Posts in the category ‘Corporate Social Responsibility’

Dodd-Frank and Unintended Consequences

While the  Dodd-Frank Wall Street reform act, passed in 2010, was mostly concerned about financial reform, it included a provision, Section 1502, chiefly through the efforts of Congressman Jim McDermott, aimed at increasing transparency about mining activities in the DRC by forcing US companies to disclose whether the sources of their mining activities were in certain areas of the DRC or unspecified neighbouring companies.

The result has been devastating to say the least. David Aronson’s op-ed in the NY Times last summer details some of the unforeseen damage on the mining industry in the eastern part of the country:

The law has brought about a de facto embargo on the minerals mined in the region, including tin, tungsten and the tantalum that is essential for making cellphones. The smelting companies that used to buy from eastern Congo have stopped. No one wants to be tarred with financing African warlords — especially the glamorous high-tech firms like Apple and Intel that are often the ultimate buyers of these minerals. It’s easier to sidestep Congo than to sort out the complexities of Congolese politics — especially when minerals are readily available from other, safer countries.

While a recent UN report acknowledges some successes of the legislation, it notes that the falling production due to the law has led to “”rising unemployment and worsened poverty among the tens of thousands…

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Criticizing the field of international investment law: A simple story made complex

The system of international investment law is often criticised by civil society organizations and legal academics. The Guardian recently described this system as a “legal weapon that gives corporations the edge on government”; it emphasized that there is a “growing concern among legal experts” that the investment regime “favours corporations over the public interest, puts sovereignty at stake, is chronically lacking in transparency and accountability and has been mis-sold to many developing countries that only realize exactly what they have signed up for when they get sued.”[1]

A Public Statement on the International Investment Regime, signed by a group of forty eight academics from around the world, has added, “We have a shared concern for the harm done to the public welfare by the international investment regime, as currently structured, especially its hampering of the ability of governments to act for their people in response to the concerns of human development and environmental sustainability”. [2] It argues, inter alia, that investment treaty arbitrations are unfair and unbalanced,[3] and that states should withdraw from investment treaties.[4] International investment law has even been described by a distinguished academic as “a law of greed”.[5]

Although perhaps somewhat exaggerated, these critiques are certainly not baseless. Several recent developments, most notably the disputes between tobacco giant Philip-Morris and the governments of Australia and Uruguay, indeed demonstrate how foreign investors can…

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L’accès aux médicaments antirétroviraux en contexte de crise de la santé publique et les obstacles posés par le droit international de la propriété intellectuelle

Chaque année, près de 2,7 millions de nouvelles infections au virus de l’immunodéficience humaine (VIH) sont rapportées et près de 2 millions de personnes en meurent (1). Les experts observent toutefois que les pics des nouvelles infections et de la mortalité annuelle sont maintenant derrière nous (1) et que les chiffres montrent une diminution globale de l’incidence du VIH/sida au niveau mondial (2). Un plus grand accès aux médicaments antirétroviraux (ARV) et une baisse de leur prix en faveur des populations des pays en développement (PED) est en grande partie responsable des progrès récents. Les ARV, en plus d’être les médicaments préconisés par les médecins  partout dans le monde pour un traitement efficace de la maladie, jouent un important rôle préventif en diminuant notablement les probabilités de transmission du virus (2, 3).

L’accès aux ARV est donc capital pour les PED, dont les populations ont les plus hauts taux d’incidence (4). Il y a près de dix ans, les ARV n’étaient que peu ou pas accessibles aux victimes de la maladie dans les PED, coûtant près de 10 000 $ par année pour chaque patient (5, 6). La société civile ainsi que certains membres de la communauté médicale internationale, outrés par l’attitude des grandes compagnies pharmaceutiques[1], ont donc dû prendre les choses en main afin de modifier l’ordre du jour politique global et  réitérer l’importance d’agir contre les ravages que…

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Special Contribution: A New Protocol To Stop Biopiracy: Worth a Standing Ovation?

 

Nailed it: Environment Minister Ryu Matsumoto raises the hammer to end the COP10 conference in Nagoya. KYODO PHOTO, Japan Times Sunday, Oct. 31, 2010

On Saturday morning, October 28 2010 the Nagoya Protocol on Access to Genetic Resources and the Fair and Equitable Sharing of Benefits Arising from their Utilization to the Convention on Biological Diversity was adopted in the midst of a standing ovation by the Parties present.

This Protocol is intended to comply with the 3rd objective of the Convention on Biological Diversity (CBD), which is the fair and equitable sharing of benefits arising from the utilization of genetic resources with the custodians of biodiversity. This Protocol is being hailed by delegates and nongovernmental organizations as one of the most important measures the world has ever taken against biopiracy.

Indeed, for many decades, pharmaceutical and cosmetics firms, and the agricultural and biotech industries have manufactured everyday products (drugs, toothpaste, makeup, etc.) consumed in our developed countries using plants or organisms from such places as the tropical rain forests of Latin America and Southeast Asia without acknowledging their origin or sharing the profits with Indigenous peoples and local communities whose knowledge made the development of these products possible[1]. Even worse, companies have patented over the last decades traditional products that were developed with the knowledge of Indigenous peoples and local communities without…

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China in Africa: Can Africa’s legal institutions cope?

The classic story is that there was once a large, poor, but resource-rich country emerging from a period of conflict, whose government decided to focus on development and modernization. They began a dialogue with a rich Asian country which had already become a major importer of their oil. This rich Asian country proposed a bargain with the poor nation: in exchange for its natural resources it would receive a line of credit and the ability to import technology, and have companies from the rich nation build infrastructure. Readers may or may not be aware that the poor country with oil is actually China and the rich country is Japan.  It is also very much the mutually beneficial dynamic that has come to characterize China’s engagement with many African countries.  However, serious questions have been raised regarding China’s role in Africa, and in particular whether African countries have strong enough legal and regulatory institutions to deal with the increased Sino-investment.

Economists project that China will soon become Africa’s largest trading partner with trade figures set to hit a record high of more than $100 billion in 2010. The International Monetary Fund recently predicted that growth for Sub-Saharan Africa, which typically includes 47 countries (excluding North Africa), should reach 5% this year, up from an earlier prediction of 4.5%.[1] In 2011, it said, growth could rise to 5.5%.[2] Increased trade…

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Bill C-300 and CSR: The Canadian Approach

The private member’s bill, an Act respecting Corporate Accountability for the Activities of Mining, Oil or Gas in Developing Countries (C-300) was defeated in Parliament on Wednesday (October 27th). While it was a close vote, 140-134, it was not a surprising outcome, considering that even Liberal leader Michael Ignatieff, whose own party brought the bill forward, claimed that the bill ‘had problems’ and did not show up for the vote. The question thus remains, what is Canada’s commitment to corporate responsibility in terms of international activities?

The stated purpose of the Act was, “to ensure that corporations engaged in mining, oil or gas activities and receiving support from the Government of Canada act in a manner consistent with international environmental best practices and with Canada’s commitments to international human rights standards.” In other words, the bill hoped to codify what is currently considered, insofar as international law is concerned, to be soft law. Despite the fact that some of the biggest Multinational Enterprise (MNEs) are technologically and financially stronger than some of the countries in which they operate, they are not recognized as having international legal personality.

Several international declarations demonstrate a consensus on behalf of the majority of states that the bottom line should not be companies’ sole prerogative; human rights must also be taken into account. The 2002 Johannesburg Declaration on Sustainable Development states that the private sector,…

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Environmental Law and the Curse of Competency

Have you ever been in an organization full of incompetents, where one competent person has to do everyone else’s work even though it has nothing to do with their own job? I certainly have – and identifying that individual really took the pressure off me and my fellow rubes. “Tibor,” we’d say, “we can’t get this project done on time even though your project depends on it. Can you help us out?” Sure enough, Tibor would come through for us, and we’d all learn something about teamwork. Something depressing.

“What does this have to do with law?” you may ask (other than its relevance to my ongoing unjust dismissal hearing). Simple: by passing the environmental buck on to financial regulatory agencies such as the Ontario Securities Commission (OSC), we would be treating them just like poor old Tibor.

In the land of the incompetent, the semi-competent man is king. Similarly, in the ham-fisted world of inefficient and ineffective governmental organisations, a body which generally satisfies its mandate, such as the OSC, is a paragon. Of course, the OSC (or the rest of Canada’s financial market regulators) isn’t beyond criticism. Many complain that Canada is more lax towards fraud and white-collar crime than other countries. Nevertheless, the OSC has fared much better in meeting its dual mandate – protecting investors while promoting fair and efficient markets – than equivalent organizations…

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Full Disclosure: Should Corporations Tell us Where it Hurts?

The United States’ Financial Accounting Standards Board (FASB) recently put forward a strange and controversial set of rules requiring firms to publish detailed information on their current and, more importantly, future and potential legal liabilities. The July draft proposal was actually an update to an initial July 2008 draft that revised the required disclosure of corporations’ loss contingencies under Topic 150. The Proposal would come into effect as of December 15, 2010, and its purpose is to address the concerns of investors who do not feel properly informed about the status of corporations that they may wish to invest in. Current and future legal liabilities obviously impact the chance, size and timing of any incoming or outgoing cash flows for corporations, and these new requirements increase transparency and information for current and potential investors.

While corporations being sued were already required to report any potential liabilities under existing laws, the new set of rules goes even further by requiring disclosure of any cash set aside for any ‘reasonably possible’ settlements in any particular area (but not in a particular case). This requirement is singularly problematic for companies as any change in this amount appears as a recognition of an increase in the corporation’s vulnerability. The new standards also demand that companies disclose the possibility – even if remote – of expensive litigation, and the amount of insurance bought to cover…

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Multinational Corporations, International Trade and Morality. “Do No Evil”?

The activity of multinational corporations in the international arena is an important engine of development. It is within the ability of multinational corporations to create jobs, to invest in expensive research, to transfer knowledge and technology around the world and to promote progress in many fields. Indeed the international community support such activities through the regulation of both international trade and investment. These rules are mostly designed to facilitate international economic activity by ensuring easy access to foreign markets and warranting fair treatment to aliens by host states.

The opening of borders to international activity has also brought about certain illnesses, some of which are not easy to confront. On the environmental front for example, it seems as if fears of losing economic competitiveness inhibit countries like the United States from passing a significant climate change bill. With regard to labour standards, competition for foreign investment may encourage countries to relax their labour laws and to use lower standards as an enticement for foreign economic actors. International economic activity is a complex, multilayered issue, one that touches (and often clashes with) a multitude of global issues.

A somewhat complicated relationship exists between international economic activity of multinational corporations and morality. The different concepts of moral behaviour, the notion of companies as entities that should act according to guidelines of morality (rather than just acting according to laws) and the role…

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Special Contribution : Moving Forward with Corporate Environmental, Social and Governance Disclosure

Whether the issue is climate change, biodiversity, labour and supply chains, or international human rights, corporate sustainability disclosure is of increasing relevance to shareholders.  In a recent report submitted to Ontario, Canada’s minister of finance, the Ontario Securities Commission (OSC) made various recommendations regarding corporate reporting that may be controversial to some, but are a step in the right direction.

The report follows the Ontario Legislature’s unanimous approval of a private member’s resolution calling on the province to review existing reporting requirements and issuers’ compliance.

The resolution asked the OSC to undertake a broad consultation in order to “establish best practice corporate social responsibility…and environmental, social and governance…reporting standards”. In response, the OSC – supported by the Hennick Centre for Business and Law at York University – convened a multi-stakeholder roundtable and held various consultations with interested parties.

The reporting of material environmental, social and governance (ESG) information should be viewed as an integral part of a businesses’ overall risk management strategy. With this information, shareholders are in a better position to assess financial risks and to allocate capital to firms best suited to mitigate these risks. Disclosure also encourages stakeholder dialogue. This dialogue, over time, informs internal decision-making and provides a critical framework for identifying both risks and opportunities. This, in turn, can drive performance, enhance an organization’s reputation and strengthen the core elements of its…

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