According to a report by Scott Porteous, the Mr. Bellingham stated: “We feel the government of Sudan should co-operate with the court on the existing arrest warrants, but on the other hand we don’t have an argument with the Sudanese people and it would be quite perverse and wrong for us to not encourage trade because trade equals wealth.”

However, as Mr. Porteous’ article notes, “research by Human Rights Watch and others has shown how exploitation of Sudan’s oil resources has fomented armed conflict and serious human rights abuses. In the late 1990s, an international outcry against abuses tied to the development of oil resources led to the withdrawal of Talisman Energy from a lucrative oil project in Sudan, and to the United States further extending a broad range of sanctions on Sudan.”

The growth of trade and investment agreements indicates that nation states are eager to gain from the benefits of liberalized markets both in their own countries and through export opportunities abroad.  The focus of such agreements is to eliminate any barriers to trade and to reduce governmental involvement in industry protection.  These pacts provide the legal framework that allow expansion of markets and reorganization of labor operations throughout the world and, as key actors in economic globalization, corporations have a tremendous amount to gain.

But there is a need to change the dialogue between trade and human rights.  Scholars have noted as much, stating that the international trade regime is more than simply a set of formal legal obligations on trade policy-makers.  Instead, it influences the constellation of actors involved in policy-making processes, helps to establish the terms of their discussion, shapes their understanding of the purpose of their endeavor, helps to generate shared conceptions about the boundaries of acceptable and legitimate trade policy and provides sanctioned technical knowledge and cognitive tools for the formulation of trade policy interests.Andrew T. F. Lang, Re-Thinking Trade and Human Rights, 15 Tul. J. Int’l & Comp. L. 335, 361 (2007).

According to Susan Aaronson, “policymakers should think of human rights as a market. They can best increase the supply of human rights abroad with incentives such as increased market access, technical assistance and training, and funding for improved governance. Policymakers should also focus on ways to bolster the inherent demand for human rights among their developing-country trade partners.”

Aaronson notes that “the European Union follows this approach when helping candidate countries join. Candidate countries are required to protect human rights, and the EU provides candidate countries with considerable foreign aid, financial assistance, and technical expertise. If candidate countries do not meet human rights objectives, they can’t accede. In this way, the EU is able to bolster the supply and demand for human rights as it enhances trade. The United States tries to do this also by incorporating provisions for political participation and due process rights in its free trade agreements.”

The UK should rethink its approach to Sudan and critically examine if economic ties would benefit the citizens suffering at the hands of the Sudanese government.  In such a way, trade and investment can be used as tools for human rights promotion, guaranteeing not only increased market freedom, but also increased freedoms in general.

Introduced to the U.N. General Assembly by Bolivia, and entitled “The Human Right to Water and Sanitation”, the resolution was adopted by a recorded vote of 122 to 0, with 41 abstentions including the United States, Canada, the UK and other industrialized nations.

The resolution represents a significant victory for participants of the global water justice movement who have spent the last decade organizing and lobbying. It symbolizes an increasing moral awareness on the scarcity of clean water due to, above all, worsening climate conditions and poverty. But how will this resolution actually affect the estimated 884 million people who lack access to safe drinking water, 2.6 billion who do not have access to basic sanitation, and the 1.5 million children under age 5 who die as a result of water and sanitation-related diseases?

Though the resolution demonstrates the GA’s intent that States and international organizations shall provide “financial resources, capacity-building and technology transfer, through international assistance and cooperation, in particular to developing countries” in an effort to provide “safe, clean, accessible and affordable drinking water and sanitation for all”, it is not binding. Furthermore, lack of a global consensus may hinder the actual implementation of these goals. The abstention by many wealthy and powerful nations like the U.K., Canada and the U.S. reflect global inequalities in access to water and sanitation, most severe in developing nations, and perhaps reflect different priorities. On the other hand, access to safe water and sanitation has emerged as a global issue with growing amounts of popular and political willpower, and this resolution may just provide the further impetus necessary to translate these goals into binding legislation and state action. Also, countries like the U.S. have stated that they strongly support the goal of universal access to safe drinking water and sanitation, and these goals will be a major focus at September’s Millennium Development Goal Summit, and at other global efforts addressing water rights.

Another challenge facing implementation of the universal right to clean water and sanitation is who will distribute it. These rights are positive rights, calling for state intervention. The draft resolution urges states and international organizations to participate in this effort. Due to the enormous amount of capital required to redo infrastructure, improve and properly manage service quality, and need for technical expertise, many governments, especially highly indebted countries and/or with corrupt governments, have failed to provide clean water services and sanitation to their populations. Hence, in an effort to promote better services, international financial institutions like the IMF and World Bank started to condition loans on introduction of the private sector in water services and sanitation around the 1990s. This phenomenon is controversial because it gives private ownership and control of formerly public services. The impact of water privatization has varied greatly; in some cases has brought about better quality drinking water while also increasing investment, or more generally has resulted in dramatic increases in the cost of water and civil unrest.

Bolivia, the country leading the draft resolution, has been linked to the efforts for water justice since 2000 when they experimented with privatization of their water supplies with disastrous results. In 1999, as a condition to a World Bank loan, water systems of some of Bolivia’s poorest regions were subject to sale to private investors. The U.S.-owned company Bechtel was given a contract to manage and deliver water in Cochabamba, Bolivia, and no public subsidies were given to ameliorate the increase in water tariffs. Not only were the people of Cochabamba hit extremely hard with a 200-300% increase in price of water, forcing them to choose between food and water, but when they tried to protest, the President placed the country under martial law and suspended almost all civil rights. The water contract with the multinational corporation was finally terminated, but this example highlights opponents’ fears about water privatization, and the inherent complexity of this issue.

A decade later, the right to water is now part of the Bolivian constitution. Several other countries have also adopted this as a fundamental right. Despite these adoptions, the numbers of people without access to safe water and sanitation remains staggeringly high. Opponents of water privations fear that when privatized, companies would be free to charge even for rainwater, as occurred in Bolivia, and lack any sort of accountability. They see water privatization as an inherent contradiction to the inalienable right to water. Proponents of water privatization argue that water privatization can work when subsidized for poorer populations.

Private water companies support the resolution to enshrine access to clean water and sanitation as a human right, according to AquaFed, the International Federation of Private Water Operators, representing 300 water companies serving hundreds of millions of people in 40 countries.

“For private water operators, this global recognition is an important milestone. Our members and our Federation have been working actively with the United Nations and many other stakeholders for a decade to ensure that the Right to Water and Sanitation is recognized, that it is practical and can be implemented,” said AquaFed President Gerard Payen.

The reality is that water privatization can be immensely profitable for investment firms, which sheds some light on why so many countries abstained from voting on the resolution; it could pose a challenge to their efforts of water privatization. Australia, for example, has entirely privatized its water, and a big American investment firm is actively buying up water rights. For these and other countries, inserting words like “access to” water was a huge point of debate as governments would only be responsible for providing access to water, and they could be free to charge for it or allow a private company to do the same. For countries like Bolivia, not adding “access to” and keeping the word “sanitation” was something they would not budge on. Furthermore, the resolution includes the words “accessible and affordable” drinking water. Maude Barlow, long time water justice advocate and former senior adviser on water to the President of the U.N. General Assembly, speculates this divide among those who see water as a “public trust” and inalienable human right and those who see water as a “commodity” is what resulted in so many abstentions.

Barlow also believes that these differing attitudes towards water privatization will continue to affect the goals set out in the resolution, but that despite this, the resolution will remain a “guiding principle” by “the closest thing we have to a global parliament”. Time will only tell if this call to action embodying the moral attitude of most supporters of the right to water and sanitiation translates into accessible rights for the world’s poorest and marginalized groups.

Nokia’s approach to innovation, which has focused on building broad platforms that can then be customized to a specific region or consumer, is notably demonstrated through its approach to the Indian telecommunications market. Responsive to its 60% market share in the Indian handset market (about 25% of users are rural consumers), Nokia unrolled its Life Tools campaign in 2009. Life Tools introduced rural India-inspired applications into the Nokia technology platform, with the goal to provide farmers and other rural customers access to agricultural information such as market prices, educational tools, and entertainment services that are easily accessible, cheap and user friendly. After a successful launch in India, Nokia expanded the life tools program to Indonesia and China this May (called Ovi Tools in China). Similarly, in 2009, Nokia responded to the absence of rural banking centers in India launching a mobile commerce platform after buying a minority stake in mobile financial services supplier Obopay. Through Obopay, customers could transfer money to other people just by using their mobile phone, a huge advance for rural areas where access to banks is limited.

Additionally, Nokia fashioned its customer service model to address the needs of its rural consumer base after becoming the first mobile phone maker to set up a satellite research and development center in India. Sales representatives staffed vans that regularly criss-crossed the countryside and set up low-cost collection points in chemist shops, where distributors and micro-distributors collected phones and took them to the nearest care center. The company developed phones with navigation technology optimized for use across urban environments, small towns, rural areas, and even pathless terrain. Some models also doubled up as flashlights because of rural India’s frequent power outages.

In 2010, Nokia partnered with branding agency Lovely Day and The Feast social innovation conference to create a platform for discussion around social innovation and the potential for mobile technology to improve people’s lives in the developing world. The platform, called “Change Connections,” consists of a series of ideas and conversations, with the eventual goal of making “connections” between different systems (i.e., the idea that education affects livelihood, which affects health outcomes). Experts are gathered from a number of disciplines and include NGO leaders, designers, developers, and writers all having touched the social innovation space in some way. Experts share their ideas, recommendations, and insights into the issue areas, with the aim of shaping and refining the ideas that are crowdsourced from participants.  Importantly, all of the ideas and information on the website are opensource so that others may draw inspiration from the contributions of others.

Ways that lives could be improved through mobile technology include helping people organize for collective power, accessing health care in rural areas, or learning even when getting to school is not a possibility. According to Nokia Future Specialist (and Nokia leader on the Change Connections project) Ville Tikka, by strengthening innovation and collaboration at a grassroots level, mobile technology can be used as sources of information to create self-empowered societies.

Finally, Change Connections builds upon Nokia’s technology strategy, which is to “build on people and places” via location-based services that give social networking a physical presence/location. It additionally is consistent with Nokia’s global approach to technology – to create one simple platform with few basic services, and then inviting local innovation and preferences based on local content.

The ultimate impact of the Change Connections campaign remains to be seen. However, as a mobile service provider with a strong market share in the developing world, Nokia is making admirable strides to innovatively and collectively use its competitive advantage for good. The Change Connections campaign is reminiscent of William Easterly’s praise of the “searchers” for solutions to global poverty – those who embed themselves within a community and derive solutions collectively. Nokia once again proves that it is no stranger to innovation, and we all will be looking forward the future application of Change Connections.

Change Connections on Youtube

In terms of structure, officially supported ECAs are classified as either public or quasi-public.  Some public ECAs are set up as an agency or even a department of state, and are therefore wholly owned by the state and operate under state control.  Other public ECAs are structured as wholly owned corporations of the state, and operate under independent management.  Still other ECAs are quasi-public entities, with either private or mixed ownership and control.  Even given these structural differences, the reality is that all ECAs are subject to the laws and regulations of their home states.  Thus, they differ from private financial organs in that their activities are regulated and chartered by the home state.

The SRSG on Transnational Corporations, Prof. John Ruggie has noted, in articulating a framework for business activity vis-à-vis human rights, that “…international law firmly establishes that States have a duty to protect against non-State human rights abuses within their jurisdiction, and that this duty extends to protection against abuses by business entities”.

The reality is that few companies will operate in developing countries without ECA support. In particular, private financial markets will not invest in large extractive or extractive-related infrastructure projects without ECA backing as the risks are considered too high. ECA involvement assures would-be investors that a project has the backing of institutions with sufficient political muscle to ensure that the host country will honor debts and contracts.

Thus, in exercising their duty to protect, States can push for a host of regulations over their ECAs.  These include: 1) regulating the form of trade and investment support given; 2) ensuring that underlying agreements protect human rights; 3) mandating transparency so that access to information is guaranteed; 4) requiring human rights impact assessments before support is given; 5) making support for project contingent upon human rights performance; 6) creating enforcement mechanisms, including an independent office to hear claims for violations and take action to terminate projects which may be violating agreed standards.

For instance, the Finnish Export Guarantee Act which brings an environmental perspective to the Finnish ECA (Finnvera) states clearly that the obligations of the ECA mirror those same legal obligations of the state itself.  This clearly requires the ECA to honor the same international legal commitments that the Finnish government itself has supported.

Another ECA, the Danish Export Credit Agency, Eksport Kredit Fonden (EKF), is pushing further in bringing social and human rights considerations to the forefront of their financing activities.

EKF was the first agency worldwide to adopt the Equator Principles (EPs), a voluntary set of international guidelines developed by the banks for managing environmental and social issues relating to project finance.  The EPs are based on the policies and procedures set by the World Bank’s International Finance Corporation.

The EPs were initially developed to ensure that project financing, “a method of funding in which the lender looks primarily to the revenues generated by a single project, both as the source of repayment and as security for the exposure” is conducted in a socially responsible and environmentally sound way.

Financial institutions that have adopted the EPs will only provide loans that conform to their principles, including:

Principle 2: Social and Environmental Assessment

Requires borrower to conduct such an assessment process to address the relevant social and environmental impacts and the risks of the proposed project. This assessment should also propose mitigation and management measures relevant and appropriate to the nature and scale of the proposed project.

Principle 5: Consultation and Disclosure

Requires that the government, borrower or third party expert has consulted with the project affected communities in a structured and culturally appropriate manner. Projects having a significant impact on affected communities, the process will ensure their free, prior and informed consultation and facilitate their informed participation.

Principles 7 and 9:

These two principles ensure independence in both review (Principle 7) and in monitoring and reporting (Principle 9).

The Right Respect salutes State governments acknowledging the obligations that ECAs owe as public or quasi-public entities. Through recognition that ECAs are bound to the same human rights obligations as the States overseeing them, accountability mechanisms are created to ensure that project financing activities do not negatively impact human rights.  We encourage citizens to demand of their governments that ECAs take human rights considerations into account in their project financing activities and encourage adoption of some of the mechanisms above for doing so.

There are undoubtedly some positive effects associated with the massive flows of FDI in the 1990s. Many economists agree that these effects included job creation of local workers, technology transfers from higher developed countries, the potential for better management practices to be adopted in the FDI receiving country, assistance with capital formation, and increased access to foreign markets and increased product diversity.  Additionally, (in theory at least) the global integration of capital markets contributed to the spread of best practices in corporate governance, accounting rules, and legal traditions.

However, many of the countries that received FDI in the 90s experienced extremely volatile market growth (and loss). Memorable examples include the East Asian financial crisis, Argentina’s financial collapse, and the weakness of response to international financial reforms across Latin America. The most common criticism of FDI in more recent academia poses the question as to whether FDI actually inspires market and political reform, or whether it simply follows these reforms – finding a stable economic investment climate in countries that already have stronger domestic institutions.

Experts estimate that every year $500 – $800 billion leave Southern countries due to criminal activities, tax evasion, and corruption. This makes South-North financial flows several times higher than the average $90 billion annual aid flows, the $240 billion foreign direct investment to the South and the couple of hundreds of billions of dollars of remittances transferred from migrants. An examination of investment patterns over the past 20 years demonstrates that FDI is concentrated in countries rich in natural resources and in a few sectors (such as oil and gas, mining, forestry) that guarantee high profits for the companies investing but often offer little return, both in terms of wealth and development, for the country itself. Obviously, host country populations suffer when their governments, in efforts to attract greater FDI, fail to enforce their social, governance and environmental regulations.

What would happen if rather than working to attract greater amounts of FDI, developing country leadership invested in their own populations through institutional reform efforts? Peruvian economist Hernando de Soto touches upon the economic power of the poor throughout his work on property reform. De Soto tracks “dead capital,” or the absence of legal property mechanisms necessary to generate capital in the third world. The amount of economic growth possible in the third world with better legal property mechanisms is simply amazing. De Soto and his team estimate that the total value of real estate held but not legally owned by the poor of the Third World and former communist countries is at least $9.3 trillion. For instance, The Instituto Libertad y Democracia, the think tank de Soto heads, offers remarkable statistics quantifying the informal sector’s economic progress and showing its contribution to the national wealth:

• In Lima alone, the informal sector employs 439,000 people.
• 48% of Peru’s economically active population and 61.2 percent of its work hours are devoted to informal activities contributing 38.9 percent of the country’s gross domestic product.
• 95% of Lima’s public transportation is informal
• 50% of the population in Lima lives in housing built by the informals, which expands at nearly 50 times the rate of the state.
• 83% of the markets in Lima were built by informal entrepreneurs.

Imagine the potential for economic growth at the government, commercial and individual level if this capital were harnessed in the form of a greater tax base, increased economic mobility, small business growth, and development of a sophisticated banking and finance sector. De Soto argues that the poor, often envisioned as needing rescue by multi-national enterprises and developed governments, have the strength in numbers, entrepreneurial spirit and initiative to begin to lift their countries out of poverty from the ground up. In a recent interview, de Soto explains:

There is now much talk about “globalization” – pro and con – but the fact is that globalization as it now stands is only globalizing the elites: those that have the tools and identities to reach across borders without leaving their neighborhoods. The poor – who are over 4 billion people, two thirds of mankind – are entrepreneurs who need the economies of scale and to be part of the division of labor that the global economy can provide. But right now they do not have the legal tools to have their assets and track records examined, to structure complex deals, sign reliable contracts, accumulate or leverage the value of their resources.

It is time to rethink globalization and the social contracts that governments hold with their populations. By brainstorming ways to realign economic growth in the developing world with the values and desires of its own people, truly remarkable change affecting an enormous segment of the global economy is possible.

For sources and information, see:

“How Beneficial is Foreign Direct Investment for Developing Countries?” (Prakash Loungani and Assaf Razin, IMF)

“Foreign Direct Investment: South Africa’s Elixir of Life?” (C.E. Moolman, E.L. Roos, J.C. Le Roux and C.B. Du Toit)

Addressing development’s black hole: Regulating capital flight (A EURODAD, CRBM, WEED and Bretton Woods Project report)

The Other Path: The Invisible Revolution in the Third World (David Levy)

The Power of the Poor – Q & A with Hernanda de Soto

Ruggie focused his statements on the lacking human rights due diligence undertaken by the Export Credit Agencies (“ECAs”) themselves and required for the projects that they finance.

ECAs are public agencies and entities that provide government-backed loans, guarantees and insurance to corporations from their home country that seek to do business abroad, including in developing and emerging markets.  According to ECA Watch, ECAs are now the world’s biggest class of public finance institution operating internationally, exceeding the size of the World Bank Group and funding more private-sector projects in the developing world than any other class of financial institution.

ECAs not only support projects in high-risk environments, but also engage actively in supporting industries with high environmental and human rights impacts, such as the extractive industries.  In fact, a recent Amnesty International submission notes that one of the reasons why ECAs were able to deliver “excellent results” in 2007-2009 was because of their major investments in large oil and gas, as well as mining and other natural resource projects.

It was only recently that most ECAs adopted environmental policies, developed from a set of recommendations known as the “Common Approaches”.  However, groups like ECA Watch have leveled criticism at the Common Approaches, noting that they do not require ECAs to consult with affected communities and civil society in the development of the projects they finance.

In Ruggie’s compelling address, he noted the two risks that ECAs are running in terms of human rights.  First is the risk that a client’s business activities or relationships contribute to human rights abuse abroad, with the moral, reputational, political  and in some cases legal implications this entails for an ECA itself. The second is the financial risk to the project that may result from its adverse impact on the human rights of individuals and communities, which in turn could affect the  ECA’s own exposure.  He further notes that the most fundamental step is the need to integrate the corporate responsibility to respect human rights into the Common Approaches.

In the United States, both the Overseas Private Investment Corporation (“OPIC”) and the Export-Import Bank of the United States (“Ex-Im Bank”) operate as ECAs. OPIC has established an Office of Accountability to assess and review complaints about OPIC-supported projects. The Office of Accountability gives local communities, which may be materially, directly and adversely affected by an OPIC-supported project, and project sponsors a means of raising complaints, independently from OPIC operations.  Perhaps due to criticism of sponsored projects impacting the environment, the latest of OPIC projects center around microfinance operations in the developing world.

This is welcome news, and it appears to be paying off both for OPIC and for the citizens benefiting from microfinance arrangements.  According to a report by the US Agency for International Development, microfinance operations supported by OPIC and others in Iraq have achieved an ambitious rate of growth and socio-economic impact.  As of the end of April 2010, such operations cumulatively disbursed over 197,000 loans of more than $453.3 million.

This evidences the extreme power that ECAs have on impacting the lives of citizens where they support projects.  However, as Ruggie properly notes, the lack of adequate processes to assess human rights impacts often leaves ECA projects doing more harm than good.  Not only must ECAs build due diligence processes into their assessments of viable projects, but the companies benefiting from ECA support must also be required to carry out due diligence, including building a human rights policy, conducting human rights assessments and monitoring human rights performance.

To read Ruggie’s speech, click here.

To read Amnesty’s Report, click here.

Despite internal criticism, the United Nations has been one of the latest numbers of nonprofit organizations to patronize PMSCs. Foreign Policy Magazine reports that the U.N. has been in consultations with a British security firm to send additional security forces to protect them in Afghanistan and the U.N.’s top security official, Gregory Starr has also been advocating an increase in the use of private security firms in Pakistan, where U.N. relief workers have been the target of kidnappings and killings, according to U.N. officials.

Addressing increasing security issues in connection with peacekeeping operations in zones being targeted by combatants or terrorists raises some difficult ethical questions. Nick Horne, a former U.N. political officer, stated with regard to the increase of private forces in Afghanistan, “As a former beneficiary of this policy, I welcomed it. The gurkhas are professional, polite and discrete. It also frees up Afghan police for policing duties. Obviously it costs money — I don’t know how much — but it does enable the U.N. to continue operating in an increasingly hostile environment.”

While security concerns are completely legitimate for the U.N., as well as other humanitarian organizations, it is difficult to condone the continued proliferation of PMSCs if they continue to function with no accountability. Under the current terms of international human rights law, PMSCs have managed to escape many of the terms of governance. Even the term “mercenary” refers to a combatant who illegally takes part in a conflict – a term inapplicable to modern day PMSCs that legally operate as businesses. Uniform human rights governance norms and accountability mechanisms have also failed to be codified into any internationally recognizable licensing or contract terms, despite the global operation of virtually every private security organization. Finally, PMSCs have managed to elude liability for human rights abuses in wartime and humanitarian operations as international conventions have targeted state actors alone and many of these companies have been indemnified or immunized by their state contracting parties.

As a $120 billion industry a year in the U.S. alone, PMSCs are not going away anytime soon. Right Respect has advocated for greater transparency in the contracting and functioning of private military organizations. The U.N. and other nonprofit organizations should be the leaders in creating greater transparency by making their contracts publicly available. It is only with increased access to information around the use and growth of PMSCs that the industry can be eventually regulated under an international and domestic framework. Transparency should be the first step in showcasing best practices, as well as uncovering missteps and abuses in private security contracting.

See the Right Respect Draft Code of Conduct for PMSCs here.

For the last few decades, globalization has been a vehicle of economic and sustainable development throughout the world. With their vast economic power, corporations have the unique ability to end the exploitation of foreign laborers. Timberland, a boot manufacturer, has proved itself as a pioneer in the field by subjecting its suppliers to a strict Code of Conduct in accordance with the Universal Declaration of Human Rights and International Labor Organization’s (ILO) conventions establishing international human and labor rights. Timberland strives to provide its employees with a fair, safe and non-discriminatory work environment in which an employee is ensured the opportunity to develop both as a worker and as a human being. Today, the Code of Conduct Team comprises 15 individuals responsible for the action, decisions, choices, program design and strategy at Timberland. The Code is available in over 20 languages to employees around the world. The following exploration of Timberland’s Code of Conduct summarizes some of the challenges faced by Timberland in upholding the Code and how they overcame those challenges. Finally, the importance of adopting such a Code will be discussed and collaborative solutions presented to ensure a brighter future for workers.

I.    A Strong Code of Conduct

To advance human rights, Timberland has created a specific set of provisions that all of its corporate affiliates must follow. The provisions include:

1.    Voluntary Employment
2.    Freedom of Association
3.    Fair and Equal Treatment
4.    Child Labor
5.    Compensation
6.    Working Hours
7.    Health and Safety
8.    Right of Review

Voluntary Employment

Though slavery has been abolished in the United States, it is still a prevalent labor practice throughout the world. To combat modern slavery, Timberland requires that each employee work voluntarily and with a meaningful option to terminate employment. Basically, this provision requires that all factory employment be at will.

Freedom of Association

Freedom of association enables workers to unionize or band together so that their voices can be heard. This is an important right because it creates an internal dialogue between workers and management, which has the effect of protecting or promoting the interests of the labor force. In other words, it acts as another check against the exploitation of the workers by the management. However, as in the United States, the right to unionize or engage in collective bargaining practices can be restricted due to the importance of a given industry to the viability of the economy at large. In those instances, Timberland has required that there be an alternative means for workers to express their grievances to the management in a manner that is equally as effective as unionization.

Fair and Equal Treatment

A hallmark of human rights is that each individual be treated in a fair and equal manner. To promote fairness in the workplace, Timberland’s Code requires that no factory employee be disciplined through corporal punishment, harassed, abused, or run the risk of employer retribution on the basis of expressing grievances predicated on the violations of basic human rights. To promote equality, Timberland’s Code prohibits status discrimination based upon race, color, sex, religion, political opinion or for any other reason.

Essentially this provision gives foreign workers the same protections that United States factory workers enjoy under such acts as the Americans with Disabilities Act (ADA) and the Civil Rights Act.  Both acts forbid employers and state and local governments from discriminating against workers in all aspects of employment. The former prohibits employers from discrimination against persons who are or may become disabled while the latter prohibits discrimination based on race, color, religion, sex, national origin, disability, or age. The effect of this provision is to give workers rights that they may not otherwise enjoy under the applicable local laws.

Child Labor

Sensitive to the fact that whether an individual is a child or an adult is largely a local, cultural and economic determination; Timberland has provided for some flexibility in that determination. They define a child to be one that is younger than 16 years of age or the age at which education ceases to be compulsory, whichever is greater. This provision has the virtue of respecting local customs and rules but at the same time realizing that some people are too young to fully understand the consequences of their choices.

Compensation

This provision helps guarantee that each worker earns a livable wage and hopes to close any possible loopholes for a foreign factory owner to not give fair compensation. Timberland’s Code requires that each worker be paid a minimum local wage and be given all mandated benefits. In addition, the Code prohibits a factory owner from categorizing employment as being conditional in order to justify paying a lower or no wage to a worker. As in the United States, the Code requires all overtime hours to be paid at a premium rate that is no lower than local law.  Though Timberland cannot directly dictate what wages ought to be paid, it can ensure that local law is not violated and try to prevent the further proliferation of modern slavery in the factories in which its goods are manufactured.

Working Hours

Timberland’s Code limits the workweek to 6 days with a maximum of 60 hours, including overtime. This restriction has proven to be particularly difficult to enforce because the workers themselves may not want to jeopardize their jobs or may want to work longer hours to provide necessities for themselves and their families. However, at the same time, allowing an individual to work as many hours as he or she may wish to can lead to adverse consequences to their physical and mental well being, and risk unhealthy work/life balance, and hinder overall productivity.

Timberland also prohibits an employer from mandating overtime. This in effect limits the workweek to 48 hours and acts as a check on factory owner and manager. Consequently, this reduces the risk of alienating workers from their families, humanity, and the like.

Health and Safety

The health and safety provision of Timberland’s Code ensures that the workplace, including all residential facilities, comply with the recognized international standards of the ILO. Furthermore, this provision requires paid training on workplace safety practices. This provision benefits workers on the frontlines, the ultimate consumers of the finished products, and in theory, management by limiting their potential legal liability. This provision also helps ensure that workers are provided a safe working environment that does not force individuals to expose themselves to unnecessary risk.

Right of Review

Lastly and most importantly, Timberland’s Code establishes a right to review for compliance amongst all business partners. Timberland subjects all of its business partners to ongoing audits, requires them to provide full and open access, provide the workers the opportunity to voice any violations of workplace standards, and make information on compliance programs available publicly. By doing so, Timberland seeks to ensure that all of the above provisions are enforced meaningfully and not just confined to a piece of paper.

II. Code in Practice: Challenges

A.    From Compliance Audits to Collaborative Assessments

In 1994, with the belief that all of their employees deserve the right to a fair, safe and nondiscriminatory workplace, Timberland formalized its workplace Code of Conduct. In 1998, Timberland joined forces with Verite, a nonprofit, to perform compliance audits of off shore factories making Timberland products.  Initially, Verite only audited footwear vendors, apparel vendors, and some licensees’ facilities but beginning in 2000, expanded its operations to all facilities including tanneries and major component suppliers.

In 2005, after finding that improvements after an audit did not last long, Timberland supplemented their factory compliance audits with collaborative assessments. So, rather than merely policing factories for compliance, Timberland decided to add an assessment process in which they worked alongside their suppliers and their workers to create positive, sustainable change. By collaborating with factories to not only identify the root problems but also to implement change, workplace quality significantly improved.
Instead of formal question and answer interviews with factories, Timberland now employs a participatory method with workers and management that enables a free flowing dialogue. In addition, when specific violations are discovered, the assessment committee immediately assigns the factory a “high priority” status and alerts Timberland’s management that immediate action is required. Ultimately, Timberland shifted its focus from reactive to proactive.

At the outset, these changes proposed a challenge for Timberland because it was unclear how much time training would take and how well people would adjust to the changes. Also, as a pioneer, they were uncertain of how to measure the impact the changes would have because of the lack of empirical data at the time. However, despite these challenges, Timberland stayed committed to the new process, and to the workers. Though the collaborative assessment process requires more energy on the post assessment front, the benefits of sustainable workplace improvements far outweigh the relatively nominal costs to multinational corporations’ balance sheets.

B. Labor Compliance Overtime

In addition to the above challenges, Timberland has also had to battle serious violations of their working hours provision. Timberland’s strong belief in a work life balance for its factory workers led them to adhere to the International Labor Organization’s general rule for working hours, stating that workers not work more than 8 hours a day or more than 48 hours a week. Timberland also requires that all workers be given at least 1 day off after 6 consecutive workdays and that all overtime be voluntary. Timberland follows industry best practice to limit total working hours (including overtime) to 60 hours a week or 12 hours a day, but unlike other brands, has shown a low tolerance for such violations.

As discussed above, working hours are harder to comply with because the workers themselves may want to work more than the 60 hours weekly cut off laid out in the Timberland Code of Conduct in order to adequately provide for themselves, especially if they have to travel a long distance to their workplace as seasonal workers. Furthermore market pressures to remain competitive have presented serious challenges to limiting working hours and other improvements to workplace standards.

In 2006, after Timberland noticed that its suppliers were unable to meet their requirements, Timberland undertook several initiatives to explore the external and internal causes of excessive working hours. The first of these was a case study performed in one of their factories.

While assessing a sourced factory, Timberland discovered that one of the major problems contributing to excessive overtime was that total demand exceeded the factory’s production capacity during peak production months. In order to battle this problem, Timberland underwent major changes. One change that helped decrease excessive overtime was reducing the number of changes allowed to sample specifications to allow sample rooms to have better information earlier and thus more manufacturing time.

Timberland also discovered that there were internal causes to excessive overtime. First, the tendency to launch multiple new products around the same time created an imbalance in production that caused factories to utilize excessive overtime to meet the demand. Second, Timberland discovered that there were large amounts of time spent on new development, which translated to more time spent on the learning curve and a lower production capacity to meet the demand. To battle the first problem, Timberland launched a project to determine how many new products can be introduced into a factory without a major impact on overall production volumes. As to the latter, Timberland launched a project to determine the true capacity for Timberland’s development resources and then lower the time allotted to meet that capacity. These changes lowered excessive hours because it gave factories an understanding of the impact those activities had on overall production capacity and recalibrated expectations.

With respect to factory management of working hours, Timberland discovered an effective solution; real time information of employee’s working hours. Essentially, the Human Resources department developed a system to monitor weekly hours and developed a plan whereby Plant Management is made aware of the number of hours each employee has worked as of the fourth working day each week. This report includes an estimation of the hours to be worked as of the fifth day, normally Friday, so that Managers are aware of how many hours each employee is available to work overtime if need be without exceeding the 60 hour maximum. In the case of a violation, the Supervisor or Manager must give written explanation and there exists grounds for disciplinary action for further violations.

III. Conclusion

Since adopting the Code of Conduct, Timberland has not wavered in its commitment to upholding the Code’s provisions. Despite facing several challenges, Timberland has been able to ensure the standards set forth in its Code are met in the over 300 factories around the world where its boots are made because they personally take responsibility to remedy the situation when a supplier fails to meet the Code. Timberland, by leaving a Chinese factory in 2006 that accounted for over 17% of its production, has demonstrated their deep commitment to the Code where a partnership is no longer tenable. Finally, by opening up the lines of communication and sharing the responsibility for whatever problems may arise, Timberland has been able to successfully improve workplace standards and achieve the goals set forth by the Code.

Globalization demands that human rights be extended to everyone. No longer can the developed world rely on its own markets to drive their economies. By implementing a Code of Conduct such as Timberland’s, it is a step towards the installation of human rights and ultimately meaningful, significant and lasting economic growth. By working collaboratively, corporations can pool their resources together to maximize time spent on actual implementation of solutions to the root cause of human rights violations, rather than on simply identifying those problems. Implementation and remediation are the necessary steps to achieving change. Industry or brand collaboration on assessments of facilities abroad is essential to realizing sustainable change in workplaces and the sooner businesses start working together, the sooner everyone wins.  Right Respect commends Timberland for their efforts in this regard.

To read more about Timberland, click here.

Right Respect and Human Rights Advocates present this report to the Working Group on the use of mercenaries as a means of violating human rights and impeding the exercise of the rights of peoples to self-determination (“Working Group”). We commend the efforts of the Working Group towards articulating a list of obligations of private military and security firms and present these comments as a means of supporting their work.

The tremendous loopholes in coverage over PMSC actors under the applicable Conventions, including the Convention Against Mercenaries, the Geneva Convention and other such international treaties, showcases the urgent need for an international consensus on accountability for the corporate entity itself.
In 1999, the United Nations Development Program concluded “multinational corporations are already a dominant part of the global economy – yet many of their actions go unrecorded and unaccounted.  They must, however, go far beyond reporting just to their shareholders.  They need to be brought within the frame of global governance, not just the patchwork of national laws, rules and regulations”.

A framework convention on the issue of private military and security companies would allow signatory governments to deliver the agreement in the context of their own legal tradition.  Furthermore, specific obligations would enable each stakeholder to understand the rights and responsibilities of one another.  Declaration of these rights in international terms establishes an avenue for public accountability, through hortatory language, serving as a basis for the public and the media calling any party government to the challenge of public justification.

States and governments face a host of political and economic realities that leave them susceptible to manipulation from private interests.  In ill-functioning governments, this vulnerability is exploitable and human rights are not ensured adequate protection.  The Special Representative on Transnational Corporations notes that many governments take a narrow approach to managing their business and human rights agenda.   This example is particularly evident in the context of failed States or those with weak governments.  However, the reality of PMSC activity is that their impacts are felt in countries in all phases of development and with all forms of government.  Thus, the need for international accountability mechanism is apparent, and the draft Convention is a strong effort toward this end.

2.    Format of International Oversight and Monitoring

The draft Convention envisions a Committee on the Regulation, Oversight and Monitoring of Private Military and Security Companies (“International Committee”) as the international body overseeing States’ compliance with the Convention.

Right Respect and HRA believe that guidance for development of this International Committee can come from previous work done on business and human rights issues, including from the Norms on the Responsibilities of Transnational Corporations and Other Business Enterprises with Regard to Human Rights as well as by examining the structure, form and function of the Compliance Committee created in the Aarhus Convention.   For any true accountability mechanism to function effectively, there must be independence, transparency, participatory processes, and legal recourse.  The following two offerings provide examples of these principles in play.

a.  Guidance from the Norms

The legal authority of the Norms derives principally from the fact that they are a restatement of existing international and legal principals found in treaties and customary international law, including dozens of UN declarations and resolutions.  The Norms themselves espouse that States will retain primary responsibility for the protection of human rights  and paragraph 19 of the Norms confirms that nothing in the document shall be construed as diminishing the human rights obligations of States.

The value of the Norms as compared to voluntary compliance regimes is that they also contain an implementation process, calling on each transnational corporation to “adopt, disseminate, and implement internal rules of operation in compliance with the Norms”.   Secondly, the UN shall conduct periodic monitoring and verification of the corporations’ efforts and investigate complaints of violations.   Thirdly, States are responsible for adopting and enforcing a regulatory scheme consistent with the Norms.   Lastly, the corporations are required to provide “prompt, effective and adequate reparation to those persons, entities and communities” harmed by their conduct, as determined by national courts and/or international tribunals.

The Norms therefore propose regularized monitoring of the activities of corporations at the international level by creating a web of reporting and observing, involving states, international actors and elements of civil society.   This web would pay particular attention to ‘stakeholder’ input and complaints about violations of the Norms.  The Commentary of the Norms also suggests that much of the information gathering could be delegated to “non-governmental organizations, unions, individuals or others” with corporations having “an opportunity to respond”.
One suggestion to be included in the draft Convention is the use of a savings clause.  In the Norms, the savings clause “intended to ensure that transnational corporations and other business entities will pursue the course of conduct that is the most protective of human rights –whether found in these Norms or in other relevant sources”.   Thus, as the Commentary states, “…a State may not invoke the provisions of internal law as justification for its failure to comply with a treaty, the Norms, or any other international norms.”   The use of such a clause would ensure that any additional obligations that States sign on to via international treaty or domestic legislation would take precedence over those of the draft Convention.

Leading scholars have echoed the value of the Norms in crafting a set of obligations on the various actors involved.  For instance, Professor Chirwa identifies five advantages to the UN norms: 1) they had the intention of creating binding and enforceable obligations; 2) they specify the rights and obligations of the actors; 3) they extend the notion of non-state actors’ responsibility for human rights beyond TNCs; 4) they provide for monitoring mechanisms that recognize both internal self-regulation and external monitoring; and 5) they make provision for the participation of various stakeholders in their implementation.   Chirwa concludes that the UN Norms are “a more promising tool for ensuring that TNCs and other business enterprises respect human rights.”

Thus, the principles for strong accountability are built into the norms including independence, transparency, participatory processes, and legal recourse.  Further, the savings clause could be used to ensure that the Convention acts not as a ceiling, but a floor on the conduct of PMSCs.

b.  Guidance from the Aarhus Convention’s Compliance Committee

The Convention on Access to Information, Public Participation and Access to Justice in Environmental Matters, or the Aarhus Convention, entered into force in October 2001. The aim of the Aarhus Convention is to further the accountability of and transparency in decision-making and to strengthen public support for decisions on the environment through three broad pillars: access to information, public participation and access to justice.  As the Aarhus Convention is clearly applicable to State parties, the draft Convention can benefit from adopting much of the form and function of the Compliance Committee.  Specifically, the Compliance Committee provides a ripe illustration of how the International Committee in the draft Convention could function.

The Aarhus Convention works by building a mechanism to ensure transparency and disclosure around activities that may significantly affect the environment. Thus, the Aarhus Convention is not aimed at the activities impacting the environment, but rather toward the information pertaining to these activities.

At its first meeting, the primary policy-making body of the Aarhus Convention, the Meeting of the Parties, adopted a decision on review of compliance, decision I/7, which established a compliance mechanism. The basis for the decision was provided by Article 15, which requires the Parties to set up arrangements of a non-confrontational, non-judicial and consultative nature to review compliance with the Aarhus Convention. The arrangements should allow for some public involvement, which includes the option of considering communications from members of the public on matters related to the Aarhus Convention.

The primary role of the Compliance Committee is to report and make recommendations to the Meeting of the Parties for it to decide upon and take appropriate action. In certain circumstances, the Compliance Committee itself may take certain actions on an interim basis, in consultation or in agreement with the Party concerned.

The Compliance Committee is composed of nine members serving in a personal capacity. These individuals are to be nationals of Parties or Signatories to the Convention who are persons of high moral character and recognized competence in the fields to which the Aarhus Convention relates, including persons having legal experience.
In terms of function, the Compliance Committee may examine compliance issues on its own initiative and make recommendations; prepare reports on compliance with or implementation of the provisions of the Aarhus Convention at the request of the Meeting of the Parties; and monitor, assess and facilitate the implementation of and compliance with the reporting requirements.

Although the Compliance Committee may examine compliance issues and make recommendations if and as appropriate, the triggers for compliance review occur in four ways:

(1) a Party may make a submission about compliance by another Party;
(2) a Party may make a submission concerning its own compliance;
(3) the secretariat may make a referral to the Compliance Committee;
(4) members of the public may make communications concerning a Party’s compliance with the convention.

Thus, the International Committee here should be able to accept referrals and submissions about compliance from companies, States and from the public at large.  The International Committee in the draft Convention, upon receiving a submission and concluding its report, should be empowered to make the following:

a)    Provide advice and facilitate assistance to individual states regarding the implementation of the draft Convention;
b)    Make recommendations to the States concerned;
c)    Request the state concerned to submit a strategy, including a time schedule, to the draft Convention regarding the achievement of compliance with it and to report on the implementation of this strategy;
d)    In cases of communications from the public, make recommendations to the Party concerned on specific measures to address the matter raised by the member of the public;
e)    Issue declarations of non-compliance;
f)    Issue cautions;
g)    Take such other non-confrontational, non-judicial and consultative measures as may be appropriate.

Of critical importance, however, is that all of these actions must be transparent, open and publicly available.Communications should be put on the web site, including all of the most significant documentation setting out the positions of the International Committee.  The Parties concerned and the communicant should also be made available on the web site.  Draft findings and recommendations drawn up by the International Committee should be publicly available upon request once they had been transmitted to the State concerned and, where applicable, to the communicant.  Similarly, any comments provided by States concerned or the communicant should be publicly available upon request.

3.    Conclusion

The complete Aarhus Manual on the Compliance Committee is attached separately to this communication.  Right Respect and Human Rights Advocates believe that it can be used to develop the form and function of the International Committee in the draft Convention.  Further, we urge the consideration of the Norms for their accountability and implementation systems.

We welcome the efforts of the Working Group in developing this convention.  In today’s globalized world, corporations hold the tremendous power to impact human rights. We look forward to continued involvement with this initiative and toward the completion of an independent, transparent, participatory and legally enforceable Convention.

Buried within the Act is a provision that was supported by human rights groups, including most actively the Enough Project.  The provision, Section 1502 of the Act states:

SEC. 1502. CONFLICT MINERALS

(a) Sense of Congress on Exploitation and Trade of Conflict Minerals Originating in the Democratic Republic of the Congo- It is the sense of Congress that the exploitation and trade of columbite-tantalite, cassiterite, gold, and wolframite in the easternnflict minerals originating in the Democratic Republic of the Congo is helping to finance conflict characterized by extreme levels of violence in the eastern Democratic Republic of the Congo, particularly sexual- and gender-based violence, and contributing to an emergency humanitarian situation therein…

The provision essentially requires publicly traded companies to submit annual reports to the Securities and Exchange Commission disclosing whether their products contain minerals from Congo or adjacent countries. If so, these companies must explain the actions taken to trace the origin of the minerals and whether they come from mines that help fund armed conflict.  Although no sanctions are contemplated in the Act, the disclosures are required to be made public on the company website, and a product may be labeled as “DRC Conflict Free” if they do not contain conflict materials that directly or indirectly finance or benefit armed groups.

In a statement of support for this provision, Secretary of State Clinton remarked:

Last year in the Democratic Republic of Congo, I spoke out against the trade in “conflict minerals” that has funded a cycle of conflict there that has left more than 5 million people dead since 1998, displaced countless more, and spawned an epidemic of sexual and gender-based violence.

President Obama has now signed into law a measure that will require corporations to publicly disclose what they are doing to ensure that their products don’t contain these minerals. The DRC has formally expressed its support for this law and has thanked both the executive and legislative branches of our government. This is one of several steps we are taking to stop this illicit and deadly trade…

At the same time, the United Kingdom is being sued by Global Witness, a London-based campaign group, for failure to name companies and individuals trading in “conflict minerals” from the DRC for UN Sanctions.  A UN resolution on the issue passed in 2008 and renewed in 2009 requires a travel ban and asset freeze to be imposed on all individuals and entities supporting illegal armed groups in eastern Congo through the illicit trading of natural resources.  The group alleges that the UK government has failed to adequately investigate companies and individuals that are linked to illicit mineral trade, thus breaching its international legal obligations.

Although the value in regulating the trade of these minerals has been questioned by some, the reality is that the provision in the Financial Reform bill is a starting point for ending the violence in the DRC by limiting some of the funding coming to the groups responsible.  Right Respect has, in the past, noted the many benefits of enhanced disclosure as a tool for human rights protections.  Still, as the suit by Global Witness indicates, active monitoring and oversight must be taken by regulatory agencies for any of these provisions to have value.  Only then can human rights concerns be properly addressed in the DRC and businesses become part of the solution rather than part of the problem.