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FINDING BALANCE. PROTECTING HUMAN RIGHTS.

FINAL REPORT

COUV.pdf 23.11.2007 9:59:22

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THE 2007 BUSINESS AND HUMAN RIGHTS CONFERENCE REPORT

CONTENTS

Preface

I. Introduction

Honorary Chair: Richard Feinberg, Director APEC Study Center, University of California San DiegoMs. Lene Wendland, Adviser on Business and Human Rights, Office of the UN High Commissioner for Human RightsMr. Luke Wilde, Director TwentyFifty Ltd

II. The Context: Frameworks of Accountability for Human Rights

Moderator: Mr. Luke Wilde, Director, TwentyFifty Ltd

Panel:Mr. John von Kaufmann, Counselor (Human Rights), Canadian Department for Foreign AffairsMr. Eric Biel, Managing Director for Corporate Responsibility, Burson-MarstellerDr. York Lunau, Corporate Citizenship Adviser, Novartis Foundation for Sustainable DevelopmentMs. Soraya Ramoul, Corporate Responsibility Adviser, Novo Nordisk

III. Finance and Investment: Capital Influence to Protect Human Rights

Moderator: Mr. Scott Jerbi, Ethical Globalization Initiative

Panel: Mr. Dominique Michel, Head of Multinational Enterprises and Social Policy, International Labour OrganisationMs. Liz Umlas, Senior Research Analyst, KLD Research and Analytics, Inc.Mr. Kamil Zabielski, Senior Executive Officer – Human Rights, Norwegian Pension Fund: Council on Ethics

IV. Conclusion

Ms. Soraya Ramoul, Corporate Responsibility Adviser, Novo NordiskProfessor Richard Feinberg, Director APEC Study Center, University of California San Diego

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ABBREVIATIONS

EGI Ethical Globalization Initiative

ESG Environmental, Social and Corporate Governance

ILO International Labour Organization

IOMBA International Organizations MBA

MNC Multi National Companies

OECD Organization for Economic Co-operation and Development

OHCHR Office of the UN High Commissioner for Human Rights

SRI Socially Responsible Investor

SRSG Special Representative to the Secretary-General

UN GRI United Nations Global Reporting Initiative

UN PRI United Nations Principles for Responsible Investment

UNEP FI United Nations Environment Programme Finance Initiative

PR Public Relations

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“We have to choose between a global market driven only by calculations of short-term profit, and one which has a human face. Between a world which condemns a quarter of the human race to starvation and squalor, and one which offers everyone at least a chance of prosperity, in a healthy environment. Between a selfish free-for-all in which we ignore the fate of the losers, and a future in which the strong and successful accept their responsibilities, showing global vision and leadership.”

Former UN Secretary-General Kofi Annan to the World Economic Forum in Davos, Switzerland, on 31 January 1999

Preface

Building on the July 2007 Global Compact Leaders Summit, which reinforced the human rights dimensions of the UN Global Compact�, and helping to build momentum for the 5th Session of the Human Rights Council held in August 2007, the University of Geneva’s International Organizations MBA program (IOMBA) and Net Impact Geneva hosted a major conference, “The Role of Business in Promoting and Respecting Human Rights,” in Geneva, Switzerland on 5 September 2007. The conference brought together representatives from business, multilateral institutions, government, civil society and academia to discuss the critical role that companies can play in ensuring that international standards of human rights are upheld and promoted.

The motivation to hold such a conference was clear: with global markets expanding significantly and private markets gaining increasing influence in developing countries, the international community has a responsibility to ensure that this globalization does not jeopardize the livelihoods of peoples and communities.

In 2005, John Ruggie was appointed Special Representative to the Secretary-General (SRSG) on the issue of human rights and transnational corporations and other business enterprises. This appointment demonstrated the importance that the international community is placing on this issue. In his February 2007 report to the Human Rights Council, Mr. Ruggie highlights the importance of the “soft law” mechanism in regulating the actions of private business and ensuring that they respect human rights norms in their business operations. This “soft law” includes international social obligation agreements such as the OECD Guidelines for Multinational Enterprises, the ILO Tripartite Declaration of Principles Concerning Multinational Enterprises and Social Policy, and the Global Compact – a set of �0 socially responsible principles, agreed upon by some of the world’s largest MNC’s.

Mr. Ruggie has also highlighted the importance of finance and investment as a tool in ensuring companies respect universal norms in human rights. A report to the 4th Session of the Human Rights Council entitled “Human Rights and the Financial Sector,” recounts consultations with some of the world’s largest investor groups including the International Finance Corporation, Barclay’s Bank, Fortis, UBS, and the UNEP Finance Initiative.

So spawned the two central themes of the conference: “Systems of accountability for business and human right” and “The role of finance and investment in respecting and upholding human rights”. In bringing together the world’s experts in these two areas, the conference organizers hoped to inspire debate, action and ideas to ensure business’ continuation as a catalyst and not an impediment to international development.

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I. Introduction

The conference’s Honorary Chair, Professor Richard Feinberg, Professor and Director of the APEC Study Center at the University of California San Diego, provided opening remarks, describing the day’s theme as a “controversial and dynamic topic”. In particular, the topic of

human rights—a theme embodied in philosophy and international law—presents a number of unique challenges when seen through the lens of the private sector. To wit, recurring topics for the day would include the dynamic between “a right” and “an obligation,” voluntary vs. mandatory actions, what should the exact role of the private sector be and on what level are they best able to focus their efforts, and how should business leverage its unique resources to impact human rights practices in the future. Professor Feinberg went on to announce that this would be the first of an annual conference sponsored by IOMBA and Net Impact Geneva to be held on topics relating to corporate social responsibility.

Lene Wendland, Special Adviser on Human Rights and Business for the Office of the UN High Commissioner for Human Rights (OHCHR), highlighted the growing attention that the business and human rights discourse is gaining from stakeholders in all sectors of society and focused her keynote speech on UN-level initiatives to address human rights issues in the corporate context.

According to Ms. Wendland, of the ten principles outlined by the UN Global Compact, the first two, concerning human rights, are both the most difficult as well as the most promising principles for companies. For business, addressing the first two human rights principles of the Global Compact can potentially

produce the most tangible benefits in the form of labor, environmental and anti-corruption standards.

In this respect, the appointment of Mr. John Ruggie in 2005 was a positive step forward in the business and human rights discourse. The OHCHR, working with the office of the SRSG, acts as a guardian of the human rights principles and works to clarify understanding of human rights standards, produce working tools that companies can use to address their human rights obligations, and identify best practices of States and transnational companies in regards to human rights.2

There is still much criticism that the human rights components of the Global Compact are weak and that companies are still struggling to understand their roles and obligations under the emerging global human rights framework. Real efforts to address human rights in the business sector only began in the late 1990s, and today we have entered a “new frontier” in the arena of business and human rights. Increasingly, non-state actors are playing a larger role in this ongoing discourse and political support for these initiatives

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Prof. Richard Feinberg –University of California San Diego

Lene Wendland – OHCHR

Why Human Rights are Important for Business:

“The responsibility for human rights does not rest with governments or nation states alone. Human rights issues are important both for individuals and the organizations that they create. As part of its commitment to the Global Compact, the business community has a responsibility to uphold human rights both in the workplace and more broadly within its sphere of influence. A growing moral imperative to behave responsibly is allied to the recognition that a good human rights record can support improved business performance.”

Principle 1 of the UN Global Compact

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continues to grow slowly. A human rights working group of the Global Compact Board has been created and Global Compact national networks are still in the process of being strengthened and developed. The UN Global Compact principles on human rights provide overarching guidelines to coordinate the growing movement on business and human rights and connect the different business and development initiatives that have emerged in the past few decades.

The second keynote speech of the day, delivered by Mr. Luke Wilde, Director of TwentyFifty Ltd., focused on the business case for respecting human rights and on the creation of a culture within businesses that contributes to social development. Mr. Wilde spoke about how there is indeed a great deal of knowledge about what the social expectations of business are , and also about how those expectations can be fulfilled through such things as monitoring programmes and cross-sector partnerships. What has been missing, in his view, is a focus on how the prevailing business culture contributes to, or constrains, corporate social performance and respect for human rights.

Secondly, Mr. Wilde spoke about the business case for incorpating human rights norms into business activites. The “hard reasons” for respecting human rights include safety for employees, PR and brand protection. In today’s business environment, these “reasons” for adopting human rights frameworks extend down to the bottom of the supply chain. Recent public scrutiny and criticims of the supply chain operation of such multinational as Nike and Walmart have shown us that businesses are expected to be accountable for all stages of their production chain.

Finally, bearing in mind that many participants in the conference were students, Mr. Wilde pointed to the contribution that young people could make as a new generation of business people for whom justice and responsibility are important. [SUPPRIMER à partir de “one had the sense…jusqu’à la fin du pararaphe]

II. The Context: Frameworks of Accountability for Human Rights

The morning panel session, moderated by Mr. Luke Wilde, sought to identify how companies are building accountability for human rights into their business practices. Specifically, the panel discussed the impact of voluntary initiatives such as the UN Global Compact, the Global Reporting Initiative and the OECD guidelines for multinational companies on human rights practices around the world.

According to Mr. Eric Biel, Managing Director for Corporate Responsibility at Burson-Marsteller, voluntary initiatives show a great deal of promise. Mr. Biel introduced the idea of “voluntary plus” initiatives, taking existing voluntary initiative structures but requiring them to have: 1) clear codes of governance, 2) general principles for measurement and accountability, 3) mechanisms for disclosure and transparency and 4) meaningful tools to promote corrective action. Mr. Biel cited the Alien Tort Claims Act in the United

“We have to show the world that rather than be the planet’s greatest enemy, people and business can be a force for good.”

Neville Isdell, Chair of Coca-Cola

Luke Wilde – TwentyFifty

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States as an example of a judicial tool that has been successfully used to make companies accountable for their human rights practices.3

Ms. Soraya Ramoul, Corporate Responsibility Adviser for Novo Nordisk echoed these sentiments, stating that the need for clearer guidelines is the most important first step for international organizations to focus on in the business and human rights agenda. Clarity among the existing international human rights frameworks are necessary to establish the level playing field that is necessary to make company policies toward human rights consistent across the globe and prevent business from embarking on a “race for the bottom” when left on their own to interpret human rights guidelines.

It was also pointed out that while there are 4,000 signatories to the Global Compact, there are currently only �00 companies with human rights policies in place. Ms. Ramoul suggested that the natural starting point for a company looking to assess their human rights impact is internal—starting with a company’s own employees. Business and international organizations should first work to establish global minimum standards for employees and provide companies with clear guidelines on human rights that can be easily translated by corporate management into tangible employment policies. Only after a company has tackled its own internal human rights issues can it then move on to develop external policies and programs.

Mr. John Von Kaufmann, Counselor on Human Rights for the Canadian Department for Foreign Affairs, correctly pointed out that while the private sector can have immense impact on human rights practices they

are under no legal obligation to do so. States on the other hand, have a legal obligation to respect human rights, and therefore, should bear the primary responsibility of regulating human rights practices. They are often hampered however by a lack of resources to do so. To this end, international organizations can help to influence human rights practice by building up the capacity of national governments to enforce laws.

� http://www.laborrights.org/publications/ATCA.pdf

“The Alien Tort Claims Act (ATCA) was passed by the first (U.S.) Congress in 1789, and provides federal courts with jurisdiction over violations of the “law of nations.” In the modern era, the federal courts have allowed foreign victims of human rights violations to use the ATCA to address egregious human rights violations. Congress explicitly ratified the modern revival of the ATCA in passing the Torture Victims Protection Act (TVPA) in 1992. More recently, the ATCA has been used against corporations that are knowingly complicit in human rights violations.”

Soraya Ramoul - Novo Nordiskand Eric Biel - Burson-Marsteller

York Lunau – Novartis Foundation and John von Kaufmann – Canadian Department for Foreign Affairs

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Following on this, Dr. York Lunau, Corporate Citizenship Adviser for the Novartis Foundation for Sustainable Development, expressed the need for business to take a leading role in educating national governments about the business and human rights issue. According to Dr. Lunau, voluntary and mandatory regulations on business with respect to human rights are not mutually exclusive approaches—with companies, the key is to find the right mix of regulation and voluntary commitment.

Additionally, Dr. Lunau described some of the future challenges for companies when trying to address human rights; most prominently, with the globalization of business, how will the appropriate role of business towards human rights be defined vis-à-vis different cultural perspectives on this issue?

III. Finance and Investment: Capital Influence to Protect Human Rights

A recent article from the Center for Corporate Citizenship at Boston College notes that so-called Socially Responsible Investors (SRIs) held $2.29 trillion in assets at the end of 2005. Growing consumer activism is spreading within the financial services industry, and multilateral initiatives such as the UN’s Principles for Responsible Investment (UN PRI) now represent more than $9 trillion in assets. In short, with SRIs and the host of new multilateral initiatives created for the financial services industry, the links between investment and social issues are gaining mainstream acceptance in both the business and human rights communities. Building on these thoughts, the afternoon panel session moderated by Mr. Scott Jerbi, from the Ethical Globalization Initiative, explored the ways in which access to finance and investment can influence the

actions of multinational companies. The panel looked at how companies are actively engaging with SRIs, as well as the criteria that SRIs are using when assessing human rights. An expose from the Norwegian Council on Ethics also spoke to the role governments and other institutional investors who have no binding or law bound mechanisms to ensure companies are respecting human rights norms can play in influencing responsibility of the private sector.

In terms of research, data and implementable standards, all panelists agreed that the field of investment and human rights is still in its early stages. Mr. Dominique Michel, Head of Multinational Enterprises for the International

York Lunau – Novartis Foundation for Sustainable Development

Dominique Michel – ILOand Scott Jerbi – EGI

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Labour Organization, highlighted the problems that spawn from a lack of commonly agreed to standards across the wider business community and the challenges of working on social issues that are not currently as “fashionable” as environmental issues.

In regards, to standardization, Ms. Liz Umlas, Senior Analyst at KLD Research and Analytics described her firm’s process for developing investment indexes based on an array of Environmental, Social and Corporate

Governance (ESG) factors. KLD’s mission is to facilitate the incorporation of ESG factors into investment decisions and to advise business on criteria the SRI firms are using in making their investments. Ms. Umlas noted that a great challenge to working in this arena is that it is not always possible to make investment and human rights a compelling business case or legal case—sometimes it is the moral case to human rights issue that must be placed in the forefront of all discussions. Ms. Umlas also pointed to the challenge of attaining information on companies who are committing human rights violations. As there exists no mandatory reporting for companies operating outside their home territory and as violations that are committed normally are perpetrated at levels of the supply chain that are obscure from scrutiny, companies cannot be held accountable. Ms. Umlas concluded her remarks by pointing out that if we want

to address these challenges, we must work more with global civil society organizations, in the South, as well as support the standardization of investment criteria like the UN GRI.

Mr. Kamil Zabielski, Senior Executive Officer at the Norwegian Pension Fund began his presentation with background on the Fund and how it makes ethical investment decisions. The Norwegian Pension Fund

started in the �990s with the investment of surplus petroleum funds. Currently, the Fund is worth $350 billion, representing the 2nd largest sovereign fund after the California public employee pension funds.

The independent “Council of Ethics,” which advises the Fund on the companies in their investment portfolio, is responsible for investigating and making recommendations on these companies’ adherence to international standards of human rights. The Fund performs negative screenings on companies, which can lead to equity divestment from that company (reaching up to 3% of a company’s shareholdings). A high profile case in 2005 lead to the divestment of $4�6 million from Wal-Mart that was found to be violating recognized standards of labor and human rights, including child labor, working conditions bordering on forced labor, wages below minimum wage and prohibition of labor unions. The decision sent shockwaves through the investment community and forced Wal-Mart to investigate its business practices.

Kamil Zabielski – Norwegian Pension Fund

Ms. Liz Umlas, Senior Analyst at KLD Research and Analytics

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Though Norway’s framework for ethical investment decision has realized many of its goals, the panel agreed that they need to transition to a more proactive, “positive screening” model.

IV. Conclusion

The day ended with closing comments from Ms. Soraya Ramoul and Professor Feinberg, both alluding to the challenges facing the business community in finding solutions to ensure effective implementation of human rights guidelines in their business practices. Professor Feinberg made direct reference to the case of China and Russia, where there is still a noticeable lack of adoption of norms of accountability and social reporting. He remarked that over the last 500 years, despite States’ progress in addressing social problems, many pressing problems still remain, and the private sector will be instrumental in helping to fill in these gaps. Fortunately, many businesses are learning to incorporate social responsibility into their core functions in ways that benefit their many stakeholders, including employees and customers. Further progress will require creative partnerships—formal and informal—between the public and private sectors.

The day’s proceedings ended with general agreement that the conference should become an annual event. It was further proposed that next year’s conference concentrate on social responsibility and reporting in emerging economies in hopes that companies looking to engage in business with the “bottom of the pyramid” are doing so in a helpful and not a harmful manner.

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Conference Moderator: Prof. Richard Feinberg –Director, APEC Study Center, University of California San Diego

8:30-9:30 – Registration: Tea and Coffee

9:30 – Opening Speeches Welcoming Remarks: Prof. Bernard Morard, Dean of the Faculty of Economic and Social Sciences, University of Geneva

Ms. Lene Wendland – Adviser on Business and Human Rights, Office of the UN High Commissioner for Human Rights

Mr. Luke Wilde – Director, TwentyFifty Ltd.

10:30 – Coffee Break 10:45 – Panel Discussion

“Frameworks of Accountability for Human Rights” Moderator: Mr. Luke Wilde – Director, TwentyFifty Ltd. Panel Members:

Mr. John Von Kaufman – Counselor (Human Rights), Canadian Department for Foreign Affairs

Mr. Eric Biel – Managing Director for Corporate Responsibility, Burson-Marsteller

Dr. York Lunau – Corporate Citizenship Advisor, Novartis Foundation for Sustainable Development

Ms. Soraya Ramoul – Corporate Responsibility Adviser, Novo Nordisk

12:45 – Networking Lunch in the Reception Hall 2:00 – Panel Discussion

“Finance and Investment – Capital Influence to Protect Human Rights”  Moderator: Mr. Scott Jerbi – Ethical Globalization Initiative Panel Members:

Mr. Dominique Michel – Head of the Multinational Enterprises and Social Policy, International Labour Organization

Ms. Liz Umlas – Senior Research Analyst, KLD Research and Analytics, Inc.

Mr. Kamil Zabielski – Senior Executive Officer, Human Rights, Norwegian Pension Fund: Council on Ethics 4:00 – Coffee Break 4:15 – Closing Remarks Mr. Anthony Nguyen – President, Net Impact Geneva

Ms. Soraya Ramoul – Corporate Responsibility Advisor, Novo Nordisk Prof. Richard Feinberg – Director, APEC Study Center, University of California San Diego 5:00 – End

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The International Organizations MBA (IOMBA) program at the University of Geneva is a unique global MBA program that it is designed specifically to develop the next generation of managers for international organizations, non-profit organizations, and development-sector organizations. The program enlists a seasoned staff of academics and professionals who are experts in the field of business and social or environmental development, and the small class size ensures that students receive a level of attention and support that they would otherwise not get in larger MBA programs. Social and environmental issues are mainstreamed throughout the program and are not treated as side-issues to the business core of the MBA degree. With the IOMBA program’s location in Geneva, Switzerland, students are able to make real-world contacts and explore opportunities to learn and work with over 200 international and non-governmental organizations and companies all based in Geneva and the surrounding area.

Net Impact Geneva was established in the Spring of 2006 by students of the International Organizations MBA program (IOMBA) at the University of Geneva to provide networking, educational and community impact opportunities for students and professionals who are committed to using business to make a positive social, environmental or economic impact.

Inational Organizations MBA (IOMBA)16 Chemin de la Voie-CreuseCH-1202 Geneva, SwitzerlandPhone: +41 22.379.8120iomba@hec.unige.chwww.iomba.ch

Net Impact Genevac/o International Organizations MBA (IOMBA)16 Chemin de la Voie-CreuseCH-1202 Geneva, Switzerlandinfo@netimpactgeneva.chwww.netimpactgeneva.ch