Tag Archives: United Nations

How did the DFC Handle Human Rights Concerns about Alto Maipo? Part Two

When presented with an opportunity to review human rights risks at a major hydropower plant in Chile, the Development Finance Corporation and affiliated international development banks reacted defensively and responded with boilerplate.

In a July post, I set out some context for records I received in response to a Freedom of Information Act request made to the Development Finance Corporation. It’s probably best to review that post before reading this follow up. Briefly, in August 2020, five UN Special Rapporteurs on Human Rights sent a detailed letter to DFC CEO Adam Boehler, warning of serious human rights risks at Alto Maipo Hydroelectric Project in Chile. The DFC is a major funder of the project.

A second set of responsive records, which DFC tells me is the final release, arrived yesterday. I’ve put them online here.

These are emails circulating within DFC and with other members of the Alto Maipo Lender Group in August and September, 2020, in response to the rapporteurs’ letter. The Santiago office of Norwegian bank DNB apparently received the letter first, on 18 August 2020, and emailed others in the Lender Group to alert them that it was on its way.

I don’t know what else the Office of Investment Policy (OIP) had heard about the Alto Maipo project before receiving Uauy’s email, or what exactly prompted OIP’s Jean Kim to remark “It Just keeps on coming.” Maybe Alto Maipo was already a source of concern or bureaucratic headaches, or maybe (given the email was sent at 8PM) it was just an especially busy day at the office.

The correspondence that follows Jean Kim’s email is pretty thoroughly redacted, making it difficult to assess the DFC response, but a few things are tolerably clear.

As suggested by Uauy’s email, DFC, DNB, International Finance Corporation, the Inter-American Development Bank, and other members of the Lender Group (like Germany’s KfW Development Bank and Brazil’s Banco Itau) will coordinate their response to the UN letter. The Lender Group’s Independent Environmental Consultant, ERM, will lead this effort.

ERM organizes a call to bring everyone up to speed, and after the call, a Social Risk Officer at DFC emails colleagues with a summary of the letter’s contents: “apparently the letter is claiming that the Project did not complete FPIC [Free, Prior and Informed Consent, as established in the UN Declaration of the Rights of Indigenous Peoples], amongst 5 other comments.” The 26 August chain of correspondence also includes a summary of a UN press release on the topic, with this quotation called out in bold:

“The Chilean Government would not be fulfilling its international human rights obligations if it prioritises economic development projects over the human rights to water and health,” said Léo Heller, UN special rapporteur on the human rights to drinking water and sanitation. He referred specifically to the Alto Maipo Hydroelectric Project, southeast of the capital, Santiago, and the avocado business in Petorca province in the Valparaiso, region north of Santiago.

Heller focuses his remarks on the Chilean government’s obligations to protect human rights. He goes on to suggest that steps taken by the government have been inadequate:

“Not only may this project reduce the main source of drinking water for residents of Santiago de Chile, it could also make air pollution in the capital worse,” Heller said, by damaging the “green corridor” of the Maipo River basin that has helped offset pollution.

During implementation of the project, which is due to come online in December, “although the Government has investigated damages to the environment no effective measure was taken to guarantee the human right to water for people affected by this megaproject”, Heller said.

There is clearly a role — or an opportunity — for the Lender Group to help the Chilean government address these challenges. As funders, the DFC and the Lender Group have a shared, concomitant responsibility to respect human rights in the economic development projects they back; to this end, DFC has its own environmental and human rights policies and compliance procedures in place.

But by September 4, the DFC appears to have assumed a defensive posture. “The letter,” writes Kate Dunbar of the Office of Investment Policy, “has reiterated key issues claimed by the opposition group throughout the Project.” She no doubt has in mind the group — “the opposition” — led by the Center for International Environmental Law, the Chilean NGO Ecosistemas, and Coordinadora No Alto Maipo. These organizations have been monitoring the project and raising concerns over human rights due diligence since its inception.

By September 21st, as the deadline for responding to the letter approaches, this defensive stance has hardened among some members of the Lender Group: the UN letter “contains a series of allegations than contain with [sic] no support whatsoever,” writes one member of the International Development Bank, dismissively. A strategy takes shape:

DNB is on board with the suggestion that the Lender Group keep the response non-confrontational, “high level and pointing to public information and bank’s general procedures.” ERM produces a draft and revisions follow, but all of that is redacted.

It’s hard to say how much these redactions could matter. Overall, the impression is that the Lender Group had decided, by late September, to stonewall. If that impression is mistaken, I welcome corrections. 

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.