As globalization drives companies to expand their business activities, their far-reaching operations have the potential to impact human rights in conflict zones around the world.
Just as pro-active environmental policies have become the cornerstone of sustainable business practices in the energy sector, companies are facing a new challenge to incorporate human rights into their risk management and corporate governance processes.
Non-governmental organizations and ethical investors have raised the bar for corporations, introducing shareholder resolutions to seek redress for human rights.
In their quest to hold companies accountable, proponents are demanding transparency of international contracts; the institution of credible, third-party monitoring systems to address human rights transgressions; and mandatory, versus voluntary, regulations.
|Photo courtesy of Amnesty International UK|
|Peter Frankental of Amnesty International has penned a book arguing that human rights should be incorporated into mainstream business practices.|
On Friday, November 28, Peter Frankental of Amnesty International UK will address the FGL Open Global Business Society – and its multi-stakeholder audience – in Calgary on the imperatives of building human rights into mainstream business practices for companies operating in conflict zones.
This meeting marks the FGL Society’s tenth civic forum and exhibition on global business issues, to be held at the Rozsa Centre, University of Calgary.
Frankental is the manager of Amnesty’s business group and co-author of the book, Human Rights – Is It Any Of Your Business?
The book was intended as a primer on human rights for the corporate sector, says Frankental, “because companies simply don’t see this issue as important in the context of commercial terms.”
Frankental will be joined by eight other speakers who will discuss human rights issues in Canada and abroad.
The group of speakers includes representation from government, academia, the media, the international business community, and the Canadian energy and non-governmental sectors. Included are Jean-Louis Roy, president of Rights and Democracy, Montreal, Quebec; the Hon. Gar Knutson, Member of Parliament and secretary of state for Central and Eastern Europe and the Middle East; and D’Arcy Levesque, director of public and government affairs for Enbridge Inc.
Frankental’s mandate is to place human rights on the corporate “radar screen.”
According to Frankental, companies working internationally in the extractive and energy sectors face human rights issues on many fronts: bribery, corruption, forced labour, indigenous land claims, relationships with security forces and complicity in third-party abuses.
In the era of globalization, many transnational corporations (TNCs) have become more powerful than individual country states, often eclipsing countries in gross domestic product and political clout.
Amnesty does not expect TNCs to assume the law-enforcement responsibilities of sovereign governments, but it does expect them to act in a socially responsible way within their sphere of influence and activities.
“We would argue that it’s impossible for a company to be neutral in a conflict zone,” says Frankental. “Many companies will act responsibly for human rights violations in the workplace, but not within their supply chains, let alone their user chains.”
Frankental wants to link human rights criteria to performance targets for business units, as part of standard reporting requirements across companies.
As well, he recommends that human rights criteria be incorporated into companies’ appraisal and remuneration systems.
While corporate voluntarism plays an important role in protecting human rights around the planet, critics remain skeptical – without clear rules on how to evaluate and address human rights violations, how will corporations be held accountable?
“Voluntarism itself isn’t enough,” says Frankental. “Corporate index providers will begin to judge companies by their environmental and social impact.”
One human rights example close to home is Calgary-based Talisman Energy Inc.’s recent experience in Sudan. Talisman’s 25-per-cent interest in the Greater Nile Oil Project – and the oil profits generated – were at the centre of an ugly civil war fraught with human rights violations.
The sale of Talisman’s interest in the project in March 2003 was in large part due to continuing shareholder activism, accusations of the company’s complicity in human rights abuses, and the threat of looming sanctions from the U.S. government.
Frankental points to last week’s conviction of three top oil executives with Elf, France’s former state oil company. Privatized in 1999, the company is known today as TotalFinaElf.
The executives were tried in France, and convicted of bribery, influence peddling and paying kickbacks to expand Elf’s oil operations in conflict zones in Africa.
Along with hefty fines, the former CEO, director-general and manager of the African hydrocarbons division each face four to five years in prison.
In his defence, Loik Le Floch Prigent, Elf’s former CEO, described influence and bribery as part of oil operations all over the world. During the trial, Le Floch Prigent said, “The whole oil system functions in an opaque way.”
Amnesty and groups of ethical investors want to lift such opaque veils, ensuring that transparent processes and credible monitoring systems protect human rights in conflict zones.
They also want to evaluate business contracts and bank loans from international financial institutions such as the World Bank that impact human rights and the environment.
“These agreements should be open to public scrutiny because these projects have far-reaching public implications,” says Frankental.
When Enbridge Inc. purchased a 24.7-per-cent stake in the 832- kilometre-long OCENSA pipeline in Colombia, a group of ethical investors took the company to task over its potential exposure to human rights abuses in a country torn apart by civil war.
Real Asset Investment Management Inc., a Vancouver-based group that focuses on social impact investing, introduced a shareholder resolution in 2001 that precipitated an open and constructive dialogue with Enbridge.
Enbridge operates the pipeline on behalf of OCENSA, a consortium of several oil companies, including Ecopetrol, Colombia’s national oil company.
The pipeline pumps about 500,000 barrels daily from the Cusiana Field to the Caribbean coast. Critical to the country’s economy, the pipeline is the target of sabotage by various armed factions and guerrillas.
OCENSA uses private security forces to protect the pipeline; in the event of an incident, the Colombian military is called in to protect the pipeline.
In response to concerns raised by shareholders, Enbridge Inc. adopted the Voluntary Principles on Security and Human Rights in January, 2002.
Developed collaboratively by the governments of the United Kingdom and the U.S., companies in the extractive and energy sectors and non-governmental organizations, including Amnesty International, the Voluntary Principles present a road map for companies to maintain the safety and security of their operations within an operating framework that ensures respect for human rights and fundamental freedoms.
For example, the protocol gives companies direction on how to screen, recruit, hire and train security forces to protect facilities and staff.
To date, Enbridge is the only Canadian company that has adopted the Voluntary Principles protocol, according to D’Arcy Levesque, the company's director of public and government affairs. In addition to the protocol, Enbridge Inc. and its subsidiaries conduct operations under clearly defined corporate guidelines on human rights and fundamental freedoms.
Of the proactive pressure exerted by Real, Levesque says, “A healthy dialogue with interested third parties resulted in a healthy outcome.”
“We don’t have a monopoly on good ideas, so we have to be open to improving our business performance,” adds Levesque. “A company’s reputation goes a long way toward securing access to capital, world markets and attracting (and keeping) the best people.”
Enbridge’s “triple bottom line” is composed of economic, environmental and social drivers that guarantee the company’s long-term sustainability. “Sustainability is really about our social licence to operate,” explains Levesque. “In this post-Enron era, companies have to earn the right to keep operating.”
Adds Levesque, “Ultimately, it’s in everyone’s collective best interests to adopt these best practices.”
Frankental concurs, suggesting that some companies choose to conduct business in developing countries where the lack of regulation is seen as a competitive advantage.
“Those companies that have reputations to protect want a level playing field. They don’t want to be undercut by other companies that may abuse human rights in order to gain a competitive advantage.”
(For information on attending the conference, Human Rights – Is It Any Of Your Business?, visit www.fgl-society.org)
(Susan Eaton is a Calgary-based geologist, geophysicist and freelance writer who manages her own environmental and energy consulting practice, SR ECO Consultants Inc. She can be reached at email@example.com)