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Others have argued that an MNC should maintain its ethical standards to establish more credibility worldwide. Use the Internet to learn more about this issue. Citing at least one recent instance or case as an example, indicate and fully explain which argument you support.
My beliefs are basically formed and influenced by my Christian background that requires those that are most fortunate to help or at at a minimum not take advantage of those that are in a lesser position to elevate themselves on their own. In this vain I am of the opinion that multinational corporations as corporate “world” citizens should not reduce its ethical standards to compete internationally. Businesses should seek to improve its profit but it ought to want to be a good corporate citizen wherever it operates. In fact before a corporation decides that it wants to participate in a country it should express to whomever the powers that be its corporate philosophy. It should not look to replicate those policies that do not advance the society as a whole. For example the rise of Western, particularly American, power in the twentieth century has been closely wedded to the ascendancy of extractive industries, chiefly oil, mining, and gas. Extractive projects, conducted by consortiums of multinational corporations (MNCs), have projected Western power and influence around the globe while providing the vital resources to fuel Western industrial and military might. The superior technology possessed by Western MNCs throughout much of the past hundred years has allowed them to maintain a monopoly over these resources. The extractive industry’s role as a de facto extension of Western power and influence has made the success of these companies a vital concern to American and European policymakers. However, the benefits of extractive industry investment, production, and development have come at the expense of many of the host states where business is conducted. The world’s most corrupt and least developed countries, such as Angola, the Democratic Republic of the Congo, Myanmar, Nigeria, Sierra Leone, and Sudan, contain some of the world’s most valuable natural resources. Revenue from resource extraction in the developing world has enabled regimes to derive their power from the natural riches of the earth rather than constituencies of their countrymen, which thereby undermines the emergence of democracy. In the developing world, an oil-producing country is twice as likely to suffer internal rebellion as a non-oil-producing one. In theory, the revenue generated from these commodities has the potential to elevate developing countries out of poverty and thus minimize the cycles of conflict and humanitarian disasters commonly found in the developing world. In reality, extractive projects frequently adversely affect the environment and disrupt the local economic and social fabric, which potentiates poverty, disease, and conflict. Western corporations operating in the developing world have a lamentable record of pursuing economic expediency at the cost of upholding the human rights ideals that the Western world purportedly espouses as a society. MNCs have justified these practices by citing the social and political operating environments of host-nations beyond their control. While this may be true in part, there is an increasing body of evidence that MNCs have actively perpetrated or have been complicit participants in human rights violations. Furthermore, the very presence and nature of extractive projects exacerbate existing human rights violations. As non-Western extractive industry corporations, such as the state-owned Chinese National Petroleum Corporation (CNPC), expand their footprint in the developing world without ratifying international human rights conventions, Western MNCs are further incentivized to pursue what have been considered economically expedient policies to maintain competitive advantage. However, there is also a body of evidence that MNCs’ silent or active perpetuation of human rights violations in
these benefits are rarely realized. In this instance. many of these valuable natural and human resources are located in developing countries where the rule of law is weak or nonexistent. First. those controlling the state’s power provide all services. and environmental standards. Second. dealing with one regime reduces the MNCs’ complexities. a mechanism for Western MNCs to proactively mitigate or eliminate the negative human rights impacts of their operations in the developing world. When MNCs begin project development planning. the lack of uniformity in defining human rights and their relevance to MNCs results in legal uncertainty and unclear regulations for private entities operating in a host state. It will then elucidate how these practices are economically costly to Western MNCs and examine the body of international voluntary initiatives that has emerged to attempt to standardize MNC operational protocol in the developing world. In reality. often in an effort to maintain power. overlooks labor. health. development. Corrupt Regimes Become Legitimized. monetary capital can legitimize a state and break the “conflict trap. In spite of the challenges associated with conducting business in the developing world. these countries’ hopes for progress. This study will first look at common indignities brought about by corporations operating in the developing world that often result in human rights abuses. hopefully changing the calculus that respecting human rights is an expensive departure from the core mission of extractive enterprises. empower. As a result. the ruling elite controls all aspects of the negotiated deal and services for the MNC. which can promote an open society. legitimize corrupt regimes. it will demonstrate that adopting the practice of an HRIA has the potential to yield economic benefits. As a result. three core challenges emerge. this study will explore how its adoption by Western MNCs may be economically beneficial. and enable the existing. the ruling elite. there is potential for good. Ravaged by civil war. Finally. Most of these states do not monitor or enforce minimum internationally recognized human rights standards. but they can be classified into five general categories. After proposing the outline and implementation of the HRIA.their areas of operation may prove increasingly costly in the form of negative brand imaging. The government often lacks the capacity or legitimacy to reign in the power and activities of MNCs even if they so desired. They also have the potential to raise a state’s labor. Extractive industry profits present aid-dependent countries with the opportunity for creating optimal state capacity. Extractive industry projects in the developing world commonly cause direct or indirect environmental. the new source of revenue serves to legitimize. and safety standards in order to accommodate MNCs and to maintain control of the funds generated. their only hope of peace is during post-conflict periods. . health. This study will describe the Human Rights Impact Assessment (HRIA). environmental. Capital from MNCs provides the opportunity for economic development. meaning that they are perpetually in a state of civil war. they assist in creating state guidelines that ensure transparency and the appropriation of funds. regardless of a host state’s infrastructure or capacity.” When MNCs operate with sound judgment. when international assistance or domestically earned revenue can break the cycle. 1. and long term costs of operating in areas with significant social and political instability. and poverty. Many resource-rich countries are classified as “conflict trap” countries. MNCs are often the only significant economic opportunity for the state. from transportation and security personnel to payment and revenue allocation structures. and provide little to no job opportunities for the domestic economy. legal liability. When commercial production begins. In theory. These infractions are intertwined. human rights. and stability are often dependent on revenue from hydrocarbon extraction. Moreover. and human rights violations. autocratic governments. MNCs in the Developing World: Do No Harm? The world’s largest MNCs operate where resources exist.
” The company operated mines in Botswana. enabled multiple autocratic regimes to maintain power. the Sudanese government forcibly removed local people. DeBeers took this negative press. and avoided liability for passive or active complicity in human rights violations. it becomes necessary for MNCs to employ security guards for their facilities and infrastructure. but was forced to withdraw from Sudan in 1984. which calls for minimum standards of certification of rough diamonds from conflict regions. 3. By 1992. The misappropriation of economic benefits from resource revenue is rampant and devastating to the host state. significant oil fields in southern Sudan in the 1980s. and production facility and employee safety a significant concern. While 3 million western Sudanese citizens have been displaced and over 200. turned it into a positive by working with the international community. where they were forced to live and work for the soldiers for free. due to the instability in the region. Although steps have been taken to ensure transparency and independent monitoring. and the National Company of India (ONGC) had moved into Chevron’s former drilling blocks. the company realized that dealing exclusively with corrupt ruling elite often results in human rights atrocities and damages the company’s brand—a massive anti-DeBeers publicity campaign was launched in New York City after it became apparent that the company’s corporation was legitimizing violent rebels and funding multiple civil wars. during this time three Chevron employees were killed by southern rebels. and major diamond trading countries created an international protocol known as the Kimberly Process. .000 killed by the government-backed janjaweed. guards are often government or paramilitary forces. Forced Relocation of Populations around MNC Projects. following UN Security Council resolutions imposing sanctions against “blood diamonds. relocated large population groups to “peace camps” in western Sudan. many technical and operational complexities remain with significant loopholes. However. using helicopter gunships to curb resident opposition. and had effectively traded guns for gems with rebel groups in conflict zones such as Angola. conducting an HRIA has the potential to add another level of accountability and protection for host-state citizens. CNPC. and regulates supply to match demand.” the company’s popular advertising phrase turned into a marketing nightmare when grassroots organizations brought worldwide attention to “blood diamonds. DeBeers. The government. often involuntarily. The countries and companies agreed to establish internal controls to eliminate the import and export of conflict diamonds from their territories. Displaced villagers are rarely provided with explanations and information regarding their resettlement. or basic necessities in their new home sites. Chevron resumed its activities and developed a sixyear exploration and drilling program. Construction of facilities and infrastructure necessarily requires resettlement of populations. With the Sudanese civil war intensifying between the north and south. In 2002. To provide access for companies to drilling sites. regimes.often autocratic or rebel. In 1988.” diamond traders. As will be described below. the world’s largest diamond producer. Britain’s Greater Nile Operating Company (GNPC). their cattle. meaningful and adequate compensation. DeBeers. The diamond industry has a contrived value. Without buy-in from local communities and sufficient planning for sustainable development. Namibia. Abuses at the Hands of Security Guards. When MNCs turn to the ruling elite to secure or clear a production field or pipeline route. after spending more than $1 billion. the DRC. Chevron relinquished all of its Sudanese land concessions in 1991. and Tanzania. Security personnel are often antagonistic to local populations and commonly subject them to forced labor and other physical abuses. and Sierra Leone. largely through marketing campaigns. and grain from the resource-rich land. For example. including the United States. “A diamond is forever. 2. Darfur. South Africa. China and other consortiums continue to operate throughout the region. Chevron discovered vast.
if the company loses the case currently in New York courts. and racial and ethnic discrimination. labor is drawn away from traditional sectors. In early 2008. torture. and migration to the cities where employment was already lacking. which were inhabited by indigenous communities. Once production facilities are up and running.” The sale of extractive exports increases the value of the local currency. workmen often engage with flourishing drug and prostitution markets. UNOCAL. Environmental Degradation Violates Health and Living Standards. making other export goods uncompetitive in the international market. such as education and agriculture. The Amazon region of Ecuador has suffered grave environmental degradation due to oil extraction. government to end trade preferences with Ecuador over the lawsuit. providing them with food. hygiene. Charged with dumping billions of gallons of toxic oil waste into the local rivers and contaminating an area the size of Rhode Island. and continued project development through 1992. was committing. leaving vulnerable and dependent workers in an under-diversified economy with fewer employment opportunities than prior to the beginning of resource extraction. the oil giant and its partners had hired local military forces in Burma. a phenomenon commonly referred to as “Dutch Disease. now recognized as Myanmar. gas flares. it was not until the end . slave labor. Texaco began building oil wells in areas of the Ecuadorian rain-forest. As the costs of goods and services rise sharply. rubber.In 1996.S. UNOCAL was acquired by Chevron Corporation shortly after the settlement. contract HIV/AIDS. Chevron reportedly lobbied the U. The Supreme Court of California ruled in favor of the peasants. “Dutch Disease”: The Boom Town Effect. Thirteen peasants from Myanmar filed suit against UNOCAL officials in U. noting that UNOCAL “knew or should have known that the military did commit. and hides. the Union Oil Company of California. became the first corporation in U. and would continue to commit these tortuous acts.S. a country becomes solely dependent on resource extraction. In 1971.” After nearly a decade of litigation. the precarious economic system collapses once a project matures. to secure a pipeline carrying natural gas from the Andaman Sea into Thailand. In the 1960s. During the 1980s. Although oil was discovered in the Niger Delta in 1956 by Royal Dutch Shell and British Petroleum.S. the New York court ruled that the case should be tried in Ecuador and is currently under appeal. Chevron also faces human rights accusations including cultural genocide. Far from home. and then unknowingly spread the deadly virus in their home communities. Farmers produced 70 percent of Nigeria’s exports and 95 percent of its domestic food needs. In 2003. and the leading exporter of cotton. public health catastrophes can result from a project’s toxic leaks. Nigeria possessed a diversified economy. federal and California state courts. poverty. United States trial attorneys and thousands of Ecuadorian peasants brought a class action lawsuit against Chevron for environmental and human rights infractions while Texaco was operating in Ecuador. Traditional culture and social cohesion are disrupted by these jobs and incentives for corruption are increased. In 2001. Large-scale projects can drastically change local economies. As a result. raped. and spontaneous miscarriages to the indigenous populations. and dumping of waste. Additionally. and transportation. and displaced entire villages. it was the largest producer and exporter of palm oil. history to face trial for com-mitting human rights abuses abroad under the Alien Tort Claims Act of 1789. These army units forced locals to work on the pipeline. and murdered civilians. In April 2008. accusing the oil company of forced relocation. the second largest producer of cocoa. 5. and murder. Texaco’s contamination of the rivers brought about alarming rates of cancerous tumors. into temporary cash service jobs. Dwindling fish stocks led to widespread malnutrition. The rivers in the region are vital to the livelihoods of the native people. an Ecuadorian court-appointed independent geological engineer recommended that Chevron spend $8 to $16 billion to clean up the environmental degradation. rape. birth defects. 4. the Chevron Corporation acquired Texaco. auto-immune diseases. robbed. which became a brand name under Chevron. UNOCAL agreed to a confidential multi-million-dollar settlement.
In 2000. a Canadian-based oil and gas company. on and off-shore. From the boardroom and courtroom to the stock market floor and Internet. 2009. and 52 percent of GDP. oil and gas was more than 95 percent of Nigeria’s exports. in 2007 with the high price of petroleum. the government incurred $37 billion in external debt at its peak in 2005. In many respects. eleven attacks have already occurred against Shell and smaller outfits such as Canadian Addax Petroleum. one of the largest floating facilities in the world. Bonga. In 2009. and vessel. MNCs are making medium. is located 120 kilometers offshore and was believed to be protected from the commonplace near. boardroom. Today this figure is almost double from 1974 figures when imports were 17. On the ground. up from $1 billion in 1971. In their home countries. Nigeria. after Bonga. militants attacked a Shell tanker. On June 20.and long-term investments in unstable and often violent areas.8 percent of GDP. and microeconomic policy. imports financed from borrowed resources had risen dramatically to over 33 percent of gross domestic product. accounted for 85 percent of government revenues. and stock market. taking eight employees hostage. Shell declared force majeure on gas supplies following pipeline damage by thieves.or on-shore attacks. tugboat. its floating production storage and offloading facility. In 1983. was attacked and production halted. believing that the project would alleviate poverty because revenue would be invested in local poverty programs. In November 2008. brand imaging for responsible corporate human rights stewardship is analogous to the shift . resulting in pressure from the stockholders. the eighth largest oil producer in the world. political instability can cause significant risk to MNC production. poor governance. Due to corruption. host state peasants testifying in United States courts can be costly to the company’s reputation in the public sphere. Wall Street can react harshly to negative MNC brand imaging. due to militant at-tacks on Shell and Chevron’s production facilities. the globalized world presents MNCs with challenges at home and abroad when operating in the developing world. Nigeria’s economy has become single commodity-based. agriculture production decreased. As the Nigerian population increased. Shell again declared force majeure on shipments from its primary Nigerian terminal because of attacks on facilities. On February 13. Talisman indicated that the perceived in-country political association was causing its stock price to sharply decline and thus posed too great a risk. ExxonMobil refused to be the primary shareholder in the Chad-Cameroon Pipeline Project without the World Bank serving as project overseer. Talisman. MNCs are spending billions of dollars to promote their brand name. These firms are essential to offshore operation and could cripple the industry.of the Nigerian Biafran war and the rise in oil prices in 1971 that Nigeria began to receive significant petroleum revenue. the project’s completion only served to raise the stakes among those vying for power and has funded the ongoing conflict with neighboring Sudan. this is still in effect. Industry executives fear that the rise in piracy may force smaller oil services to withdraw from Nigeria. has lost 20 percent of its oil exports since early 2006. The World Bank agreed. and today 54 percent of the population lives on less than one dollar a day. 2008. Nigeria is now a food-importing economy. MNC Liability in Host State and Home State Evidence suggests that the MNCs are finding that associating with corrupt regimes and passive or active complicity in human rights violations is an increasing financial liability rather than merely an unfortunate but economically expedient externality of the industry. employment opportunities vanished. However. due to concerns over political unrest. In the host state. Finally.” a legal clause permitting producers to miss deliveries due to circumstances beyond their control. with-drew from Sudan after its private military forces became em-broiled in a bloody oil war and the ongoing genocide. Shell declared a “force majeure. In January 2009.
2007. and following the 1998 BP-Amoco merger. and political freedom. However. Warren Buffet’s Berkshire Hathaway was criticized for its $3. these ads acknowledge environmental concerns. On July 31. 2007. BP suffered from one of the worst safety records of all the major petroleum corporations. guidelines. and tout the companies’ eco-friendly innovations. The United Nations Universal Declaration of Human Rights was the first of three documents created to comprise the IBHR. to which many less developed countries are signatories. Although little has changed with regards to BP’s safety and environmental standards. The ICCPR. followed by Shell at 15 percent.” In 1966. Chevron launched a “will you join us?” campaign with ads filmed in thirteen countries and aired in eight languages worldwide. Respect for human rights is a critical piece of the puzzle. water. An August 7. these promising campaigns. standards. In 2007. forty-eight Western and Muslim world leaders met in Paris to adopt the International Bill of Human Rights. the same year Shell produced a nine-minute film about a compassionate oil engineer and distributed the DVD inside National Geographic magazines. Article one declares. there is a perception on the part of MNCs and an increasing reality that responsible practices and/or publicity campaigns claiming their ethical behavior add more value to a company than expedient ones. “All human beings are born free and equal in dignity and rights. the additional Covenants were ratified—the International Covenant on Economic. Buffett the capitalist must have realized that investing in PetroChina was a bad idea. Sales rose from $192 billion in 2004 to $266 billion in 2006 and according to the Landor Associates. Critics accuse BP of using green language to distract the public. 2007 to begin divesting in PetroChina. Although not necessarily portraying accurate information. Chevron. not only for publicity campaigns. The initiative came to fruition after China changed its position in support of the resolution. but also for a company to maintain competitive advantage and profit maximization. global warming. authorizing a 26. .. This group of Covenants maintains that human beings have the right to food. a subsidiary of the CNPC. and should be protected from arbitrary abuse at the hands of their state. declarations. and Shell fill the media outlets. the campaign succeeded. Full-page newspaper and commercial television advertisements for oil and gas companies such as BP. 21 percent of customers thought BP was the greenest petroleum company. and tools stem from the first international human rights doctrines seventy years ago. and the International Covenant on Civil and Political Rights.3 billion shares by October 18. brand image awareness campaigns are everywhere.3 billion stake in PetroChina Co. completely selling all 2. Buffet agreed on July 11.toward greater corporate environmental responsibility.000 peacekeeping force to police Darfur. and Chevron at 13 percent. In the 1990s. outlines an obligation for states to ensure human rights to all individuals within its territory and subject to its jurisdiction. BP’s brand awareness increased from 4 percent to 67 percent between 2000 and 2007. which is the biggest operator in the Sudanese oil sector. Following World War II.” Human Rights Rubric in the International Community International government leaders. The Gates’ charity that will get a fortune from Buffett has spent millions aiding Sudanese refugees. However. BP invested substantially in a “Beyond Petroleum” campaign to brand the company as socially responsible. Social and Cultural Rights. and non-profit groups have begun to create standards for accountability and transparency. “Ultimately. After pulling out of the Global Climate Coalition. ExxonMobil. the campaign won the company the coveted American Marketing Association 2007 Gold EFFIE Award. the United Nations Security Council passed resolution number 1769 under Chapter Seven of the UN Charter. shelter. 2007 Market Watch Report stated. business executives. Taking into account the human rights atrocities that commonly occur during MNC operations in the developing world. In the United States. which outlines politically agreeable minimum standards for human rights. Additionally. religious.
which includes twelve standards for international stability. transparency. In today’s globalized world. Independent organizations have also taken salient steps to create HRIA tools and frameworks. former UN Secretary-General Kofi Annan extended an invitation to business leaders to join an international initiative. Shell. The Human Rights Impact Assessment Framework In a capitalist market.000 participants. together with over 7.000 MNCs worldwide have become signatories. labor unions. the IFC worked with ten international banks in London to create an industry-wide framework to address environmental and social risks in project finance. resolution 48/121. have produced HRIA tools that are available online. The International Finance Corporation (IFC) led another initiative. conflict. the Group of Eight Transparency Compacts. to create. and good governance. met in Vienna in June 1993. and civil society in order to address the challenges of globalization. The synergy between MNCs and governments is based on the understanding that a lack of accountability and transparency when handling oil revenues potentiates corruption. to promote responsible management of natural resource wealth for the public good. and the GC jointly produced their draft Guide to Human Rights Impact Assessment and Management to be tested by businesses and finalized by mid-2009. these include the “Publish What You Pay. Drawing from the footprint of existing literature. which is designed to bring companies together with UN agencies. and BP. MNCs are operating on a scale that was previously not possible. The MNCs’ increasing role as corporate citizens on the world stage presents potential to do both good and harm. potential for project interruption or abandonment. and poverty. The Global Compact. the Business Leaders Initiative on Human Rights. to lead and develop a corporate response to human rights.” a campaign to help citizens of the developing world hold their governments accountable for petroleum revenues. At the 2002 World Summit on Sustainable Development Building. Corporate risk through the human rights lens is defined here as legal liability. former British Prime Minister Tony Blair launched the Extractive Industries Transparency Initiative to increase the transparency of and accountability for cash flows between MNCs and governments. It is not an easy position: MNCs are operating in corrupt states where it is the norm for citizens to be deprived of basic rights by their government. a Netherlands organization.” and the need for cooperation between domestic and international organizations. More than 3. UN representatives from 171 States. the HRIA is designed to serve as a practical medium. recognizing the “interdependence between democracy. during. The Da-nish Institute for Human Rights and Aim for Human Rights. the Equator Principles. development and human rights. and after project implementation. An HRIA is designed to anticipate corporate risk prior to. Canadian organization Rights and Democracy is conducting HRIA methodology trials in five countries. but MNCs should not be actively or passively complicit in perpetuating a lack of basic rights. In June 2007. the IFC. Revenue Watch Institute. An HRIA focuses on human rights impacts occurring within a corporation’s . In an address to the World Economic Forum in 1999. and/or negative impacts on the corporate brand. and the Organization for Economic Cooperation and Development’s Guidelines for Corporate Governance. There are additional promising initiatives and standards geared towards addressing corruption. “a new vision for global action for human rights into the next century. the International Business Leaders Forum. including 178 extractive industry corporations such as DeBeers. a corporation’s primary objective is to maximize profits for its shareholders. foreign governments. designed to work with developing countries to fight corruption and improve transparency.and long-term risk management tool that incorporates the human rights rubric into a company’s decision-making process.” The Vienna Declaration and Program of Action was endorsed by the UN General Assembly. which inevitably leads to human rights atrocities.After forty-five years.
tires. people need cars. refineries are requiring extensive repair. and evaluating impacts and risk-mitigating alternatives. employ few locals. keep investors. in theory.S. EIAs evolved out of the 1969 U. Being a medium. The first step is encouraging host governments to comply with basic human rights standards to decrease dependence on foreign aid and gain stature in the international community. maintain competitiveness. providing MNCs with new markets for their products. Impact Assessments are disclosure tools that governments and corporations recognize and accept. and pose corporate risk when they are not located in secure environments. This will require more extractive products which will in turn increase the corporation’s profits. plastic items. especially as U. these can be lengthy fifty-year projects. such as local wind power. an early warning system and an essential first step in creating transparent accountability within corporations and host states. Corporations in the extractive indus-try move into the developing world. It is essential to choose the right team to work with an MNC in order to devise an effective and efficient HRIA. As the quest for resources continues. Although the World Bank recently recommended that small refineries in Africa be closed. the HRIA presents MNCs with the opportunity to spread wealth. The HRIA framework is grounded in the successes of environmental and social impact assessments that have been the cornerstone of environmental and social protection in developed countries. As MNCs look to provide energy from sources other than hydrocarbons. and entire infrastructure. and profits. There is a growing list of exceptionally qualified consulting agencies offering services to prepare impact . Environmental Impact Assessments (EIAs) and Social Impact Assessments (SIAs) were developed to systematically assess applicable impacts and offer alternatives to mitigate negative impacts. and is too costly and difficult to export to the world market.S. The Foreign Assistance Act of 1979 effectively extended the NEPA’s reach to U. and structured approaches that avoid or mitigate significant and irreversible damage through describing preexisting conditions on the site. Regional stability creates the opportunity to increase outlets for other byproducts of oil drilling. As the practice of an HRIA becomes widely held. There is often excess natural gas in operating fields. SIAs came into fruition in the United States in the 1970s as it became evident that projects altering natural ecosystems also alter the culture and social organization of embedded populations that surround the projects. there is increasing global demand. develop new markets. Refineries present additional opportunities. As a balance of transparency and accountability begins to create lasting frameworks throughout the MNC and international diplomatic community. 1. transparent.sphere of influence. National Environmental Policy Act (NEPA) and have been adopted worldwide. The seven crosscutting basic principles that should guide the corporate HRIA are described below. demand is inherently created. higher production. which may either. As wealth trickles into a state economy. gas. it is likely that liquefying and transporting natural gas will be an increasingly popular method. Designing an HRIA Team: Work with Competent Practitioners and Credible Data.and long-term investment.S. As stability is encouraged and promoted within societies. and operate in a bubble removed from the host state’s shortcomings. contribute to or detract from the fulfillment and progressive realization of internationally-recognized human rights standards. there will be increased opportunities for new markets through emerging societies. foreign aid activities. Both SIAs and EIAs represent proactive. much of which gets burned off as required by environmental laws. and be responsible global citizens. creating a plan for action. identifying potential impacts that may occur as a result of the action. the value will be in the inherent process of engaging all stakeholders and creating a sense of ownership while respecting human rights. operate an oil field block for ten to twenty years. oil-producing countries will become additional energy markets. This study proposes building on the SIA/EIA principles to create the HRIA.
and maintain financial and institutional independence to avoid actual or perceived corrupt practices. 2.1 billion project attempted to avoid the opaque practices that have fueled graft and corruption in other African oil states such as Angola. and did not. and showed an information video. and local NGOs. Whether through town meetings or surveys. In the event that misappropriations of funds or human rights violations result during project implementation. Interactions between parties present a real opportunity for joint problem-solving and cultural exchange. and economic climate. Each impact should then be pre-classified as a: (1) potential problem. In 2000. 3. scarcity of libraries. However. history. Congo. Similar to a practical risk management tool. The consortium arranged nearly 900 village meetings.and long-term project investment opportunities. and Addressing Impacts. Equatorial Guinea. project consortiums attempt to involve the affected public but fail because they are unable or unwilling to consider the local culture. the World Bank took an unprecedented step by switching from their role as major financial development lender to project overseer of the Chad-Cameroon Petroleum Development and Pipeline Project. This should include everyone from senior staff to under-represented stakeholders such as project workers. Given the low literacy rate. Once the HRIA team is defined and has peripherally assessed the host state’s social. Petronas. this step simulates the interests and demands of all stakeholders throughout the length of a project. anthropology. (2) potentially . the project is still failing and Chadian President Idriss Déby is embroiled in a brutal conflict with the neighboring Sudanese regime. distributed a nineteen-volume information pamphlet to libraries. the result was dismal. The World Bank guided the private sector consortium of ExxonMobil. defined. Once all potential stakeholders are determined. and minimize environmental and human rights abuses. A Salient Case Study: The World Bank Chad and Cameroon Pipeline Development Project At times. the non-translated video and the pamphlets could not. There should be an internal group within the MNC to work with the external auditors during the creation of the HRIA framework. With the innovative safeguards. and Chevron in order to design a model for developing countries to use revenue from their own resources in a transparent manner to alleviate poverty. especially any politically marginalized segments of the state’s population. the same northern guards were tapped to accompany the ExxonMobil representatives to the southern meetings.assessments. Measuring. engage the local citizens. Gabon. and their complexities to formulate a meaningful process. and numerous dialects in southern Chad. the team needs to identify and meet with representatives of all groups that will be involved with or affected by the project. Texaco. Employing and consulting with credible experts in the field of human rights. host communities. Despite the ongoing military attacks by the northern government militia in the south. and local NGOs provides an MNC insight into the geopolitical complexities on the ground. Although the consortium was well intentioned in its efforts to involve the southern Chadians about pipeline construction. transparency. Community buy-in and liability protection is essential to maximize short. is particularly critical when operating in states where the rule of law and infrastructure is virtually absent. the MNCs will have established a relationship with all players and documentation of that interaction. the team should report directly to the MNC’s board of directors. political science. Maximum inclusion of all actors. these exchanges should be interactive and not a sales pitch. prevent further class separation and the legitimization of corrupt ruling elites. impacts need to be identified. and classified into categories. and democracy. The $4. this is essential to building a sound HRIA that is integrated into corporate decision-making and viable to the international community. political. and Nigeria. the consortium hoped to promote accountability. External auditors should exhibit familiarity with HRIAs. The Business Case: Involve All Stakeholders and Create a Sense of Ownership for All. Design Methods for Defining.
the board room is required to consider suspending the project. as is witnessed in Nigeria. staff training and management protocol should be designed for overseeing contractors and local employees. security. communication between the HRIA team and the corporate decision-makers should be clearly outlined. such as the development needs of the community. Each proposed action should be assessed while examining its impact on local dynamics. Through these actions. The MNC needs to create a sense of ownership in the project that permeates through every stakeholder. World Bank. IMF. 6. company crane operators and engineers. and stockowners. including the local population and NGOs. If the project is recommended. MNCs are presented with a unique opportunity to create internal standards early. The HRIA team should create a methodology to address each category. stability. and education initiatives. should problems arise during or after production. this requires MNCs to be familiar with existing labor.mitigated problem. This will create long-term risk management by strengthening and legitimizing the impact assessment while simultaneously encouraging accountability. such as the state’s current human rights situation. Internalize the Impact Assessment in Corporate Decision Making. Groups that are disenfranchised may become frustrated and aggressively retaliate. corruption threats. and any historical divisions. optimal production and results will be realized. the daily burn rate is significantly increased compared to the pre-project planning stage. 4. debt restructuring. and set operating . or (3) potentially reversible problem. and forecast potential complex issues surrounding the project’s impact on local communities prior to production. After gathering reliable and informed data. and potentially decreases corporate complicity in the event of litigation or human rights atrocities. This system can be used in tandem with the local and international community experts. If the perceived risks outlined by the HRIA suggest that the human cost from the project could be devastating. even when operating in complex and volatile areas. Assessing the equity of impacts directly confronts potential complicity and liability issues. encourages discussion. Wall Street executives. It is timely and cost efficient to discuss. offering petroleum revenue allocation structures. involve the public. and transparency. otherwise it will be a useless exercise. environment. This classification system should be used by the team throughout the project to monitor the identified potential problem areas. bi-monthly meetings are recommended with the HRIA team and the corporate decision makers. the state will have the potential to gain prestige and legitimacy in the world arena. development. thereby threatening production. It also creates benchmarks for measuring progress and problems while encouraging transparency and accountability for all actors. international initiatives. health. and the exacerbation of ethnic tensions. This includes different assumptions. and housing standards around the project as they pertain to human rights. and Open Society. define. Transparency: Share Findings. At this time. The public disclosure of findings by MNCs sends the right message to the ruling elite. Once revenue is flowing into the community. International organizations. and indigenous peoples. labor. media coverage. can provide economic and development advisors to the state. such as branches of the UN. the host state government. Clearly delineated internal codes of conduct need to be outlined for receiving and internalizing in-formation with explicit policies for addressing discrimination. A byproduct of this step is the creation of a complex emergency response system. the education needs of employees. Assess Equity of Impacts. for example. and human rights organizations is to publicly disclosing the process and results of a HRIA. Raising the standard of living for the local population presents the opportunity for a regime to win the hearts and mind of its people. the HRIA team should determine the positive and negative impacts from the project and any potential unbalanced distributions between communities. The first step in gaining credibility with the company’s stakeholders. When team pride and integrity is nurtured at all levels of a business. The HRIA assumptions and projections should be institutionalized throughout the corporate management structure. 5. once production is under way. who would have been previously approached by the team.
recommending. It may seem contrary to the CEO mindset to dedicate energies toward promoting transparent and ethical dealings with corrupt state regimes. sharing successes with crane operators. as they ask others to follow suit. and cost-effective tool for MNCs to assess and control the impact of their development activity in places where host governments are unable to safeguard their citizens’ rights. Additionally. The MNCs must honestly disclose the HRIA study to an appropriate extent in order to legitimize the corporation’s process and decision-making as well as encourage the host state’s government and local population participation. An HRIA Makes Economic Sense A Smart Investment With a global economic recession. the impact on the ground. promising. an HRIA is a sensible insurance policy. and engage the developing world. inhumane practices by subcontractors. and the press. This system is an ethical. payments dispersed to given entities. and to protect national interests. MNCs cannot be solely responsible for a state’s success or failure to effectively utilize resource revenue to elevate populations out of poverty.S. promote efficiency. However. and the ethical treatment of all peoples. U. estimated production rates.S. plummeting oil prices. or misappropriation of funds by the government. U. opportunity. The Obama administration has initiated positive steps toward restoring global trust and moral leadership in the international community with the projected closing of Guantanamo and a renewed commitment to uphold the Geneva Conventions when apprehending suspected terrorists on foreign soil. HRIAs are win-wins for the corporation. Maintaining Western CompetitivenessChange Begins at Home The United States was founded on the principles of encouraging competition. decreased U. To be sure.and long-term.S. MNC executives are under pressure to cut costs. Detailed monitoring and reporting should include disclosure of profits. Now is the time for the team to draw on the HRIA investment. MNCs must be mentally prepared to temporarily suspend production or significantly alter their course of action should massive human rights violations commence. and maintain strong profit returns and competitiveness. the HRIA team should aggressively monitor all human rights impacts related to the project. it is an optimal time to integrate the HRIA into corporate decision-making. . the boardroom. the United States violated international human rights covenants on the basis of protecting national security. 7. to combat extremism. During the eight years of the Bush ad-ministration. Although more time and money is initially required.-based corporations have the potential to be leaders in this area.procedures on the international stage. The Central Intelligence Agency’s secret detention centers located overseas and the imprisonment of detainees at Guantanamo Bay. the United States needs to begin by promoting. while oil production is down. As the Obama administration continues to strive for principled and transparent leadership. New processes and procedures are easier to implement when beginning new projects. especially considering the monetary and public costs of facing a trail in the long run. Ongoing Monitoring and Evaluating: Managing Human Rights. and the decrease in oil production. Once a project is underway. increase productivity. and the status of potential impacts assessed during pre-project planning. excellence. and enforcing ethical codes of conduct with businesses at home. design an independent HRIA team to work with MNCs. foreign policy should reflect a meaningful effort to improve the basic quality of life of all citizens in the world. or working through potential complex issues surrounding complicity. fluctuations in the value of the commodity. influence on the international stage when arguing for human rights standards in Myanmar or Sudan. without respect to the Geneva Conventions. conducting HRIAs has the potential to yield economic returns in the medium.
or MNC royalty penalties outlined as a result of the HRIA. financed. The corporate citizen is challenged to emerge with proactive ways to create new markets. International Monetary Fund. military. The scope of this legislation may encompass extractive and/or other projects with significant human rights impacts undertaken. Margo Tatgenhorst Drakos recently completed her MA in international affairs from Columbia University. private. Today. and the corporate world comes at them side to side.S. Congress is encouraged to seek an agreement among states holding corporations directly liable for their HRIA obligations in the absence of domestic accountability. The United States should encourage the adoption of Human Rights Impact Assessments at the supranational level and incorporate the cross-sector codes urged by the Global Compact. The international community should put significant pressure on developing world leaders to address any real or potential problems from an HRIA. World Bank. At the international level. the U.” published in the spring 2007 issue of the Cornell International Law Journal. and “Extracting Corpo-rate Responsibility: Toward a Human Rights Impact Assessment.com. a digital music and social networking site for live classical music based in San Diego.S. the Export-Import Bank. Equator Principals.and public-sector overseas projects. the U. She is chief operating officer of InstantEncore. receive local population pressure from the bottom-up. government support the creation of an independent and competent board of human rights auditors and/or an auditor certification scheme to provide corporations with reliable and timely impact assessments. the Overseas Private Investment Corporation.” published in the winter 2008 issue of Stanford Social Innovation Review. and socially responsible practices. it is advisable to establish a funding or payment mechanism that ensures the financial integrity of the HRIA process.S. and preventing the manipulation and abuse of people in developing countries. and USAID. This may include resolutions from the United Nations Security Council. To avoid allegations of impropriety. . Congress should lead the Western world in designing an HRIA for applicable U. It is recommended that the U.Using the NEPA as a roadmap. decreasing costs in the long term. and others. The good news is that this presents new opportunities for positive influence beyond the conventional thought and corporate mindset. The HRIA is a promising step toward creating future markets. or otherwise supported by corporations operating or registered in the United States. sanctions by the United States. all states are challenged globally from the top-down. Congress may design tax incentives for MNCs that adopt and incorporate the HRIA tool into their corporate decision making. Stakeholders have expanded to include actors from all corners of the world. long-term investment return. She is co-author of “Getting Human Rights Right. This legislation would include application to private lenders.S.
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