Business and Human Rights:

1. Business and Human Rights: Companies in Conflict March 2009 Presentation by Arvind Ganesan Director, Business and Human Rights Program

2. HRW’s Work on Companies and Conflict • Our work on extractive industries began in the late 1990s when we documented abuses related to companies operating in India, Nigeria, and Colombia. We documented abuses and other problems linked to Enron, Shell, BP, Occidental, and other companies. • These abuses focused on conflicts between companies and communities over environmental, land, or other disputes. And typically, protests were met with arrests, beatings, killings, or other reprisal attacks. Residents of Katalwadi village in India stand near Enron’s Dabhol power plant (in the background). When some villagers protested against the power plant, contractors for the company and police retaliated against them. © 1999 Arvind Ganesan

3. HRW’s Work on Companies and Security Providers • In each case, the problem was caused by the company’s relationship with abusive security providers, such as the military or police. That common feature led us to believe that a key solution to this problem was largely related to ensuring that the relationship between, and the actions of, the company and its security providers were governed by human rights considerations. • These problems are not unique to conflicts in the sense of war or insurgency but are related to any type of conflict, including conflicts between communities and companies. • Our first effort to address this problem was to work with governments and companies to develop the Voluntary Principles on Security and Human Rights, which set out standards governing human rights with respect to these security arrangements.

4. HRW’s Work on Companies and Corruption • Around the same time as we started our work on companies’ relationships with security providers, we began to see that key improvements in human rights might not be possible in resource-rich states such as Angola. • Governments argued that they did not have money to improve basic human rights and that it was pointless to criticize them. • We realized that we would have to look at how they received and spent their money to hold them accountable.

5. HRW’s Work on Companies and Corruption • Our work on Angola detailed how the government could not account for $4.22 billion between 1997-2002. During the same period, total social spending in the country was about $4.27 billion. Most development indicators fell during that time, even though Angola was the second largest oil producer in sub-Saharan Africa. It is now the largest. • In Equatorial Guinea, we’ve documented how the president’s son has a $35 million mansion in California that cost more than the entire education budget of the country. • In Nigeria, we documented how the former governor of Rivers State, the wealthiest of the oil-producing states, failed to invest in schools and clinics, as required by law. Instead he gave himself a $60,000/day travel budget and other forms of excess.

6. Security and Human Rights In order to deal with the problems of security and of corruption or mismanagement of resources, we have adopted a multifaceted approach. • On security: • We have worked with governments, companies, and NGOs to develop the Voluntary Principles on Security and Human Rights • We work with individual companies to develop human rights policies and procedures. • We press governments to improve their practices. • We have worked with institutions like the International Finance Corporation (IFC) to press them to develop security and human rights policies. • Most recently, we would like to see governments make security and human rights policies mandatory.

7. Governance Issues and Human Rights • Governance issues have seen more robust institutional responses: • The Extractive Industries Transparency Initiative (EITI) has made progress. • International Financial Institutions (IFIs) have embraced the transparency agenda. • Governments are more supportive of transparency. • Companies support these efforts as well.

8. Transparency and Human Rights However, the transparency movement has not necessarily improved human rights or reduced corruption. • In order to further advance the agenda, there needs to be: • More attention focused on the human rights records of resource-rich governments. • Stepped-up efforts to use existing money-laundering, anti-corruption, and other laws to aggressively combat corruption by kleptocrats. • An effort to evolve the transparency debate by focusing on how governments spend their money.

9. What Can Socially Responsible Investors Do to Address These Problems? • Recognize that the problems of security and governance are not limited to conflict zones, but can actually be a source of conflict. • Insist that when they invest in companies they assess whether these companies have meaningful human rights policies and procedures and can demonstrate that they actually work. • As investors, press governments such as the US to aggressively address human rights in areas where these companies operate.

10. What Can Socially Responsible Investors Do to Address These Problems? 4. Urge governments to aggressively enforce laws that would crack down on corruption and mismanagement that plague many resource-rich countries. 5. Urge institutions such as the IFC to aggressively enforce their own policies and press the private sector to adopt similar standards in lending. 6. In any situation, companies should always respect the labor rights of their employees. 7. Finally, to truly combat the problem, governments should pass baseline legislation requiring companies to respect human rights. We believe that the Foreign Corrupt Practices Act is a useful model to achieve this objective.