Tag Archives: John Ruggie

Can Mining Be Saved?

TeslaGigafactory

The Tesla Gigafactory, currently under construction in Storey County, Nevada.

Andrew Critchlow, Commodities Editor at The Telegraph, speculates in a recent article that Elon Musk and Tesla might “save the mining industry” by ushering in a new age of renewable energy. Domestic battery power production at the Tesla Gigafactory (now scheduled to go into production in 2016) is bound to create such demand for lithium, nickel and copper, Critchlow thinks, that the mining industry will find a way out of its current (price) slump and into new growth, or possibly a new supercycle.

“Major mining companies are already ‘future proofing’ their businesses for climate change by focusing more investment into commodities that will be required by the renewable energy industry,” writes Critchlow; and the “smart commodity investor” will follow suit, with investments in “leading producers” such as — this is Critchlow’s list — Freeport-McMoRan, Lundin Mining and Fortune Minerals.

It’s a credible scenario, but it’s also terribly short-sighted. The big switch over to domestic solar power and battery storage Musk is hyping in the run up to the opening of the Gigafactory would no doubt give miners a short-term boost, but it will also take a lasting toll on the places where copper and nickel are mined, raise serious human rights concerns, and put even more pressure on the world’s freshwater resources.

After all, the copper and nickel used to make Tesla’s batteries are going to come from places like the Democratic Republic of Congo, where Lundin and Freeport-McMoRan operate a joint venture at Tenke Fungurume, and which has been at the center of the recent debate in the EU parliament over conflict minerals; Peru, where protests against Southern Copper Corporation’s Tia Maria project led the government to declare a state of emergency in the province of Islay just last Friday; or the nickel and copper mining operations around Lake Superior that I’ve been following here, where there are ongoing conflicts over free, prior and informed consent, serious concerns that sulfide mining will damage freshwater ecosystems and compromise one of the largest freshwater lakes in the world, fights over haul routes, and repeated complaints of lax regulatory oversight and political corruption.

Rice farmers clash with riot police in Cocachacra, Peru. The fight is over water. (AP Photo/Martin Mejia)

These are just a few examples that come readily to mind. It wouldn’t take much effort to name others (Oyu Tolgoi, Oak Flat, Bougainville) and to see that the same problems arise, to a greater or lesser degree, no matter where copper and nickel mining — sulfide mining — is done.

The mining industry and commodities investors have historically tended to minimize and marginalize the environmental and social costs of sulfide mining; so it’s really no surprise that Critchlow should argue that increased demand by battery producers is all it will take to “save” mining. Leave it to others, I guess, to save the world.

But the supply and demand model is reductive and misleading, even for those looking to make a fast buck. A recent Harvard study of company-community conflict in the extractive sector summarized by John Ruggie in Just Business suggests just how costly conflict can be. A mining operation with start-up capital expenditures in the $3-5 billion range will suffer losses of roughly $2 million for every day of delayed production; the original study goes even further, and fixes the number at roughly $20 million per week. Miners without authentic social license to operate lose money, full stop. So Critchlow’s is at best a flawed and myopic investment strategy that ignores significant risks. It also appears to shrug off legitimate human rights claims, and turn a blind eye to environmental degradation, and deadly violence of the kind we’re seeing in Peru right now. That’s irresponsible, if not downright reprehensible.

A Macquarie Research report cited by Critchlow claims that the switch away from fossil fuels to battery power in the home is all but inevitable. But if we make the switch to renewables and fail — once again — to address the ethics of mining, what exactly will we have saved?

A Reply to Dan Blondeau

When I sat down to reply to a comment from Dan Blondeau of Eagle Mine on my Mining Renaissance post, I found that I’d written what is, essentially, a new post. So I’m running my reply here instead of in the comments thread.

Here is Dan’s comment:

Louis and others commenting here – is there any way you would support mining anywhere? I highly doubt it. Large, long-life deposits are few and far between now. Smaller projects such as Eagle, Polymet and so on are becoming the typical scale of mining. Instead of just bashing the industry and focusing on events that happened decades ago, perhaps you could take a more positive and collaborative approach to your concerns. Thank you

Here’s my reply:

I take it that by “events that happened decades ago,” you are referring to the story told in my film 1913 Massacre. That story from what you correctly characterize as a bygone era of mining first drew me to the Upper Peninsula, and it would be dishonest or disingenuous to say that it doesn’t still color my thinking. But since completing that project I’ve tried to stay focused on what’s happening in the area now.

At the same time, the unresolved past and the present are not so easily kept apart. For example, the conversation after our screening of 1913 Massacre at the DeVos Art Museum last October went almost directly and without any prompting to the new mining up around Big Bay and across the Peninsula. I believe the film resonates with people in the UP (and in other parts of the country) not just because the immigrant experience it documents is the quintessential American experience, but also because the basic questions it raises are still very much alive today.

That aside, I am not sure why you read me as “bashing the industry” here. My post focused on sloppy and hopelessly compromised journalism. I don’t think of mining as something I would “support” or not support.  It would never occur to me to put it that way, and I’m not for or against mining per se. In some of my posts, especially those on Shefa Siegel’s work, I try to acknowledge mining’s crucial role in what Orwell calls “the metabolism of civilization”; and I’m trying to understand how bigger changes in the commodities markets and the global economic picture are driving the new mining around Lake Superior. But I also think it’s important to appreciate the real risks and the potential cost of copper and nickel mining operations in the Lake Superior watershed, and to question whether it really will create lasting prosperity for the UP or the Lake Superior region. Those are (for me) the big issues the new mining raises, and I think they are issues that any honest conversation about mining (or the development that mining brings) needs to take into account.

As I tried to suggest in my post, Kocazek just ignores them, and I wondered why she didn’t try to take them on – especially since she writes for a publication dedicated to water issues. And not just any publication: Circle of Blue, which was founded by J. Carl Ganter (who served as vice-chairman of the World Economic Forum Global Agenda Council on Water Security) and which has ties to – it is a “non-profit affiliate” of – the prestigious Pacific Institute.

As for taking “a more positive and collaborative approach,” I am all for it, or at least I am all for genuine collaboration. I don’t really know what a “positive…approach” would entail in this case apart from boosterism. As I say, I don’t consider myself a mining booster or a mining basher, but an observer, still (and no doubt always) an outsider, despite my many trips to the UP, exploring a place and trying my best to document what’s happening there. I’m open to having my views challenged and being shown where I am wrong or where there’s a better way to talk about or do things. (And for that reason I appreciate you taking the time to comment here.) I don’t think there can be any collaboration unless each party is willing and able to listen and – this is important – ready to yield to the other. In other words, listening goes beyond making concessions to the other in conversation: it means doing things differently in response to the other’s demands. (This is a theme I’ve been exploring in my posts on The Power of Asking, and one that I come up against over and over again when I write about mining issues.)

Am I often critical of what mining companies are doing in the UP and around Lake Superior? Sure, and I am troubled, as well, by the almost hubristic level of confidence the mining industry places in technology and engineering, even in the face of disasters like the Bingham Canyon collapse; its worrisome record on environmental and human rights issues nearly everywhere in the world mining is done; and the power and distorting influence it exerts on politicians and public debate – in the UP and elsewhere.

I still think there’s plenty of opportunity for collaboration and dialogue. If I did not, I would just call it quits; but giving up on dialogue is tantamount to giving up on people. In the area of human rights, for instance, I believe there’s still opportunity for collaboration around the Ruggie principles (despite the doubts I’ve expressed about them) and – in the Lake Superior region – around the United Nations Declaration on Indigenous Rights. Both frameworks (as well as the work done by the Lake Superior Binational Forum on Responsible Mining in the Lake Superior Basin) are decent places to start enumerating in a serious way the responsibilities and obligations that mining companies have in a region where human rights concerns and freshwater issues are intertwined.

In fact, I think genuine and ongoing collaboration on these efforts is essential, because I don’t think the mining industry can do it alone, or is the appropriate party to set the agenda here.

“It Is Claiming that Gives Rights Their Special Moral Significance”

This passage from Feinberg’s “The Nature and Value of Rights” (here’s a Google books link ) helps me to frame and think further about what I said in my previous post on John Ruggie and respect, so I want to set it down here as a kind of postscript.

Where I used the word “demand,” which carries some sense of asking (like the French demander), and talked about respect as something we “ask” of others, Feinberg settles on the more legalistic “claim,” and most writers follow him. I can probably do the same and allow his work to inform what I have to say about “the power of asking.”

Claims are, after all, a kind of asking, a crying out (cf. Latin clamare); they call for an answer, and I think this becomes tolerably clear later on in the same essay, where Feinberg talks about “valid” claims; and in the passage below, where Feinberg offers the thought that  that “‘human dignity’ may simply be the recognizable capacity to assert claims.”

I would probably want to flip that point around or jostle it a little, to emphasize the role of recognition and the critical role second persons play in recognizing the dignity of first persons. If “it is claiming that gives rights their special moral significance,” then it’s fair to suggest that “moral significance” is something mutually created by those who make claims and those who recognize them, or at least recognize another’s capacity to make them.

Even if there are conceivable circumstances in which one would admit rights diffidently, there is no doubt that their characteristic use and that for which they are distinctively well suited, is to be claimed, demanded, affirmed, insisted upon. They are especially sturdy objects to “stand upon,” a most useful sort of moral furniture. Having rights, of course, makes claiming possible; but it is claiming that gives rights their special moral significance. This feature of rights is connected in a way with the customary rhetoric about what it is to be a human being. Having rights enables us to “stand up like men,” to look others in the eye, and to feel in some fundamental way the equal of anyone. To think of oneself as the holder of rights is not to be unduly but properly proud, to have that minimal self-respect that is necessary to be worthy of the love and esteem of others. Indeed, respect for persons (this is an intriguing idea) may simply be respect for their rights, so that there cannot be the one without the other; and what is called “human dignity” may simply be the recognizable capacity to assert claims. To respect a person then, or to think of him as possessed of human dignity, simply is to think of him as a potential maker of claims. Not all of this can be packed into a definition of “rights”; but these are facts about the possession of rights that argue well their supreme moral importance.

Is Respect Really All That Simple?

Last week, John Ruggie addressed the UN Global Compact Leaders Summit, where a “new global architecture” for corporate sustainability was unveiled and celebrated. Ruggie started out by talking about the special challenges — the “problems without passports” — that the world’s “tightly-coupled” systems present, and the inadequacy of our “largely self-interested politics” to address them. This was not, however, the brief he’d been given, so he had to move on; and I hope he’ll have more to say on the topic in the future. Instead, Ruggie had been asked, he said, “to say a word about respect,” and — not surprisingly — he took the opportunity to talk about the UN Guiding Principles on Business and Human Rights, and how the framework helps companies meet their obligations to respect human rights.

I have been asked to say a word about respect, specifically about respecting human
rights. Its meaning is simple: treat people with dignity, be they workers, communities in which you operate, or other stakeholders. But while the meaning is simple, mere declarations of respect by business no longer suffice: companies must have systems in place to know and show that they respect rights. This is where the UN Guiding Principles on Business and Human Rights come in. [pdf.]

Fair enough, but I found myself pausing here, and wondering whether the meaning of “respect” is really so simple as Ruggie makes it out to be, or at least whether “treat people with dignity” is sufficient guidance.

I understand that Ruggie’s intention here is largely rhetorical: we all know what respect means, but we need more than fine words, declarations and definitions. We need practical and consistent ways of acknowledging, checking and demonstrating human rights commitments — “systems” like the UN Guiding Principles.

Still, there are good reasons to start unpacking — and challenging — this simple definition, if only to ward off misconceptions.

First, to say that “[to] respect” human rights means “[to] treat people with dignity” (and leave it at that) invites confusion, because it passes the semantic buck from respect to dignity. If we are to treat people “with dignity” — if that’s our definition of respect — then we had better have a good working definition of dignity to govern or temper our treatment of others.

Of course, the word “dignity” is a staple of human rights discourse, so we’ve got to make allowances for shorthand here. If we don’t — if we want to take the long route and spell things out — we will most likely find our way back to Kant’s moral theory. I’m not going to attempt a summary here except to say that for Kant, dignity imposes absolute and non-negotiable constraints on our treatment of other people. Our dignity derives from our moral stature as free, rational and autonomous agents — ends in ourselves — and cannot be discussed in terms of relative value (or usefulness, or any other relative terms). It must be respected: in other words, dignity imposes strict and inviolable limits, absolute constraints, on how we treat others and how others treat us.

Most obviously people may not be treated merely as means to our ends; and that caveat is especially important when it comes to business, where, for starters, people are valued and evaluated as priced labor or “talent,” in terms of services of they perform or as “human resources.” To respect the dignity of people — “be they workers, communities in which you operate, or other stakeholders” — is to recognize them as persons (or ends in themselves) and not just mere functions in an efficiency equation.

This is hasty pudding, but suffice it to say that in the Kantian idea of dignity there is the suggestion that respect follows from our recognition of others as persons: this is an idea suggested by the word “respect” itself, which comes from the Latin respicere, to look back, to give a second look. Every person deserves a second look — or I should say, demands it. Recognition is something we demand of others and others demand of us.

I like to put it this way: respect is always the first, and sometimes the only thing we ask of each other. How we respond to this demand will depend in all cases upon whether we understand that our dignity as persons makes us mutually accountable or answerable to each other in the first place. So before we can talk about how we “treat” others — before we jump, with Ruggie, to considerations of behavior — let’s take a couple of steps back, and make sure that when we talk about respect we are also talking about recognition as well as accountability.

Of course all of this may be implied in Ruggie’s definition, and I wonder if recognition and accountability are just other ways of saying that companies must “know and show” that they respect human rights. My concern is that when you gather business leaders at the UN and tell them that to respect human rights is to treat people with dignity, you may leave them with the mistaken impression that dignity is something they have the power to confer on others, rather than something that makes them answerable to others. Dignity is not something the mighty can grant or deny the meek, and respect is not another word for benevolent gestures companies might make toward communities, workers and other stakeholders. Where people stand, business must yield.

The Limits of Corporate Benevolence, from Mongolia to Michigan

The phrase “human rights” is nowhere to be found in the Oyu Tolgoi Investment Agreement, a document [pdf] that will play a critical role in guiding Mongolia’s development over the next decade. The Agreement sets the terms for the $6.2 billion investment in the Oyu Tolgoi gold and copper mining project, which promises to account for no less than one-third of Mongolia’s GDP by the year 2020. Rio Tinto has a 66 percent stake in the project through its subsidiary, Turquoise Hill Resources Ltd; the Mongolian government owns the rest.

Along with the serious environmental concerns cited by the United States when it abstained, in February of this year, from a World Bank investment scheme in Oyu Tolgoi, there are a host of human rights issues to address — from migrancy to land seizures, rights to the scarce water resources of the Gobi desert region, conditions in Ulaanbaatar’s Ger camps, and the survival of Mongolia’s herder communities. (The Bank Information Center provides an overview of these concerns, here and here.) The Investment Agreement briefly addresses some of these points, but it resorts, in all instances, to what I would call the language of corporate benevolence.

So the Investor agrees to abide by the Extractive Industries Transparency Initiative (a voluntary agreement to publish payments made by the Oyu Tolgoi mine to the government); in another place (section 4.13; but cf. also section 4.6) the Investor consents to “build and maintain productive working relationships, based on principles of transparency, accountability, accuracy, trust, respect and mutual interests, with non-governmental organizations, civic groups, civil councils and other stakeholders.” Beyond this, there is not much else to guide or govern the company’s conduct vis a vis civil society and its responsibility to respect human rights.

Given the high stakes, the scale of Oyu Tolgoi and the involvement of the World Bank and IFC in the project, it is surprising the Agreement does not explicitly incorporate — or reference — the UN Guiding Principles on Business and Human Rights. Instead of creating binding agreements or even practical mechanisms to ensure that Oyu Tolgoi and the government of Mongolia meet their respective human rights obligations as the economy accelerates and the social terrain continues to shift, the Investment Agreement relies on the language of corporate social responsibility to smooth things over.

Part of the trouble with CSR isn’t just that it tends to replace binding agreements and articulated responsibilities with vague sentiments, the language of corporate benevolence, and promises of sustainability and shared prosperity. That’s bound to happen when social responsibility meets public relations. A bigger problem is that the commitments companies voluntarily make to contribute to economic development and social progress — and to respect human rights — will last only as long as the business requires them.

For an example of how abruptly a company can ditch stakeholder communities, what happened in Michigan yesterday with another Rio Tinto project may turn out to be more instructive than what’s happening right now in Mongolia. In the face of serious environmental and human rights challenges to its Eagle Mine project over the last several years, Rio Tinto all along touted its good corporate citizenship, promising to “leave more wood on the woodpile” and to take an active hand in the long term, “sustainable development” of the Upper Peninsula. That is just part of “The Way We Work,” as the title of a Rio Tinto CSR publication would have it — or at least it was the Way We Worked. Yesterday, the company announced that it had sold the Eagle Mine project to Toronto-based Lundin Mining for the tidy sum of $325 million cash — part of CEO Sam Walsh’s strategy to divest from “non-core” assets and protect the single-A credit rating the company currently enjoys. A community of stakeholders whose future Rio Tinto promised to make happy, bright and prosperous became, overnight, a disposable asset.

Liability? Responsibility? No, Sustainability.

I’ve been looking for a transcript of the remarks Johan Lubbe made yesterday, on behalf of the National Retail Federation — a trade association representing about 9000 American retailers and the chief and most vocal proponent of an “alternative” to the legally-binding global pact to ensure the safety of clothing factories in Bangladesh. The global pact has won pretty widespread support in Europe, but so far there are only two American signatories. The Americans won’t sign up because, they say, the global pact would expose them to litigation, or what one spokesperson for The Gap called “unlimited litigation,” should something go wrong at one of the factories they use.

Yesterday they brought out Lubbe. Here is how today’s AP report summarizes his remarks:

On Friday, the retail trade group made available for the media an international labor lawyer who rebuked the global pact and said that it is too vague for retailers to sign. At the heart of the criticism: the contract would expose retailers to legal liability for the failure of factories to comply with the set standards even though merchants don’t own the facilities.

In rejecting the global pact, Lubbe and the NRF are trying to limit the scope of legal liability to ownership — in this case, brick and mortar property ownership. I can’t tell if the claim here is that with outsourcing comes immunity, or that liability does not extend in any way down through the global manufacturing supply chain. For the moment, however, I’m less interested in all that than in knowing whether Lubbe or the NRF have made any kind of statement acknowledging their responsibility for conditions in the Bangladesh garment factories.

Responsibility is a word that applies, or should apply here, no matter how the debate about liability gets resolved. It is not a “vague” word of the sort that the NRF would reject. It’s a word that entails specific human rights commitments, which have been carefully enumerated and articulated in connection with the UN’s Guiding Principles for Business and Human Rights. It comes with ownership, but it also extends beyond ownership to business partnerships and relationships — all the way to Bangladesh.

I imagine there is anxiety that acknowledging responsibility might be misconstrued as admitting liability. The word and the idea of responsibility are certainly nowhere to be found in the statement the National Retail Federation issued on Wednesday. Instead, the NRF focused on how applying “a legal standard” would limit the ability of retailers and brands “to respond” to an “ever-changing environment.”

Given the global nature of the apparel and retail industry, applying a legal standard is a very complex proposition. The Safer Factories Initiative understands that flexibility is required to address a broad array of worker safety issues and enables brands and retailers to respond swiftly and effectively to an ever-changing environment.

Let’s forgive the sloppy confusion (“flexibility is required to…enables”?) of the second sentence, and hope that in future the NRF hires a PR firm with grammarians in its employ. Just have a look at the language they’re floating here. These are such well-worn business tropes that we barely notice them: complexity, flexibility, responding swiftly to an ever-changing environment. Here, the big, giant brand, the multinational with suppliers and partners all around the world, is both powerful agent and vulnerable patient: capable of responding, at least if not bound or restricted by law, but subject to forces far beyond its control.

Sidestepping obligations and commitments, the NRF statement opts for “flexibility” and (as the statement continues) “sustainability,” an already-overused and much-abused word that appears in nearly every statement the Federation makes. Talk about vague. The NRF want “sustainable solutions” to make the Bangladesh garment industry “a sustainable manufacturer.” They offer a “sustainable action plan” now and “will continue to pursue a sustainable industry-wide solution,” and so on. The word and its variants appear 9 times in the course of a single statement.

You get the idea. As companies respond to rapidly changing conditions — or flee from one disaster to the next — they need flexibility to fashion a sustainable way forward. Otherwise they might be engulfed by their own blunders, or held responsible or liable for their part in the whole mess before they can run to the next country.

Rio Tinto and the Rhetoric of Respect – Notes from the 2013 AGM

“Your mining is not unproblematic.” That understatement nicely summed up the Rio Tinto Annual General Meeting held yesterday morning in London. But by the time a representative from the London Mining Network had uttered it near the end of the question period, Rio Tinto Chairman Jan du Plessis appeared to have stopped listening.

Up to that point it had been a lively and contentious meeting. Shareholders were miffed about the company’s blunders in Mozambique and the Alcan write off and confused by the executive compensation scheme. Some wanted to know why Tom Albanese wasn’t there to answer for the company’s troubles in 2012, when he was still CEO; another said it was time to stop scapegoating Albanese, and hold the board accountable: “every few years,” he said, we have “a resounding chaotic blunder…What has the board done?”

They were not the only ones to talk about blunders and bad decisions that put the company at risk. Activists, environmentalists and indigenous leaders who attended the meeting testified to the destructive effects of Rio Tinto’s large-scale industrial mining operations on the land, local communities, and traditional ways of life. These speakers all said they and the groups they represent would continue to oppose the company. In fact, their opposition is only growing; a couple even suggested that Rio Tinto could start cutting costs (a big priority for the mining giant right now) by abandoning or divesting from places where mining operations are not welcome. The message to shareholders was clear: protests, lawsuits and continued local opposition will put projects at risk, disrupt schedules and cost money.

Did the board get the message? Not likely. When an Alaskan Yupik elder spoke in opposition to the Pebble Mine project and urged the company to divest, Rio Tinto CEO Sam Walsh thanked him for his “sincerity” and both du Plessis and Walsh complimented the elder on how “articulate” he was. It was a patronizing gesture, a pat on the head, not serious engagement. There were some further comments shouted from the audience but du Plessis shut the discussion down and moved to the next question.

Du Plessis repeated a talking point about how much he respects those who had to travel long distances to attend the meeting, but (as I saw it) this was an effort to recover from a stumble. Only minutes earlier he had impatiently dismissed a question about the Eagle Mine – citing “shoddy environmental protections,” poor design work, “fraudulently issued permits,” and the fact that the mine desecrates ground sacred to the Keweenaw Bay Ojibwe — as “not particularly new.” He was having none of it.

There was lots of talk at the meeting about respect, and I’m afraid “respect” is becoming a word corporate boards use to deflect criticism and politely dismiss human rights, environmental and ethical issues. (Whether this is the unfortunate rhetorical fallout of the Ruggie Protect-Respect-Remedy human rights framework is a question for another day.)

For example, when asked what Rio Tinto has done to improve the lot of miners in South Africa, du Plessis responded that the company has developed “very healthy, respectful relationships not just with employees but with the community” in its South African operations. But what sorts of real commitments do those relationships entail? While the company is “not anti-union” –Walsh rejected that characterization — it nevertheless wants a free hand to “maintain direct contact with all our employees” for the sake of safety, efficiency, and (Walsh iced the cake with this) “value.”

One participant said that he couldn’t see how Rio Tinto reconciled its “corporate rhetoric” with its “actions on the ground.” At Oak Flat in Arizona, he went on to explain, Rio Tinto is trying to gain control of public lands sacred to the Apache. The reply was (again): “we will be respectful.” The company would like to “open up direct dialogue” on the Oak Flat project; the trouble is, dialogue can only be direct and truly respectful if the other party actually has an opportunity to be heard and – this is important — heeded.

Dialogue, community engagement, respect, responsibility – all these were floated at the meeting as remedies to the many problems communities face when Rio Tinto moves in. But what doesn’t get taken into account is that the company and these communities are not on equal footing. Nowhere near it. Rio Tinto has enormous influence and power, billions to invest, and – it should not be forgotten – shareholders who want a return on their investment.

So, during the question period, a woman representing Mongolian herders who will be displaced and deprived of water by Rio Tinto’s Oyu Tolgoi project spoke eloquently about a looming “catastrophe.” She had a soft voice that trembled a little as she spoke. Walsh listened, thanked her for traveling all that way to speak, and then replied that in Mongolia (as in Michigan and elsewhere) the company has “developed a participatory environmental water monitoring program.” If you see something, say something, I guess.

Never mind that she had just finished telling him about the threat of toxic leaks, environmental damage, pollution and river diversion. The IFC and “the people of Mongolia,” Walsh said, will hold Rio Tinto to account. He can’t really believe they will. The community of herders has little recourse and not even a fraction of the power Rio Tinto has; and Oyu Tolgoi, when completed, will account for 36 percent of Mongolia’s GDP. The scales are hopelessly tipped in Rio Tinto’s favor.

Maybe the question period of a shareholders meeting is not the place to have constructive dialogue on serious issues. Maybe those conversations have to happen after the meeting is over, or even behind closed doors. But if and when they do happen, will Rio Tinto really be listening?

Can the UN Make Business Respect Human Rights?

Last Wednesday, the UN Human Rights Council announced its endorsement of the Guiding Principles on Business and Human Rights, developed by John Ruggie. The UN press release called it “an unprecedented step,” the establishment of “the authoritative global reference point” in questions of business and human rights.

Unprecedented? Only if you ignore history. In fact, the UNHRC endorsement caps a long period of unhappiness over business and human rights at the UN.

Consider the origins of Ruggie’s mandate. After several false starts, beginning in the 1970s, the UN in 2003 issued the Norms on Transnational Corporations and Other Business Enterprises. The original goal, as Ruggie describes it [pdf], was “to impose on companies, directly under international law, the same range of human rights duties that States have accepted for themselves under treaties they have ratified.”

Sensible enough, you’d think. The Norms gave the UN a chance to “revive its relevance,” as Surya Deva puts it [pdf], “in a new world order in which states no longer enjoy the monopoly as violators of human rights”. Despite a promising start, the Norms ended up falling far short, in Deva’s judgment, of laying the groundwork for “an effective international regulatory regime of corporate human rights responsibility.”

Businesses fought back fiercely; and governments, far from offering support, “went into hiding,” as Ruggie put it in a 2008 interview. By the time the Norms emerged from a UN Sub-Committee in August of 2003, they were hardly fighting words. Like the UN Global Compact, launched amid much hullabaloo only three years earlier, the Norms were not legally binding and left it up to businesses to decide the depth of their commitment and to meet human rights responsibilities on their own terms. (And as I pointed out in a previous post, most companies are only too happy to say that they are equipped to decide, all by themselves, whether they are respecting human rights.)

Recognizing that his mandate began in “controversy,” Ruggie took a “consultative” approach to developing his framework. This was shrewd, as it included business from the start, and gained endorsements — I almost want to call them corporate sponsors, given the display of logos on the Global Business Initiative site — along the way: South American mining company Cerrejon, GE, Flextronics, Coca Cola, JSL Stainless, Sime Darby, Novo Nordisk, and French oil giant Total, among others. 47 states, including the United States, also signed on.

The diplomatic achievement is admirable, but result of all this consensus-building is predictably anodyne. According to the “Protect, Respect and Remedy” framework Ruggie developed, the State has a duty to Protect human rights; corporations have a responsibility to Respect human rights; and victims of abuse need access to judicial and non-judicial Remedy. The Guiding Principles set out “comprehensive recommendations” for how states and businesses are to “implement” the framework, “in order to better manage business and human rights challenges.” “Manage” seems to be the operative word here, and the whole exercise is, unfortunately, replete with management-speak.

In other words, the Guiding Principles and the Framework they accompany feel a little like Norms 2.0, offering guidance and encouragement instead of rules and regulations, and on terms business finds acceptable. Like the Global Compact, the Guidelines create a forum for discussion and dissemination of ideas — “another talk shop,” as Arvind Ganesan of Human Rights Watch said dismissively. US envoy Daniel Baer was a little more generous – and decidedly cautious — when he said the Guiding Principles would make it “less likely” that businesses take “actions that might undermine the enjoyment of human rights.”

So it’s unclear to me exactly how much has been accomplished. Julian B. Gonzalez, Vice President for Sustainability and Public Affairs at Cerrejon, says Ruggie’s work has “not been in vain” and credits Ruggie with having shown his company the way: now the mining company has established “a rights-based Grievance Office” and has gained “better knowledge of neighbor communities and our impacts.” Flextronics reports it is now “proactively” addressing human rights; Coca-Cola CEO Muhtar Kent appeared in a “global video” emphasizing the importance of respecting human rights across the global supply chain. And so on.

Maybe this counts as a step in the right direction, or maybe it’s just a public relations exercise. It might be both. Whether the UN could have done more this time around remains a question. In any case it seems clear that Wednesday’s announcement represents another attempt to establish UN authority in the area of human rights without offending some of the world’s most powerful actors, without regulating business activity or curtailing bad corporate behavior.

3 Big Reasons Why Boards (Say They) Don’t Back Human Rights Proposals

Last week the Manhattan Institute launched ProxyMonitor, a site tracking shareholder proposals submitted to publicly traded companies via the annual proxy process. Right now, the site is limited to proposals made to Fortune 100 companies. Data goes back three years, to 2008. The site already offers some great features, including links to SEC filings around each proposal as well as the ability to filter and sort search results and export them to Excel.

People who have read my blog posts about business and society won’t be surprised that I went immediately to the “Social Policy” filter, which turns up 266 results.

Of these, thirty are human rights proposals made to the boards of twenty-one corporations: Abbot Laboratories, Archer Daniels Midland, Bank of America, Boeing, Caterpillar, Chevron, Cisco, Citigroup, Coca-Cola, E. I. du Pont de Nemours, Google, Honeywell International, IBM, JPMorgan Chase, Microsoft, Morgan Stanley, Motorola, News Corp, Philip Morris, United Technologies and Wells Fargo.

I’ve been sorting through those 30 proxy proposals, to see what they say about the way shareholder proponents and Boards of Directors deal with proposals around human rights.

It’s a fairly narrow range of investors putting forward these resolutions, and I wonder if this limits their chances of success. Proponents include churches and religious orders — the Sisters of Charity of St. Elizabeth, the Domestic and Foreign Mission of the Episcopal Church, the Province of St. Joseph of the Capuchin Order and the Presbyterian Church — as well as socially responsible investment funds: Christian Brothers Investment Services (who invest for Catholic institutions) and New Covenant (dedicated to advancing the Presbyterian mission through investment) along with independent, socially conscious investment firm Trillium Asset Management. Among the thirty proposals is one from Amnesty International; a handful of individual investors submit their own proposals. So far, no big surprises. The only standout entry in the list of human rights proponents is the New York City Comptroller’s Office, shareholders in Archer Daniels Midland.

It’s no surprise, either, that shareholder support for these proposals is usually weak, ranging from around 3-8 percent. There are a few notable exceptions. The NYC Comptroller’s Office proposal to ADM — requesting “that the company commit itself to the implementation of a code of conduct based on…ILO human rights standards and United Nations’ Norms…by its international suppliers and in its own international production facilities” — garnered 20 percent and 25 percent of the vote in 2008 and 2009 respectively. A 2010 proposal would have required Caterpillar to “review and amend, where applicable, Caterpillar’s policies related to human rights” and to post “a summary of this review…on Caterpillar’s website by October 2010”; that gained 20 percent support. And a proposal put forward by Chevron shareholders — that the Board “adopt a comprehensive, transparent, verifiable human rights policy and report to shareholders on the plan for implementation by October 2008” – won almost 28 percent support.

Why these proposals fared so much better than others is a question for another day. Why they didn’t ultimately succeed merits discussion as well. Despite impressive levels of support, they met with the same objections as all the other human rights resolutions in the ProxyMonitor database.

Why do Boards of Directors oppose these resolutions and recommend that shareholders vote against them? Or, at least, why do they say they can’t get behind human rights resolutions? What reasons do they offer?

Board opposition falls roughly into three categories.

First, the proposals are opposed because they are restrictive. The argument here is that the proposal would limit the company’s autonomy and blanket policies will hamper the company’s ability to operate. As JPMorgan Chase notes in its response to a 2008 human rights proposal, these matters are “complex” and “fact-specific,” so they need to be taken on a case-by-case basis. Good judgment deals in particulars, without having to check each call against abstract measures; and since “opportunities for engagement” on these issues “vary greatly,” blanket policies might prevent the company from responding to a particular case in an appropriate way; and they might also hinder the company from pursuing “objectives and policies” they are charged with.

Second, they are opposed because they are burdensome. Putting human rights proposals into practice can be expensive, and it can place other burdens on company resources. Some companies make it sound as if they would simply be overwhelmed. This argument is taken to an absurd extreme by Wells Fargo in a 2008 filing.

Proponents were moved by the example of Sudan to put forward a resolution to “authorize and prepare a report to shareowners which discusses how our investment policies address or could address human rights issues.” The report was to specify “appropriate policies and procedures to apply when a company in which we are invested, or its subsidiaries or affiliates, is identified as contributing to human rights violations through their businesses or operations in a country with a clear pattern of mass atrocities or genocide.” Wells Fargo took refuge in its position as “a diversified financial services company”:

we invest on behalf of clients and customers in thousands of domestic and foreign companies, many with complex and far-reaching global operations. The effort required to screen thousands of individual companies, as the Proponents would seem to advocate, would be a task of tremendous scope requiring in-depth research and detailed evaluations of the nature and extent of each company’s global operations. We simply do not have appropriate resources or access to adequate and accurate information to make informed judgments on these complex issues.

So the argument that won the day came down to this: Wells Fargo can’t really track its own investments. The world is just too complex. Unable to do the research required to clarify its positions in “thousands of individual companies” and to make “informed judgments,” Wells Fargo simply can’t account for all the places it puts its clients’ money. This is not exactly reassuring. Still, the argument seems to have served its intended purpose. The proposal only received 6.81 percent support.

The third and by far the most common objection to human rights proposals is simply that the resolution is unnecessary or redundant. We see this argument made again and again in the SEC filings: the company already has a human rights framework or a code of conduct in place; the proposal, as one Chevron filing says, would “merely duplicate…current efforts” – an “unnecessary and inefficient use” of company resources.

Chevron has The Chevron Way. Caterpillar has its Worldwide Code of Conduct. ADM “believes that our company’s Business Code of Conduct and Ethics and our existing business practices address the substantive areas covered by the proposal.” Coke and Motorola say that when it comes to human rights, they already have it covered. Microsoft “continues to take steps we believe are appropriate” in the area of human rights and requires no additional prodding or cajoling. Citigroup has “implemented best practices regarding human rights,” so “a report concerning the company’s investment policies with respect to human rights issues would provide no meaningful benefit” to shareholders.

So much for scrutiny. In nearly every response to human rights resolutions, we are asked to believe that the company’s good faith, code of conduct and current efforts will be sufficient. Over and over again, companies assert against human rights proponents that they are perfectly capable of monitoring themselves and governing their own behavior. They have already incorporated existing human rights frameworks, such as the non-binding UN/Ruggie framework, into their deliberations, or developed their own codes of conduct with reference to those frameworks. Additional human rights reporting would be meaningless and probably just interfere with business operations. What could a report possibly turn up, these companies ask, that we ourselves have not already seen?

Call it arrogance, but these Fortune 100 companies are now confidently asserting their own human rights competence. They refuse to be held accountable because in their own estimation they are already socially responsible.