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

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


1
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

2
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

3
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4
Who Can You Trust?
5
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6
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
7
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).
8
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).
9
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.
10
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

11
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

12
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

13
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

14
  • 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

15
  • 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....

16
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

17
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

18
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

19
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

20
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

21
REALITY CHECK No matter what standards are
proposed, many stakeholders may consider them
unacceptable. Maybe this is just part of
Engagement

22
Source IFC, Stakeholder Engagement, May 2007
23
20 Year Event / Initiative / Development
Chronology
24
20 Year Event / Initiative / Development
Chronology
25
20 Year Event / Initiative / Development
Chronology
26
20 Year Event / Initiative / Development
Chronology
27
20 Year Event / Initiative / Development
Chronology
28
hh
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.

29
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.
30
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
31
ICMM Framework
32
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.
33
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34
Source MMSD
Source MMSD Report
35
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.
36
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.
37
hh
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.

38
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 ???
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