May 09, 2006

Development: Big Business in Reform School, But Is It Sticking?

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In Canada, banks and financial institutions with over one billion dollars in equity must produce public accountability statements regarding their contribution to the country’s economy and society.

In Nigeria, oil and gas companies are required to contribute about three percent of their annual revenues to the Niger Delta Development Commission, while the British government requires pension funds to disclose how they take into account social, environmental and ethical factors in their investment decisions.

In a report titled “Trends in Sustainable Development”, released to coincide with the current session of the 53-member U.N. Commission on Sustainable Development (UNCSD), the Department of Economic and Social Affairs (DESA) lists several examples of “corporate social responsibility”.

“Public demand for better working conditions and environmental responsibility in global production systems is influencing government policy,” the report points out.

In France, the government has stipulated that publicly traded companies should include auditable information on social and environmental performance in their annual reports, while Brazilian companies that voluntarily undertake corporate governance practices beyond what is mandated receive a special listing on the Sao Paulo stock exchange.

But keeping tabs on corporate responsibility is also becoming increasingly difficult due to outsourcing and globalisation.

“The globalisation of production network means that corporations increasingly source their products and services from overseas, making it more difficult to regulate corporate activities through a single country’s national legal and regulatory mechanisms,” according to the study.

The United Nations is also tracking corporate social behaviour through its “Global Compact” established in 2000. Described as “one of the world’s largest corporate social responsibility initiatives”, the Global Compact consists of over 2,300 companies worldwide. All of the companies who join the compact are expected to implement 10 universal principles in the areas of human rights, labour standards, and environmental and anti-corruption practices.

The two-week session of the UNCSD, which concludes Friday, is focusing on energy for sustainable development, industrial development, pollution and climate change. A “Day of Business and Industry” has been set aside to showcase the best practices of business and industry.

“Industrialisation could not make an enduring contribution to development when it worsened climate change and air pollution,” U.N. Under-Secretary-General for Economic and Social Affairs Jose Antonio Ocampo told delegates.

He said that “history turned on its head the idea that environmental issues could somehow be postponed until later in the development process”.

“As interdependent and mutually supportive pillars, economic growth, social development and environmental protection must be considered together in an integrated way,” he added.

Patti Lynn, campaign director at Corporate Accountability International, complains that the United Nations has failed to place high priority on the one of the key social and environmental issues worldwide: the right to water.

As a result, giant corporations operate worldwide without enough limits to their power or strong, enforceable standards to protect people.

“The United Nations projects that two out of three people will not have access to enough water by 2025. As the international community confronts this global water crisis, the United Nations Commission on Sustainable Development (UNCSD) has an important role to play ensuring the human right to water and people’s access to water in coming years,” Lynn told IPS.

The United Nations recognises that “water is crucial for sustainable development, including the preservation of our natural environment and the alleviation of poverty and hunger.”

She said the world body has set goals to reduce by half the proportion of people without access to safe drinking water or basic sanitation by 2015, and to stop unsustainable exploitation of water resources.

Just as the global tobacco treaty—formally known as the World Health Organisation’s (WHO) Framework Convention on Tobacco Control—protects public health policies from interference by tobacco corporations like Philip Morris/Altria, the UNCSD must help protect water policies from interference by corporations seeking to profit from water, she argued.

“There can be powerful conflicts of interest between water industry profits and people’s health,” she said, adding that corporations like Coke and Suez are prominent partners in U.N. sustainable development projects.

Given the inherent conflicts of interest these corporations have, Lynn said, these kinds of private sector partnerships could be very dangerous.

She pointed out that water is a fundamental human right—not a commodity to be bought and sold—and its provision is not a service for sale to the highest bidders.

“Inviting corporations to the table before enshrining these concepts in binding international law is risky business. The world must move ahead with international legal instruments to protect people’s right and access to water,” Lynn declared.

Walter Hook, executive director of the Institute for Transportation and Development Policy, complained about the absence of energy efficient technologies in transport.

In transportation, he said, the most energy-efficient vehicle was the human body, and anything that ran on human power was the most efficient.

So, the promotion of efficient technology should start with walking, he said. The bicycle was also very energy efficient. That was not a problem in the developed world, and in Asia and Latin America, but that was an issue in Africa where the supply of bicycles and businesses to support them was not in place, he added.

“The global car industry saw Africa as a potential market,” Hook said, “but the global bicycle industry apparently had not discovered that 800 million people in their lifetime would never be able to afford a motor vehicle, and, therefore might be something of a market niche for bicycles.”

India, he said, was “300,000 cycle-rich”, and that generated no pollution and lots of jobs.

Hook also said the next most energy efficient technologies were those that transported large numbers of people, namely buses, except when they were trapped in congestion by single-person vehicles.

Giving buses the right of way was perhaps the most important measure developed and developing countries could take, he added.

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