MAC: Mines and Communities

UN ethics guidelines may alarm multinationals

Published by MAC on 2003-08-12

UN ethics guidelines may alarm multinationals

12 August 2003

By Jonathan Birchall at the United Nations BBC broadcast

A United Nations special rapporteur on workers' rights in the global garment industry . . . A UN human rights probe into conditions in banana plantations . . . UN experts examining an oil company's relations with local security forces. The UN Draft Norms on the Responsibilities of Transnational Corporations, expected to be endorsed on Wednesday in Geneva, may alarm compliance officers at even the most ethically engaged multinational.

The document's call for companies to be "subject to periodic monitoring and verification by the UN" has been strongly criticised by international business organisations as being at odds with "voluntarist" efforts to promote global corporate responsibility."We don't have a problem at all with efforts that seek to encourage companies to do what they can . . . to protect human rights," says Stefano Bertasi of the International Chamber of Commerce. "We have a problem with the premise and the principle that the norms are based on.

"The ICC points instead to the UN's voluntary Global Compact on corporate governance, launched three years ago by Kofi Annan, UN secretary-general. So far, 42 US companies and 24 in the UK have endorsed the compact's nine key principles governing human rights, labour rights and the environment.But critics, including participating NGOs (non-governmental organisations), say the Global Compact moves too slowly and fails to subject company claims of compliance to any form of mo nitoring or regulation."We live in a deadline-based society," says Amy Domini, president of the New York-based Domini Asset Management."You need some threat of enforcement to get people to act."

Robert Lake, head of socially responsible investment at Henderson Global Investors in London, argues that standardised enforcement and monitoring benefit companies. "Seen in competitive context, a monitoring mechanism can help overcome the 'free rider' problem, where many companies are reluctant to take action for fear that their competitors may not.

"The threat of a new enforcement mechanism for global business standards remains a long way off, however. If adopted by the international experts of the UN's sub-commission for protect ing and promoting human rights, the draft norms will then move to the full 53-nation Commission for Human Rights, where they will be subject to intense lobbying by those opposed to codifying any UN role in global enforcement of business standards.

"We think the draft norms are at the start of a very lengthy process - it will be years before the UN member states get anywhere close to agreeing how to measure or enforce performance," says one multinational member of the UN's Global Compact.

The draft norms in their present form bring together international legal obligations and standards for companies that have struggled with varying codes and standards."For us it's a great benchmark, a basis on which you can analyse companies and how they're responding," says Kirsty Thomas, an analyst of socially responsible investment at Isis Asset Management in London. Henderson's Mr Lake adds: "If the UN agrees this set of standards, then we'd expect companies that face a set of issues covered by the draft norms to be paying very close attention to them."

** Business 'must face UN scrutiny' ** United Nations experts demand powers to investigate multi-nationals accused of human rights abuses.

http://news.bbc.co.uk/go/em/fr/-/1/hi/business/3149385.stm


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