur through their role in Myanmar/Burma with respect challenge for the company is to play, and a process of “saving face,” such a critical to the socio-political issues, they will to be seen as playing a positive and public stance may, company staff fear, leave themselves increasingly vulnerable constructive role in the country. directly undermine their attempts at to stakeholders who criticize them. As one 142 Second Field Visit Report: Yadana Gas Transportation Project

Following are some elements or building with the government. We consistently opportunities and have done so in the blocks that that company may take into asked people to share their insights. past, for example by sponsoring consideration in developing its future The following are some workshops on Humanitarian Issues. vision and strategy. We discuss the recommendations from people in building blocks per group of stakeholders. Myanmar/Burma: u Draw clear boundaries and be predictable. One senior UN official (I) — Working with the government u Establish personal connections. All explained his experience that these As we pointed out in our first report, some people pointed out the value of boundaries are constantly tested and that Total staff equate engagement with the personal connections that are a “hard-nosed, transparent and consistent government as political interference, and cultivated over time. Old family approach” is most effective when equate political interference with non- relations and ties that go back to working with the government. Another neutrality. This is incorrect. The reality is school times matter. point that he made is that the military that Total engages, and must engage consider any “unpredictable” behavior as (even if only on a technical level) with the u Work via national staff. This tends to a threat. Instead, they are well able to government on a daily basis. Thus, the minimize the strain on government handle an approach they may not agree challenge for Total is how to work with officials. Many NGOs have found the with but that is at least in line with what the government in ways that promote working relationship to be much more the company said it would do. progress in the country. effective when they route most of their government communication via their b) Meet with government officials even The overwhelming majority of the people senior national staff and only officially when there is no fixed agenda. we spoke with, ranging from senior bring the international staff into the diplomats and heads of UN agencies to process if details have been sorted out. In our own discussions with one senior NGOs and managers of other companies, government official, we noted the were of the opinion that Total should take u Conduct business in a way that avoids candid way in which he discussed a more pro-active approach in relation to anyone losing face. Several people issues such as forced labor, government issues and broaden their identified the importance of transparency of revenue allocation, and policy regarding political involvement in acknowledging and maintaining the position of the NLD. One of the the country. Many people saw no reason contacts with each layer in the reasons for this may have been the fact why the company could not be more hierarchy and not skipping levels; for that the CEP team had no fixed agenda engaged. Others considered that Total example, only contacting senior officials for the meeting but merely requested a was overlooking the business case in case of a need. A bottom-up meeting to listen and discuss. In other pointing towards the impact of the approach has been identified as more countries we have seen repeatedly that political climate in Myanmar/Burma on effective than going straight to the top. having a discussion around issues that Total’s reputation and share price. “need to be driven home by the u No government officials like surprises company to the government” creates All international observers we spoke to, or to be put on the spot unnecessarily. an atmosphere of formality. Instead, it make the case that Total, as the biggest One organization overcame this would also be valuable for Total to investor in the country, has considerable problem by hiring a national develop a relationship with senior leverage over the government. All government-liaison officer who is government officials through regular Myanmar nationals we spoke with also responsible for keeping government meetings where there is no fixed felt Total had considerable political agents informed and for informally agenda. It may well be that discussions influence with the exception of one testing the tone of draft letters with in a more informal atmosphere provide business leader who felt the company officials before a final version is a good opportunity to open up issues in was politically powerless. officially put forward. more detail.

Options u Develop positive working relationships c) Spell out what constitutes political with bureaucrats through informal interference and what does not a) Use a variety of ways to effectively meetings and gatherings. These communicate with the government occasions can be parties organized by A practical step in addressing the by the various Embassies or communications with the government is The following is a careful analysis of Business Associations. Total and its co- to determine what constitutes political how Total can engage most effectively investors can also create these interference — which is what the Second Field Visit Report: Yadana Gas Transportation Project 143 company wants to avoid. Some provided they link the direct impact of the and open to new ideas but need to be company staff considers any type of social-political situation to business. legitimized and supported to be more interaction with government officials open about this. over non-technical issues to be d) Increase contacts with more individual “political” and they therefore feel the government representatives across more e) Create vehicles for social functions company should refrain from these departments interactions. But not all engagement One diplomat suggested that Total with the government is political Many people stated that in the could proactively create venues where interference. Many diplomatic, UN, and Myanmar/Burmese context, informal interaction with government NGO representatives feel it is opportunities to influence, support, or officials takes place. Suggestions appropriate for a company to alert the encourage the government present included seminars and workshop about government about what, from a themselves in unexpected ways. They technical topics such as “providing a business perspective, is good or bad for stated that only those companies with good policy environment for business” business. That does not, in their opinion, a good informal network with or “fundamental Laws enabling foreign constitute interference or meddling. government officials on various levels investment.” Workshops with such are able to capitalize on these topics do not directly involve the For example, several diplomatic, UN, opportunities. If the company wants to military and, thus, will be easier to and NGO representatives in sell gas and to focus on its good efforts organize and may provide a more Myanmar/Burma indicated that in the pipeline corridor, a minimalist effective manner to address the statements from Total with regards to approach predominantly focused on the challenges of working in the political situation could not be Ministry of Energy will be sufficient to Myanmar/Burma. interpreted as political interference meet technical requirements. But the when these statements were clearly fact that the political situation in the f) Be alert to and document examples of the and directly explained through a country can negatively affect Total’s process of change within the government business lens for the company. They business underlines the case for Total interpreted “political interference” to to step up its engagement with the One observer also urged Total to look be an agenda of political change. government, rather than to maintain an for the processes and steps by which as-needed approach. Other ministries any government changes its position. For example, if the company stated that it such as Home Affairs (the Minister of He noted that within the government, “supports government attempts to abolish Home Affairs also serves as the individuals are at various levels along a forced labor and implement order I-99” or chairman of the National Human Rights spectrum: that is “in favor of a reconciliation Committee) or the Ministry of Labor are process” or that it “supports a relevant to Total’s operations.Total 1. Officials invalidate a certain concept government policy that does not allocate could have also have discussions with and do not see the relevance of its gas revenues for war purposes”, these existing contacts within the Ministry of applicability to the country. statements can all be made from the Energy about non-typical issues such 2. Officials validate a concept but do perspective that this development would as forced labor or the manner in which not see it as relevant to the context improve the conditions for investment, gas revenues are being allocated by 3. Officials validate the concept as well regardless which government is in power. the government. as its applicability. Similarly if the company stated it “would 4. The government establishes Laws, regret if the International Labor An analyst with whom we spoke inside committees and procedures as an Organization (ILO) had to withdraw its the country noted that most efforts to enabling framework. representation in the country due to the engage with the government are pitched 5. The government moves from lack of perceived progress on the part of at the top political level in the assumption procedures to implementation. the government”. it would signal that all decisions are made by the top. He encouragement to support the stated that even in the Myanmar system, A company should be aware of where government in following through on the government is not monolithic and that each bureaucrat is in this change commitments made earlier. In summary, many opportunities exist to engage with process. A better analysis of such international stakeholders in different officials on various levels. This changes is important for Total to adjust its Myanmar/Burma encouraged Total to take was confirmed by a senior diplomat who strategy and ensure that it supports a more liberal approach with regards to agreed that in various ministries officials decisions moving forward along this the political context in which they work, on various levels are constructive thinkers spectrum. 144 Second Field Visit Report: Yadana Gas Transportation Project

II) — Working with International NGOs and Stakeholders Options Non Governmental Organizations Total’s open door policy to invite Various people we spoke with mentioned At present, Total and its co-investors carry diplomats, journalists, and NGO the following options. Of course, all these the “burden” of working in representatives to the pipeline corridor options should be part of an overall and Myanmar/Burma largely by themselves. has led to better informed discussions coherent strategy linked to the approach External communication has been largely between the company and external to the government and other stakeholders. re-active, defensive, and legalistic. This stakeholders, as well as between various creates conditions where few NGOs feel outside groups. In some organizations, a) Be strategic in broadening relations with invited to share ownership with the people have been better informed through various groups of NGOs. company to jointly seek constructive visits to Myanmar. Others have started to options to improve the positive impact of encourage their colleagues to rethink Given the large number of outsiders. One of the objectives of a well- fixed position and, instead, focus on stakeholders interested in the socio- designed strategy would be exactly that: shared objectives. In other occasions, political issues in Myanmar and the to share ownership for Total’s challenges people observe closely what is actually time commitment necessary to nurture and to have more brains working on going on and push for progress, but at the a working relationship, careful developing options for getting it right. same time, “trust” the individuals in the selection of NGOs becomes an company who are trying to make a important practical consideration. This NGOs present in country positive change. does not mean that others are The General manager of Total has actively unimportant or should be neglected, engaged with various humanitarian NGOs Still, this increased openness is fragile but Total’s relationship with them may since his arrival. This exercise has been and the burden of proof to show that the be for other purposes. constructive, and increased contacts with corporate presence in Myanmar is NGOs have allowed the company to better positive lies on the shoulders of the A next stage in developing relations with disaggregate the various mandates and company. Any form of corporate NGOs is to also engage with other types activities of NGOs. Still, contacts have been communications by any of the co- of NGOs such as political analysis NGOs, primarily with humanitarian NGOs and investors that is presented as definite but UN agencies, and NGOs that have an focused on the exchange of information can factually be contested (for example advocacy mandate either in about the Socio-Economic Program. that all accusations against the company Myanmar/Burma, in the region are false, or that the Yadana project (Bangkok) or internationally in the US or All NGOs and UN agencies with which the contributes to the overall development of in Europe. Of course, each group has CEP team had discussions are open to Myanmar/Burma) will not help to build different objectives and discussions with direct discussions with Total. Even the bridges between the Yadana partners and different groups take can take place for NGOs that strongly oppose Total’s external stakeholders. While such different purposes. For example: presence in Myanmar/Burma would information may be useful for potential welcome the possibility to have direct investors, it reinforces the perception u Medical NGOs can be useful for interactions with Total staff. Although among NGOs that JV partners are exchange of medical data. Some of this parties may agree to disagree with Total defensive in their response, not open to exchange is currently already ongoing. that it should be present in listen to civil society groups and not able u Several NGOs in Myanmar/Burma have Myanmar/Burma, the process of getting to reflect on their own practices. On the micro credit expertise and can teach, or each other’s perspectives and sharing other side, we have also seen that Total’s learn from Total’s experiences on a insights is an important step in clarifying response to an article that was critical of programmatic level. factual misunderstandings. As we noted in the company’s presence in the previous report, the disagreement Myanmar/Burma was integrally placed in u Other NGOs may be able to provide between the company and outside groups the same magazine. This may be because helpful information of how they engage over facts is currently one of the main of the non-defensive tone of the response with the government. obstacles to furthering a discussion about accompanied with an open invitation of what these facts mean. Total for journalists to visit its u Some groups can be approached to get Myanmar/Burmese operations to verify a better analysis of the political facts for themselves. situation on an ongoing basis.

u Others would be able to provide Total with a historical perspective of the Second Field Visit Report: Yadana Gas Transportation Project 145

impact of the pipeline and why they Conduct should be interpreted and Options would prefer for Total not to operate in applied in the Myanmar context. Myanmar/Burma. a) Develop a joint vision and strategy b) Share information about existing policies u Some groups will be able to provide and procedures in place As discussed above, a joint vision Total with a better idea of the among partners of how see their role in perception of the various political All company staff acknowledge that the socio-political context of the country parties in or outside the country about working in the Myanmar/Burma would be an important first step. the Yadana pipeline. context is not easy and comes with Currently such a common vision does challenges. The company is constantly not exist. In addition, none of the co- u It will be fruitful to actively approach discussing dilemmas, contemplating investors is explicit about how it sees its some advocacy groups that have been how to react to painful observations, role in the country and what it wishes to critical of Total’s program in the pipeline and searching for the “right” approach. achieve. Various government officials area (and its presence in the country in This process is not reflected in have regular meetings with general) and to have discussions, see communications with external representatives from the different co- where some possible common ground stakeholders via the web site or investors about the same topics. There exists (if any at all) and explore venues company brochures. Ownership for is a missed opportunity for Yadana to for regular discussion. developing constructive options will speak with one voice, aimed at increase when the company is more achieving identified and agreed-upon Various NGOs that fall within these open about the dilemmas they are common goals. categorizations have indicated they are dealing with and more humble about willing to have ongoing discussions its achievements. It would invite b) Capitalize on complementary with Total. One option for meeting with outside groups to bring ideas to the competences NGOs in Myanmar/Burma is for Total to table and explain the company’s offer to provide a presentation of its approach, acknowledging that policies A joint strategy also means that co- Socio-Economic Program after one of can always be improved. For example, investors can ensure that their efforts the monthly NGO meetings. The fact Total could start by describing its are better coordinated. For example, that some NGO representatives in the current policies and procedures in some co-investors are in a better country are not aware of the fact that place. It would be useful to explain position to work with local communities Total has such a program suggests Total’s efforts to increase employment or NGOs whereas others may have a there is an opportunity to exchange for local villagers or to explain, step by broader network with government experiences. One NGO representative step, what procedure is followed when officials. suggested that Total should first meet an allegation of forced labor within the informally with a small group of NGOs corridor reaches the company. c) Support the government on issues to share information. where interests overlap (III)— Joint Venture Partners One of the key-issues for the company In any joint venture, the different co- The Minister of Energy has stated that is not only to explain its current investors bring their own strengths and under his Ministry “there is no forced activities, but to also actively seek weaknesses to the venture. Each co- labor.” Such a statement provides feedback from outside groups about its investor can also learn from its other ample opportunities for Total to help role in society. For example, Total’s partners. The Yadana project is no the Minister to ensure this indeed is Code of Conduct is one of the most exception. While there are obvious the case and that everyone in the important ethical guides for company differences in responsibilities between the department is implementing this policy. behavior. However, this Code is operator and the co-investors, there are For example, Total could suggest that developed by the company and, thus, also shared interests. Especially in the outside groups verify allegations made holds little weight in convincing outside Yadana project, all partners are, in one by Mon human right groups of forced critics that the company means well. way or another, affected by negative labor along the Kanbauk-Myaingkalay Since much thought has gone into publicity surrounding the project. Still, pipeline, since this has a large developing the Code of Conduct and there are clear opportunities for synergy reputational impact on Total. Total feels comfortable with it, it would among the partners. be constructive to discuss with outside stakeholders how the current Code of 146 Second Field Visit Report: Yadana Gas Transportation Project

Other ideas that government officials and With a clear vision and strategy, efforts to NGO representatives brought up and that achieve this outcome can be focused, and should be explored by Total to develop a new working partnerships can be built better working relationship with and nurtured. Within these, creative government are jointly activating the solutions to the challenges of working in power line that has been partially Myanmar can be formulated. constructed in the pipeline corridor or jointly undertaking a project to improve local knowledge on pipeline technology.

The building blocks above all need to be integrated and contribute towards a larger objective, which is articulated in a vision. The above-mentioned options may be positive actions in and of themselves. However, they may remain only good efforts, and not more than that, if they are not part of a strategy to materialize a vision. When companies try to tackle large problems in one “giant leap,” they often fall short, which can play into the concerns of critics. On the other hand, we have seen in other companies that it is valuable to focus on a series of smaller steps, in order to achieve a larger objective. Small steps increase opportunities to gain credibility and trust, because expectations are met in the immediate term in tangible, visible ways.

Conclusion

The second visit to the Yadana pipeline confirmed the positive impact that the presence of the oil companies currently has on the population within the pipeline corridor. It is also evident that these positive impacts in the pipeline corridor will not convince outside critics about Total’s positive contribution to the country at large. The company will continue to be criticized and remain vulnerable to outside pressure from some stakeholders until it is better able to address concerns on the larger socio-political context in the country. The single most important observation revealed in this report is the need for the co-investors to develop a vision of the role they want to play in Myanmar/Burma and the strategy they will use to achieve this. Article 18 Resources and Further Information

151 Universal Declaration of Human Rights

174 Business and Human Rights Resource Centre

176 The Human Rights Compliance Assessment (HRCA) Article 19 Article 20 Universal Declaration of Human Rights

Preamble

Whereas recognition of the inherent dignity and of the equal and inalienable rights of all members of the human family is the foundation of freedom, justice and peace in the world,

Whereas disregard and contempt for human rights have resulted in barbarous acts which have outraged the conscience of mankind, and the advent of a world in which human beings shall enjoy freedom of speech and belief and freedom from fear and want has been proclaimed as the highest aspiration of the common people, Article 21 Resources and Further Information 153

Whereas it is essential, if man is not to be compelled to have recourse, as a last resort, to rebellion against tyranny and oppression, that human rights should be protected by the rule of law,

Whereas it is essential to promote the development of friendly relations between nations,

Whereas the peoples of the United Nations have in the Charter reaffirmed their faith in fundamental human rights, in the dignity and worth of the human person and in the equal rights of men and women and have determined to promote social progress and better standards of life in larger freedom,

Whereas Member States have pledged themselves to achieve, in cooperation with the United Nations, the promotion of universal respect for and observance of human rights and fundamental freedoms,

Whereas a common understanding of these rights and freedoms is of the greatest importance for the full realization of this pledge, Article 22 Now, therefore, The General Assembly,

Proclaims this Universal Declaration of Human Rights as a common standard of achievement for all peoples and all nations, to the end that every individual and every organ of society, keeping this Declaration constantly in mind, shall strive by teaching and education to promote respect for these rights and freedoms and by progressive measures, national and international, to secure their universal and effective recognition and observance, both among the peoples of Member States themselves and among the peoples of territories under their jurisdiction. Article 23 Article 1 All human beings are born free and equal in dignity and rights. They are endowed with reason and conscience and should act towards one another in a spirit of brotherhood. Article 2 Everyone is entitled to all the rights and freedoms set forth in this Declaration, without distinction of any kind, such as race, colour, sex, language, religion, political or other opinion, national or social origin, property, birth or other status.

Furthermore, no distinction shall be made on the basis of the political, jurisdictional or international status of the country or territory to which a person belongs, whether it be independent, trust, non-self-governing or under any other limitation of sovereignty. Article 3 Everyone has the right to life, liberty and security of person. Article 4 No one shall be held in slavery or servitude; slavery and the slave trade shall be prohibited in all their forms. Article 5 No one shall be subjected to torture or to cruel, inhuman or degrading treatment or punishment. Article 24 Article 6 Everyone has the right to recognition everywhere as a person before the law. Article 7 All are equal before the law and are entitled without any discrimination to equal protection of the law. All are entitled to equal protection against any discrimination in violation of this Declaration and against any incitement to such discrimination. Article 8 Everyone has the right to an effective remedy by the competent national tribunals for acts violating the fundamental rights granted him by the constitution or by law. Article 9 No one shall be subjected to arbitrary arrest, detention or exile. Article 10 Everyone is entitled in full equality to a fair and public hearing by an independent and impartial tribunal, in the determination of his rights and obligations and of any criminal charge against him. Article 25 Article 11 1. Everyone charged with a penal offence has the right to be presumed innocent until proved guilty according to law in a public trial at which he has had all the guarantees necessary for his defence.

2. No one shall be held guilty of any penal offence on account of any act or omission which did not constitute a penal offence, under national or international law, at the time when it was committed. Nor shall a heavier penalty be imposed than the one that was applicable at the time the penal offence was committed. Article 12 No one shall be subjected to arbitrary interference with his privacy, family, home or correspondence, nor to attacks upon his honour and reputation. Everyone has the right to the protection of the law against such interference or attacks. Article 13 1. Everyone has the right to freedom of movement and residence within the borders of each State.

2. Everyone has the right to leave any country, including his own, and to return to his country. Article 14 1. Everyone has the right to seek and to enjoy in other countries asylum from persecution.

2. This right may not be invoked in the case of prosecutions genuinely arising from non-political crimes or from acts contrary to the purposes and principles of the United Nations. Article 26 Article 15 1. Everyone has the right to a nationality.

2. No one shall be arbitrarily deprived of his nationality nor denied the right to change his nationality. Article 16 1. Men and women of full age, without any limitation due to race, nationality or religion, have the right to marry and to found a family. They are entitled to equal rights as to marriage, during marriage and at its dissolution.

2. Marriage shall be entered into only with the free and full consent of the intending spouses.

3. The family is the natural and fundamental group unit of society and is entitled to protection by society and the State. Article 17 1. Everyone has the right to own property alone as well as in association with others.

2. No one shall be arbitrarily deprived of his property. Article 18 Everyone has the right to freedom of thought, conscience and religion; this right includes freedom to change his religion or belief, and freedom, either alone or in community with others and in public or private, to manifest his religion or belief in teaching, practice, worship and observance. Article 27 Article 19 Everyone has the right to freedom of opinion and expression; this right includes freedom to hold opinions without interference and to seek, receive and impart information and ideas through any media and regardless of frontiers. Article 20 1. Everyone has the right to freedom of peaceful assembly and association.

2. No one may be compelled to belong to an association. Article 21 1. Everyone has the right to take part in the government of his country, directly or through freely chosen representatives.

2. Everyone has the right to equal access to public service in his country.

3. The will of the people shall be the basis of the authority of government; this will shall be expressed in periodic and genuine elections which shall be by universal and equal suffrage and shall be held by secret vote or by equivalent free voting procedures. Article 22 Everyone, as a member of society, has the right to social security and is entitled to realization, through national effort and international co- operation and in accordance with the organization and resources of each State, of the economic, social and cultural rights indispensable for his dignity and the free development of his personality. Article 28 Resources and Further Information 167

Article 23 1. Everyone has the right to work, to free choice of employment, to just and favourable conditions of work and to protection against unemployment. 2. Everyone, without any discrimination, has the right to equal pay for equal work. 3. Everyone who works has the right to just and favourable remuneration ensuring for himself and his family an existence worthy of human dignity, and supplemented, if necessary, by other means of social protection.

4. Everyone has the right to form and to join trade unions for the protection of his interests. Article 24 Everyone has the right to rest and leisure, including reasonable limitation of working hours and periodic holidays with pay. Article 25 1. Everyone has the right to a standard of living adequate for the health and well-being of himself and of his family, including food, clothing, housing and medical care and necessary social services, and the right to security in the event of unemployment, sickness, disability, widowhood, old age or other lack of livelihood in circumstances beyond his control.

2. Motherhood and childhood are entitled to special care and assistance. All children, whether born in or out of wedlock, shall enjoy the same social protection. Article 29 Article 26 1. Everyone has the right to education. Education shall be free, at least in the elementary and fundamental stages. Elementary education shall be compulsory. Technical and professional education shall be made generally available and higher education shall be equally accessible to all on the basis of merit.

2.Education shall be directed to the full development of the human personality and to the strengthening of respect for human rights and fundamental freedoms. It shall promote understanding, tolerance and friendship among all nations, racial or religious groups, and shall further the activities of the United Nations for the maintenance of peace.

3. Parents have a prior right to choose the kind of education that shall be given to their children. Article 27 1. Everyone has the right freely to participate in the cultural life of the community, to enjoy the arts and to share in scientific advancement and its benefits.

2. Everyone has the right to the protection of the moral and material interests resulting from any scientific, literary or artistic production of which he is the author. Article 30 170 Resources and Further Information Resources and Further Information 171

Article 28 Everyone is entitled to a social and international order in which the rights and freedoms set forth in this Declaration can be fully realized.

Article 29 1. Everyone has duties to the community in which alone the free and full development of his personality is possible.

2. In the exercise of his rights and freedoms, everyone shall be subject only to such limitations as are determined by law solely for the purpose of securing due recognition and respect for the rights and freedoms of others and of meeting the just requirements of morality, public order and the general welfare in a democratic society.

3. These rights and freedoms may in no case be exercised contrary to the purposes and principles of the United Nations.

Article 30 Nothing in this Declaration may be interpreted as implying for any State, group or person any right to engage in any activity or to perform any act aimed at the destruction of any of the rights and freedoms set forth

herein. § 172 Resources and Further Information

Human rights have risen to the top of the a link to the company’s website, and business agenda, and business has come indicate whether or not the company is a to the top of the human rights agenda. participant in the UN Global Compact. The Business & Human Rights Resource Other sections of our website include: Centre website (www.business- humanrights.org) covers over 1600 u Latest news & featured reports companies, over 160 countries, and over (homepage) 150 issues. It is updated hourly, and u List of companies with a human rights receives over 1.5 million hits per month. policy statement (link from homepage) The United Nations, International Labour u Selected company social/environmental Business & Human Organization and various business reports: Examples of organisations have, at their request, leading/substantive reports Rights Resource Centre: linked their websites to ours. u Getting started: An introduction to the A free online tool subject of business & human rights About the Resource Centre u Training managers & employees The Resource Centre is an independent u Examples of company support for Christopher Avery non-profit organisation started by a group initiatives promoting development / Director, Business & of former business people, human rights economic & social rights Human Rights Resource Centre and environmental advocates, and u Sectors: over 150 industry sectors August 2004 academics. Our objective is to provide u Issues: over 150 issues, including: one-stop access to information about Diversity & discrimination important social and environmental issues, Labour rights; Child labour No debate can move “ and to promote respect for human rights. Environment — Why environmental forward, no positive change issues are human rights issues can be made, without facts. We operate in partnership with Amnesty Development & poverty alleviation The Business & Human International sections and leading Health; Safety; Access to essential Rights Resource Centre is academic institutions. Mary Robinson, medicines the only website to provide former UN High Commissioner for Human Security issues & conflict zones such a broad range of Rights and President of Ireland, is Chair of Supply chain/"Fair trade" our International Advisory Network: 80 balanced information on Impact assessment experts from all regions, recognised for Complicity business and human their expertise in relevant subjects. The Profitability & human rights rights.” Co-Chairs of our trustees are Chris u Principles, including: –Mary Robinson Marsden OBE (Chair of Amnesty OECD Guidelines Director of the Ethical International UK Business Group; former UN Global Compact Globalization Initiative, Head of Community Affairs at BP) and Ulf UN Norms on business & human rights Former United Nations Karlberg (Founding Chair of Amnesty International Sweden Business Group; High Commissioner for former Executive Vice President at Our sources Human Rights and AstraZeneca). President of Ireland Our website links to materials published by a wide range of sources, including NGOs, companies, the media, corporate What does the website cover? responsibility organisations, governments, Our website has separate sections on policy experts and the UN. We are an over 1600 companies worldwide. In each information/education resource rather of those sections we provide links to than an advocacy organisation and do not news and reports about the company’s produce reports ourselves. social and environmental record. At the top of each company section we provide Resources and Further Information 173

Who uses the site? Coming soon: Custom Alerts Companies use the site to keep abreast of Soon we will be launching a special developments, learn about "best practice", Custom Alerts service. Subscribers will and check their suppliers. NGOs, investors, receive an immediate email every time procurement officers, governments, we add to the website an item about one universities and journalists use it in their of their selected companies or subjects. daily work and decision-making. For example, Pfizer could choose to be alerted anytime an item is added about "Pfizer", "Merck", "Pharmaceutical", Comments & suggestions "South Africa", "Health", or "Access to We aim to include a balanced range of Medicines". These alerts will save information on the website. The website business people time, and ensure they includes links to positive reports of "best are the first to know when relevant items practice" by companies, as well as are added to our website. reports about alleged misconduct. We encourage companies and organisations to contact us if they wish to submit a “The Resource Centre clarification or response to a linked item provides a service unique on our site. We also welcome suggested in the comprehensiveness additions to our site – for example, an and impartiality of its announcement of positive steps a information. It is company is taking, or a new report by a human rights or environmental indispensable for anyone organisation. We endeavour to include involved in business and links to major social and environmental human rights, whatever reports by companies, so we appreciate their standpoint.” being notified when these are published. –Sir Geoffrey Chandler Founding Chair of Coming soon: Weekly Updates Amnesty International UK Soon we will invite over 10,000 opinion Business Group; former leaders worldwide to receive our free senior manager at Royal weekly email updates, which will draw Dutch/Shell; former attention to breaking news and important Director General of the developments. People will also be able to UK National Economic register for the updates via our Development Office homepage. The updates will include positive and negative reports about companies’ activities. Before sending out a report focusing on criticism of a particular company we will invite that company to provide a response to be included in the update, alongside the critical report. This will keep the updates balanced, and encourage companies to publicly address important concerns being raised by civil society. 174 Resources and Further Information

What are the origins of the HRCA? human rights treaties and conventions. An ? interactive web-based computer The HRCA is the result of a joint venture programme allows each company to select between the Danish government and the and modify the information in the database Danish business and human rights to suit their type of business and area of communities. All parties recognized that operations. The standards and indicators human rights were an increasingly will be updated on an annual basis, based important area for these businesses, but on feedback from company and human that many Danish companies were too rights groups users, and to reflect small to provide adequate in-house changes/developments in international expertise. The need was to find a widely human rights law. accessible resource which would help The Human Rights these Danish companies help themselves to deal with human rights issues. The What does the HRCA produce? Compliance result was the HRCA. ? Assessment (HRCA) Running the tool produces a computerized report which identifies your company’s What is the HRCA? areas of compliance and non-compliance ? with human rights. The programme also The HRCA is a diagnostic tool, designed to gives access to a ‘country risk’ database at help companies detect potential human the Danish Institute for Human Rights, so rights violations caused by the effect of that the company can inform itself of the their operations on employees, local particular human rights risks in its area of residents and all other stakeholders. From operation before selecting the particular November 2004, the HRCA will be made checks to run in the HRCA. This ensures available on the web to all companies who that the checks selected reflect the most want to address human rights issues in a relevant human rights issues for the transparent and systematic manner. particular area of operations. In addition, where weaknesses are detected, the HRCA proposes ways of avoiding the main Who made the HRCA? cultural and legal pitfalls, and offers ? suggestions for how to strengthen the The HRCA was developed from 1999 – rights at greatest risk. Your company’s 2004 by a team of researchers at the overall performance is quantified, so that Danish Institute for Human Rights, who continued improvements can be measured drew on the input and expertise of many of and tracked on a regular basis. the 120 other human rights specialists at the Institute. The researchers worked in direct cooperation with the Confederation of How much will it cost? Danish Industries, the Danish ? Industrialization Fund and a number of The’ quick check’ will be available for free affiliated companies to ensure that the and contains 10% of the most essential resulting tool meets the needs of questions in the entire database, so this businesses. will give companies an idea of how the tool works and an initial assessment of their How does the HRCA work? performance. Access to the entire tool will ? cost a fee in order to ensure that we have The tool runs on a database containing the resources to continually update the over 350 questions and 1000 human rights database. Timewise, the company will indicators, developed from the Universal have to invest from one day to two weeks Declaration of Human Rights, the 1966 to test their compliance, depending on the Dual Covenants and over 80 other major type of checks selected. Resources and Further Information 175

Can I be sure it is practical? Human Rights’ (M. Jungk, 2001). Both ? brochures can be obtained for free from The sources used include: Reports from 60 Throughout the development of the tool, the Human Rights & Business Project sister National Human Rights Institutes, the researchers have received input from a website (www.humanrightsbusiness.org), or Danish Institute Human Rights project number of associated companies and ordered directly from the Danish Institute partners (NGOs in the field), Danida business organizations to ensure that the for Human Rights (+45 32 69 88 51). information officers, UN treaty review practical interests and needs of the bodies, Special rapporteurs, Secondary business community continually guided the material from Amnesty International, work. In particular, Shell International has Human Rights Watch, US State Dept served as the test company for the tool. The HRCA system reports, etc. Field tests were run in relation to two and the pilot on Shell distinct Shell companies: one in a country The HRCA system and the pilot on Shell will Each right is colour-coded to reflect its level of with a poor human rights record generally, be presented by Christina Schultz from the risk in the country. Green is low-risk, yellow the other in a society with racial conflict Danish Institute for Human Rights at the signifies medium-risk, and red is high. between populations. Human Rights breakout session, part B, 11 December, 2 pm – 4 pm. Step 2: Human Rights Focal Areas for Contractors Are the human rights standards The Danish Institute for Human Rights | ?relevant to business? piloted the Human Rights Compliance Assessment (HCRA) system on Shell during The objective of this second stage of the The field of human rights is politically and 2003 in order to establish a systematic human rights analysis is to determine 5 to academically well developed, with rights approach for addressing human rights 10 key human rights focal areas, where and standards emerging from treaties and risks in all its countries of operation (over the local operating company should remain conventions, international legal decisions, 140). The system is comprised of 6 main vigilant for human rights abuses in its and reports of a number of different UN, steps: contractors. national and international bodies. But most standards and application procedures have The selection of the Focal Areas is based been developed for governments, not Step 1: Country Risk Analysis (CRA) on the results of the CRA: companies. As a result, the development of | the HRCA has involved a year-long 1. Highest level of risk (only red lights from consultation process funded by the The CRA takes every right in the Universal the CRA results are taken into account) European Union, involving a total of 90 Declaration of Human Rights (UDHR) and 2. Severity of the violation (only jus companies and human rights groups from examines the level of risk in the particular cogens/non-derogable rights are 10 European countries. Each review team country. Risk is assessed in two areas: considered) consisted of one commercial and one formal laws and practice. 3. Anticipated impact on Shell’s human rights representative to ensure that reputation/operations (i.e. the focus of the resulting standards and indicators The formal laws category documents any human rights groups in the particular represent practical and economic concerns human rights violations which are upheld area is taken into account). as well as community/rights interests. through the laws of the state, such as the prohibitions against unions, limitations on Local Operating Company might choose to the rights of women, inadequate protection follow up on these key focal areas in a Where can I find out more of property rights, etc. The sources used number of different ways: Use as selection ?about this tool? include: reservations to international criteria for determining which contractors human rights treaties and conventions, will be hired in the future; Write into legal More information about the aim and national constitution and laws and reports documentation with all existing development of the HRCA can be found in of UN treaty bodies, etc. contractors; Send as questionnaires with ‘Building a Tool for Better Business key indicators for completion on an annual Practice: the human rights compliance The practice category documents human basis; Undertake spot checks every few assessment’ (M. Jungk, 2003). The rights violations, which are frequently months. premise of business responsibility u perpetrated at the societal level, such as rpinning the HRCA is explained in ‘Defining discrimination against religious minorities, the Scope of Business Responsibility for violence against women, etc. 176 Resources and Further Information

The various indicators are formulated into Step 3: Human Rights Compliance a company-specific Human Rights Step 5: Stakeholder dialogue Assessment (HRCA) | Compliance scorecard, and the company’s | current coverage of the rights is assessed. Questions and indicators are selected for The company is awarded a ‘pass’ for To ensure wider feedback and good public appropriateness having regard to the nature compliance, ‘attention required’ if the relations, the local operating company is of the Local Operating Unit and the result of coverage is insufficient for the level of risk encouraged to assemble a group of the CRA. A 3-tier graduated indicator in the country, and a ‘fail’ for non- individuals, either already based in the system is used in relation to each right. compliance. Areas where a performance country under consideration, or with strong level indicator requires field research are connections to that country, to engage in Example: child labour given a ‘further information required’ in the an ongoing review of the human rights and score category. social impacts of its operations. 1. Child labour is a low risk in the country xxx– a green light Each human rights issue has been placed In particular, the stakeholders might be No checks required, if the right is in a category that is designed to reflect asked to review 1) the particular rights fundamental perhaps a policy indicator Shell’s management structure, and should which were investigated: were any rights such as: ‘Does the operating unit have a allow each process owner to target its of concern to the stakeholders overlooked policy against child labour? Does the human rights responsibilities quickly. To in the analysis; 2) the scores achieved: do policy have the right scope, covering ensure ownership and "traction for action", the stakeholders believe these accurately children up to age of 14 for regular work, process owners will be carrying out the reflect performance; and 3) what follow-up and up to age 18 for hazardous work’. assessment on their own processes (e.g. course of action would the stakeholders recruitment manager on recruitment like to see with respect to the areas of 2. Child labour was assessed to be a issues). Each right could have a number of substandard performance? medium level risk in country xxx – a different issues covered under each key yellow light business process. For example, the right to A list of suitable stakeholders will emerge Then 2 different levels of indicators are adequate housing may be checked under during the research for the Country Risk selected. First, policy indicators (as employment practices, and the same right Assessment as the CRA necessitates described above). Second, we add a may also be checked under land contacts with human rights experts on the process indicator. For example: ‘Does management, with respect to the ground. The candidates’ suitability will be the company have a procedure in place relocation of a population. assessed on 3 levels: independence from where the personnel department checks the government (including funding the birth certificates of all job candidates considerations, and whether there are before the employment contract is Step 4: Strength, Weakness, and governmental representatives on the signed?’ In countries where birth |Opportunities Analysis boards of their organizations, or any form certificates are not commonly used, then of reporting process back to the the process indicator might require a Emphasis is on brevity here. This system is government), their level of familiarity with check of local church baptismal records designed to facilitate follow-up action human rights issues in the country; and instead, or local school records. within the company, so we don’t their willingness to engage in relevant, necessarily want people to read through a objective and confidential dialogue. 3. Child labour was assessed as a high lengthy investigation before they can get level risk in country xxx – a red light right down to the action. Instead, they Then we select 3 levels of indicators. First might read that a particular right (article we check the policies and the processes, 21) is a weakness, and then they can trace Step 6: Reporting as in the previous examples. We then add that article back to see what indicators | a performance indicator, to ensure that the were not fulfilled (HRCA), and back even Transparency is a key part of any company policy and process are actually working. further, to see whether that right is a risk in human rights activity, so we suggest that For example, we might conduct random the particular country of operation (CRA). the local operating company reports interviews with employees, or check with externally on the results of the analysis in local area schools or child-rights NGOs to their annual reports. see if there are any reports of children working for Shell who should be in school. Endnotes 177

1 The Global Compact Office would like to 10Beyond Voluntarism, p. 136. thank Jeffrey Senne for his substantial 11 assistance in making this publication a Ibid. reality. 12This would include any population dependent 2The Global Compact Case Study Research on the company when it de facto replaces Guidelines are available on the Global the Government, either because the Compact website: government is ineffective or because it has www.unglobalcompact.org. delegated government-like responsibilities to 3 the company. See Defining the Scope of Participating companies are expected to set Business Responsibility for Human Rights in motion changes to business operations so Abroad. that the Global Compact principles become 13 part of strategy, culture and day-to-day A draft comment submitted to the Business operations. A participating company is also Leaders Initiative on Human Rights. Final expected to describe in its annual report or statements from the Initiative are available at similar public corporate report (e.g. www.blihr.org. sustainability report) the ways in which it is 14ILO Conventions No. 29 concerning Forced supporting the Global Compact and its Labor; No. 87 concerning Freedom of Endnotes principles. Association and Protection of the Right to 4See also for a practical overview of tools, Organize; No. 98 concerning the Application techniques, case studies, information and of the Principles of the Right to Organize and resources, including those relating to human to Bargain Collectively; No. 100 concerning rights, see Raising the Bar — Creating Value Equal Remuneration for Men and Women with the United Nations Global Compact, Workers for Work of Equal Value; No. 105 Fussler, Cramer and Van der Vegt (eds.), concerning the Abolition of Forced Labor; No. Greenleaf Publishing, 2004. 111 concerning Discrimination in Respect of 5 Employment and Occupation; No. 138 Beyond Voluntarism — Human rights and concerning Minimum Age for Admission to the developing international legal obligations Employment. of companies, International Council on 15 Human Rights Policy, 2002, p. 125. See Beyond Voluntarism, p. 138, and Human 6 rights is it any of your business?, p. 28. See The full text of the Universal Declaration is also Margaret Jungk, Defining the Scope of attached in Annex 1. Business Responsibility for Human Rights 7This was established in the Vienna Abroad, Danish Institute for Human Rights, Declaration and Programme of Action, Human Rights + Business Project, adopted by the World Conference on Human www.humanrights.dk. Rights (Vienna, 1993). 16Ibid., p. 38. See also www.ohchr.org for 8A body of 26 independent experts that details of the work of the Office of the High functions as a “think-tank” for the United Commissioner for Human Rights on the issue Nations Commission on Human Rights. of human rights and indigenous peoples. 9United Nations document 17Beyond Voluntarism, p. 140. E/CN.4/Sub.2/2003/12/Rev.2. The 18This variation on a causation test has been Commentary on the Norms are contained in applied by the Court in the US ATCA case, United Nations document Doe I et al v Unocal Corporation et al. (See E/CN.4/Sub.2/2003/38/Rev.1, Annex II. The Clapham, 2004), section 3.2, p. 230). Commission on Human Rights in 2004 asked 19 the High Commissioner for Human Rights to Beyond Voluntarism, p. 121. prepare a report to be presented to the 20Ibid. p. 126 – 135. Commission in 2005, setting out, inter alia, 21This is known as the “colour of law” concept, the scope and legal status of existing a principle common to the legal traditions of initiatives and standards relating to the many countries (e.g. U.S.C. 42 § 1983), responsibility of transnational corporations wherein a private actor (e.g. a company) can and related business enterprises with regard be considered a state actor, for purposes of to human rights, which will include analyzing law, if it is working closely together with a the scope and legal status of the Norms (see state actor. Commission on Human Rights decision 22See Andrew Clapham, 'Corporate Complicity 2004/116). 178 Endnotes in Violations of International Law: Beyond manufacturers (GM, Ford, Chrysler) and is a 40United Nations, The Global Compact, The Ten Unocal', in W.P Heere (ed) “From government basic requirement for becoming a supplier to Principles, Principle 2, available at to governance: the growing impact on non- the “Big Three” for most parts and services. http://www.unglobalcompact.org. State actors on the international and By late 2002, more than 24,000 factories in 41 European legal system”, Proceedings of the more than 70 countries had become QS The history of the corporate social Sixth Hague Joint Conference held in the 9000 certified. responsibility movement illustrates the evolving definition of the role and Hague, The Netherlands, 3-5 2003, TMC 33Human rights is it any of your business?, p. responsibilities of business in society, from a Asser Press, The Hague, 2004, pp. 227-38 29. at 236. focus exclusively on shareholder returns or 34United Nations Secretary-General Kofi Annan other financial measures, to the 23Beyond Voluntarism, p. 136-142. noted at the Global Compact Leaders acknowledgment by business of a much 24For more information about the International Summit in June 2004 that “Business must broader group of corporate stakeholders and Cocoa Initiative, see www.international- restrain itself from taking away, by its responsibilities. Cf. Milton Friedman, The confectionary.com (visited August 2004). lobbying activities, what it offers through Social Responsibility of Business is to 25See also Global Compact Business Guide to corporate responsibility and philanthropy.” Increase its Profits, N.Y. TIMES MAG, Sept. Conflict Impact Assessment and Risk 35See for example, Human rights on the line: 11, 1970; Peter Drucker, The New Meaning Management in Zones of Conflict; Deciding the Baku-Tbilisi-Ceyhan pipeline project, of Corporate Social Responsibility, CAL. Whether to do Business in States with Bad 2003, Amnesty International, analyzing the MGMT REV. (vol. 26, no. 2, Winter 1984). Governments, The Confederation of Danish legal framework for the host government 42The discussion of these trends infra relies Industries, the Danish Centre for Human agreement between the pipeline consortium heavily on Elliot Schrage & Anthony Ewing, Rights, The Industrialization Fund for and the Government of Turkey, concluding Engaging the Private Sector, 14 FORUM FOR Developing Countries, 2001; and Business that the agreement posed a threat to human APPLIED RES. & PUB. POL'Y 44 (1999) and and Human Rights — A geography of rights. Following the report from Amnesty Elliot J. Schrage, PROMOTING corporate risk, ibid. International, a joint statement was issued by INTERNATIONAL WORKER RIGHTS THROUGH 26See Business & Human Rights — A the BTC Consortium and the three PRIVATE VOLUNTARY INITIATIVES: PUBLIC Geography of corporate risk, Amnesty Governments involved in the pipeline project RELATIONS OR PUBLIC POLICY? (University International UK and International Business (Azerbaijan, Georgia, and Turkey) , confirming of Iowa Center for Human Rights, January Leaders Forum, www.humanrightsrisk.com. their commitment to ILO conventions and 2004), at 3-6, available at explicitly committing the signatories to abide 27Emerging best practices concerning security http://www.uichr.org/content/act/sponsored/g by the Universal Declaration of Human arrangements developed by industry, civil wri_report.pdf. Rights. The BTC Consortium also provided a society, and governments reflect international 43See, e.g., D.J. Harris, CASES AND human rights undertaking (a so-called “Deed human rights standards, particularly the MATERIALS ON INTERNATIONAL LAW 470 Poll”), including a formal agreement not to Convention against Torture and Other Cruel, (1983). Public outrage over the international seek compensation from the governments for Inhuman or Degrading Treatment or slave trade and political action to prohibit it any breach of the host government Punishment; the Rome Statute of the were a highly unusual exception -- and were agreements brought about by the International Criminal Court; the UN recognized as such. Governments acting on obligations under Principles on the Use of Force and Firearms; 44 international human rights, environmental, or See Louis Henkin et. al, HUMAN RIGHTS 73 and the UN Code of Conduct for Law other treaties. (1999). Enforcement Officers. See also the US-UK 45 36 See U.N. Charter, art. 1, para. 3 (“To achieve Voluntary Principles on Security and Human For more information, see www.equator- international cooperation . . . in promoting Rights for companies in the extractive and principles.com. and encouraging respect for human rights energy sectors, developed in dialogue with 37Office of the UN Global Compact, Guide to and for fundamental freedoms for all without NGOs. the Global Compact. distinction as to race, sex, language, or 28The Final Report of the panel of experts on 38Universal Declaration of Human Rights, Dec. religion . . . .”; art. 55 (“. . . the United the illegal exploitation of natural resources 10, 1948, G.A. Res. 217A (III), U.N. Doc. Nations shall promote . . . universal respect and other forms of wealth of the Democratic A/810 (1948). The International Labor for, and observance of, human rights and Republic of the Congo which assessed the Organization's Declaration on Fundamental fundamental freedoms for all without role of political economy in triggering or Principles and Rights at Work, the Rio distinction as to race, sex, language or prolonging conflict. Declaration on Environment and religion.”). 29 Development, and the UN Convention Against Human rights is it any of your business?, p. 46The UN system includes the International Corruption are the sources for the Global 29. Labor Organization (ILO), established in Compact principles on labor rights, the 30Ibid., p. 31. 1919, which has developed hundreds of environment and anti-corruption respectively. 31Ibid. standards for working conditions and worker 39United Nations, The Global Compact, The Ten 32 rights. QS 9000 series is a quality standard created Principles, Principle 1, available at 47While most business and human rights by the “Big Three” US automotive http://www.unglobalcompact.org. Endnotes 179 issues are a product of the modern human 52See, e.g., Marina Ottaway, Reluctant 62International Organization of Employers, rights movement, there are earlier examples. Missionaries, FOREIGN POL'Y, July/Aug. EMPLOYERS HANDBOOK ON CHILD LABOUR The 19th Century movement to end 2001, at 44-54. Companies are called on to (2001). European and American commerce in African manage the “externalities” generated by 63 slaves was perhaps the first successful ”The Case for Social Responsibility”, globalization. See Virginia Haufler, A PUBLIC campaign to ensure corporate compliance Presentation to the Annual Conference of ROLE FOR THE PRIVATE SECTOR (2001). with a widely accepted international human Business for Social Responsibility, Boston, 53 rights standard. See, e.g., Sullivan Principles (1977), at USA (Nov. 10, 1998). http://globalsullivanprinciples.org/ 64 48See, e.g., Norms on the Responsibilities of See, e.g. Elliot J. Schrage, Judging Corporate principles.htm (specifying labor practices for Transnational Corporations and Other Accountability in the Global Economy, 42 workers employed by U.S. companies and Business Enterprises with Regard to Human COLUM. J. TRANSNAT. L. 153 (2003); Elliot their affiliates in apartheid South Africa -- the Rights (Aug. 26, 2003), U.N. Commission on Schrage, Emerging Threat: Human Rights principles were re-launched in 1999 as the Human Rights, Sub-Commission on the Claims, 8 HARV. BUS. REV., No. 8 (2003). Global Sullivan Principles for Corporate Social Promotion and Protection of Human Rights, 65Survey by the Ashridge Centre for Business Responsibility); The International Code of U.N. doc. E/CN.4/Sub.2/2003/12/Rev.2, and Society, cited in United Nations, Office of Marketing of Breastmilk Substitutes, World preamble (noting that transnational the High Commissioner for Human Rights Health Assembly, 24th Assembly, WHA Res. corporations “have the capacity to foster (OHCHR), “Business and Human Rights: An 22, U.N. Doc. A34/Vr/15 (1981); McBride economic well-being . . . and wealth as well Update,” July 26, 2000 available at Principles for Global Corporate Responsibility as the capacity to cause harmful impacts on http://www.unhchr.ch/businesupdate.htm#I. (1984) (addressing concerns of anti-Catholic the human rights and lives of individuals . . . 66 discrimination in employment); United States See, e.g. .,. Schrage, supra n. 6. .”). Model Business Principles (1995) (voluntary 67Reebok (human rights advocacy), The Body 49See generally, International Council on principles on workplace safety, fair Shop (indigenous rights), and Sweat X (labor Human Rights Policy, BEYOND employment practices, fair competition and conditions) are examples. VOLUNTARISM: HUMAN RIGHTS AND THE free expression developed by the Clinton 68See, e.g. Spar, supra n. 15. DEVELOPING INTERNATIONAL LEGAL administration in connection with the renewal 69See Henkin, supra n. 8, at 73. OBLIGATIONS OF COMPANIES (2002) of China's most favored nation trade status 70 [hereinafter BEYOND VOLUNTARISM]; Jordan with the United States) (on file with author). Universal Declaration, art. 2. J. Paust, Human Rights Responsibilities of 71 54For a brief listing, see http://www.business- Louis Henkin, THE AGE OF RIGHTS (1990). Private Corporations, 35 VAND. J. 72 humanrights.org/Categories/Companies/Polic Under international law, treaties bind only TRANSNAT'L L. 801 (2002); Steven R. ies/Companieswithhumanrightspolicies. their signatories. 151 states have ratified the Ratner, Corporations and Human Rights: A 55See “The Global Compact Database of ICCPR, 148 states have ratified the ICESCR. Theory of Legal Responsibility, 111 YALE L. OHCHR, Status of Ratifications of the J. 443 (2001); Barbara A. Frey, The Legal Participants,” available at http://www.unglobalcompact.org. Principal International Human Rights Treaties, and Ethical Responsibilities of Transnational Nov. 3, 2003, available at 56See, e.g., UN Office of the High Corporations in the Protection of International http://www.unhchr.ch/pdf/report.pdf. Commissioner for Human Rights, BUSINESS Human Rights, 6 MINN. J. GLOBAL TRADE 73 153 (1997). AND HUMAN RIGHTS: A PROGRESS REPORT, Other international treaties containing widely accepted human rights standards include the 50UNCTAD, “Overview,” WORLD INVESTMENT (January 2000), available at http://www.unhchr.ch/business.htm. Convention on the Prevention and REPORT 2002: TRANSNATIONAL Punishment of the Crime of Genocide 57BP Group, GUIDELINES ON BUSINESS CORPORATIONS AND EXPORT (1951), the Convent on the Elimination of All CONDUCT (2002), available at COMPETITIVENESS 1 (2001). Forms of Racial Discrimination (1965), the 51 http://www.bp.com/liveassets/bp_internet/glob For examples of the literature arguing that Convention on the Elimination of All Forms of albp/STAGING/global_assets/downloads/B/BPs globalization is a race to the bottom, see, Discrimination Against Women (1979), the _guidelines_on_business_conduct.pdf. e.g., Dani Rodrik, HAS GLOBALIZATION Convention against Torture (1984), the GONE TOO FAR? (1997); Lori Wallach & 58Novo Nordisk, Human Rights, available at Convention on the Rights of the Child (1989), Michelle Sforza, WHOSE TRADE http://www.novonordisk.com/sustainability/po the Protocol to Prevent, Suppress and Punish ORGANIZATION? CORPORATE sitions/human_rights.asp. Trafficking in Persons, especially Women and GLOBALIZATION AND THE EROSION OF 59Hewlett-Packard, HP Human Rights and Children (2000) and the Convention on the DEMOCRACY (1999). For the Labor Policy, available at Worst Forms of Child Labor (2000). counterargument that globalization is a race http://www.hp.com/hpinfo/globalcitizenship/h 74Statute of the International Court of Justice to the top, see, e.g., Thomas Larsson, THE umanrights.html. (1945), art. 38. RACE TO THE TOP: THE REAL STORY OF 60BP, Hewlett-Packard, Novo Nordisk and BHP 75International crimes recognized by treaty or GLOBALIZATION (2001); Debora L. Spar, The Billiton presented human rights cases. Spotlight and the Bottom Line: How as part of customary international law 61 Multinationals Export Human Rights, World Economic Forum, VALUES AND VALUE include piracy, slavery, genocide, torture, war FOREIGN AFF., Mar./April 1998. (2004). crimes and crimes against humanity. War 180 Endnotes crimes include grave breaches under the therefore, bring a case against a company. 102See, e.g., Royal Dutch/Shell Group of Geneva Conventions (1949), other serious 86 Universal Declaration, preamble. Companies, “Shell's Approach to Human violations of the laws and customs applicable 87Beyond Voluntarism, supra n. 13, at 61. Rights,” available at in international armed conflict, and, for civil 88 http://www.shell.com/home. wars, certain violations of the Geneva OECD, “The OECD Guidelines for 103 Conventions. Statute of the International Multinational Enterprises: A Key Corporate Amnesty 2004, supra n. 57, at 8. Criminal Court (1998), art. 8. Responsibility Instrument,” POLICY BRIEF, 104Amnesty International UK, HUMAN RIGHTS June 2003. The UN Expert Panel on Illegal 76Crimes against humanity include murder, ON THE LINE (May 2003), available at Exploitation of Natural Resources and other extermination, slavery and trafficking, forced http://www.amnesty.org.uk/images/ul/H/Hu Forms of Wealth in the Democratic Republic and arbitrary displacement of people, man_Rights_on_the_Line.pdf. of Congo (DRC) issued two reports identifying arbitrary imprisonment, torture, sexual 105Royal Dutch/Shell Group of Companies, by name and home country eighty-five violence, enforced disappearances, and “Statement of General Business Principles,” companies that it found had not observed aparthied if “committed as part of a available at the OECD Guidelines in the DRC. UN doc. widespread or systematic attack directed http://www.shell.com/static/media- S/2002/1146 (October 2002); UN doc. against any civilian population, with en/downloads/sgbp.pdf. S/2003/1027 (October 2003) knowledge of the attack.” Statute of the 106See, e.g. Klaus M. Leisinger, Business and 88ILO Tripartite Declaration of Principles International Criminal Court (1998), art. 7 Human Rights, (Noting that the business Concerning Multinational Enterprises and 77All UN member states except six have and human rights debate has shifted from Social Policy (1977), art. 8. ratified at least one legally binding human criticism of corporate interference in 90 rights treaty that refers to the Universal World Bank, Operational Directives, domestic affairs to the promotion of Declaration. BEYOND VOLUNTARISM, supra Indigenous Peoples, OD4.20 (Sept. 1991), corporate engagement on human rights n. 13, at 61 (the six states are Brunei Involuntary Resettlement, OD 4.30 (June issues.) 1990); IFC, Policy Statement on Forced Darussalem, Kirbati, Micronesia, Nauru, 107UN Global Compact, “Case Study: Labor and Harmful Child Labor (March Oman and Palau). DaimlerChrysler South Africa -Dealing with 1998), Harmful Child Labor Interim Gudance 78See Virginia A. Leary, The Paradox of the Effects of HIV/AIDS on Human and (July 1999). Workers' Rights as Human Rights, in Lance Social Capital,” Dec. 2002, available at 91 A. Compa and Stephen F. Diamond, eds. Beyond Voluntarism, supra n. 13, at 107. www.unglobalcompact.org. HUMAN RIGHTS, LABOR RIGHTS AND 92Id., at 70. 108National courts are one source of litigation INTERNATIONAL TRADE 22 (1996). 93Amnesty International, THE UN HUMAN against companies alleging responsibility for 79ILO Declaration on Fundamental Principles RIGHTS NORMS FOR BUSINESS: TOWARDS human rights violations. Cases in U.S. and Rights at Work , 86th Session, Geneva, LEGAL ACCOUNTABILITY 4 (2004) courts have alleged corporate commission June 1998, art. 2. [hereinafter Amnesty 2004]. of war crimes, crimes against humanity, 80Forced and compulsory labor is a modern 94Id., at 6. genocide, torture, slave labor and murder, among other human rights violations. See form of slavery. Forced labor is “all work or 95Commentary on the Norms on the Jordan J. Paust, Human Rights service which is exacted from any person Responsibilities of Transnational Corporations Responsibilities of Private Corporations,35 under the menace of any penalty and for and Other Business Enterprises with Regard VAND. J. TRANSNAT'L L. 801, 803 (2002) which the said person has not offered to Human Rights, U.N. Doc. at n. 4. Allegations of corporate complicity himself voluntarily.” Forced Labour E/CN.4/Sub.2/2003/38/Rev.2 (2003), para. in human rights abuse have been brought Convention, June 28, 1930, ILO C29, art. 2 A.1. (b). before U.S. courts against, among others, (entered into force, May 1, 1932). 96 Amnesty 2004, supra n. 57, at 15. IBM, ExxonMobil, ChevronTexaco, Citicorp, 81Convention on the Right to Organize and 97UN Economic and Social Council, Report of Coca-Cola, Gap, Ford and Del Monte. See Bargain Collectively, July 1, 1949, ILO C98 the Sub-Commission on the Promotion and Paust, id. at 805, n. 9; Elliot J. Schrage, (entered into force, July 18, 1951). Protection of Human Rights, UN doc. Judging Corporate Accountability in the 82See, e.g. Velasquez Rodriguez Case, E/CN.4/2004/L.73/Rev.1 (April 16, 2004). Global Economy, 42 COLUMBIA J. Judgment of July 29, 1988, Inter-Am Ct. 98See The Business Leaders Initiative on TRANSNATIONAL L. 153, 154 (2003). H.R., Ser. C, No. 4 (1988) (holding Honduras Human Rights (http://www.blihr.org/). 109Address to Third International Global responsible for failing to prevent and punish 99 Compact Learning Forum Meeting, the disappearance of a student committed by World Economic Forum, VALUES AND VALUE December 2003. private actors — an unofficial death squad). (2004), at 8. 100 110See generally, Andrew Clapham and Scott 83ICESCR, art. 2. See, e.g. Amnesty 2004, supra n. 57, at 7; BEYOND VOLUNTARISM, supra n. 13; Jerbi, Categories of Corporate Complicity in 84The ICC has jurisdiction over genocide, war Ratner, supra n. 13; Frey, supra n. 13. Human Rights Abuses, 24 HASTINGS INT'L crimes and crimes against humanity. & COMP. L. REV. 339 (2001). 101See, e.g., Jonathan Birchell, UN Ethics 85The ICC can bring cases against individuals, 111 Guidelines May Alarm Multinationals, FIN. The first international proceedings to but not legal persons. The ICC cannot, TIMES (London), Aug. 13, 2003, at 8. establish individual responsibility for Endnotes 181 international crimes were the Nuremberg Substantive Law under Alien Tort Claims rough diamonds are free of diamonds used Tribunals. In the World War II cases, Act, 116 HARV. L. REV. 1525 (2003). to finance violent conflicts. The Kimberley companies that actively and willingly 123Schrage, supra n. 72, at 159. Process participated in war crimes were found to (http://www.kimberleyprocess.com:8080/sit 124Taylor, supra n. 76. have violated international law. e/). 125Taylor, supra n. 76. 112Mark Taylor, Address to Third International 132The Equator Principles, available at 126 Global Compact Learning Forum Meeting, See, e.g., Amnesty International and The http://www.equator- December 2003. Prince of Wales International Business principles.com/principles.shtml. Leaders Forum, BUSINESS AND HUMAN 113Anita Ramasastry, Corporate Complicity: 133See Anthony Ewing's Implementing the RIGHTS: A GEOGRAPHY OF CORPORATE From Nuremberg to Rangoon, 20 BERKELEY Global Compact Human Rights Principles, RISK (2002). The Business Leaders Initiative J. INT'L L. 91, (2002). also included within this publication. on Human Rights has published a matrix of 114 134 Clapham and Jerbi, supra n. 74, at 347. “essential, expected and desirable” actions See below for the discussion of company 115Id. companies can undertake on the issues presence in an area where there is widespread and systematic human rights 116See, e.g., Frey, supra n. 13. covered by the UN Norms. The Business Leaders Initiative on Human Rights, abuse in the form of crimes against 117Taylor, supra n. 76. BUILDING UNDERSTANDING 11 (2003). humanity. 118 OHCHR, “Business and Human Rights: A 135 127Voluntary Principles on Security and Human From his foreword to Amnesty International Progress Report,” Jan. 2000, available at Rights (2000). The Voluntary Principles / The Prince of Wales Business Leaders http://www.unhchr.ch/business.htm. adopt the UN Basic Principles on the Use of Forum, Human Rights — Is It Any of Your 119 28 U.S.C. 1350 (2000). Liability under tort Force and Firearms by Law Enforcement Business? London 2000, p. 5. law begins with a duty of care. There must Officials and the UN Code of Conduct for 136For examples of current problems, see be some relationship between the company Law Enforcement Officials, and call on Amnesty International, Human Rights on the and the victim and the company's action or companies to establish clear safeguards Line. The Baku-Tbilisi-Ceyhan Pipeline failure to act must have led to violations of that any financial or material support to Project, London, 2003, and Amnesty human rights. Liability under tort law does security forces is not used to commit International, Democratic Republic of not require intent or knowledge — a human rights abuses. Congo, “Our Brothers Who Help to Kill Us,” company is responsible for the foreseeable 128See, e.g., Royal Dutch Shell Group of Economic Exploitation and Human Rights consequences of its actions.. Companies, “The Human Rights Compliance Abuses in the East. London April 2003 (AFR 120 Schrage, supra n. 72, at 158. In a recent Assessment Tool,” available at 62/010/2003); see also ATCA proceeding unrelated to corporate http://www.shell.com/home. http://action.web.ca/home/pac/attach/w_afr activity, the U.S. Supreme Court kept the ica_e.pdf and L. Gberie, West Africa: Rocks 129See, e.g., The Global Compact, BUSINESS door open for suits against companies by in a Hard Place. The Diamonds and Human GUIDE TO CONFLICT IMPACT ASSESSMENT refusing to limit causes of action under the Security Project. Occasional Paper #9, AND RISK MANAGEMENT IN ZONES OF ATCA to a narrow list of violations of the law Ottawa, May 2003; see also G. Chandler, CONFLICT (2002) (identifying minority of nations. Sosa v. Alvarez-Machain, No. “Oil Companies and Human Rights,” populations, land treaty rights and 03-339, June 29, 2004. Business Ethics. A European Review, Vol. 7, community displacement as key human 121 No. 2 (1998), pp. 69-72. Under the “color of law” principle, rights issues for companies operating in 137 companies are considered state actors zones of conflict). UNDP, Human Development Report 2000. under U.S. law if they willfully participate in Human Rights and Human Development. 130Indicators of corporate vulnerability include: joint action with the state or its agents, act New York/Oxford: Oxford University Press, inadequate legal frameworks and in concert with the state to deprive rights, 2000, pp. 79ff. governance structures to ensure fair and participate in a conspiracy with the state, or 138 equitable administration of justice; weak, OECD, The OECD Guidelines for act with significant state aid. 42 U.S.C. authoritarian or failing public sector Multinational Enterprises: Revision 2000, 1983. But see Paust, supra n. 73, at 805, institutions with thriving corruption; high Paris: 2000, see n. 9 (arguing that “U.S. tests for 'color of levels of poverty and inequality; lack of http://www.oecd.org/dataoecd/56/36/1922 law' or 'state action' responsibility are not access to basic services; strict press 428.pdf p. 19. part of international law and are controls; and existing or potential civil 139Anyone who enters the two terms in an inappropriate and too limiting with respect conflict with politically or ethnically Internet search engine such as Google will to non-state actor liability for various other motivated human rights violations. find over 5 million contributions to the human rights violations.”) Leisinger, supra n. 70, at 9. debate. 122Doe v. Unocal, 2002 WL 31063976 (9th Cir. 131The Kimberley Process is a voluntary 140See R.T. de George, Competing with 2002), vacated by Doe v. Unocal Corp., initiative of governments, the international Integrity in International Business. New 2003 WL 359787 (9th Cir. 2003). See also, diamond industry and civil society York/Oxford: Oxford University Press, 1993. Recent Cases: Ninth Circuit Uses organizations to certify that shipments of 141 International Law to Decide Applicable See, e.g., CETIM / American Association of 182 Endnotes Jurists: Will the UN Compel Transnational observance.” Wales Business Leaders Forum, Human Corporations to Comply with International 150Robert Davis and Jane Nelson, The Buck Rights: Is It Any of Your Business? London: Human Rights Standards? Geneva/New Stops Where? Managing the Boundaries of 2000, pp. 30ff. York: 2002, p. 10f. Business Engagement in Global 162After the 1973 coup d'état of the Chilean 142International Chamber of Commerce / Development Challenges, London: military against President Salvador Allende, International Organisation of Employers, International Business Leaders Forum, the suspected support of the U.S.-American “Joint views of the IOE and ICC on the Draft 2003, p. 3. ITT corporation led to widespread protests Norms on the Responsibilities of 151The U.N. Global Compact, too, so far enjoys and to a U.N. General Assembly Resolution Transnational Corporations and Other the support of fewer than 1,400 of the (May 1, 1974) calling for an international Business Enterprises With Regard to Human 70,000 or more companies with Code of Conduct preventing interference Rights,” Paris/Geneva, July 22, 2003. international operations. with the “internal affairs” of the countries 143 within which companies operate (ECOSOC- See the data of Globe Scan Research 152See J.S. Duesenberry, Income, Savings, and Commission for Transnational Corporations: Teams/Environics International Ltd., Toronto the Theory of Consumer Behavior. New Material Relevant to the Formulation of a 2003. York: Oxford University Press, 1967; for a Code of Conduct, 10 December 1976, 144See www.unglobalcompact.org. short introduction see: §59). This view was confirmed by the U.N. 145 http://cepa.newschool.edu/het/essays/multi “Norms on the Responsibilities of Charter of Economic Rights and Duties and acc/ratchet.htm. Transnational Corporations and Other taken up by the 1976 version of the OECD 153 Business Enterprises With Regard to Human P. Drucker, Post-Capitalist Society. New Guidelines for Multinational Corporations. Rights” E/CN.4/sub.2/2003/12/Rev.2 York: Harper Business, 1993, pp. 57f, 80, See: United Nations Division on (Geneva 26 August 2003), see also the 97-101; to support this notion see also C.L. Transnational Corporations and Investment accompanying Commentary, U.N. Avery, Business and Human Rights in a (UNCTAD-DTCI), International Investment Doc.E/CN.4/Sub.2/2003/38/Rev.2. Time of Change. London: Amnesty Instruments: A Compendium. Geneva: 146Whereas the U.N. Global Compact is a International, 2000. United Nations, 1996, p. 54ff. 154 voluntary framework for promoting good C.L. Avery, Business and Human Rights in a 163See D. Litvin, “Raising Human Rights corporate citizenship, the U.N. Norms are Time of Change. London: Amnesty Standards in the Private Sector,” Foreign seen as a regulatory approach that entails International, 2000, p. 46. Policy, November/December 2003, pp. 68- imposing obligations on companies that 155See K.M. Leisinger, “The Benefits and Risks 72. previously only applied to governments. of the U.N. Global Compact: The Novartis 164G. Chandler, “Oil Companies and Human Another point to be discussed in more detail Case Study,” The Journal of Corporate Rights,” in Oxford Energy Forum (November in the negotiation process ahead is the Citizenship, Autumn 2003, pp. 113-31. 1997), p. 3, quoted from C.L. Avery, “periodic monitoring and verification by the 156R. Sullivan (ed.), Business and Human Business and Human Rights in a Time of United Nations and other international and Rights. Dilemmas and Solutions. Sheffield: Change. London: Amnesty International, national mechanisms already in existence Greenleaf Publishing, 2003, p. 14. 2000, p. 22. or yet to be created.” See Amnesty 157 165 International's contribution to this debate: E. Schrage, “Emerging Threats: Human C.L. Avery, Business and Human Rights in a The UN Human Right Norms for Business: Rights Claims,” Harvard Business Review, Time of Change. London: Amnesty Towards Legal Accountability. London: August 2003. pp. 16ff. International, 2000, p. 24. 2004. 158See www.unglobalcompact.org; see also 166C.L. Avery, Business and Human Rights in a 147See the annual reports of Amnesty Amnesty International / The Prince of Wales Time of Change. London: Amnesty International. Business Leaders Forum, Human Rights: Is International, 2000, p. 23. It Any of Your Business? London: 2000, 167 148See, e.g., New Academy Review, Vol. 2, No. E. Bernard, “Ensuring Monitoring is Not Co- pp.28ff. 1 (spring 2003): “Business interests…have opted,” New Solutions, Vol. 7, No.4 159 been antagonistic to human rights” (p. 50) In U.N. Global Compact Resource Package (summer 1997), quoted in C.L. Avery, or “MNCs can now pose a significant threat — Human Rights Presentation. Business and Human Rights in a Time of to human rights, and also undermine the 160A. Clapham and S. Jerby “Categories of Change. London: Amnesty International, ability of individual states to protect people Corporate Complicity in Human Rights 2000, p. 51. from human rights abuses” (p. 92). Abuses,” see 168S.P. Sethi: Setting Global Standards. 149The text of the preamble says “that every http://www.amnesty.it/edu/mitw/documenti/ Guidelines for Creating Codes of Conduct in individual and every organ of society, Corporate_complicity.doc; see also P. Multinational Companies. New York: Wiley & keeping this Declaration constantly in mind, Stoett, “Shades of Complicity: Towards a Sons 2003. shall strive by teaching and education to Typology of Transnational Crimes Against 169As UNDP did in Human Development Report promote respect for these rights and Humanity,” 2000. Human Rights and Human freedoms and by progressive measures, www.migs.concordia.ca/workshop/typology. Development. New York/Oxford: Oxford national and international, to secure their htm. University Press, 2000, pp. 93ff. universal and effective recognition and 161See Amnesty International / The Prince of Endnotes 183 Pipeline,” available at 170Mary Robinson points to such issues in R. 206Article 25 of the Universal Declaration of http://www.caspiandevelopmentandexport.c Sullivan (ed.), Business and Human Rights. Human Rights; refined in Article 12 of the om/ASP/PD_BTC.asp. Dilemmas and Solutions. Sheffield: International Covenant on Economic, Social Greenleaf Publishing, 2003, p. 10. 188Public disclosure of revenues generated by and Cultural Rights. natural resource extraction and how 171UN-ECOSOC: Human Rights, Trade and 207Articles 7 and 23 of the Universal governments use these revenues is the Investment. E/CN.4/Sub.2/2003/9, 2 July Declaration of Human Rights; also in Article subject of increasing scrutiny by the 2003. 7 of the International Covenant on international community. The Publish What 172 Economic, Social and Cultural Rights and For example You Pay campaign Article 24 of the International Covenant on www.unesco.org/ibc/en/genome/index.htm: (http://www.publishwhatyoupay.org/), for Civil and Political Rights. “The Universal Declaration on the Human example, seeks to prevent revenues from 208 Genome and Human Rights.” fuelling conflict. Article 12 of the Universal Declaration of 173 Human Rights; also in Article 17 of the S. Swithern, “From Bhopal to Doha: 189Amnesty International UK, HUMAN RIGHTS International Covenant on Civil and Political Business and the Right to Health,” New ON THE LINE (May 2003), available at Rights. Academy Review, Vol. 2, No. 1 (spring http://www.amnesty.org.uk/images/ul/H/Hu 209 2003), pp. 50-61. man_Rights_on_the_Line.pdf. Novo Nordisk's “Diabetes Attitudes, Wishes 174 and Needs” (DAWN) programme. K. Jaspers, The Question of German Guilt. 190BP's open dialogue did not extend to all 210 New York: Fordham University Press, 2000, critics. Kurdish Human Rights Watch, for A three-year (2003-2006) cross sector p. 25-26. example, argues that the pipeline will raise business initiative chaired by Mary 175K. Jaspers, The Question of German Guilt. ethnic tensions. Robinson with the aim of mainstreaming human rights in both the corporate social New York: Fordham University Press, N.Y., p. 191Jay Pearson, BP. 27. responsibility and corporate governance 192The BTC Pipeline Case Study. agendas. www.blihr.org 176See K.M. Leisinger and K. Schmitt, 193See supra note 62. 211 Corporate Ethics in a Time of Globalization, Global Compact Principle Two — Colombo, Sri Lanka: 2003. 194“Breaking New Ground,” BTC pipeline “Businesses should make sure they are not project. complicit in human rights abuses.” 177K. Jaspers, “Über Bedingungen und 212 Möglichkeiten eines neuen Humanismus,” 195Id. 'What does being there mean to you?’ Novo in Die Wandlung. Herbstheft, Heidelberg: 196Id. Nordisk 2003 Sustainability Report. 213 Schneider Verlag, 1949, p. 734. 197BP Environmental and Social Review, 2002. Global Compact Performance Model (2002), 178 www.unglobalcompact.org R. Guardini, Das Ende der Neuzeit. Die 198BTC Regional Review, Executive Summary. Macht. Mainz/Würzburg: 214The four stages are derived from the 199Although there are always differences of Grünewald/Schöningh, 1986, p. 56. Malcolm Baldridge Quality Award and the opinion within any large organizations, the 179 European Foundation for Quality I owe this quote to a poster shown at the positions stated to the author within the Management. 2003 Business and Human Rights seminar context of the BTC Project were 215 of the “Business Leaders Initiative on institutionally consistent. For a list of senior Comment made by a member of staff Human Rights” (Honorary Chair: Mary officials consulted in the course of writing during interviews for this Case Study. Robinson), London, December 9, 2003. this case study, please see Section VII. 216'What does being there mean to you?' Novo 180 See Anthony Ewing's Understanding the 200IFC Press Release, November 4, 2003. Nordisk Annual Financial Report 2003. Global Compact Human Rights Principles, 217 201It is important to note here that while the Novo Nordisk (2004) 'What does being also included within this publication. Human Rights Self-Assessment Toolkit is there mean to you?', Sustainability Report 181 BP, Hewlett-Packard, Novo Nordisk and BHP based on the UDHR, the International Bill of for 2003. www.novonordisk.com Billiton presented human rights cases. Rights does not recognize a hierarchy of 218Ibid. 182 Case Study on Principle #2, UN Global rights — all rights are equally important, 219NOP Healthcare (2003) Social and Compact Resource Package. indivisible, interdependent and interrelated. Environmental Issues in the Supply Chain of 183 Hewlett-Packard, “Global Citizenship Policy,” 202’What does being there mean to you?' Novo Novo Nordisk — Quantitative Research, available at Nordisk Annual Financial Report 2003. NOP World. http://www.hp.com/hpinfo/globalcitizenship/ 203Novo Nordisk Annual Financial Report 2002. 220Novo Nordisk (2004) ‘What does being gcpolicy.html. 204'What does being there mean to you?' Novo there mean to you? Sustainability Report 184 Hewlett-Packard, “HP Human Rights and Nordisk Annual Financial Report 2003 (2003). Labor Policy,” supra n.23. 221 205Global Compact Principle One — Global Compact Principle Three — “ 185 OHCHR, supra note 82, at 7. “Businesses should support and respect the Business should uphold the freedom of 186Andre van de Bergh, BHP Billiton. protection of internationally proclaimed association and the effective recognition of the right to collective bargaining”…” the 187BP,“Project Documentation for the BTC human rights”. freedom to associate involved employers, 184 Endnotes unions and worker representatives freely terms of their sphere of influence. See discussing issues at work in order to reach Amnesty International and The Prince of agreements that are jointly acceptable” Wales Business Leaders Forum, Human (www.unglobalcompact.org) Rights: Is it Any of Your Business, April 222Global Compact Principle Five — “The 2000, pp. 28-9. effective abolition of child labour”. 233Amnesty International and The Prince of 223Global Compact Principle Four — “The Wales Business Leaders Forum, Human elimination of all forms of forced and Rights: Is it Any of Your Business, April compulsory labour”. 2000, pp. 28-9. 234 224Of this sub-set of 54 suppliers, 41% Business & Human Rights: A geography of answered explicitly that the Novo Nordisk corporate risk, Amnesty International and evaluation was a template for their own The Prince of Wales International Business engagement with suppliers. NOP Healthcare Leaders Forum, November, 2001. (2003) Social and Environmental Issues in 2352003 CSR Monitor, Environics International, the Supply Chain of Novo Nordisk — March 2003. Quantitative Research, NOP World. 236Edleman, Rebuilding Public Trust Through 225Kingo, Lise (2003) A Business Model for the Accountability and Responsibility, address to 21st Century Slide show presented at the the Ethical Corporation Magazine European Academy of Business In Society Conference, New York City, October, 2002. annual conference, Copenhagen19-20 237Interview with Senior Vice President, September 2003. With acknowledgements Corporate Affairs, HP. to Malcolm McIntosh 238See HP's Commitment to Global Citizenship, 226 NOP Healthcare (2003) Social and 17 July 2003, Environmental Issues in the Supply Chain of http://www.hp.com/hpinfo/globalcitizenship/ Novo Nordisk — Quantitative Research, 239Interview with Director of Supply Chain NOP World. Services, HP. 227Ibid. 240Interview with country Human Resources 228 For example: Manager, HP Malaysia http://www.novonordisk.com/sustainability/r 241HP's Global Citizenship policy, 17 July esponsibility/economic_footprint.asp 2003, and http://www.hp.com/hpinfo/globalcitizenship/ http://www.novonordisk.com/esr2000/esr0 242 0/introduction.asp?ID=298&secID=1 Interview with Chief Privacy Officer 243 229Business Leaders Initiative on Human Rights Total S.A., headquartered in France, is one (2003) Report No.1: Building of the world's largest integrated oil Understanding, Respect Europe: Stockholm. companies, operating in more than 100 www.blihr.org countries with 2003 sales of $131 billion. 244 230For more on the nature and sources of Bangkok Post, April 21, 2003 human rights see J., Donnelly, Universal Human Rights in Theory and Practice, Cornell University Press, Ithaca, 1989 pp. 14 – 19 and R., Higgins, Problems and Process: International Law and How We Use It, Clarendon Press, Oxford, 1994, pp. 95- 110. 231For more on the current system of human rights protection at the UN level see H., Steiner and P., Alston, International Human Rights in Context: Law, Politics, Morality, Oxford University Press, Oxford, 2000 pp. 137-141. 232Amnesty International and the Prince of Wales Business Leaders Forum look in some detail at a company's obligations in