Burma: First Steps for Investment of Western Capital
Commentary, 05 October 2012
By John Morrison, Chief Executive, IHRB
This op-Ed was originally published on TheGuardian.com.
IHRB is working with the Danish Institute for Human Rights on a new initiative to develop a resource centre with partners in Burma to help business, government, civil society and trade unions apply the UN Guiding Principles and other relevant international standards to the many challenges ahead.
For the social impacts of international investment in Burma to be positive, companies need to align their interventions with international norms
Burma represents a test of much of what has been written about the social impact of business, and piloted elsewhere. Given the history of sanctions which until recently kept western capital out of the country, the social impact of this capital in Burma will be tangible. There will be no place in Burma for self-promoting corporate social responsibility (CSR) or cultural relativism. Instead companies will need to align their social interventions to international norms. Burma is also a country where the human rights case for any business should be self-evident. If early conclusions about whether the social impacts of international investment are to be positive, then the work of business, civil society, governments and trade unions needs to start now.
Burma's president Thein Sein and opposition leader Aung San Suu Kyi have both called for investment into Burma. They recognise that business needs to be sustainable in both social and environmental terms. These are encouraging commitments. Now they need to be translated into tangible actions. For this investment to be responsible, it must deliver value both for investors and the people of Burma, operate with respect for the rule of law and be accountable for its actions and impacts.
A key measure of social sustainability in Burma will be the alignment of investment with international standards, such as those of the United Nations, International Labour Organisation as well as multi-stakeholder approaches such as the Extractive Industries Transparency Initiative (EITI). The United Nations Guiding Principles on Business and Human Rights, endorsed unanimously by the UN Human Rights Council in June 2011, are crucial to getting investment in Burma right. Both the European Union and the United States have made direct reference to the Guiding Principles when announcing their respective easing of sanctions. The US government has included the Guiding Principles as part of its new reporting requirements for US businesses investing in Burma. Moreover, the UN framework is a key part of the updated OECD Guidelines on Multinational Enterprises and other initiatives such as the ISO 26,000 social responsibility standard adopted last year.
For the UN Guiding Principles to help in making responsible business a reality, they must be applied in the day-to-day life of business activity. This means companies should undertake ongoing human rights due diligence processes – to know the risks and to take all actions possible to minimise any negative impacts of business activity. Critical questions still requiring stronger consensus in order to move in this direction include how much knowledge a company can be expected to have, both in terms of impacts of its actions, and the environment in which it operates. Another important question concerns levels of transparency – how much disclosure and reporting of social impacts is necessary when operating in countries experiencing the challenges currently faced by Burma?
For many international companies considering investments in Burma, a huge challenge is how they will select their local business partners. Getting this right is critical to avoiding relationships with local businesses accused of having benefited from cronyism, that has resulted in Burma being rated poorly by leading corruption indices. During the time when EU and the US sanctions were in force, lists were compiled of individuals and companies viewed as being linked to government repression. However, in the political context of Burma during the sanctions years, many local businesses had no choice but to work with the government or the military. Many benefited from such ties. This places enormous importance not just on the due diligence investors need to undertake before selecting business partners, but also the accountability and transparency of these relationships over the months and years ahead.
International companies that think they can be secretive about their relationships in Burma, beyond the threshold justifiable by normal competitive requirements, are gravely mistaken and will be increasing the risk associated with their investments and operations. This is equally true in the context of other key challenges ahead for the country, such as issues relating to land appropriation and use, discrimination, labour rights, conflict and resource allocation.
The Institute for Human Rights and Business (IHRB) is working with the Danish Institute for Human Rights on a new initiative to develop a resource centre with partners in Burma to help business, government, civil society and trade unions apply the UN Guiding Principles and other relevant international standards to the many challenges ahead. That includes learning from how difficult questions relating to corporate responsibility have been addressed across a broad range of business sectors and in different parts of the world. The bottom line is that all actors in Burma need to be accountable for their human rights impacts. It is equally important that people have access to adequate remedies when rights abuses do occur. These points are critical in shaping a culture of sustainable investment in the country.