Bennett Freeman, Deputy Assistant Secretary of State
for Democracy, Human Rights, and Labor
Remarks to the Third Warwick Corporate Citizenship Conference
University of Warwick
Coventry, England, July 10, 2000
Globalization, Human Rights and the Extractive Industries
It is a pleasure to join so many leaders and experts at this Third Annual Warwick Corporate Citizenship Unit Conference this morning. There is no question that the Warwick University Business School's Corporate Citizenship Unit, led by Malcolm McIntosh and Alyson Warhurst, is playing an increasingly influential role in setting and expanding the agenda for corporate citizenship, in Britain and beyond.
This conference comes as the momentum for higher standards of corporate citizenship continues to accelerate on both sides of the Atlantic and around the world. The proliferation of conferences on the subject is remarkable. More significant and one hopes, more durable, are the initiatives and actions underway on the part of so many far-sighted companies, NGOs, and public sector institutions -- or efforts inspired by visionary leaders such as the Rev. Leon Sullivan. Whether it is called corporate citizenship, corporate responsibility, or corporate social responsibility, and whatever the theological distinctions made between those terms, it is clear that its momentum is not only accelerating but that this movement is entering a new era. It is making new gains. It is winning new adherents. It is extending its reach globally, locally, and sectorally. And it is widening its scope to face new issues and embrace new challenges.
Most interesting may be why this new era for what I prefer to call global corporate responsibility is now upon us. I think that the answer lies, not surprisingly, in what is clearly the greatest revolutionary force of our time: globalization. It is linking economies and cultures, empowering individuals and groups, and opening spectacular new opportunities for freedom and prosperity to an extent that the world has never before seen. At the same time, it is generating a potent political backlash that is more than local demonstrators in the streets of Seattle, Washington, London, or outside a courthouse in Millau, France; it is a global demonstration on behalf of democracy and accountability aimed at our institutions, both public and private. Whether out of a desire to drive its revolutionary force forward or to manage the backlash against it, it is globalization that is transforming corporate responsibility from a choice into an imperative for more and more companies.
Certainly, there is no one code, no one set of guidelines, no one size that fits all. But there is a growing recognition that there are principles to shape and work by; best practices to consider and adopt; and new partners with whom to consult, cooperate, and innovate. And there is growing acceptance of the premise that even if globalization is irreversible, global corporate responsibility is essential certainly as a pragmatic investment and for some even an idealistic commitment.
The action in the world of global corporate responsibility is mostly -- and appropriately -- with companies and NGOs, both increasingly powerful non-state actors. But there is also a constructive role for another pair of actors: the nation-state and the international institutions through which it also operates. They, too, are emerging as important forces encouraging the movement toward greater corporate responsibility, whether on behalf of a cleaner and healthier environment, a safer and fairer workplace, or more just communities and countries where human rights are respected and human lives are protected.
Indeed, more and more governments are recognizing their own roles in encouraging global corporate responsibility -- in working with NGOs, their business communities, and international institutions to promote high standards of corporate conduct and accountability in their own countries, and through their companies, around the world. So, too, is the central institution of the international community in advancing Secretary General Kofi Annan's Global Compact initiative to focus the many elements of the UN system on behalf of similar goals.
The U.S. Government has also encouraged corporate responsibility in several significant ways. We have developed a set of voluntary Model Business Principles and encouraged American companies to follow them. We have worked with industry, the environmental community, and the entire international community to begin the long process of tackling the threat posed by global climate change. We have worked on a tripartite basis with business and labor through the International Labor Organization to forge the 1998 Declaration on Core Labor Standards and last year's Convention to Eliminate the Worst Forms of Child labor. And we are working hard with companies, unions, and community activists to combat the still too persistent reality of sweatshop labor in the apparel and other industries at home and abroad.
President Clinton has often spoken of putting "a human face" on the global economy. Encouraging global corporate responsibility is one major way the Clinton Administration is trying to do just that.
There is another arena in which we are intensifying our efforts abroad -- the extractive industries -- in which corporate responsibility and human rights converge beyond the workplace. Indeed, there is no arena in which corporate conduct and human rights have come under a harsher spotlight than in the extractive sectors of oil and mining, in part because of their massive impact on the communities and countries where they operate.
Over the past several years, American and British companies in these sectors have become lightning rods for sometimes violent political conflicts in key developing countries, often in regions where public governance is weak and where the companies are seen as the local proxy for authority and wealth. Some companies have been accused by local activists and international NGOs of complicity in human rights abuses, including killings. They are sometimes charged, for example, with responsibility for the consequences of the use, wittingly or unwittingly, of their equipment or facilities by national or local security forces with which they legitimately work. Whether the accusations have been true or false, fair or unfair, or somewhere in between, they remain controversial.
In any case, the conditions underpinning these incidents and allegations have the potential to call into question the continuing ability and even the willingness of some companies to operate in what have been challenging political environments such as those in Nigeria, Indonesia, and Colombia. They have certainly focused the attention of the U.S. Government. Given the magnitude of the economic interests at stake, the strategic importance of the countries in which our companies have come under that harsh spotlight, and the severity of the allegations that have been made, their problems are therefore problems for U.S. foreign policy. They also present, in our view, opportunities for creative American diplomacy.
We are, of course, absolutely committed to doing what we can to ensure the safety and security of our companies operating abroad. We are also committed to promoting a healthy, productive business environment in which our companies can both profit and contribute to other countries' development.
Moreover, we are no less committed to encouraging our companies to act according to high standards of corporate responsibility, and not just because their conduct affects company operations and reputations. Their conduct also affects the reputation of the United States, not to mention the lives and livelihoods of people in other countries who work and come into contact with American citizens and American companies around the world. At the same time, we are committed to doing everything we can to support democracy and human rights in every region, not least in Nigeria, Colombia, and Indonesia -- three countries that Secretary Albright has identified as priority countries in our global efforts to ensure democracy's success.
For all these reasons, we at the State Department have been actively exploring new ways to build on the efforts already underway on the part of several of our companies and our embassies in the field. In recent months, we have intensified our consultations on both sides of the Atlantic with a variety of corporate responsibility groups and human rights NGOs, as well as with a number of oil and mining companies, to see what more can and should be done. With their advice and encouragement, we are looking for ways to work with the business community to address these difficult issues while simultaneously advancing our foreign policy objectives of protecting human rights, supporting democratic institutions, and strengthening the rule of law.
As we continue to develop this initiative, we are keeping two key tests in mind. First, we are committed to proceeding in ways that can be equally welcomed by both the human rights and business communities. Second, our steps must be consistent with the interests of the U.S. Government and with the capabilities of our posts.
We envision contributing in at least five concrete ways to an affirmative approach to the human rights and broader governance and development issues surrounding our companies.
First, by promoting high standards of corporate responsibility and best practices on the part of U.S. companies, drawing on a number of other encouraging initiatives in both the private and public sectors.
Second, by conducting country-specific briefings for companies on human rights and encouraging companies to incorporate information on human rights issues into their country risk analyses and investment decisions.
Third, by fostering company-NGO dialogue to promote communication, trust, and ultimately partnership between U.S. companies, the local communities in which they operate abroad as well as the emerging national elements of civil society. Such dialogue could help defuse tensions surrounding company operations and at the same time strengthen the legitimacy and capacity of local NGOs.
Fourth, by encouraging company-host government dialogue, with direct high-level U.S. Government participation, to raise broad governance and development issues -- including human rights, security, and revenue distribution -- that shape the business operating environment and companies' long-term presence in the country. This kind of dialogue could be particularly timely as such key governance and development issues are being addressed by the Governments of Nigeria and Indonesia in particular.
Fifth, by working with companies, NGOs, and host-country governments to ensure that company security arrangements are consistent with international standards of human rights. We are pursuing this objective on two tracks -- on the part of our embassies in several countries and jointly with other partners in a global context. Let me elaborate very briefly on the global dimension of this focus on security and human rights.
Together with the British Foreign and Commonwealth Office, we have already launched a process aimed at forging a set of voluntary principles that can provide companies with practical guidance as they seek to prevent human rights violations stemming from legitimate corporate security requirements. Our discussion and drafting group, now comprising nine American and British oil and mining companies together with half a dozen NGOs, will meet in Washington for a third time at the end of this week to see if we can move closer to an agreement. If we succeed in the coming months, such a set of principles could raise standards of accountability in a key sector of the global economy and strengthen respect for human rights in a number of countries around the world.
These, then, are the key elements of the initiative we have been developing. Let me be clear what this initiative is not. It is not a one-stop solution to the human rights, security, and other governance issues facing American, for that matter, other extractive sector companies in their operations abroad. Nor is it in any way a substitute for established company efforts or NGO engagement on these issues; those will continue in all dimensions no matter what we or other governments or institutions do.
Let me be equally clear what we hope this initiative is or can become. It should represent a public recognition by the U.S. Government that human rights, security, and other governance issues surrounding the extractive sector touch key U.S. interests, and that developing ways to address these issues constructively and creatively is a foreign policy interest of the United States. Moreover, it can add our facilitative role and diplomatic skills to the more fundamental efforts of others to help find solutions which strengthen both the governance environment for human rights and the business operating environment for companies in several key countries.
We believe that these kinds of steps can be the basis of an affirmative approach to addressing the problems our companies face in Nigeria, Indonesia, and Colombia in particular. At the same time, we can contribute to the hard work being done by well-intentioned government leaders and institutions of civil society to build better futures for those countries as prosperous and stable democracies underpinned by good governance and the rule of law.
We hope that this kind of cooperative approach can make a positive impact beyond the specific issues in the sectors it addresses and beyond the several countries in which it would be pursued. We have the chance to bring together competing, often clashing, forces to recognize that good governance and the rule of law are good for business and good for human rights. In short, we have the ability to build bridges between interests and actors that all too often have been in conflict -- when, in fact, they should have the basis to find and build on common ground.
We have the opportunity to build bridges from major companies to the far-flung countries and communities that our firms increasingly call home in the global economy. We also have the opportunity to build bridges from the corporate community to the human rights NGO community that is gaining such influence. By doing both, we can help widen and deepen the constituency for human rights and contribute to the formation of what my boss, Assistant Secretary of State Harold Koh, calls "transnational networks for human rights." At the same time, we can help strengthen the fragile consensus at home and abroad on behalf of globalization. We can do that by demonstrating that in this critical sector, our companies are embracing and implementing high standards of corporate responsibility -- and that their presence can contribute to the quality of life and governance in the communities that host them.
This initiative which I have outlined, I hope, can lend greater force to the kinds of innovative partnerships that will be necessary if major companies are able to address successfully over time the human rights and broader corporate responsibility challenges they face. In the meantime, the efforts of the companies themselves, together with the essential and determined prodding of the human rights and corporate responsibility communities, are already beginning to make a positive difference. This conference, too, is making a contribution by focusing attention on these difficult issues at such a time of new momentum and further challenge.
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