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U.S. Department of State

Great Seal logo Harold Hongju Koh, Assistant Secretary of State
For Democracy, Human Rights, and Labor

Remarks, Social Accountability International
New York City, December 7, 2000
Blue Bar rule

As prepared for delivery

The Role of Corporate Social Responsibility in the
Promotion of Democracy and Human Rights

Thank you, Alice, for inviting me to speak at this important conference. Let me take this occasion to congratulate you for the tremendous role that you and SAI have played in promoting the role of corporate social responsibility in the protection of human rights and labor rights.

I am particularly delighted to be here because, however the chads may fall, I am now in my last days as Assistant Secretary of State for Democracy, Human Rights, and Labor. This gathering gives me the chance to address a subject to which I and my bureau have devoted a great deal of thought and energy over the last few years, namely, the burgeoning role of corporate social responsibility in the global effort to promote democracy and human rights.

Let me make three simple points: first, that corporate social responsibility represents a good, a critically important element in the global fight for the promotion of human rights; second, that corporate social responsibility (CSR) is not just good in itself, but good for business; and third, government efforts to promote corporate social responsibility should continue no matter who is President, or which political party is in charge of Congress.

Let me start by addressing why we need to promote CSR in the global struggle for human rights. In the 25 months I have held this job, I have traveled to more than 50 countries, and made more than 150 foreign trips, all the while commuting from that hub of American transportation, New Haven, Connecticut. Just this week, I flew to Paris, spent 2 days at a UN Conference in the West African country of Benin, drove to Togo, flew to Brussels where I hitchiked a ride on Secretary of Defense Bill Cohen's plane back to Washington, before coming here to New York.

This experience has taught me in a very personal way that globalization is not simply a talking point for academics and pundits, but the greatest revolutionary force of our time. Globalization is linking economies and cultures, empowering individuals and groups and creating new opportunities for prosperity the likes of which we have never seen before. The rapid globalization of communications, transport, commerce, technology, and ideas has transformed the way we all live, work and do business, with new global markets, new technologies and transportation and information links expanding human opportunities in ways we never dreamed possible.

Perhaps the most overlooked aspect of this globalization has been the remarkable, recent globalization of human freedom. Just three decades ago, there were fewer than 30 democracies in the world. Today, more than 120 of the world's 194 countries qualify, in form if not in substance, as democratic governments with stated commitments to the preservation of freedom and self-governance.

Yet, as I find every day when I deal with governments that nominally embrace the democratic path, freedom has proven to be a double-edged sword for most of the world's peoples. On the one hand, the democratic revolution has empowered millions to vote, to form political parties and non-governmental organizations, to worship according to their beliefs, and to express more fully their cultural heritage. On the other hand, the lifting of governmental controls has unleashed corruption, trafficking in drugs and human beings, the spread of infectious disease, environmental damage, terrorism, and ethnic and communal violence. Even as international trade and investment help generate a borderless world, local financial crises or national economic instability can produce global repercussions at unprecedented speed, leaving poor and developing countries struggling to make the social changes needed to compete.

Given these inequities, it is no surprise that globalization is increasingly seen as a threat by the many who feel anxious and alienated that they have been left out or left behind. At the recent UN Millenium Summit, the world's governmental leaders declared that "the central challenge we face today is to ensure that globalization becomes a positive force for all the world's people. For while globalization offers great opportunities, at present its benefits are very unevenly shared, while its costs are unevenly distributed." The protests in Seattle, Washington, DC, London and Prague are only the most recent reminders that unless we humanize the process of globalization, the backlash against "the dark side" of globalization will accelerate.

How do we change the image of globalization from a threat to an opportunity? One important response, I would argue, is a concerted effort on behalf of governments, civil society and business to promote the concepts of corporate social responsibility and corporate citizenship. By corporate social responsibility I mean the frank recognition that business profits can no longer stand on a separate balance sheet from human costs in terms of human rights, labor standards and environmental issues. By corporate citizenship, I mean the acknowledgement by transnational corporations, as they expand their operations abroad, that they are not merely visitors, but fully responsible citizens of the communities in which they operate. Both ideas recognize the reality that in the era of globalization, corporate willingness to accept the social responsibility along with the economic benefits of doing business abroad is no longer a choice, but an important moral imperative. This is what the President means when he speaks of putting "a human face" on the global economy. Last year at the Davos World Economic Forum, President Clinton called on nations, in partnership with business, labor and NGOs, to come together and build a world economic system that is more fully inclusive. "[W]e cannot pretend that globalization is just about economics," he said, "economics must be blended with other legitimate human concerns." To make this admonition concrete, the Clinton Administration has 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.

But clearly, promoting corporate social responsibility is too big and important a task to be left to governments. No government can promote human rights alone or promote a "race to the top" without forging partnerships with other members of a global human rights community that cross public and private, institutional and national lines. As corporate leaders become more outspoken about their responsibilities, as consumers become increasingly aware of the way the products they purchase are made, we have seen the rise of transnational human rights networks - an emerging international civil society of government officials, business leaders, activists, and thinkers who share a common commitment to global human rights. In recent years, partnerships among governments, businesses and civil society have expanded well beyond the economic sector, to the social sector. These partnerships are key to maintaining the sustainability and credibility of corporate responsibility and to changing the image of globalization from a negative to a positive one. Adding a human dimension to economic partnerships works to the advantage of both business and society.

The emergence of the Global Sullivan Principles and the U.N. Global Compact are only two recent examples of partnerships among governmental and intergovernmental entities, corporations and civil society to address issues on the labor, human rights and environmental fronts. Indeed, one of the central themes at Davos 2001 will be how corporations can address the backlash against globalization by redefining their business strategies as market demands extend to corporate citizenship.

In sum, globalization and the backlash against it are transforming the way we look at the interaction of corporate business practices, labor standards, and human rights. Private- public partnerships to promote corporate citizenship and social responsibility are emerging as a critical part of the solution. But what's in it for the corporations?

This brings me to my second point: because Corporate social responsibility is not just good, it is good for business. There are at least four clear benefits from integrating human rights, labor and environmental standards into business practices. First, it strengthens the rule of law and the capacity of civil society organizations. Companies lead by example in the countries where they operate. By supporting the rule of law and working with NGOs, companies can strengthen the local business and human rights environment.

Second, it increases the opportunities for dialogue between corporations, civil society and the communities where they operate. These types of public-private partnerships are key to ensuring that community developments programs funded by companies are transparent and sustainable over the long term.

Third, it improves the business environment by setting a positive example and enhancing corporate reputation and image in the public eye. Corporations are under increased scrutiny not only from NGOs, but also from consumer groups, community organizations, and the media. A positive image can strengthen shareholder confidence and give companies a competitive advantage over other companies not yet adopting such policies.

Fourth and finally, it diminishes security risks to personnel and equipment. Companies may be less at risk for strikes, demonstrations and attacks if an open dialogue is maintained with local stakeholders.

Companies that take the other path, and fail to integrate human rights and labor standards into their business practices, by contrast, often see their reputations damaged. The speed at which information can cross international borders via the internet and television leaves companies with very little or no hiding place. Further, failure to integrate these standards can also have economic implications. Companies associated with human rights abuses often end up dealing with decreased share prices, damaged or lost assets, and lost operating time.

In short, creative partnerships for corporate social responsibility can be win-win-win situations for business, government, and the human rights community. To illustrate let me describe three ways in which the State Department, under Secretary Albright's leadership, has worked with innovative corporations, other governments, and the NGO community to address the human rights components of the natural resource extraction, labor, and information sectors.

A. Extractives

The first critical area in which we have been intensifying our efforts abroad is the extractive industry. In the oil, mining and energy sectors, corporate responsibility and human rights converge beyond the workplace. Indeed, there is no area in which corporate conduct and human rights have come under a harsher spotlight than in the extractive industry. This is due in part to the impact the industry has on the communities and countries where they operate and the potential economic benefits to the corporations and their shareholders.

Over the past several years, American and British companies in this industry have become lightning rods for sometimes violent political conflicts in key developing countries. These conflicts often occur in regions where public governance is weak and where the companies are seen as the local proxy for authority. Companies have been accused by local activists and international and national NGOs of complicity in human rights abuses. 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 or somewhere in between, they remain controversial.

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. 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 problems for U.S. foreign policy. They also present, in our view, an opportunity for creative American diplomacy and a unique opportunity to build public and private partnerships.

Over the past year, human rights and corporate responsibility groups and oil, mining and energy companies have worked with the U.S. and UK governments to develop a set of Voluntary Principles on Security and Human Rights. The objective of these principles is to provide companies with practical guidance on how to prevent human rights violations while meeting legitimate corporate security requirements.

The Voluntary Principles focus on three areas of mutual concern to the companies and human rights groups. First, risk assessments-- a set of considerations that the companies take into account -- whether legal, technical or political -- as they structure and revise their security arrangements in light of local conflicts. The principles add human rights considerations into the equation. Second, interactions between the companies and public security -- whether military or police units. From our point of view, this is the most significant section of the principles because they address the most pervasive and difficult intersection of security issues and human rights concerns for the greatest number of U.S. companies. Finally, it focuses on interactions between the companies and private security firms -- an area of particular concern to our British colleagues.

The Principles set a voluntary global standard for the oil, mining and energy sector. So far, a number of corporate responsibility and human rights NGOs, together with companies have indicated their support for the principles - and we hope others will do so soon. Once the principles and initial signatories are announced, we will be prepared to facilitate a continuing process where companies and NGOs can come together and address difficult issues where security and human rights interests converge. Building partnerships that strengthen accountability in a key sector of the global economy -- the old economy -- is good for business and good for human rights.

B. Labor

A second area in which we have made great strides concerns worker rights and labor standards, particularly with respect to child labor and the right to unionize.

The U.S., like 175 other country members of the International Labor Organization (ILO), are committed to respect the four essential worker rights cited in the ILO Declaration of Fundamental Principles and Rights at Work. The U.S. Government (USG) works closely with the ILO to monitor worker rights and recently built a broad consensus within the ILO to take action against forced labor in Burma. In one of the most important multilateral advances on behalf of worker rights in this decade, the ILO approved ILO Convention 182 on the worst forms of child labor. The U.S. delegation, led by President Clinton, was a key force in producing the broad consensus for that convention-- and the U.S. was among the first government to ratify it.

Our ILO agenda is closely tied together with the USG's efforts to advance worker rights bilaterally. The 2000 Trade Act established a number of trade benefit programs that include human rights and worker rights criteria. Countries in Africa and the Caribbean basin were encouraged to apply for these benefit programs with the stipulation that their worker and human rights practices met international standards. The U.S. has extended benefits to many of these developing countries but it has also withheld benefits and condition the extension of benefits to countries that failed to meet worker rights and other standards. GSP privileges continue to be afforded on the basis of criteria that include worker rights. The 2000 Trade Act specifically requires that beneficiaries are meeting their commitments under ILO Convention 182.

Fundamental to these changes is a renewed appreciation of the role of labor diplomacy and the importance of workers and trade unionism. Once an ally in the world fight against Soviet totalitarianism, trade unions have an essential role to play in the new millennium. In response, the International Labor Affairs Affairs in my Bureau has tripled in size over the past year. A senior panel of distinguished Americans, the Advisory Committee on Labor Diplomacy, has been appointed by the Secretary to make extensive recommendations to modernize and revitalize how we pursue labor diplomacy. Those recommendations are on track and I hope that the new Administration will make them happen.

Workers and trade unions are important allies of American values and interests on the most critical fronts on which we and our values are engaged. In country after country, from Poland to Indonesia, trade unions and workers have fought and are fighting for democratic change. By the same token, trade unions are an important to solving the tragic ethnic, religious and tribal cleavages dividing country after country. Trade unions, by presenting a broad agenda for progressive social and economic reform that appeals across societal fault lines, can help heal divisions in Africa, the former Yugoslavia and Northern Ireland. As globalization affects country after country, it is unions that give voice workers and their families. In so doing they constitute an essential interlocutor for governments seeking to address the needs of workers in the context of a globalized world.

In my own Bureau we have taken major steps to promote worker rights and labor standards. The United States has provided over $100 million in funding to the ILO in support of its International Program on the Elimination of Child Labor (IPEC). The U.S. also supports ILO technical assistance to labor ministries in developing countries and has donated heavily to the ILO's fight against HIV/AIDS.

In addition, early this year the Administration provided $4 million to support a major new Anti-Sweatshop initiative aimed at combating sweatshop conditions in industries overseas which produce for the U.S. market. We have designed a plan to program that money to institutions in civil society willing to engage in creative partnerships to combat sweatshops. We anticipate announcing the full initiative to the public in the near future.

But even more than the funding, we recognize that the key ingredients to make these partnerships work are the expertise of our partners in civil society, and most especially our common goals and concern for worker rights.

This Administration recognizes that any successful, sustainable effort to promote human rights and worker rights needs to engage the broad array of organizations and forces in civil society that share this goal. That means business, labor, NGOs, consumers, students, academia, and religious organizations, among others. In other words, the very kind of people gathered here.

C. The Internet and Human Rights A third area of private public partnership concerns the New Economy -- the Internet. In the new millennium, there are now at least three universal "languages:" the languages of money, the Internet, and human rights. Programmers like to say that information wants to be free. But also people want to be free. How do we fuse these two desires? The time when human rights abuses and child labor remain hidden has passed. We are in an era where CNN and the Internet can send information around the world in minutes.

In an era of globalization, it is in the interest of technology -- and -- content providers to use the influence at their disposal to promote human rights and democracy on the internet. It can bring these companies new customers, help build civil society, and create a positive image for themselves. It also presents a unique opportunity to create public-private partnerships among technology and content providers, human rights and democracy NGOs, and the U.S. Government.

The key to forging such partnerships lies in protecting companies' ability to participate in the global marketplace while encouraging them to use their market access and leverage to support human rights. As some have noted, information age companies may not be prepared to be the "tip of the sword on the human rights issues." However, their market access can help promote the public's access to the Internet and combat attempts at restricting it. To meet this challenge, we can take several steps.

First, facilitate a dialogue between companies and NGOs to promote human rights and democracy. This dialogue could help bridge the digital divide -- ensuring that NGOs in developing and transitional countries have access to equipment and training. Efforts underway by technology and content providers should be encouraged. AOL for example has partnered with NGOs to fund projects to provide internet technology, training and equipment.

Second, we can work to promote legal and regulatory systems that foster economic development and a transparent and open environment. Several NGOs, including the Lawyers Committee on Human Rights, the Center for Democracy and Technology, and Internews, are drafting recommendations and working on projects to promote the internet. Third, we should also work with companies to convince governments that they should stop restricting internet access. Governments that suppress information not only undermine human rights efforts, they also suppress their own economic potential.

Room exists for creative partnerships in developed countries as well. In France, a trial court recently ruled that Yahoo had to devise ways to keep French users from viewing pages featuring Nazi memorabilia. The implications of this decision are dramatic. While none of us support the work of such hateful groups, it has long been a core tenet of our law and our values that anyone has the right to express their opinion, no matter how hateful. But as this case demonstrates, the application of other nation's laws to the internet can have a crippling effect on the internet. By potentially subjecting companies to the changing laws of over 200 countries -- not all of which have great records on the freedom of expression -- the decision could have a chilling effect on free speech and commerce. NGOs that rely on the internet to transmit, communicate and receive information could also be adversely impacted by having publications protected in the U.S. under the 1st Amendment deemed illegal in foreign countries.

The good news here is that opportunities for creative partnerships to address challenges facing the internet exist. Regulatory efforts at home and abroad have resulted in the emergence of a new community of cyber-liberties groups. These organizations are dedicated to responding to government restrictions on speech that challenge freedom of expression on the internet. Companies can work with these groups and governments to find better solutions to dealing with domestic restrictions on the internet.

This brings me to my third and final point: we need a sustained bi-partisan commitment to promoting corporate social responsibility. Promoting corporate responsibility transcends political lines. It should not be considered an issue solely for Democrats and Republicans. Rather it is one that transcends political parties. Both parties have an interest in advancing U.S. business interests and human rights, democracy, and labor standards. Corporate responsibility takes the interests of corporations -- safety and security of personnel and assets, shareholders, and economic interests -- and augments those. CSR is an investment in building and sustaining the political consensus for globalization. While globalization, in turn, is the greatest force driving open markets and open societies seen in decades.

Here the best analogy I can draw is to the global anti-corruption movement. In the early '70s, when the Lockheed scandal broke, the conventional wisdom was that corruption was a way of life that never could be affected by governments, much less transnational corporations, NGOs or intergovernmental organizations. Thirty years later, we have a rapidly developing global good governance movement, marked by the U.S. and other national foreign corrupt practices laws, an OECD Antibribery Convention, Transparency International -- a transnational network of NGOs -- and numerous intergovernmental instruments and declarations dedicated to targeting and eliminating corruption as a way of life.

What made the global anticorruption movement successful was that it was bipartisanized, and promoted as a race to the top by a transnational partnership of private and public entities, including corporate leaders. The same could be said for the global movement for democracy and the rule of law, which will continue regardless of who controls the White House or Capitol Hill. The concept of corporate social responsibility should be viewed the same way. The issues that underpin corporate social responsibility -- like child labor, human rights, good governance, rule of law and transparency -- are bipartisan issues. By promoting these values, we promote the interests of our corporations. The less time they spend dealing with misunderstandings and crises with stakeholders, the more time they have for business. We have begun this race to the top in the extractive and labor industries. We should encourage these efforts and promote them in other sectors.

In closing let me say that if any country stands to benefit more from the advancement of globalization, it is the U.S. No other country on the planet, by virtue of its values and interest, stands to benefit from open markets and societies than the U.S. Corporate responsibility is an investment in America's future. By demonstrating that our companies will operate at home and abroad in accord with the highest principles, we safeguard our interests and protect our people. And this is in everybody's interest.

Thank you.

[end of document]

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