Explaining the Human Rights Strategy of Transnational Corporations - A Social Constructivist Perspective Kristian Holst Department of Political Science UNIVERSITY OF OSLO Spring 2005 ii Explaining the Human Rights Strategy of TNCs iii Acknowledgements The road leading to the conclusion of this thesis has been full of twists and turns. Along the way, there have been a number of people who have been there to give me the necessary drive and back-up to reach my goal. Firstly, I would like to thank Jeffrey T. Checkel for lending a hand at a crucial stage of the process. I would also like to thank my fellow students who through the years have made the time at the University of Oslo a memorable one, and shared their insights on issues ranging from political science, to making Creme Brulée and the meaning of life. These include Jonas (member of the ‘glass cage think-tank’), Haakon, Christopher, Nils, Hallvard, Elisabeth, Erling, Ingunn, Hilde, the Bandy gang and all the rest of you. I would also like to thank Marit and Arne Holst for believing in me and for being there. This also goes for the rest of my family and friends who have wittingly or unwittingly been a part of this effort. Finally, I would like to thank Kristin – for your encouragement and understanding, endless patience and invaluable support. Oslo, June 2005 Kristian Holst iv Explaining the Human Rights Strategy of TNCs Acronyms AGM Annual General Meeting (Shell) AIUK Amnesty International United Kingdom ATCA Alien Tort Claims Act CMD Committee of Managing Directors (Shell) ECCR Ecumenical Council for Corporate Responsibility ECOSOC Economic and Social Council (UN) FDI Foreign Direct Investment HRCA Human Rights Compliance Assessment Tool (Shell) HSE Health Safety and Environment (Shell) ICC International Chamber of Commerce ILO International Labour Organization INGO International Non-Governmental Organization IOE International Organization for Employers KPI Key Performance Indicator (Shell) MOSOP Movement for the Survival of the Ogoni People NGO Non-Governmental Organization OECD Organization for Economic Co-operation and Development PIRC Pensions Investment Research Consultants Ltd SPDC Shell Petroleum Development Corporation (Shell Nigeria) TNC Transnational Corporation UDHR Universal Declaration of Human Rights (UN) UN United Nations v Figures and Tables Figure 2.1. Norm life cycle........................................................................................ 18 Figure 2.2. The process of norms socialization....................................................... 23 Figure 3.1. Dominant contextual forces, operational features, and processes influencing the strategy of TNCs complicit in human rights violations. ..... 42 Figure 3.2. The cycle of TNC human rights responsibility. .................................. 44 Table 2.1. The spiral model, dominant actors and dominant interaction modes. ............................................................................................................................. 24 Table 2.2. Three types of headquarters orientation toward subsidiaries in any international enterprise. ................................................................................... 38 Table 3.1. The corporate spiral model: dominant strategies, actors and interaction modes. ............................................................................................. 51 vi Explaining the Human Rights Strategy of TNCs vii Contents ACKNOWLEDGEMENTS ..............................................................................................................III ACRONYMS...................................................................................................................................... IV FIGURES AND TABLES ...................................................................................................................V CONTENTS ......................................................................................................................................VII 1. INTRODUCTION......................................................................................................................1 1.1 INTRODUCTION AND THEME.....................................................................................................1 1.2 QUESTION OF ANALYSIS AND BASIC DEFINITIONS ...................................................................3 1.3 BASIC APPROACH AND ASSUMPTIONS......................................................................................5 1.3.1 Applying Theory and Model on TNCs ..........................................................................7 1.4 ORGANIZATION ......................................................................................................................10 2. THEORETICAL PERSPECTIVES .......................................................................................11 2.1 INTRODUCTION ......................................................................................................................11 2.2 SOCIAL CONSTRUCTIVIST THEORIES IN INTERNATIONAL RELATIONS ....................................12 2.2.1 Norms and the Normative Space.................................................................................13 2.2.2 Norm Entrepeneurs and Transnational Advocacy Networks......................................15 2.2.3 World Time and the Norm Life Cycle .........................................................................17 2.2.4 Socialization Mechanisms and Internalization...........................................................19 2.2.5 The Spiral Model ........................................................................................................22 2.3 INFLUENCES ON TNC HUMAN RIGHTS STRATEGY .................................................................26 2.3.1 A New Political, Communicating and Economic Reality............................................27 2.3.2 TNC Complicity and Responsibility............................................................................30 viii Explaining the Human Rights Strategy of TNCs 2.3.3 NGO Regulation and Dialogue.................................................................................. 33 2.3.4 TNC Vulnerability to Criticism .................................................................................. 35 2.3.5 Policy Orientation...................................................................................................... 37 3. OPERATIONALIZATION AND METHODS ..................................................................... 41 3.1 INTRODUCTION...................................................................................................................... 41 3.2 OPERATIONAL FRAMEWORK FOR ANALYZING TNC STRATEGY............................................ 42 3.2.1 World Time and the Norm Life Cycle......................................................................... 43 3.2.2 TNC Operational Features ........................................................................................ 46 3.2.3 Human Rights Strategy and a ‘Corporate Spiral Model’ .......................................... 48 3.3 METHODOLOGICAL CONSIDERATIONS................................................................................... 55 3.3.1 Approach and Design................................................................................................. 55 3.3.2 Data............................................................................................................................ 57 3.3.3 Analysis ...................................................................................................................... 58 4. THE CASE OF THE ROYAL DUTCH/SHELL COMPANY ............................................ 61 4.1 INTRODUCTION...................................................................................................................... 61 4.2 OPERATIONAL FEATURES...................................................................................................... 62 4.2.1 Shell’s Operations in the Niger Delta........................................................................ 62 4.2.2 Exposure and Brand Identity ..................................................................................... 63 4.2.3 Policy Orientation...................................................................................................... 64 4.3 SHELL’S HUMAN RIGHTS STRATEGY AS A ‘SPIRAL PROCESS’............................................... 68 4.3.1 Phase 1: Nigerian Troubles and Activation of Network ............................................ 68 4.3.2 Phase 2: Denial and Non-Interference ...................................................................... 73 4.3.3 Phase 3: Tactical Concessions and Reality-Check .................................................... 77 4.3.4 Phase 4: Prescriptive Status ...................................................................................... 86 ix 4.3.5 Towards Rule Consistent Behaviour?.........................................................................92 4.4 CONCLUDING ANALYSIS OF SHELL’S TRANSFORMATION.......................................................97 4.4.1 The Future of TNC Human Rights Socialization ......................................................104 5. CONCLUSIONS.....................................................................................................................109 TABLE OF AUTHORITIES ...........................................................................................................113 APPENDICES...................................................................................................................................125