Presentation to the Corporate Social Responsibility Advisory Council
to Export Development Canada
November 30, 2006
Halifax Initiative Coalition
My comments will focus on two issues that are central to the CSR debate: social / human rights concerns and transparency.
1. Social Issues and Human Rights
In recent years, IFIs and ECAs have focused increased attention on the environmental impacts of their private sector clients’ activities. These institutions have developed a suite of environmental policies and procedures. While many civil society organizations are critical of these instruments and argue that they need to be significantly strengthened, administrative frameworks, policies and personnel are in place to address environmental concerns.
Relatively less attention has been paid to social and human rights considerations. While the IFIs address a growing number of social issues, important gaps remain and the ECAs lag behind the Banks in this area. Furthermore, public financial institutions have virtually ignored the area of human rights.
Why have these issues emerged?
Many projects that are supported by IFIs and ECAs generate significant social and human rights impacts. An extreme example involves Canadian mining company Anvil’s Dikulushi operations in the Democratic Republic of Congo, which received US$13 million in political risk insurance from MIGA. In 2004 Anvil provided logistical support to the Armed Forces of the Democratic Republic of Congo to suppress a rebel uprising. The company supplied the army with planes, vehicles, personnel and food. According to a UN mission, the army utilized these resources to carry out serious human rights abuses, including summary executions. Recently, a Congolese military prosecutor has recommended that three former Anvil employees, including a Canadian national, be prosecuted for their involvement in these events. The foreigners have been indicted for the commission of or complicity in war crimes.
In response to cases such as Dikulushi and others with less extreme but often devastating social and human rights impacts, affected populations are increasingly vocal in defense of their rights.
How are these issues being broached?
There is a vibrant debate taking place about the applicability of international human rights standards to public financial institutions. In January 2006, then Senior Vice President and General Counsel to the World Bank, Roberto Dañino, issued a Legal Opinion on Human Rights and the Work of the World Bank. The Bank has long argued that its Articles of Agreement, which restrict the Bank to evaluations of “economic considerations,” bar the institution from considering human rights in its lending operations. In his opinion, Dañino argues that “it is consistent with the Articles that the decision-making processes of the bank incorporate human rights and any other relevant input which may have an impact on its economic decisions.” He goes on to acknowledge that in some cases the Bank may be required to consider human rights in its operations and concludes that in the relationship between human rights and national sovereignty, “the balance has shifted in favor of protecting human rights.”
A similar debate is taking place regarding ECAs. Civil society organizations and some legal scholars argue that as organs or agents of the state, ECAs are bound by the international human rights obligations of their home governments. UN conventions impose a duty on governments to adopt legislation in order to comply with their undertakings under international agreements. This duty includes the obligation to regulate private actors.
States can discharge their obligation to ensure that ECA-supported activity is conducted in a manner that complies with international human rights norms by:
- regulating the forms of trade and investment that are supported
- mandating transparency in ECA operations to guarantee access to information
- including human rights performance requirements in client contracts - i.e. condition support
- establishing reporting and enforcement mechanisms for performance requirements and ensure that enforcement mechanisms are accessible to those who are potentially-impacted by human rights violations
In his February 2006 interim report, John Ruggie, Special Representative of the U.N. Secretary General on Human Rights and Transnational Corporations addressed the issue of ECAs and human rights, arguing that “[t]he debate about business and human rights would be far less pressing if all governments faithfully executed their own laws and fulfilled their international obligations. Moreover, the repertoire of policy instruments available to states to improve the human rights performance of firms is far greater than most states currently employ. This includes home countries providing investment guarantees and export credits often without adequate regard for the human rights practices of the companies receiving the benefits.”
Increased transparency and public participation are widely acknowledged to improve the quality of public decision-making. As in the issue of social and human rights considerations, significant attention is being paid to the area of transparency in public finance. Civil society organizations argue for strengthened public disclosure requirements that are applied throughout the project lifecycle. Environmental and social impacts that occur during project construction, operation and decommission often vary from those that are projected to occur in environmental and social assessment documents.
Innovators in this area include the ADB, which requires the disclosure of project environmental and social monitoring reports. The EU has also adopted binding law to implement the Aarhus Convention on Access to Information, Public Participation in Decision-Making and Access to Justice in Environmental Matters of the United Nations Economic Commission for Europe. This law applies to all EU ECAs. It creates a right of access to environmental information and provides for a judicial or administrative review in cases of refusal. Significant limits are placed on the power to withhold commercially-confidential information. Government decision-makers must weigh the public interest served by disclosure with the private sector interest served by refusal.
EDC could significantly strengthen its disclosure policy by following these precedents, in addition to providing the following information:
- detailed project descriptions
- project classification rationales
- the specific standards used to assess a project
- project assessments
- identified modifications and mitigation measures
- project monitoring and evaluation documents generated by EDC, project sponsors and consultants throughout project implementation
- contracts and revenues between clients and host governments