DESCRIPTION:

GE is a member company of the Global Business Initiative on Human Rights, or GBI, which is made up of 18 multinational companies, including Coca-Cola, Total, ABB, Shell, Flextronics, Novo Nordisk and HP. GBI’s purpose is to bring the discussion of businesses’ role in respecting human rights to “emerging market” countries and regions where human rights are under pressure. Recent GBI gatherings have taken place in Brazil, Egypt, Kenya and, most recently, China.

GBI leadership spent over a year planning its meeting in Beijing—held recently. As you can imagine, there was substantial concern about discussing human rights with Chinese businesses and civil society representatives. While there have been conferences in China on corporate social responsibility, this is the first conference we are aware of that focused primarily on human rights. This focus was prompted by the UN Human Rights Council’s having unanimously adopted the Guiding Principles on Business and Human Rights in 2011—encouraging all business entities, including Chinese businesses, to respect human rights in their commercial operations. Leading up to the conference, there was considerable angst among GBI member companies about whether we should use the term “human rights” in our discussions or whether we would be safer speaking of the term’s component rights, such as freedom from discrimination, privacy, religious freedom, the right to collective bargaining and so on.

Fortunately, some key cosponsors of the conference were able to allay some of these concerns. In addition to the UN Global Compact’s local network (the China Enterprise Confederation, essentially the Chinese Chamber of Commerce), the Chinese shipping giant Cosco and Tsinghua University agreed to sponsor the conference. Also attending were representatives from China Development Bank, China Mobile Communications Corporation, Sinosteel and other, smaller Chinese companies. The Cosco representative showed particular leadership and spoke at the opening gathering of nearly 200 attendees. GBI member companies came away with the unanimous view that Chinese companies were more comfortable talking about business and human rights than any of us individually or collectively expected. As GE has over 20 joint-venture partners in China, this was good news.

We engaged in many noteworthy conversations at the conference. Following are we feel could be of interest.

• One of the Chinese corporations that attended the conference was a hydropower company that operates in Myanmar (Burma). While it operates several hydro-electric dams in that country, in September 2011 it was asked to close down operations at one dam due to concerns over practices that fueled fighting between the national army and the Kachin rebels. A company spokesman who was asked about the situation by a Chinese attendee expressed surprise at the forced exit from Burma. He explained that his company had approval from the Burmese central government and, from his experience, this was all the licensee needed to do business— that it was not accustomed to paying attention to local ethnic-diversity issues. GE advisors noted that this withdrawal of the right to operate in Myanmar had not gone unnoticed within Chinese business circles and has prompted greater discussion about how Chinese businesses operating in foreign jurisdictions need to pay more attention to local human rights issues.
• Another Chinese company noted that significant Chinese foreign investment began only in 2005 but that it has ramped up significantly since then. Consequently, Chinese companies have relatively little experience managing these investments and need to attend conferences such as GBI’s in order to learn how to address the human rights challenges that accompany them.  
• During the trip I also spoke at Peking University Law School (PKU). PKU is widely viewed as the equivalent in China of Harvard Law School and I was pleasantly surprised to learn that it offers a course on human rights law. I presented GE’s approach to human rights and business, and a colleague from BASF described its approach to human rights due diligence.

You have to be impressed by the candor of these conversations. I hope it gives you a sense that businesses around the globe are increasingly recognizing their obligation to respect human rights. This is a good thing for the citizens of the world and for GE.

Read about China and Human Rights on GE's Thoughts from Stakeholders blog.

Tweet me: .@general_electric's #MarkNordstrom writes about #China and #HumanRights http://3bl.me/8zv95y

KEYWORDS: Events, Conferences & Webinars, Finance & Investment, People, Social Action & Community Engagement, China, Human Rights, Global Business Initiative on Human Rights, GBI, Beijing, conference, policy

DESCRIPTION:

GE has asked the members of its Citizenship Advisory Panel to reflect on trends and key challenges for sustainable development in 2013. This post by Thero Setiloane explores the business of social cohesion.

The bond that brings people together across society, social cohesion, is one of the “soft” inputs for sustainable development. It is often seen as a “nice to have,” particularly for emerging economies, and deferred as something to focus on at a later stage of development.

Over the past two years, the events of Arab Spring have shown that creating a cohesive society is in fact an important precondition for sustainable development. Closer to home for me, the labour unrest in South Africa following the Marikana tragedy also demonstrated the same thing.

As political, labour and business leaders begin to appreciate the importance of social cohesion, I hope to see more action in 2013 on how to build connections between people; bridging divisions of class, race, wealth and education. Societies need a strong bank of social capital that enables cooperation and allows people to achieve social mobility. While South Africa is seeking to build itself as a  “rainbow nation,” social cohesion is needed everywhere. Robert Putnam, at Harvard, argued over a decade ago that both bonding and bridging networks are critical for healthy societies and economies. This is not just a pipe dream, but a source of value creation. What is needed now is to develop the institutions to build those networks. This will be one of the crucial paths that needs to be opened in 2013.

Read more perspectives on GE's Thoughts from Stakeholders blog.

Tweet me: .@generalelectric Citizenship Advisory Panel member Thero Setiloane discusses the #business of #socialcohesion http://3bl.me/yzgfp5

KEYWORDS: Human Rights, Business, South Africa, perspectives, GE, Stakeholder engagement

DESCRIPTION:

It was 2006 when GE first concluded that the growth rates in emerging markets were three times those of the developed markets and that our business interests would have us operating in countries where human rights are under pressure. It was then we began a human rights journey that has crossed many milestones: joining the Business Leaders Initiative on Human Rights, adopting a Statement of Principles on Human Rights, joining the UN Global Compact, adopting Implementing Principles on Human Rights, engaging with the UN Special Representative on Human Rights to provide a business perspective on the Guiding Principles on Business and Human Rights and the list goes on.

As a business enterprise, under the UN Guiding Principles, GE is obligated to respect human rights. This is the corollary to the primary obligation of states to protect human rights. Many who describe the legal principles of human rights speak in terms of “soft law,” as human rights principles arise from international treaties that do not necessarily find expression in the specific statutory framework of a given country. While viewing human rights as “soft law” is flawed in several respects (which I will not go into), this perspective is losing ground as a practical matter, as governments around the globe are enacting regulations and statutes that are turning human rights into hard law.

A recent example of this is the conflict minerals provision of the Dodd-Frank Act, which legally requires companies like GE to indicate whether their products are made from conflict minerals: gold, tin, tungsten and tantalum extracted from the civil war–torn mines of the Democratic Republic of the Congo. Another example arises from lifting of certain restrictions by the U.S. State Department for U.S. companies seeking to do business in Myanmar (formerly Burma). These restrictions were lifted this past summer, and GE was the first U.S. company authorized to operate in Myanmar. Such restrictions, however, are only permitted where certain conditions are met as required by General License No. 17. The requirements of this license closely follow the precepts established by the UN Guiding Principles, intended to assure that businesses operate in Myanmar in a manner that respects human rights.

Recall, however, that states hold the primary obligation to protect human rights. What if a state widely fails to shoulder this obligation, yet a business entity—like GE—seeks to do business in that country? In fact, the government of Myanmar has faced UN sanctions (enforced by the International Labour Organization, or ILO) for a dozen years for rampant violations of forced and child labor laws. Maplecroft, an internationally recognized rating organization, has listed Myanmar as presenting “extreme risk” in the following categories: Rule of Law, Business Integrity and Corruption, Human Security, Regulatory Framework, Business Environment, Labor Rights and Protection, and Civil and Political Rights. Given this woeful failing by the Myanmar government to protect human rights and provide other elements of a working and ethical social framework, what chance does GE have to conduct business in Myanmar in a way that respects human rights that are not otherwise protected? Can we fulfill the requirements of General License No. 17?

These are the questions that brought Bob Corcoran, vice president of GE Citizenship and president of the GE Foundation, and me to Myanmar last week. We participated in a series of meetings with NGO leaders, government officials, UN officials and the U.S. ambassador. The meetings offered a fair amount of hope for both our business interests and the advancement of Myanmar reform, but also presented reservations about what GE can reasonably expect to achieve in the current environment. It is still early days for the new government, and the entire social and political landscape is changing very rapidly.

First the signs of hope.

Let’s start with the people of Myanmar. They are friendly, engaging, energetic and yearning to improve themselves and their country. Fifty percent of the population is under 24, so jobs are needed, especially if and when the military retrenches. Several individuals we interviewed spoke about how the Myanmar people welcome change, and balance change against stability. Even Aung San Suu Kyi, the reformer who is credited with helping to lift the UN sanctions, is viewed as having been practical in her recent dealings with the president and majority parties in parliament. Bob and I both expected to see a substantial military presence in the streets of Yangon, the new government having taken over from a military dictatorship less than two years ago. We observed no such presence. In fact, the absence of police or military was notable. The streets were alive with the hustle and bustle of a thriving democracy, with nearly double the number of cars as compared with a year ago. One afternoon while caught in traffic we noticed young boys selling candy, newspapers and other literature to passengers (like us) in the idling vehicles. I asked our driver what one boy was selling, as the papers he was holding up did not look like newspapers. The driver’s reply was that these were translations, in various languages, of Myanmar’s Foreign Investment Code. These are clearly people who feel a curtain has been lifted and are eager to welcome the Western world.

It is clear that the Myanmar people feel they have been isolated from the good influences of democracy, sustainable development, human rights and corporate social responsibility. Many of those we interviewed decried the loss of these noble tenets that were learned by the Burmese people decades ago in university and military exchange programs in such Western countries as the UK, the U.S., and the Nordics. During the sanctions period, Myanmar was forced to turn to China for commerce and sociopolitical interaction. In their view, this was an unfortunate source of dependency that they wish to turn away from as rapidly as possible. There is a great distrust of the Chinese, and many in Myanmar see Western culture and businesses as an antidote for their country’s dependence on China, and what they see as China’s aggression. One of the key government advisors we met specifically discussed GE as a leader in corporate governance and transparency that could help build capacity among Burmese businesses that seek to follow the tenets of corporate social responsibility but do not know where to start. Likewise, this same advisor noted that the UN Global Compact had started a local chapter and proposed that GE could assist in developing programs to combat corruption.

Finally, nearly 90% of the Burmese people are Buddhists. Bob and I felt the warmth, sensitivity and peaceful nature of the people we met. Picking up on the theme of change and stability, several times we noted that conversations tended to always look to the future and not dwell on the past. For example, one former political prisoner, only recently released, talked about corruption due to the constitutional weight given to the military—guaranteed 25% of the seats in parliament. He decried the generals’ influence on the judicial system, where he said that “legal victories were simply bought.” Yet, his call was not to have the generals pay for his past imprisonment or for the rape of women in his home province of Shen. Rather, he simply expressed his desire for the corruption to stop and for the military’s influence to become transparent. As he so aptly put it, “There is no purpose in fighting over old bones.” Bob and I contrasted this sentiment with the tendency of some in the U.S. who carry grudges—some are still living out the Civil War, for instance. I believe the Burmese people, with their Buddhist mind-set, have an extraordinary yearning to look forward and hope, not backward seeking revenge.

Despite the breathtaking speed of positive developments in Myanmar, there is cause for concern on multiple fronts. The most obvious is akin to what we are seeing in Egypt today—impatience for progress following the Arab Spring. The Burmese dictatorship was overthrown and no peace dividend is at hand. The ethnic conflict continues, inadequate food and shelter still persists in most of the provinces, electricity is still not available, and the military hegemony remains unchecked. There is so much that must be accomplished, and one has to wonder if the pace of change can keep up with the Burmese people’s expectations. This question is particularly salient because “capacity building” is a huge underlying issue if change is to be effectuated. Whether our discussions were about new hospital equipment, employees’ right to strike, government transparency, education or corporate governance, most of those we interviewed recognized that the Burmese people—particularly due to their years of isolation—were not up to handling or absorbing the positive developments that are rapidly coming as a result of political and social reforms.

Second, rule of law and corruption are very real problems that threaten to turn away good Western companies that wish to do business in Myanmar but can’t compete amid the common-place sordid business practices that now exist. Getting basic things done in Myanmar can be a real problem for an ethical company. GE had problems opening an office because several of the local banks we tried to do business with were on various U.S. corruption blacklists. We eventually found a lawful way around this problem, but it took time and perseverance. Similarly, the ILO delegate we met talked about having to make several “facilitating payments” merely to get an electricity bill paid. For my own part, it took three tries by my wife going to our bank before the bank could get MasterCard to approve payment of my hotel bill—and then only if I agreed to surrender the card upon return to the States and get a replacement card. And while the U.S. dollar is common currency in Myanmar—which is largely a “cash and carry” economy—don’t try to pay for anything with slightly worn bills. Even the Buddhist temple we visited rejected Bob’s $20 bill, as it had a slight ink spot at one of its edges. Corruption is so rampant that doing even simple business tasks ethically will require patience and determination.

Finally, ethnic conflict and undue military influence (corruption) must be brought under control. While Myanmar has made substantial progress in curbing ethnic violence and signing peace agreements, armed conflict in Kachin continues to rage. Given the special protection afforded the military under the Constitution, it is unclear how this reform will be effectuated. While many of the state-owned enterprises under military control have been turned over to the new government, several others—including the copper mines—remain under military control and their revenues are unknown to the minister of finance.

Myanmar is a country of 60 million people that has tremendous resources in mining, oil and gas, and other industries in which GE participates. The Burmese people are in dire need of our sustainable energy equipment, healthcare products, and oil and gas. They also need our help—through philanthropy and through good practices in corporate governance, human rights and business ethics. A single trip to Myanmar, especially one confined to Yangon, by no means makes me an expert on doing business in this emerging country, and I recognize our interviews were confined to progressive thinkers.  Clearly, the challenges of doing business in Myanmar are fraught with risk. However, with careful planning, adequate due diligence and measured initiatives, I believe we can use our ethical reputation to help our businesses win orders for our sustainable-product lines. In doing so, we will be doing “good” and “making a difference” for the people of Myanmar.

Tweet me: .@generalelectric discusses #Myanmar and #HumanRights http://3bl.me/hcf6a4

KEYWORDS: Myanmar, Burma, Human Rights, GE, Trade, rule of law, public policy

DESCRIPTION:

It was 2006 when GE first concluded that the growth rates in emerging markets were three times those of the developed markets and that our business interests would have us operating in countries where human rights are under pressure. It was then we began a human rights journey that has crossed many milestones: joining the Business Leaders Initiative on Human Rights, adopting a Statement of Principles on Human Rights, joining the UN Global Compact, adopting Implementing Principles on Human Rights, engaging with the UN Special Representative on Human Rights to provide a business perspective on the Guiding Principles on Business and Human Rights and the list goes on.

As a business enterprise, under the UN Guiding Principles, GE is obligated to respect human rights. This is the corollary to the primary obligation of states to protect human rights. Many who describe the legal principles of human rights speak in terms of “soft law,” as human rights principles arise from international treaties that do not necessarily find expression in the specific statutory framework of a given country. While viewing human rights as “soft law” is flawed in several respects (which I will not go into), this perspective is losing ground as a practical matter, as governments around the globe are enacting regulations and statutes that are turning human rights into hard law.

A recent example of this is the conflict minerals provision of the Dodd-Frank Act, which legally requires companies like GE to indicate whether their products are made from conflict minerals: gold, tin, tungsten and tantalum extracted from the civil war–torn mines of the Democratic Republic of the Congo. Another example arises from lifting of certain restrictions by the U.S. State Department for U.S. companies seeking to do business in Myanmar (formerly Burma). These restrictions were lifted this past summer, and GE was the first U.S. company authorized to operate in Myanmar. Such restrictions, however, are only permitted where certain conditions are met as required by General License No. 17. The requirements of this license closely follow the precepts established by the UN Guiding Principles, intended to assure that businesses operate in Myanmar in a manner that respects human rights.

Recall, however, that states hold the primary obligation to protect human rights. What if a state widely fails to shoulder this obligation, yet a business entity—like GE—seeks to do business in that country? In fact, the government of Myanmar has faced UN sanctions (enforced by the International Labour Organization, or ILO) for a dozen years for rampant violations of forced and child labor laws. Maplecroft, an internationally recognized rating organization, has listed Myanmar as presenting “extreme risk” in the following categories: Rule of Law, Business Integrity and Corruption, Human Security, Regulatory Framework, Business Environment, Labor Rights and Protection, and Civil and Political Rights. Given this woeful failing by the Myanmar government to protect human rights and provide other elements of a working and ethical social framework, what chance does GE have to conduct business in Myanmar in a way that respects human rights that are not otherwise protected? Can we fulfill the requirements of General License No. 17?

These are the questions that brought Bob Corcoran, vice president of GE Citizenship and president of the GE Foundation, and me to Myanmar last week. We participated in a series of meetings with NGO leaders, government officials, UN officials and the U.S. ambassador. The meetings offered a fair amount of hope for both our business interests and the advancement of Myanmar reform, but also presented reservations about what GE can reasonably expect to achieve in the current environment. It is still early days for the new government, and the entire social and political landscape is changing very rapidly.

First the signs of hope.

Let’s start with the people of Myanmar. They are friendly, engaging, energetic and yearning to improve themselves and their country. Fifty percent of the population is under 24, so jobs are needed, especially if and when the military retrenches. Several individuals we interviewed spoke about how the Myanmar people welcome change, and balance change against stability. Even Aung San Suu Kyi, the reformer who is credited with helping to lift the UN sanctions, is viewed as having been practical in her recent dealings with the president and majority parties in parliament. Bob and I both expected to see a substantial military presence in the streets of Yangon, the new government having taken over from a military dictatorship less than two years ago. We observed no such presence. In fact, the absence of police or military was notable. The streets were alive with the hustle and bustle of a thriving democracy, with nearly double the number of cars as compared with a year ago. One afternoon while caught in traffic we noticed young boys selling candy, newspapers and other literature to passengers (like us) in the idling vehicles. I asked our driver what one boy was selling, as the papers he was holding up did not look like newspapers. The driver’s reply was that these were translations, in various languages, of Myanmar’s Foreign Investment Code. These are clearly people who feel a curtain has been lifted and are eager to welcome the Western world.

It is clear that the Myanmar people feel they have been isolated from the good influences of democracy, sustainable development, human rights and corporate social responsibility. Many of those we interviewed decried the loss of these noble tenets that were learned by the Burmese people decades ago in university and military exchange programs in such Western countries as the UK, the U.S., and the Nordics. During the sanctions period, Myanmar was forced to turn to China for commerce and sociopolitical interaction. In their view, this was an unfortunate source of dependency that they wish to turn away from as rapidly as possible. There is a great distrust of the Chinese, and many in Myanmar see Western culture and businesses as an antidote for their country’s dependence on China, and what they see as China’s aggression. One of the key government advisors we met specifically discussed GE as a leader in corporate governance and transparency that could help build capacity among Burmese businesses that seek to follow the tenets of corporate social responsibility but do not know where to start. Likewise, this same advisor noted that the UN Global Compact had started a local chapter and proposed that GE could assist in developing programs to combat corruption.

Finally, nearly 90% of the Burmese people are Buddhists. Bob and I felt the warmth, sensitivity and peaceful nature of the people we met. Picking up on the theme of change and stability, several times we noted that conversations tended to always look to the future and not dwell on the past. For example, one former political prisoner, only recently released, talked about corruption due to the constitutional weight given to the military—guaranteed 25% of the seats in parliament. He decried the generals’ influence on the judicial system, where he said that “legal victories were simply bought.” Yet, his call was not to have the generals pay for his past imprisonment or for the rape of women in his home province of Shen. Rather, he simply expressed his desire for the corruption to stop and for the military’s influence to become transparent. As he so aptly put it, “There is no purpose in fighting over old bones.” Bob and I contrasted this sentiment with the tendency of some in the U.S. who carry grudges—some are still living out the Civil War, for instance. I believe the Burmese people, with their Buddhist mind-set, have an extraordinary yearning to look forward and hope, not backward seeking revenge.

Despite the breathtaking speed of positive developments in Myanmar, there is cause for concern on multiple fronts. The most obvious is akin to what we are seeing in Egypt today—impatience for progress following the Arab Spring. The Burmese dictatorship was overthrown and no peace dividend is at hand. The ethnic conflict continues, inadequate food and shelter still persists in most of the provinces, electricity is still not available, and the military hegemony remains unchecked. There is so much that must be accomplished, and one has to wonder if the pace of change can keep up with the Burmese people’s expectations. This question is particularly salient because “capacity building” is a huge underlying issue if change is to be effectuated. Whether our discussions were about new hospital equipment, employees’ right to strike, government transparency, education or corporate governance, most of those we interviewed recognized that the Burmese people—particularly due to their years of isolation—were not up to handling or absorbing the positive developments that are rapidly coming as a result of political and social reforms.

Second, rule of law and corruption are very real problems that threaten to turn away good Western companies that wish to do business in Myanmar but can’t compete amid the common-place sordid business practices that now exist. Getting basic things done in Myanmar can be a real problem for an ethical company. GE had problems opening an office because several of the local banks we tried to do business with were on various U.S. corruption blacklists. We eventually found a lawful way around this problem, but it took time and perseverance. Similarly, the ILO delegate we met talked about having to make several “facilitating payments” merely to get an electricity bill paid. For my own part, it took three tries by my wife going to our bank before the bank could get MasterCard to approve payment of my hotel bill—and then only if I agreed to surrender the card upon return to the States and get a replacement card. And while the U.S. dollar is common currency in Myanmar—which is largely a “cash and carry” economy—don’t try to pay for anything with slightly worn bills. Even the Buddhist temple we visited rejected Bob’s $20 bill, as it had a slight ink spot at one of its edges. Corruption is so rampant that doing even simple business tasks ethically will require patience and determination.

Finally, ethnic conflict and undue military influence (corruption) must be brought under control. While Myanmar has made substantial progress in curbing ethnic violence and signing peace agreements, armed conflict in Kachin continues to rage. Given the special protection afforded the military under the Constitution, it is unclear how this reform will be effectuated. While many of the state-owned enterprises under military control have been turned over to the new government, several others—including the copper mines—remain under military control and their revenues are unknown to the minister of finance.

Myanmar is a country of 60 million people that has tremendous resources in mining, oil and gas, and other industries in which GE participates. The Burmese people are in dire need of our sustainable energy equipment, healthcare products, and oil and gas. They also need our help—through philanthropy and through good practices in corporate governance, human rights and business ethics. A single trip to Myanmar, especially one confined to Yangon, by no means makes me an expert on doing business in this emerging country, and I recognize our interviews were confined to progressive thinkers.  Clearly, the challenges of doing business in Myanmar are fraught with risk. However, with careful planning, adequate due diligence and measured initiatives, I believe we can use our ethical reputation to help our businesses win orders for our sustainable-product lines. In doing so, we will be doing “good” and “making a difference” for the people of Myanmar.

Tweet me: .@generalelectric discusses #Myanmar and #HumanRights http://3bl.me/hcf6a4

KEYWORDS: Myanmar, Burma, Human Rights, GE, Trade, rule of law, public policy

DESCRIPTION:

GE has asked the members of its Citizenship Advisory Panel to reflect on trends and key challenges for sustainable development in 2013. This post by Salil Tripathi the challenge of integrating human rights into business due diligence.

The framework for business and human rights the UN Human Rights Council adopted unanimously is relatively new. But its underlying expectation—that companies undertake due diligence to ensure that their conduct does not undermine human rights, and in fact respects rights—is an old one.

This challenge has grown in a world where the lines between business and government are blurring. For a company of GE’s size and scale, the processes the company develops to identify and address risks is critical to delivering on its responsibility to respect human rights. In some respects this is no different than establishing any other set of companywide processes; but in going through the process of human rights impact assessments, new challenges and dilemmas are likely to be uncovered.

One such challenge is understanding the responsibility of the users of products and services, and how this relates to the responsibility of the company that develops them. GE’s products include component systems that support the functioning of defense equipment that can be used in weapon systems, and it is critical that the company has in place systems, protocols and processes to ensure that its products or services do not contribute to human rights violations. This is not an easy task for a company that has contractual relationships with governments. Relations with governments can pose challenges in other areas too: Governments may choose to use technology to provide certain services to certain groups only, or may ask the company to modify products in a way that may undermine rights. These challenges simply raise the bar for due diligence.

Likewise, there are human rights challenges and implications with regard to the collection of healthcare data. Access to data can enable researchers to identify patterns and assist in the treatment of diseases. But the same data can be misused, and there are implications for individual privacy if too much data is collected or shared without adequate safeguards. Dealing with that is a delicate balancing act. Once again, it is not easy. And once again, it is necessary.

Read more in this series on GE's Citizenship blog: Thoughts from Stakeholders.

Tweet me: .@generalelectric discusses #HumanRights and #Business & reflects on 2013 challenges http://3bl.me/5fp9m4

KEYWORDS: salil tripathi, Human Rights, Business, due diligence, GE, UN human rights council, citizenship advisory council, Government, data, csr

DESCRIPTION:

The Democratic Republic of Congo is Africa’s second largest country, but also the continent’s most violent. Over the last two decades, foreign and domestic armies, militias and gangs of armed thugs have been waging war and staging rebellions that have killed at least 5.5 million people and displaced many more. The fighters sustain their troops with money from the DRC’s rich mineral deposits. Observers estimate that armed groups control half of the tin, tantalum, tungsten and gold mines in the vast eastern part of the country and generate as much as $225 million annually from the mineral quarries. “They may own the mines in the conflict region, or tax the mines or tax the trade routes used to export the minerals,” says Sandy Merber, counsel for international trade regulation and sourcing at GE.

Because manufacturers around the world use these minerals in everything from digital cameras and cell phones to paint and golf clubs, NGOs seeking to cut off the funding have pushed companies to audit their supply chains to reduce the risk that the minerals they are using may support the conflict. In August, the U.S. Securities and Exchange Commission announced a new reporting rule that requires listed companies to “publicly disclose their use of conflict minerals that originated in the DRC or an adjoining country.” GE, through its citizenship initiatives, has been working with companies, NGOs, investors as well as government agencies to foster a system that supports cutting out conflict minerals from the supply chain and improves reporting.

Read more about how GE is taking on conflict minerals at RD Mag.

*This article originally appeared in RD Mag

Tweet me: Blood Diamonds of Ore: @GeneralElectric Takes On #ConflictMinerals http://3bl.me/32s9q8

KEYWORDS: Technology. Innovation & Solutions, Human Rights, Democratic Republic of Congo, Conflict Minerals, blood diamonds, GE

How can we do what we do better? Public-private partnerships (PPPs) that pair companies, the public sector, and civil society offer a powerful answer to this question. Partnerships can enhance true coordination, use resources efficiently, and eliminate duplicated efforts to deal with some of society’s toughest social and environmental challenges. When successful, PPPs can:

• Balance the strengths of companies, governments, and civil society to make progress on an issue;
• Inform substantive public policies; and
• Create constructive dialogue.

At the same time, public-private partnerships present challenges, such as aligning different and divergent interests, and overcoming weaknesses of the entities involved.

These partnerships come in a variety of different forms, usually involving companies, government agencies, and municipalities, as well as non-governmental organizations (NGOs). They range in tone from formal to informal, and in scope, addressing issues from the global to the local scale.

“Partnerships should involve the company’s core business practice. Companies should think about strategic partnering, as they are moving their corporate social responsibility programs away from philanthropy and into strategic thinking. These models should be looked at for PPPs. Philanthropic interests come and go, but business doesn’t.”

JIM THOMPSON, REGIONAL DIRECTOR, GLOBAL PARTNERSHIP INITIATIVE AT THE U.S. STATE DEPARTMENT

For GE, public-private partnerships help align GE’s interests with the interests of society to create what Harvard Business School Professor Michael Porter and FSG Social Impact Consultants Founder Mark Kramer call “shared value.” “Businesses must reconnect company success with social progress,” they state in their recent Harvard Business Review article. “Shared value is not social responsibility, philanthropy, or even sustainability, but a new way to achieve economic success. It is not on the margin of what companies do but at the center. We believe that it can give rise to the next major transformation in business thinking.”

For GE, public-private partnerships are a critical tool to drive corporate citizenship initiatives and align GE’s interests with the interests of society. They also help build key alliances with governments to support best practices and shift the paradigm to a more sustainable world.

Effective public-private partnerships leverage the strengths of all participants, with each player bringing its own expertise, credibility, and resources to the table to solve key challenges. For example:

• Companies can offer a partnership access to their powerful networks, project management expertise, and a high profile presence on tough issues. Effective partnerships often include more than one company—whether in the same sector to tackle an industry-related issue, or across multiple sectors that are all impacted by a single societal or environmental issue.
• Governments can offer strategic thinking around entering new markets, resources for understanding the feasibility of a partnership, and access to countries or regions where companies have not yet been able to gain entry. Regulatory agencies can also help to validate an issue for companies and help them prioritize that issue.
• NGOs can bring credibility with local communities, thought leadership on an issue, and a deep understanding of the direct impacts on the intended beneficiaries.
• Universities and academics increasingly serve as petri dishes for innovative thinking on issues in public-private partnerships.

ACHIEVING CITIZENSHIP GOALS WITH PUBLIC-PRIVATE PARTNERSHIPS

Aligning PPPs with integrated corporate citizenship initiatives enables companies to test the waters on an issue, and ensure that it’s coordinated with the overall goals the company aims to achieve as responsible corporate actors. PPPs can help companies make progress on key environmental, social, and governance (ESG) issues identified as material to the business.

“We are the 900-pound gorilla in the room, and we will be a gravitational force in any partnership we are involved in. Despite that dynamic, we stay mission focused in our partnerships, and we want the expenses to stay mission focused too. We look for partners whose missions are 100% aligned with what we are trying to achieve, and we find that’s where the best outcomes result.”

KRISTA BAUER, DIRECTOR OF GLOBAL PROGRAMS FOR GE

“For companies, doing right used to be philanthropy only,” said Mark Nordstrom, senior corporate counsel of Labor and Environment Law in GE’s corporate legal staff, speaking of human rights issues in emerging markets where the company’s global operations are expanding. “However, today GE looks at ways we can be responsible in preserving or securing human rights in emerging markets. Through the GE Foundation, we funded innovative research. The UN Global Compact and Maplecroft used these philanthropic dollars to develop different scenarios for addressing human rights issues such as freedom of association, living wages, and other issues in emerging markets like Brazil, Russia, India, and China, as our business expands globally in these places.”

It’s also important for companies to ensure that their citizenship activities align with their public policy goals. According to Karan Bhatia, vice president and senior counsel, International Law and Policy at GE, the company’s public policy work focuses on three main categories:

• Globalization and free trade;
• Policies that stimulate innovation; and
• Strengthening the rule of law.

GE recognizes that it cannot tackle these issues alone, and that it must partner with governments, civil society, and fellow private sector players to make true progress. By establishing clear goals for both corporate citizenship and public policy, partnerships can be designed in ways that ensure effective efforts on one side are not being undermined on the other.

FUNDAMENTALS OF STRONG PUBLIC-PRIVATE PARTNERSHIPS

Most public-private partnerships face many of the same challenges. For one, the public and private sectors often move at very different paces. On the whole, business tends to move more swiftly and decisively, given its natural drive toward efficient use of resources and orientation to bottom-line results. On the other hand, government agencies tend to move slowly in comparison, with multiple layers of approval, and a longer-term focus on issues they face. Civil society organizations can often fall in between, sometimes taking a more cautious approach initially on conducting feasibility studies or research on a partnership or issue, or by contrast feeling urgency to act quickly on pressing challenges. Civil society and governments both tend to look 10, 20, or even 50 years out on an issue, and tend to grapple with some of the toughest problems facing the world, such as climate change or corruption and bribery. Strong corporate citizens balance this perspective with a drive for quarterly and annual results.

Despite these fundamental challenges, public-private partnerships can be constructed to address a variety of issues. They can focus on building infrastructure, such as bridges, or they can address medium-term projects such as opening markets for renewable energy on the road to tackling the much larger global issue of climate change. PPPs can also involve large-scale, multiyear commitments to establish frameworks for change on an international level, taking on issues like corruption and bribery, or building viable workforces in emerging economies. PPPs can even be as straightforward as a contract between a company and a government agency to provide a good or service, but which takes into account the needs of society and the political climate at hand.

KEYS TO EFFECTIVE PUBLIC-PRIVATE PARTNERSHIPS

Despite this wide variance in the nature of PPPs, there are some key ingredients, outlined in the subsequent pages, that every effective partnership should have.

A CLEAR FOCUS AND STATED GOALS AT THE OUTSET

Partnerships that clearly articulate their objective, goals, and desired outcomes at the design phase will be more successful than those that are left open-ended. Clear goals and defined roles give the partnership solid direction, break down complicated tasks, and coordinate efforts among the partners.

Alex Perera, co-director of Business Engagement in Climate and Technology at WRI, says partnerships need a clear objective and vision for what they seek to achieve. Partners should develop a clear, compelling vision, in conjunction with goal setting, measurement, and verification, early on. In some cases, the lessons learned may even prove more important than the actual results achieved—so in addition to goals, it’s useful to track important learnings and incorporate them into next steps during or following a partnership. WRI is not a think-tank, but a “do-tank,” says Perera. “We can’t do the work we do, or have the global research we have, without partnerships. It’s in our DNA to work with partners on the ground to achieve our goals.”

At the end of the day, the main objective of the EHS Academy is to provide managers with the training they need to involve everyone — from the production line to the CEO — in achieving and sustaining successful EHS performance. Pictured above is a group of individuals that went through EHS Academy training.

GE always looks for effective ways to support the environment, health and safety (EHS) performance of its Chinese suppliers. In order to achieve this goal, GE collaborated with the U.S. Institute for Sustainable Communities (ISC), and the U.S. Agency for International Development (USAID) to establish the EHS Academy, a training institute for suppliers offering techniques for improved performance and sustainable solutions, as a public-private partnership. The partnership also included the involvement of private sector companies such as Wal-Mart, Honeywell and others. GE and the other companies helped develop the curriculum and provided Train-the-Trainer workshops for EHS Academy personnel based on our collective experience of sound EHS management. The partnership also brought in a local university in Guangdong to establish the training platform and help measure the success.

The EHS Academy had one clear goal: train EHS resources for local factories. GE partnered with ISC as an anchor partner, which helped focus the project on Guangdong, a region where there is significant potential for uptake of best practices in EHS.

“The development of the EHS Academy concept worked because ISC had credibility with GE, the other companies, and the Chinese government,” said Ann Condon, GE’s director and counsel of EHS programs in Europe, the Middle East and Africa. “We had a lot of flexibility on our side, both on timing and how to achieve our goals. The benefit of having ISC working with us is that they were able to do a much wider consultation process, which helped build in the right government and local support.” Condon emphasized the importance of having all the key players at the table during the design phase of the partnership to ensure their ownership of the EHS Academy goals. A consequential benefit also included the building of a strong commitment from all parties to its long-term success.

The collaboration with ISC enabled GE to broaden its vision for this partnership; whereas GE initially wanted to offer training classes, ISC proposed the larger concept of creating a training academy. The partnership is achieving its stated goal to offer training to build the skills of EHS professionals in Guangdong and is evolving to meet local needs. Because of the longer-term vision of the partners, the Academy is now on its way to existing as a self-funding entity that will continue independently of the founding supporters.

A CHAMPION INSIDE EACH ORGANIZATION

Establishing a point person responsible for the partnership within each entity, who can represent the interests of the entity and partnership internally and externally, is key to ensuring the partnership meets all the intended goals. Having an internal champion ensures clear communication and accountability as the partnership moves forward.

Bob Corcoran, vice president of corporate citizenship, at Cambodia’s National Pediatric Hospital

The GE partnership Developing Health Globally™ (DHG) focuses on upgrading the capabilities of rural district hospitals. The goal of the program is to improve healthcare delivery for some of the world’s most vulnerable people. In developing this partnership, GE learned many important lessons and best practices for its PPPs.

GE worked through some challenges faced in the partnership by treating it like a business initiative, and assigning a project manager to take the lead. This allowed GE to play to its inherent strengths of organizing the team and managing the project to its goals, while allowing the partners to play to their strengths of issue expertise and thought leadership on how to improve healthcare for vulnerable populations. By bringing in the right content experts and focusing its own team on execution, GE stayed attuned to the needs of the project, understanding the natural stopping points and barriers. GE learned the important lesson of having an internal champion for its partnership who helped run the project and facilitate the stakeholders involved, to enable issue area experts to lead on thinking about how to effect real change on the ground.

REGULAR, OPEN AND HONEST COMMUNICATION

Partners need to communicate regularly to track progress toward goals, and address emerging issues. Frequency and format for the communication will vary from partnership to partnership, but obtaining a commitment on all fronts to communicate clearly, and creating a channel for regular contact established at the project start is a key success factor.

Transparency International exemplifies an organization focused on partnering with diverse stakeholders to resolve long-term issues related to bribery and corruption, and promoting good governance at the corporate and country levels. GE has been deeply involved with Transparency International from the organization’s outset, supported by the company’s long-term focus on the issue of transparency.

Nancy Boswell, president and CEO of Transparency International USA, cautions companies and organizations involved in partnerships to beware of reputational risks that partners might unwittingly bring to the table in a partnership. If one partner ends up facing a reputational issue, it could compromise the partnership, and with specific issues like transparency and corruption, this is a key risk to assess. Open communication is key.

She encourages companies and organizations to discuss taking successful partnerships to greater scale, noting “if it works in two countries, let’s see if we can achieve the same results in 20.” Finally, she also notes the importance of participants maintaining independence in a partnership, especially one where there is both a private sector partner and an NGO. There needs to be financial support, along with some expectations as to how the partnership will work. Also, opinions on either side of the partnership might differ at times, so the entities must be able to communicate and maintain their independence in order to not compromise their missions as individual entities.

“We tend to be more analytical in designing partnerships that are going to create transformation on the ground. We use partnerships to inform our analysis of what is needed to create this transformation. These partnerships serve a dual purpose to inform our analyses and enhance the lives of the beneficiaries.”

ALEX PERERA, CO-DIRECTOR OF BUSINESS ENGAGEMENT IN CLIMATE AND TECHNOLOGY AT WORLD RESOURCES INSTITUTE

FLEXIBILITY TO ADAPT TO CHANGING CONDITIONS

Particularly for longer-term projects, conditions on the ground, in markets, and in political climates will change from the time of the project’s inception to when it meets its goals. To achieve their goals, partners should design a structure that allows for change and flexibility along the way.

Partnerships around issues like corruption require a longer-term vision, while still keeping up day-to-day on the progress. Many private sector companies that Transparency International works with are bottom-line driven and want to work quickly, but on issues such as transparency and corruption Transparency International has worked to deepen its relationships with companies over time in order to address the challenges they face.

GE has worked with Transparency International throughout the years by helping to mobilize different kinds of support for increased transparency by leveraging its network, or by bringing technical, financial, and political capital to the shared agenda as well as to the organization, depending on what is needed. The issue of transparency can often be highly technical, and “financial capital is critical, but technical expertise and networks are also key,” Boswell notes. “Companies in different industry sectors can contribute important technical expertise and perspectives to the development of solutions to specific challenges.”

Similarly, WRI uses its analytical approach and its network of partners to drive change that is environmentally sustainable for the long term. Business partners and others inform the analysis that WRI conducts, which enhances the results for the beneficiaries. The organization designs all of its partnerships to create transformation on the ground. At times, this can be a challenge for an organization that is focused on issues that are global in scope and playing out over decades.

In one partnership aimed at tackling climate change, WRI joined with companies to help open markets for renewable energy. The goal of the partnership was to create options for companies to buy renewable energy, and it was designed from the outset to ensure that all participants get something useful out of it. With the big picture in mind, the partnership set interim goals based on what would be transformative for expanding use of renewable energy.

In aiming to scale up over 10 years, WRI leveraged many of the key characteristics of successful partnerships. The organization set goals early on, held quarterly calls to track progress, and then consistently raised the bar amongst the partners to continually push toward greater and greater uptake. Over time, the corporate partners began to compete against one another to see which could utilize more renewable energy. Perera states that eventually, “this sharing of insight unlocked the competitive spirit within the group, and there was healthy competition around achieving the goals. We designed milestones and ways to accomplish these goals, and tracked performance, while regularly raising the bar.”

RESPECT AMONGST PARTNERS

Michael Bloomfield, founder and executive director of the Harmony Foundation, notes that “having partners at the table that bring important, relevant, and necessary expertise is essential. Often, partners differ widely in scale and size; however, respect should not be based on the size of the partner, but on the skill that the partner brings to the partnership.”

Neither should respect be based on which partner brings the most financial resources to the table. While money is an important ingredient, organizations that bring resources other than funding should not end up in a position where they compromise their mission in order to maintain financial support for the project.

WRI’s Perera warns that in some situations, partnerships can evolve over time in a way that might not be in the best interest of the mission-driven organization involved. When an emerging partnership begins, it might be innovative and groundbreaking. However, as an issue underlying a partnership matures, more experts and consultants might enter the marketplace and partnerships can begin to resemble consulting-type relationships. Companies might begin to rely on partnerships for this type of consulting work because they are less costly than hiring external advisors. Perera notes the importance of setting an exit strategy for all parties involved at the outset of a partnership so that it is clear when it is time to sunset a partnership after the goals have been met.

CONCLUSIONS

By taking into account the wide range of lessons learned from many different types of partnerships, and aligning PPPs with a company’s efforts at being a good corporate citizen, best practices in public-private partnerships include balancing the interests and needs of the entities involved with the goals of providing improved access or service for communities and beneficiaries. Key areas where such partnerships should focus their efforts include:

• Setting goals that maximize the strengths each partner brings to the table
• Communicating clearly
• Reducing and sharing risks across partners
• Involving multiple stakeholders for input, expertise, and thought leadership
• Mobilizing resources effectively and efficiently
• Maintaining flexibility and adaptability of the partnership as conditions change
• Achieving long-range goals
• Sharing lessons learned

A variety of armed groups, including units of the Congolese military, local militias, and Congolese and Rwandan rebels, operate in the eastern provinces of the DRC despite the formal end of a civil war in the country in 2003. These groups engage in armed conflict and some of the world’s worst human rights violations. The UN’s special representative on sexual violence in conflict called the country the “rape capital of the world” in 2010. The International Rescue Committee also noted that ongoing fighting had caused more than 5.4 million deaths in the decade between 1998 and 2008, making it the world’s deadliest conflict since World War II.

The armed groups operating in this area often control or illegally tax the extraction and trade of minerals and other resources in the region. According to estimates from The Enough Project, an NGO focused on conflict minerals, the groups’ revenues from minerals may run into the hundreds of millions of dollars. Although no group is wholly dependent on this trade for funding, it makes up a significant portion of many groups’ income, and it is hoped that efforts to cut off this flow of funds will help reduce conflict. At the same time, the livelihoods of perhaps a million people in the region depend on the legitimate extraction and trade of minerals not taxed by the armed groups.

“There is a need to get a mineral chain of custody up and running, or there’s nothing else to talk about. Without a system of provenance, tracking systems won’t take hold in the DRC.”
ASSHETON CARTER, PACT’S SENIOR VICE PRESIDENT FOR GLOBAL ENGAGEMENT AND STRATEGY

DEMANDS FOR ACTION, AND COMPANY RESPONSES

Recognition of this link between the minerals trade and the financing of armed groups in the DRC has moved companies like GE to identify their use of potential conflict minerals and find ways to sever the link between these minerals and the armed groups. GE committed to act on this issue in the company’s 2010 Citizenship Report, one of several companies making similar commitments.

In mid-2010, the United States enacted a law requiring many companies to report publicly on their use of conflict minerals in the products they manufacture. GE’s first report, to be filed in 2014, will be based on its use of minerals beginning in 2013. The law will require companies to conduct an inquiry into the origin of tin, tantalum, tungsten and gold in their supply chains. If these supplies come from the DRC or surrounding region, or if their country of origin is uncertain, then companies will have to conduct a more thorough review of their supply chain in an attempt to determine whether the supplies support armed groups in the DRC.

GE and other companies are in the relatively early stages of developing and integrating conflict minerals programs within their supply chain processes. GE is identifying the sources of these minerals in its products and will work with its suppliers to minimize or eliminate the use of minerals that may support conflict in the DRC.

GE is working to apply the experience and infrastructure it has developed for other supply-chain social responsibility programs to address the conflict minerals issue. For example, an application developed by GE for environmental, health and safety data management, to support compliance with product reporting laws like the European Restriction of Hazardous Substances directive, may be adapted for supplier reporting on conflict minerals.

This ability to apply existing techniques and lessons will be critical to the rapid development and deployment of the supply chain conflict minerals effort. Sasha Lezhnev, who works with The Enough Project on the conflict minerals issue, emphasizes this point, noting that companies can learn from supply chain transparency and certification efforts of such organizations as the Fair Labor Association, Forestry Stewardship Council and the Kimberley Process for certifying conflict-free diamonds.

THE NEED FOR JOINT ACTION

At the same time that individual company policies and practices need to be developed to support supply chain transparency and reporting, an individual company—even one the size of GE—will not make a significant difference by acting alone. Motorola highlighted this issue in a recent Enough Project report, where company representatives were quoted as saying, “If the goal is to stop the flow of money to illegal armed groups then, like stopping the flow of water in a river, the dam must be built all the way across.” Companies with overlapping supply chains have greater influence over their suppliers when acting together, enabling them to encourage greater transparency and action. This has led to several industry initiatives, including a joint Electronics Industry Citizenship Coalition—Global e-Sustainability Initiative effort to verify conflict-free metals smelters, and the ITRI Tin Supply Chain Initiative (iTSCi), which is the only mine-to-smelter mineral traceability program currently operating in the region.

GE is working to support the EICC and GeSI program for verification of tungsten smelters. These industry programs are important steps, but critical work remains to be done to implement effective mineral tracing and certification. Pact, an NGO focused on local development in the DRC and elsewhere, along with the Enough Project and the industry efforts themselves, all highlight weaknesses in the verification of conflict-free minerals between mines and smelters that process the minerals.

SAYING “YES” TO CONFLICT-FREE DRC SOURCING

Pact also highlights the need to find something to say “Yes” to: “Everyone is saying ‘No’ to the DRC, but can we turn this into positive energy; can we find a way to say ‘Yes’ to a flow of conflict-free minerals from the DRC and ‘Yes’ to mining communities that want to make a living legitimately and safely? That’s our challenge,” says Carter.

This need is also highlighted in a set of multi-stakeholder recommendations for the new U.S. reporting requirements, which GE helped develop along with over 20 other companies, NGOs and investor organizations. The recommendations emphasize the need for incentives for companies to source verifiably conflict-free minerals from the DRC and surrounding region, both to encourage the production of conflict-free minerals and to discourage the possibility of a de facto embargo that could harm local economies and livelihoods in the DRC and surrounding countries.

FOCUS ON SUPPLY CHAIN EFFORTS

The root causes of conflict in the DRC run deeper than a focus on mineral extraction for financial gain and include issues of land tenure, weak governance and a need for local economic development. There may be opportunities for companies to help address some of these issues by supporting local development programs and encouraging appropriate government efforts. However, representatives from Pact, the Enough Project and others note that companies first need to focus on tracing the minerals in their supply chains, verifying that they are conflict free, and supporting conflict-free sourcing from the DRC and surrounding region. These are the areas where companies have the most influence and ability to have an impact.