UN Global Compact Summit: China
Irene Khan (second left) at the UN Global Compact Summit©AI
Speech by Irene Khan at the UN Global Compact Summit: China - 1 December 2005
Management in Support of Harmonized Workplace and Community Relations
I represent Amnesty International, a worldwide human rights organization with nearly two million members who campaign to promote respect for human rights around the world. We believe all human rights – civil and political, as well as economic, social and cultural – are indivisible and universal. We hold governments, companies, armed groups and others to account for their failure to respect human rights. We speak out for those who are denied access to justice or who are discriminated against. We campaign for the release of those who have been imprisoned without due process or for peacefully expressing their opinion. We seek an end to torture, the death penalty, unlawful killings and disappearances. We campaign for the promotion of economic, social and cultural rights, such as the right to health, food and shelter. We do not accept government funds for our work. Our income comes from our members and supporters who are individuals.
Many AI members are in business, or have been business people. They and other AI members regularly meet with companies to discuss human rights issues and to lobby for change. We engage in public campaigns to build public opinion to influence the behaviour of companies in favour of human rights. We also engage in private dialogue with companies to persuade them to adopt human rights policies. I am a regular participant at the World Economic Forum and was member of the Advisory Council of the Global Compact in the past.
We do all this because we believe that human rights are the business of business.
Why should companies care about human rights?
What human rights responsibilities do companies have?
How can companies respect and promote human rights: Voluntary Codes and the UN Norms
What about Chinese multinationals?
Conclusion
Why should companies care about human rights? - pageUp -
Governments have the primary responsibility to respect, protect and promote human rights. But companies also have obligations under international law to respect human rights and not to encourage or be complicit in human rights abuses committed by governments or others. ILO and the UN human rights system have identified a range of human rights that companies should respect.
Indeed, the Universal Declaration on Human Rights, adopted by the United Nations in 1948, recognizes that all organs of society must uphold human rights, and companies are an important organ of society.
Human rights responsibilities of companies are not only legal but also moral. The nature and scale of economic globalization has increased the power and influence of companies, and reduced the willingness and ability of governments to regulate the conduct of multinationals in international space and in the domestic arena, for instance when governments deregulate, or set up public-private partnerships, or when companies are so huge in poor countries that they effectively wield more power than governments.
I am not suggesting that companies should substitute for the responsibility of governments. Not at all - governments must continue to be held accountable for their own obligations. But multinational companies today are powerful players on the international stage, with huge impact on the lives of people, particularly in the workplace, and in the communities in which they operate. With such power comes a moral responsibility.
There are also good pragmatic reasons for companies to respect human rights. When a multinational company is linked with human rights abuses, it loses trust among its customers, shareholders, investors and the community, and risks bad publicity, consumer boycotts and litigation.
- Risk management: Building harmonious and sustainable relations in the workplace and in communities is essential for good business. That happens when companies respect human rights of workers, consumers and the society in which they operate, and people can trust companies. An environment in which human rights are regularly and seriously abused is a risk factor for companies. Operating in conflict zones, under regimes with a weak rule of law, where human rights are regularly violated, where corruption is rife, endangers the safety of employees and company assets as well as project viability.
- Consumer boycotts: This risk is not theoretical – as you know, NGOs have successfully campaigned and led boycotts against companies that failed human rights or environmental or ethical standards. Evidence linking diamonds to human rights atrocities in Sierra Leone created such a fear of a consumer boycott that the diamond industry agreed to a system of international certification to stop the trade in gems fuelling conflict. Reports about appalling conditions and wages in factories in developing countries forced clothing companies in wealthy countries to look at the behaviour of those supplying them with extraordinarily cheap products.
- Legal liability: The increased threat of litigation has also affected the way companies look at human rights. In the USA, the Alien Tort Claims Act is being used to bring companies to US courts for complicity in human rights violations in a range of countries.
- Staff recruitment and retention: As employers, you want to be able to recruit and retain the best staff possible from around the world. CEOs from multinationals have told us that the best and brightest candidates they recruit on campuses are as keen to learn about their companies’ corporate social responsibility policies as about remuneration and career path.
- Activists are consumers and investors too. Many more people today are concerned about where their money is spent or invested. The dividing line between investors, shareholders, consumers and the general public is disappearing. For instance, pension funds are large investors and shareholders in companies. People in many countries want to know where their pensions are being invested, and have forced their pension funds to divest from some companies or invest in ethical funds.
Human rights are fundamental for stable, open societies which business needs for its operations. Human rights violations create political and social instability, which is not healthy for business. Therefore, as corporate leaders, it is in your interest to promote a safer, more stable world, to respect human rights directly in your operations and to use your influence to promote them in the communities in the countries in which you work.
What human rights responsibilities do companies have? - pageUp -
Companies have a direct impact on human rights:
- in the context of their own operations, e.g. health and safety of workers, fair terms and conditions of work, non-discrimination in recruitment and treatment of workers and respect for trade union rights;
- in the communities in which they operate, e.g. health and safety of the community, physical security, forced displacement of population.
A company can directly abuse human rights or do so indirectly, through its supply chain, a subsidiary or sub-contractor or by collusion with a government which abuses human rights.
Depending on the core business of the company, particular aspects of human rights may be affected. For example, extractive industries should pay particular attention to their security arrangements as many of them operate in regions where violence is endemic; apparel industry should be careful to avoid child labour or sweat shop practices; arms manufacturers should ascertain that their weapons are not used to violate human rights.
The area over which a company has the greatest control is the workplace. A company is responsible for the human rights of its own employees, as well as of the employees of its subsidiaries, and to a lesser extent, of its associates, partners, suppliers, and sub-contractors. In practical terms it means respecting the workers’ right to free association and assembly, to bargain collectively, to be paid a living wage, to be treated without discrimination, and to be protected from threats to health and safety. These rules come from the core conventions of the International Labour Organisation, and from the international human rights treaties. Where governments do not permit independent unions, alternative mechanisms do exist, such as the workers’ right to elect committees. Companies cannot shirk from those responsibilities, citing local traditions.
Even when there is a long supply chain or if the workers are employed by sub-contractors, a company’s responsibilities do not disappear. We all know what happened with Nike. The practices of some of its sub-contractors in Indonesia and Vietnam, as well as in other parts of the world, were below international labour standards set in the ILO’s Core Conventions. A concerted campaign against Nike by some NGOs eventually led the company to change its policies on suppliers – and at heavy cost to its reputation. To its credit, Nike now publishes the names of all its suppliers on its website. The Nike case was a clear proof that those who do not pay attention to international standards will become the target of international campaigns, and learn the hard way.
Mine safety in China is an issue of great concern. In November last year, volatile gases exploded deep underground in the Chenjiashan coal mine in China's Shaanxi province. Of the 293 workers in the mine, 127 were able to get out, but 166 others, working deep inside, were left trapped. Three days later it was confirmed that they had all died. Local press reports in China said the managers had sent workers deep down even though there had been fires only a week before. In terms of miner deaths per tonne of coal produced, the Chinese fatality figures are 100 times more than in the United States, and ten times than the figures in India. The Chinese Government recorded over 4,000 deaths in the first nine months of 2004.
Discrimination is another area where companies have responsibilities to prevent abuse of human rights. In a report that Amnesty International will publish shortly, we look at the responsibilities of multinational companies that do business with local companies in Bosnia and Herzegovina. The Bosnian war was one of the most violent conflicts in Europe since World War II, and at its root were ethnic divisions. The international community has made a huge investment to build peace in Bosnia. And yet, companies in Bosnia-Herzegovina continue to discriminate against ethnic groups in their recruitment policies, undermining the rehabilitation of refugees and persons displaced by the war. We believe that the international partners of the Bosnian companies cannot simply turn a blind eye to such discrimination. They are responsible for ensuring that international principles are allowed down the supply chain.
The responsibilities of companies extend not only to how they treat their workers, but how they relate to the communities in which they operate.
Take the right to water which is recognized in UN Covenant on Economic, Social and Cultural Rights as a human right. The UN Committee on Economic, Social and Cultural Rights has clearly stated: “The human right to water is indispensable for leading a life in human dignity. It is a prerequisite for the realization of other human rights.” Last week international media reported widely that an explosion at a plant run by the China National Petroleum Corp in Jilin Province had killed five workers and the oil spill it generated has reached the city of Harbin, contaminating the city’s source of water, affecting millions of people, and possibly putting at risk the Russian city of Khabarovsk. The Chinese Government has initiated an investigation, which may lead to criminal charges. In such a case, the State has an absolute responsibility to protect human rights and regulate the conduct of the company. But it is also the responsibility of the company to take all possible steps, immediately, to prevent further contamination, to cooperate fully with investigations, and to take corrective action, including compensation, rehabilitation and restitution to those affected.
One of the worst examples where a company’s failure to take the necessary safety measures killed thousands of local people and endangered the lives of many more was 21 years ago when dangerous gas leaked from the Union Carbide plant in Bhopal in central India. More than two decades later, Dow Chemicals which took over Union Carbide, has failed to clean up the site, or to compensate properly those who were affected and who continue to suffer. Company officials are still avoiding facing Indian courts over criminal charges brought by the Indian authorities.
There are many examples where private security forces employed by companies collude with state forces to attack the local community or use disproportionate force to quell violence, for instance when local population is forcibly displaced to build pipelines or production facilities. In our recent work in Nigeria we have found that ten years after the execution of Ken Saro-Wiwa and eight other Ogoni activists, the situation on the ground has not changed much. Oil companies that operate there fail to meet the promises they make to the communities in which they operate, and when communities protest, security forces take over. They use disproportionate force, causing many deaths. This leads to greater insecurity, instability and even open conflict, which is not good for business. And such cases implicate many of the world’s leading companies in the extractive sector.
Business need not cause harm for it to be tainted, or even legally liable. A company that knowingly helps a state to violate human rights or benefits indirectly from human rights abuses committed by a state could be liable in court even if the government itself cannot be sued. For instance, UNOCAL was accused in the US courts of complicity when its government contractors in Myanmar allegedly used forced labour to build oil pipelines for UNOCAL. The company settled the case out of court for an unknown sum.
How can companies respect and promote human rights: Voluntary Codes and the UN Norms - pageUp -
High profile court cases like that against UNOCAL or horrendous disasters like the Bhopal gas leak or consumer boycotts have led many multinationals to adopt human rights policies and voluntary codes of conduct. One example is the Kimberly Process, an international diamond certification scheme aimed at rooting out from international trade rough diamonds bought from conflict zones. Amnesty International was among the NGOs that highlighted the impact of this trade, and is part of the Process, which includes all diamond trading countries, the industry, and leading NGOs. The other is Voluntary Principles for Security and Human Rights, an initiative of the US and UK governments, aimed to ensure that the legitimate security needs of the extractive sector are not met at the cost of fundamental freedoms. Today, Norway and the Netherlands have joined the process, and 16 major international companies from the extractive sector have signed up to the principles. Amnesty International has been involved in formulating both these initiatives.
The strength of such voluntary codes is that because they are designed by the industry and voluntarily accepted by companies, they are likely to be respected. The weakness is that they are adopted and implemented by the willing. Because they are not binding and there is no obligation on the governments to enforce them, the worst perpetrators ignore them with impunity.
An important initiative of the UN is the Norms on Responsibilities of Transnational Corporations and Other Business Enterprises (referred in short as the UN Norms). Based on existing international law, they provide comprehensive, authoritative, and common benchmarks for corporate behavior on human rights. All companies that are part of the Global Compact would agree with what the Norms ask them to do: that companies do not contribute to conflict, that their security forces operate under the umbrella of international law, that they do not discriminate, that they ensure their workers’ fundamental freedoms and provide them a safe environment, that they consult meaningfully with the communities around them and seek their consent, that they do not offer bribes, and that they do not become complicit in human rights abuses.
The speakers by my side – from ABB and Statoil – represent two of ten companies that have embarked on a project (the Business Leaders’ Initiative on Human Rights) to road-test the Norms, to help their own understanding of human rights, and develop their own policies and procedures to ensure that their operations are within the framework of international human rights rules.
Some companies have resisted the Norms, saying that they have their own voluntary codes of conduct or that they are members of the Global Compact, and so do not need the Norms. Amnesty International welcomed the formation of the Global Compact, and I was a member of the advisory panel set by the UN Secretary General. In our experience, the Global Compact is a useful forum to share ideas, knowledge, learning and practices, but it does not set out standards against which corporate behaviour can be measured, nor does it include any means for verification of corporate behaviour. The Global Compact and the UN Norms are therefore not either/or options – companies should adhere to both.
What about Chinese multinationals? - pageUp -
As operations go global, as brands no longer have geographical boundaries, and as communication technology means that stories can cross the world in seconds: ignoring human rights is a risk that companies can no longer afford to take, no matter where they come from or where they operate. The international investment community is increasing its scrutiny around the world and this scrutiny no longer focuses just on headquarters: it is now exhaustive and may include scrutiny of production chains and entire operations, including suppliers.
What all this means is that as Chinese companies become global players, they will be expected to play by global rules. Global stakeholders will scrutinize their conduct and expect them to live up to global responsibilities.
In recent months, there has been considerable attention paid to China’s oil companies. CNOOC almost acquired Unocal earlier this year. The surge in demand for oil in China has meant Chinese oil and petrochemical companies –the Chinese National Petroleum Company, SinoPec, Petrochina – are looking for assets around the world or international partners at home.
Amnesty International and other organizations have challenged companies like Shell, BP and ExxonMobil to operate under the highest standards. It will expect no less from CNPC. The Chinese company operates in partnership with Malaysia’s Petronas Bhd and India’s Oil and Natural Gas Commission in South Sudan, where the Sudanese Government has conducted bombing raids on Sudanese villages, forcing them to flee from their homes, and the oil consortium operated in the area after it was cleared. The consortium had earlier included a Canadian oil company, Talisman, which pulled out due to pressure from international civil society. CNPC was a partner of Talisman at that time, and continues to operate in Sudan. Chinese oil interests were widely reported as being an obstacle to the ability of the UN Security Council to respond firmly to the atrocities being committed by the Sudanese forces in Darfur.
In July this year, Peter Leuprecht, special representative of UN Secretary General Kofi Annan for human rights in Cambodia, said that award of land area of 10,000 ha in Mondulkiri province of Cambodia to Wuzhishan LS Group should be revoked because, as he put it, “The government and the company have disregarded the well-being, culture and livelihoods of the Phnong indigenous people….… and many breaches of the law and of human rights have been committed,” he said. No environmental or social impact studies had been carried out on the August 2004 concession which encompasses hilly grasslands and forests in the valleys, and Wuzhishan had sprayed herbicide in the hills where the Phnong graze their cattle, while “their ancestral burial areas and spirit forests have also been desecrated in the process of clearing and planting.”
These are just two examples of the ways in which Chinese companies may get implicated in human rights abuses as they expand their operations around the world, and come under greater scrutiny. The international community expects the same adherence to international standards from Chinese and other emerging transnational companies, as we have from the transnational companies from the US, Europe and Japan. You can:
- Show boardroom commitment: adopt human rights policies and guidelines and publish them
- Back it up by actual delivery: Set up procedures to ensure dissemination and respect by all employees at all levels – operationalize the policy and guidelines; and
- Subject your performance to independent and regular verification.
Conclusion - pageUp -
The global balance of corporate power is shifting. A company started by an Indian entrepreneur is the world’s biggest steelmaker today. Singapore is the leading producer in the disk drive industry and in life sciences. China will soon be the world’s biggest market; it is already the world’s biggest factory. Chinese manufacturing companies are making everything, from toys and textiles to televisions and telecommunication equipment. Chinese companies are astutely buying brands: Lenovo bought IBM’s personal computer business.
In such an environment of shifting power, we need consistent rules, which apply equally and effectively to all companies. UN Norms on Business and Human Rights provide that consistency, and will allow a level playing field for all.
Globalization is opening new doors, there are new responsibilities, borders are being pushed. Civil society, consumers and investors are all more aware and active on corporate social responsibility. As emerging corporate leaders will you be pushed or will you be proactive? Will you lead or will you lag behind and have to play catch-up? Or will you react only after disaster has already destroyed trust and confidence?
Thank you.