KEVIN COON INTERNATIONAL PARTNER BAKER & McKENZIE LLP kevin.coon@bakermckenzie

1. SOCIETY OF CORPORATE COMPLIANCE & ETHICS 10th ANNUAL COMPLIANCE & ETHICS INSTITUTENAVIGATING COMPLIANCE RISKS IN EMERGING MARKETS“Human and Labor Rights Risks, Obligations & Compliance” KEVIN COON INTERNATIONAL PARTNER BAKER & McKENZIE LLP kevin.coon@bakermckenzie.com SEPTEMBER 11, 2011

2. Human & Labor Rights Risks, Obligations & ComplianceToday’s Roadmap • Global Corporate Campaigns • Globalization of the Trade Union Movement • Sources of Human and Labor Rights Obligations • Commercialization of Human and Labor Rights • Mitigating Human and Labor Rights Risks NAVIGATING COMPLIANCE RISKS IN EMERGING MARKETS

3. 1. Global Corporate Campaigns- The New Norm • Basis of a Campaign? • Identifying structure of corporation, its stakeholders and vulnerabilities • Emerging Markets = Higher Risk • -bad or week public governance and administration • -lack of public transparency • -high level of bribery and corruption • -poor human and labor rights records • -inadequate environmental, safety and labor standards • -high level of poverty and inequality • -conflict zone? NAVIGATING COMPLIANCE RISKS IN EMERGING MARKETS

4. Corporate Campaigns • Where is the Risk? • Brand and reputation • Union Representation • Regulatory • Relationship • Legal/Litigation • What is the Context? • Human & Labor Rights • Savvy, sophisticated and well financed Unions and NGO’s • Unions and NGO co-ordination and co-operation • International “standards” • Social Media/Media • Public awareness, perception and sympathy • Favorable political climate • International Framework Agreements • Supply chain implications NAVIGATING COMPLIANCE RISKS IN EMERGING MARKETS

5. Corporate Campaign Tactics • Introduce shareholder resolutions • Target community and religious leaders to pressure Company • Target prominent politicians to act as political champions • Recruit film, music and other celebrities to be media champions • Picket and or disrupt corporate annual meetings • Picket and or disrupt corporate sponsored events or charities • Encourage investigations of potential anti-trust tax or other violations • File, encourage and support litigation • Maximize consumer/customer awareness • Effective and relentless use of traditional and social media • Use international human and labor rights complaint process NAVIGATING COMPLIANCE RISKS IN EMERGING MARKETS

6. Corporate Campaign Tactics-The Message • “Still Waiting For Nike To Do It” • “Support Breasts not Dictators” • (Triumph International in Myanmar) • “right to join a fair trade union” • (Marks & Spencer) • “one penny for every pound of tomatoes picked” • (Taco Bell) NAVIGATING COMPLIANCE RISKS IN EMERGING MARKETS

7. 2. Globalization of Trade Union Movement • International Trade Union Confederation (ITUC) • 176 million members • 151 countries • Regionally organized • New “Policy” focus • “We’re saying to multinational companies…we’re tired of the face of cooperation in Germany and the club of intolerance in the United States” NAVIGATING COMPLIANCE RISKS IN EMERGING MARKETS

8. Globalization of Trade Union Movement • Global Union Federations (GUF’s) • 11 GUF’s (sectoral) • IFA’s, Corporate Campaigns, MNE’s • “One Company, One Standard” • Implications for employers? • Co-coordinated • Global bargaining • Transnational Linkages NAVIGATING COMPLIANCE RISKS IN EMERGING MARKETS

9. 3. SOURCES OF HUMAN & LABOR RIGHTS OBLIGATIONS & RISK • i) United Nations Universal Declaration of Human Rights • Article 2. • Everyone is entitled to all the rights and freedoms set forth in this Declaration, without distinctionof any kind, such as race, colour, sex, language, religion, political or other opinion, national or social origin, property, birth or other status. Furthermore, …. • Article 3. • Everyone has the right to life, liberty and security of person. • Article 18. • Everyone has the right to freedom of thought, conscience and religion; …. • Article 19. • Everyone has the right to freedom of opinion and expression; this right includes freedom to hold opinions without interference and to seek, receive and impart information and ideas through any media and regardless of frontiers. • Article 20. • (1) Everyone has the right to freedom of peaceful assembly and association. • (2) No one may be compelled to belong to an association. NAVIGATING COMPLIANCE RISKS IN EMERGING MARKETS

10. United Nations Universal Declaration of Human Rights • Article 23. • (1) Everyone has the right to work, to free choice of employment, to just and favourable conditions of work and to protection against unemployment. • (2) Everyone, without any discrimination, has the right to equal pay for equal work. • (3) Everyone who works has the right to just and favourable remuneration ensuring for himself and his family an existence worthy of human dignity, and supplemented, if necessary, by other means of social protection. • (4) Everyone has the right to form and to join trade unions for the protection of his interests. • Article 24. • Everyone has the right to rest and leisure, including reasonable limitation of working hours and periodic holidays with pay. • Article 25. • (1) Everyone has the right to a standard of living adequate for the health and well-being of himself and of his family, including food, clothing, housing and medical care and necessary social services, and the right to security in the event of unemployment, sickness, disability, widowhood, old age or other lack of livelihood in circumstances beyond his control. NAVIGATING COMPLIANCE RISKS IN EMERGING MARKETS

11. SOURCES OF HUMAN & LABOR RIGHTS OBLIGATIONS & RISK • ii) ILO International Labour Standards • 8 Core Labour Standards • Freedom of association-C87 • Free collective bargaining-C98 • Forced Labour and its abolition-C29 & 105 • Equal Remuneration-C100 • Employment Discrimination-C111 • Minimum Age-C138 • Worst Forms of Child Labour-C182 NAVIGATING COMPLIANCE RISKS IN EMERGING MARKETS

12. International Labour Standards • -State to State • -Remedies for breach • -NGO’s and Union priority • -Committee of Freedom of Association NAVIGATING COMPLIANCE RISKS IN EMERGING MARKETS

13. SOURCES OF HUMAN & LABOR RIGHTS OBLIGATIONS & RISK • iii) United Nations Global Compact • 10 Principals • Human Rights • Labour Rights • Environment • Anti-Corruption - 5000 Companies - Commitment, Implement, Report NAVIGATING COMPLIANCE RISKS IN EMERGING MARKETS

14. SOURCES OF HUMAN & LABOR RIGHTS OBLIGATIONS & RISK • iv) O.E.C.D. Guidelines for Multi-National Employers • Voluntary Principles and Standards of Practice for Companies “take into account established policies in countries in which they operate and consider views of stakeholders” General Respect the human rights of those affected by activities. • Encourage human capital formation. • Promote employee awareness of compliance with company policies. • Refrain from discriminatory or disciplinary action for reporting contraventions. NAVIGATING COMPLIANCE RISKS IN EMERGING MARKETS

15. Specific • - Disclosure of activities, structure, financial situation and performance • -Employment and Industrial Relations • Right to be represented by a trade union • Right to engage in bargaining conditions of work • Abolition of child, forced or compulsory labour • Non-discrimination(race, colour, sex, religion, political opinion…) • Provide facilities & information to assist in development of effective collective bargaining • Occupational health and safety NAVIGATING COMPLIANCE RISKS IN EMERGING MARKETS

16. OECD Guidelines • -National Contact Points(NCP) • -inconsistent approaches • -Complaint Mechanism • -Supply Chain • -NGO’s and Union priority NAVIGATING COMPLIANCE RISKS IN EMERGING MARKETS

17. SOURCES OF HUMAN & LABOR RIGHTS OBLIGATIONS & RISK • v) The Ruggie Framework-”Protect, Respect & Remedy” • -UN Secretary General’s Special Representative on Business and Human Rights • -six years and hundreds of submissions • -New Guiding Principles NAVIGATING COMPLIANCE RISKS IN EMERGING MARKETS

18. ”Protect, Respect & Remedy” • New framework; • i)state duty to protect against human rights abuses by business • ii)the corporate responsibility to respect human rights • iii)and the need for more effective access to remedies • -primary state duty • -corporate responsibility • -communication • - effective remedies • role of state and corporations NAVIGATING COMPLIANCE RISKS IN EMERGING MARKETS

19. 4. Commercialization of Human Rights & International Labour Standards • Turning voluntary principles into mandatory corporate obligations • Codes of Conduct, international initiatives, CSR • Procurement, Supply Chain, Financial Institutions, IFC, National Governments, Customers • -Collective Agreements, International Framework Agreements(“IFA’s”), Workplace Policies NAVIGATING COMPLIANCE RISKS IN EMERGING MARKETS

20. Commercialization of Human Rights and International Labour Standards • New arsenal of union and NGO weapons: • U.N. Global Compact • OECD Guidelines for Multinational Employers • NAFTA & Bilateral Trade Agreement Labor Side Accords • ILO Committee on Freedom of Association • EU Directives/National law requirements • IFA’s • Alien Tort Claims Act • Dodd-Frank Wall Street Reform and Consumer Protection Act • “conflict minerals” NAVIGATING COMPLIANCE RISKS IN EMERGING MARKETS

21. 5. Mitigating the Risk • Due Diligence • take all precautions reasonable in the circumstances • -Enterprise wide • What are the circumstances? • -assess actual and potential human and labor rights impacts/vulnerabilities • -integrate and act upon findings • -monitor and communicate performance and response • -develop methods to remediate impacts NAVIGATING COMPLIANCE RISKS IN EMERGING MARKETS

22. Specific Considerations • Scope of operations • -corporate organization and ownership/affiliation • -geographic • -sectors(extractive, consumer goods, apparel, etc) • -public/private • -supply chain • -financing of activities NAVIGATING COMPLIANCE RISKS IN EMERGING MARKETS

23. Specific Considerations contd. • Market Sensitivity • -brand and reputation • -market position(…”800 pound elephant”...) • -customers(consumers, corporations, government, military • Human Resource Issues • -location of workforce • -demographic and worker profile • -union and non-union • -collective agreement rights • -national law rights • -terms and conditions of employment • -understand union modis operendi NAVIGATING COMPLIANCE RISKS IN EMERGING MARKETS

24. Specific Considerations contd. • Stakeholders • -identify if local, regional or global • -assess their interests • -monitor activity and interests • -supply chain • -create opportunities to engage and build alliances • Corporate Values, Objectives and Priorities • -what are they, where and how are they set and communicated • -ensure alignment throughout the entire Enterprise NAVIGATING COMPLIANCE RISKS IN EMERGING MARKETS

25. Specific Considerations contd. • Assess the risk of human rights impact and unionization. Conduct labor relations audits • Measures to reduce impact on Human rights and risk of unionization • -specific policies • -procedures • -engagement with stakeholders • -proactive steps • -monitor and audit measures • -enforcement • -build human and labor rights brand and credibility • -transparency NAVIGATING COMPLIANCE RISKS IN EMERGING MARKETS