David Allan, Sustainable Outcomes, GMS Workshop on Extractive Industries, Agri-Business, Plantations Dams

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Standards, tools and best practice guidelines in
the mining / oil and gas, hydropower
plantations sectors, and links to community
civil society development sectors.

• David Allan, Sustainable Outcomes,GMS Workshop
  on Extractive Industries, Agri-Business,
  Plantations Dams Hydro Power.
• 27-28 September 2007, Chiang Mai

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Presentation Overview

• MATTERS of TRUST?
• CORPORATE PERFORMANCE DIFFERENTIATION
  QUESTIONS
• RECENT PRESS RELEASES
• 20 YEARS of DEVELOPMENTS
• TYPES OF STANDARDS, ETC - BINDING or
  NON-BINDING
• SOME KEY DOCUMENTS
• DIFFERENTIATION IMPLICATIONS
• SUMMARY
• QUESTIONS

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Who Can You Trust?
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Trust in Institutions to Operate in the Best
Interests of Society???

• Trust in 2004 North vs South
• North South NGOs 68 63
• United Nations 65 54
• National Government 52 54
• Trade or Labor Unions 50 48
• Domestic Companies 49 57
• Press / Media 43 60
• Global Companies 38 46

Source Environics
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Revenue Transparency in the Oil and Gas Sector
One concern is that the companies with the
greatest commitment to human rights and the most
reputation to protect pull out of pariah or
failing states early, while foreign mining and
other types of investment continue in the form of
less recognizable companies whose provenance and
ownership are difficult or impossible to
trace.This is analogous to the drift netters in
the Pacific, who behind layers of intermediary
corporate vehicles continue practices almost
universally condemned.
Source Beyond the Rhetoric, SCUK, 2005. (Ranking
25 Companies on performance in 6 Countries).
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Revenue Transparency in the Oil and Gas Sector
One concern is that the companies with the
greatest commitment to human rights and the most
reputation to protect pull out of pariah or
failing states early, while foreign mining and
other types of investment continue in the form of
less recognizable companies whose provenance and
ownership are difficult or impossible to
trace.This is analogous to the drift netters in
the Pacific, who behind layers of intermediary
corporate vehicles continue practices almost
universally condemned.
Source Beyond the Rhetoric, SCUK, 2005. (Ranking
10 Home Countries on performance in 4
Criteria).
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UNITED OUTCRY AGAINST MINING GREENWASH

• Indigenous peoples, mine-affected local
  communities and major
• organisations of civil society decried today the
  partnership forged
• by the World Conservation Union (IUCN) and the
  International
• Council on Mining and Metals (ICMM) as a cynical
  greenwash of
• the mining industry.
•  
• "Its a contradiction  for the ICMM, whose mining
  industry members
• have systematically engaged in the rape of the
  Mother Earth to
• have suddenly changed heart to implement best
  management
• practices to protecting  biodiversity.  By nature
  of its technology,
• mining is unsustainable. The mining industry has
  a poor record of
• community accountability and in many parts of the
  world is
• socially unacceptable", said Tom Goldtooth of the
  Indigenous
• Environmental Network. 
• Supported by - Indigenous Environtal Network,
  Tebtebba Foundation, African Indigenous
• Womens Organisation, Indigenous Information
  Network, Asian Indigenous Womens
• Network, International Indian Treaty Council,
  Indigenous Womens Network, Third World
• Network, Friends of the Earth, Oilwatch,
  AMIGRANSA....

Source IEN Website, Sept 07.
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Report Title "Undermining Communities and the
Environment A Review of the International
Finance Corporations Environmental, Health, and
Safety Guidelines for Mining"

• The guidelines (Environmental, Health and
  Safety Guidelines for Mining EHS Guidelines)
  are marked by significant gaps and omissions...In
  some cases the guidelines do not even meet the
  mining industrys existing best practice
  standards...The weaknesses of the mining
  guidelines...are matched by IFCs refusal to
  report meaningfully on whether its mining
  investments actually reduce poverty...
• Source Bank Information Center, Center for
  Science in Public Participation, Earthworks,
  Oxfam International and WWF International, Sep
  2007

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IFC launches a new publication, "Stakeholder
Engagement A Good Practice Handbook for
Companies Doing Business in Emerging Markets".

• Over thirty case examples from private sector
  operations across regions and sectors illustrate
  various aspects of the engagement process...The
  Handbook offers new and detailed guidance in a
  number of areas, including gender, indigenous
  peoples, grievance mechanisms, sustainability
  reporting, management functions, and the
  integration of stakeholder engagement activities
  with core business processes....
• International Finance Corporation Website,15 May
  2007

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Human rights trump internal procedures

• "Human rights and the financial sector" In
  February the UN Special Representative on on
  human rights, TNCs and other business enterprises
  John Ruggie held a consultation to "consider
  existing initiatives and standards relevant to
  the financial sector, and examine ways to
  strengthen the protection of human rights in the
  activities and decision-making of financial
  institutions"Ruggie's consideration of the role
  of the financial sector has been welcomed by
  civil society as a positive step which pushes the
  boundaries of his mandate and the limited
  resources at his disposal.
• However, many human rights activists are
  concerned by Ruggies faith in voluntary
  standards and the role of market mechanisms to
  establish accountability practices. They are
  disappointed by his failure to acknowledge the
  complex scenarios that often result in states
  being in a weak position to stand up to companies
  and gain access to justice, even if legal and
  policy tools should technically permit them to
  do so..
• Author Bretton Woods Project Dated 02 Apr 2007
  

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Groups urge World Bank to strengthen guidelines
for controversial mining projects

• A coalition of anti-poverty and environmental
  organizations today called on the private sector
  arm of the World Bank to re-write and improve its
  new safety and environmental guidelines for
  large-scale mining projects
• "Large-scale mining projects can displace
  entire communities and produce massive amounts of
  waste material and pollution," said Payal Sampat
  from EARTHWORKS. "The IFC claims to set the
  standard for the industry in these areas, but the
  weaknesses of these guidelines call that
  commitment into question."
• Author Oxfam Dated 06 Sep 2007

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• IFC and UN Cooperation Study of Investment
  Contracts and Human Rights
• IFC...and the United Nations Secretary-Generals
  Special Representative on Business and Human
  Rights, Professor John Ruggie..., launched today
  a joint study on foreign direct investments and
  human rights...which aims to examine the
  relationship between the protection of investor
  rights and the human rights obligations of the
  host states. Some contracts between investors and
  host governments include clauses that either
  freeze the laws that apply to the investor or
  allocate compensation for the costs incurred by
  the investor to comply with new laws. The study
  will look at the potential impact of these
  clauses on the host states ability to adopt and
  implement new human rights laws...
• Author International Finance Corporation (IFC)
  Dated 07 Aug 2007

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• Title World's biggest palm oil trader shamed
• Author Friends of the Earth Europe Dated 03
  Jul 2007Wilmar, the world's biggest trader in
  palm oil, is illegally logging rainforests,
  setting forests on fire and violating the rights
  of local communities in Indonesia according to a
  new report...Friends of the Earth Europe has
  demanded that the EU drops its recently adopted
  target to increase the use of biofuels in
  transport...Paul de Clerck, Corporates
  Campaigner...said "This report reveals that
  Indonesian palm oil traded by Wilmar is
  scandalous and is damaging the environment....and
  local people are suffering." Europe is the
  world's biggest palm oil importer...Wilmar
  supplies multinational companies such as
  Unilever, Nestle and Cargill... Wilmar...is
  funded by the World Bank's private arm IFC as
  well as private European banks which have codes
  of conduct against unsustainable palm oil.
  Rabobank and Standard Chartered Bank are the main
  financers...
• Title Wilmar's CSR Policies and Practices
• Author Wilmar International Ltd Dated 04 Jul
  2007
• As a leading global palm oil player with one of
  the largest plantation land banks in Indonesia
  and Malaysia, we believe Wilmar...has become a
  convenient target for Friends of the Earth
  Netherlands (FOE), which has made a number of
  serious allegations about the Group. We have made
  a point-by-point rebuttal of these
  allegations....

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Honest broker? The IFC, extractive industries
and affected communities

• TheInternational Finance Corporation (IFC) is
  planning to double its mining investment in
  Africa and increase involvement in Southeast
  Asia, raising civil society concerns about the
  rights of affected communitiesIn the IFC
  backed Ahafo gold mine case, 10,000 residents
  have lost their homes and/or livelihoods.
  Thousands more in farming-dependent communities
  are expected to be displaced by its second
  phaseKarsten Fuelster of the IFC'sSoutheast
  Asia resource division said "We see that the
  uncertainties in mining in Asia might require an
  institution like ours to act as an honest broker
  and bring some stability."....
• Author Bretton Woods Project Dated 02 Jul 2007

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The G8 and responsible business wading into
CSR waters

• The attention given to corporate social
  responsibility by the recent G8 meeting marks a
  new level of government interest in the voluntary
  activities of the business sector. This is a
  sensible move, but questions remain
• Author Paul Hohnen, in Ethical Corporation
  Dated 12 Jun 2007

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Growth and Responsibility in the World Economy

• The development of a consolidated set of
  principles and guidelines that apply to the
  international mining sector in developing
  countries would help ensure that the sector
  contributes to development while at the same time
  providing a clear and more predictable set of
  expectations for investors...In order to
  encourage such a consensus among key stakeholders
  we reaffirm our support of the OECD Guidelines
  for Multinational Enterprises...will...support...t
  he Voluntary Principles on Security and Human
  Rights...encourage active engagement of mining
  sector companies with the UN Global
  Compact...encourage mining sector companies to
  undertake regular reporting using inter alia the
  Global Reporting Initiative (GRI)
  framework...will support the work of the UN
  Special Representative of the Secretary General
  for Business and Human Rights..
• Author G8 Summit Declaration Dated 07 Jun 2007
  

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Development Without Conflict The Business Case
for Community Consent

• While much has been written on the legal,
  normative, and development arguments for ensuring
  that host communities have the opportunity to
  provide their free, prior, and informed consent
  (FPIC) to a project, relatively little attention
  has been paid to the business case for
  FPICThis report demonstrates the business case
  for incorporation of FPIC principles in
  large-scale development projects.Drawing on
  four case studies In the Philippines, the
  Malampaya Deep Water Gas-to-Power Projecta joint
  venture of the Royal/Dutch Shell subsidiary Shell
  Philippines Exploration (SPEX), Chevron Texaco,
  and the Philippine National Oil Company (PNOC)
  In Argentina, the Esquel Gold Projectowned by
  Meridian GoldIn Thailand, the Samut Prakarn
  Wastewater Management ProjectIn Peru, the Minera
  Yanacocha Gold Mine Project Yanacocha is a joint
  venture of NewmontCompañía de Minas
  Buenaventuraand the International Finance
  CorporationThe report also describes best
  practices and leading policy developments that
  provide practical guidance for implementing FPIC
  principles.
• Author Jonathan Sohn, Steven Herz, and Antonio
  La Vina,
• World Resource Institute USA, May 2007

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Guide to Human Rights Impact Assesment and
Management - Road-testing draft

• The guide is a work in progress, and this draft
  version has been published to allow companies
  from different business sectors to test it in
  practice. The experience gained from the
  road-testing will be used to further refine the
  guide. A revised version of the guide will be
  published by mid-2009. Advisory group included
  BP, Newmont, Novartis Foundation.
• Author Intl. Business Leaders Forum, IFC, UN
  Global Compact Dated Jun 2007

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REALITY CHECK No matter what standards are
proposed, many stakeholders may consider them
unacceptable. Maybe this is just part of
Engagement

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Source IFC, Stakeholder Engagement, May 2007
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20 Year Event / Initiative / Development
Chronology
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20 Year Event / Initiative / Development
Chronology
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20 Year Event / Initiative / Development
Chronology
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20 Year Event / Initiative / Development
Chronology
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20 Year Event / Initiative / Development
Chronology
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CLASSIFICATION OF STANDARDS ? (Using Ligteringen
/ Zadek typology)

• NORMATIVE FRAMEWORKS Provide substantive
  guidance on what constitutes good or acceptable
  levels of performance.
• PROCESS GUIDELINES Enable measurement,
  assurance, and communication of performance.
• MANAGEMENT SYSTEMS Provide integrated or issue
  specific management frameworks to guide the
  ongoing management of environmental and social
  impacts.

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Normative frameworks Ceres Principles
EITI Equator Principles Global Compact
Global Sullivan Principles ILO Declaration
MacBride Principles OECD Guidelines UN
Norms Universal Declaration Voluntary
Principles on Security and Human Rights
Process Guidelines AA1000 Ceres
Principles EITI Equator Principles GHG
Protocol GRI MacBride PrinciplesManagement
Systems AA1000 ISO 14001 SA8000
Source Goel, Guide to instruments of Corporate
Responsibility, 2005.
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Normative frameworks(ex relevant documents list)
WC Dams Report Recommendations Forest
Stewardship Council Standards MMSD Review
ICMM Principles / Guidelines IFC
Sustainability Guidelines UNDHR ILO169
Ratification Conflict Development Report
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ICMM Framework
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ICMM PRINCIPLES

• 1 Implement and maintain ethical business
  practices and sound systems of corporate
  governance.
• 2 Integrate sustainable development
  considerations within the corporate
  decision-making process.
• 3 Uphold fundamental human rights and respect
  cultures, customs and values in dealings with
  employees and others who are affected by our
  activities.
• 4 Implement risk management strategies based on
  valid data and sound science.
• 5 Seek continual improvement of our health and
  safety performance.
• 6 Seek continual improvement of our environmental
  performance.
• 7 Contribute to conservation of biodiversity and
  integrated approaches to land use planning.
• 8 Facilitate and encourage responsible product
  design, use, re-use, recycling and disposal of
  our products.
• 9 Contribute to the social, economic and
  institutional development of the communities in
  which we operate.
• 10 Implement effective and transparent
  engagement, communication and independently
  verified reporting arrangements with our
  stakeholders.

Source Enduring Value, Minerals Council of
Australia, October2004.
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Source MMSD
Source MMSD Report
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Binding or Not?

• the use of international conventions as the
  basis for the recommended practices should
  specify their role within existing legal
  processes. International conventions are
  addressed to national governments that may or may
  not choose to ratify and incorporate them into
  law. These laws are then applied to companies if
  they choose to operate in the jurisdictions that
  have adopted them. Any implication that
  international conventions in their own right
  create legal obligations for companies is legally
  flawed. Such an implication could be readily
  drawn, for instance, in relation to ILO
  convention 169 which is said to be binding
  p6. While many well-managed companies do have
  regard to relevant international conventions in
  determining their operational practices, they do
  so at their discretion. It is not a legal
  obligation....

Source ICMM Preliminary Comments of the Draft
Framework for Responsible Mining, p3 ,
23/3/2006.
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Pariah States

• One concern is that the companies with the
  greatest
• commitment to human rights and the most
  reputation
• to protect pull out of pariah or failing states
  early,
• while foreign mining and other types of
  investment
• continue in the form of less recognizable
  companies
• whose provenance and ownership are difficult or
• impossible to trace. This is analogous to the
  drift
• netters in the Pacific, who behind layers of
• intermediary corporate vehicles continue
  practices
• almost universally condemned....

Source Breaking New Ground, MMSD, 2002.
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WHAT ARE SOME KEY CHALLENGES?

• Pariah States / Govt Takeup - Some national
  governments simply have no intention of engaging
  in any best practices.
• 4 Categories of Laggards
• attracting underperformers
• SME adoption too hard and too much overhead
  needed for work.
• Fig Leaves those who certify on one portion of
  the operation, but with non-transparency on
  others matters.
• Free Riders those who do nothing, but benefit
  from standards of others.

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OVERALL SUMMARY

• Huge amounts of work done, by a diverse range
  of groups.
• Build on this work!!! Many of the key
  questions are known. Many areas are already
  covered. Accountability becomes the issue.
• FPIC will be a very challenging area.
• Full spectrum of positions exist High stds,
  high transparency to Low stds, low
  transparency even 0!
• In GMS, tend to be dealing with the lower end
  of the spectrum.
• Standards / guidelines / codes exist. How to
  ensure application / use ???