Saturday, December 19, 2009

No Meaningful Agreement in Copenhagan. No Surprise.

Let's see if we can grasp the so-called agreement reached in Copenhagan.

1. Many of the Developed Countries (the North) have promised to reduce their greenhouse gas emissions as much as they (comfortably) can in the future. These are not binding commitments; just promises to make a best effort. And, they are all over the place in terms of the cuts they represent compared to past and present CO2 emission levels. A number of Developing Countries (the South, including China) have now promised to mitigate greenhouse gas emissions. Again, nothing binding and wildly inconsistent targets and timetables. And, even if you add up all the promises, you won't come close to getting the world on track to stabilizing greenhouse gas emissions at a (350 - 450 ppm) level by 2050 sufficient to forestall the worst effects of climate change over the rest of the century and beyond.

2. The The North has promised to come up with $30 billion over the next three years to help the South "fight" climate change. It's not clear, though, how this money will be used or where it will come from. Presumably, some of it will be used to reduce CO2 emissions (although it is not clear what the best way to do that is or how such efforts should be prioritized). Some of it will have to be used to help countries adapt to sea level rise, increased storm intensity, periods of draught, adverse effects on biodiversity, and other disasters. (Which forms of adaptation should be pursued, are not clear.) Also, it is not obvious how this money will be administered or who will get it (presumably a disproportionate share should go to the poorest countries in Africa). The North says it will try to raise $100 billion by 2020, but, again, it is not clear where the money will come from, how it will be administered, or who will get it. Finally, these are just informal promises, not binding commitments.

3. There was almost a new forest agreement, but at the end it got dropped. In Kyoto, the question of how to define and protect "sinks" (i.e., forests and oceans that absorb CO2) was not addressed. In Copenhagan, the leaders agreed that halting deforestation is "crucial." Funds to pay countries, like Brazil, to conserve their forests are now supposed to be forthcoming. Note that rich nations like this idea because they want to count the funds they donate for this purpose toward "carbon credits" (thereby reducing the CO2 reductions they have to make in their own countries). It is not yet clear, though, how this system of carbon credits and forest preservation would work.

4. As with all global treaty negotiations, there was a lot of uneasiness when the topic of monitoring and enforcement came up. No country can really force another to do what it doesn't want to do -- even if it has signed a treaty. Countries are sovereign. Most global agreements require countries to report regularly. But, in this case, if the reports don't seem accurate, all the Climate Change Secretariat can do is ask for more information or clarification. It can't double-check the data that countries submit or take independent measurements of its own. The South agreed for the first time, however, to report domestic CO2 emissions on a regular basis. There was some language discussed regarding "provisions for international consultation and analysis." That's as close as we'll get to verification. Some observers had hoped that a new global panel of experts might have access to all monitoring equipment, data and technical specialists in each country so that suspect reports could be verified, but that didn't happen.

5. The so-called "Statement on Temperature" agreed to in Copenhagen says that the nations agreed that any global increase in future temperature should be kept to under two degrees Celsius. Since the new agreements specifies no targets, timetables, enforcement mechanisms, provisions for technology sharing between the North and the South, or ways of enhancing capacity building, it's hard to take such a statement seriously. Saying it should be done, but not saying how, is tantamount to saying nothing.

6. None of the promises made in Copenhagan are binding. Maybe, in the next year or two, a formal Protocol will be drafted that explains how implementation of these various commitments is supposed to happen. Until then, though, we'll be operating under the Rio Climate Change Convention and the Kyoto Protocol.

What happens when the Kyoto agreement runs out in 2012? It appears that we will have no binding targets in place to bring global greenhouse gas emissions to a level (450 ppm? by 2050) needed to forestall dangerous temperature increases. We certainly won't have the level of cooperation between North and South required to tackle the climate change problem over the long haul. Many countries in the South resent the way they were (once again) left out of the last minute wheeling and dealing in Copenhagan. And, tossing money at them, no matter how many billions, without ever agreeing in principal that the North is responsible for the climate change mess we are currently in, just puts off the day we can achieve the global collaboration required to address the problem effectively. Small island nations face total destruction. The numbers of international refugees that will have to move from low-lying coastal areas devasted by meterological events is sure to increase markedly. Unfortunately, nothing will be done to jump-start Southern efforts to achieve more sustainable patterns of development. In short, after Copenhagen, the climate change problem will continue to get worse at an even faster clip.

What should have been done and what can still be done to turn this situation around? First, we need to alter the system of global treaty drafting. Each region of the world should bring together governmental and non-governmental interests on a specific multi-year timetable to produce a draft global treaty that takes account of its needs and sort out its responsibilities for achieving proportionate greenhouse gas mitigation efforts sufficient to reach the required 450 ppm goal by 2050. Two or three countries in each region should immediately mobilize such efforts. Using a common template -- developed by the Climate Change Secretariat which still has a 160+-country mandate -- each regional caucus should spell out ten year incremental reduction targets sufficient to meet the 450 ppm goal by 2050, explicit strategies that countries can use to meet these targets if they have to, the cost implications of meeting such targets (netting out the costs of not meeting them as well), ways reasonable data reporting and verification responsibilities might be met, institutional capacity building requirements, financial forecasts likely to have an impact on implementation, and possible financial or in-kind contributions each country needs or could provide). This needs to be done in eight to ten regions of the world. Each regional "caucus" should draft its suggested version of a new global agreement to meet greenhouse gas reduction requirements responsibly and designate five members from its caucus to participate in a global treaty-making council with responsibility for reconciling the differences among the proposed regional drafts. The Global Congress would have to be mediated by an international panel of skilled facilitators acceptable to all the regions. A Congress of 40 - 50 regional representatives would need a year or more to prepare a meaningful treaty the takes account the differences among all the regional drafts. The final version of the treaty would then be sent to each national legislative body to ratify (not at another Copenhagan-style type fracus). When a minimum of 2/3 of the countries in each region ratifies it, and a minimum of 2/3 of the regions ratify it, it would come into force. If 2/3 of the countries in 2/3 of the regions ratified the treaty, those 130 countries would be in a position to take action (under a range of trade and other treaty regimes) to pressure any and all hold out countries to ratify the new Climate Change treaty. If a county won't sign the new treaty, they ought not be eligible to participate in international trade regimes. If they don't sign, they ought not be eligible for assistance from any multinational banks. Since all the same countries are part of all these regimes, the climate change treaty signers would have sufficient numbers (and through the process I am describing) sufficient legitimacy, to make this happen.

Let's get to work.

Friday, December 4, 2009

Resolving Complaints About Irresponsible Corporations

Corporations are supposed to pay attention to environmental, health, safety, labor, tax, consumer protection, information disclosure, and human rights laws wherever they set up shop. But, we've all seen and heard stories about multinationals guilty of violations in far-away places. They have been charged with allowing unsafe working conditions, blocking legitimate unionization efforts; ignoring environmental and health standards, bribing officials, and turning a blind eye to human rights violations. Developing countries are often ambivalent about holding violators to account: they can't afford to lose the investments and the jobs, and they often lack enforcement muscle even if they want to act.

The 30 member nations in the Organization for Economic Cooperation and Development (OECD) -- mostly developed countries -- have agreed to press multinationals based within their borders to conduct themselves responsibly and abide by applicable laws wherever their far-flung business interests may take them. There are lots of voluntary guidelines that seek to impose similar norms of socially-responsible corporate behavior, but the OECD Guidelines for Multinational Enterprises cover 85% of all foreign direct investment in the world. They also put countries in a quasi-enforcement role which most voluntary codes of ethics don't do.

Every OECD country is required to appoint a National Contact Point (NCP). All complaints about foreign-controlled corporations are channeled through the (home country) NCPs, regardless of where an alleged infraction take place. So, for example, if an environmental group in the Philippines thinks a Dutch-based multinational is operating inappropriately in the Philippines, it can file a complaint with the NCP in the Netherlands. While the NGO can also bring a lawsuit against the Dutch subsidiary in the Philippines, getting the Dutch NCP involved brings an entirely different level of international attention to the complaint. If after an investigation, the NCP in the Netherlands is unable to get the parties to settle their differences, it is empowered to issue a statement of findings -- either giving the company a "clean bill of health" or stipulating (1) that the guidelines have been breached and (2) how the company's conduct must change in the future. Neither the NCP or the OECD can shut a company down or fine them for breaking the rules. However, the NCP might be in a position in some countries to punish a non-complier by forbidding them to do business with their home country government. Any company named as a non-complier by an NCP will take a serious reputational hit (which could affect its market value) in national and international circles.

While the OECD guidelines have been in effect for a number of years, only a few hundred notifications have been sent to NCPs worldwide. Recently, though, the Dutch and Canadian NCPs (in anticipation of an upcoming OECD review of the guidelines) asked whether those of us who help to mediate CSR disputes would offer suggestions for improving the "system." On November 31st, the Dutch and Canadian NCPs met with a group of experienced international dispute resolvers at Harvard Law School to share ideas.

We heard about a number of cases. The Dutch NCP tries hard to resolve complaints behind the scenes without ever having to issue formal statements, but this is not always possible. When they try to mediate disputes, they encounter three sets of obstacles or concerns. The first relates to the roles and responsibility of NCPs. Exactly what authority do they have? The Dutch NCP is independent. While it is appointed by the Dutch government, it is made up of four individuals who represent labor unions, corporations, environmental groups and academia. All other NCPs are government officials. When they receive a notification, they must investigate. But, its hard to gather first-hand evidence in another part of the world with a small staff and a limited budget. Should they proceed if charges are pending in court or being pursued in parallel in another country? Different NCPs think differently about this. How should they decide which standards of performance to use in evaluating specific corporate actions? Does it matter whether the complainant is truly representative of the people or group it alleges to represent? What if the corporate subsidiary being charged is truly independent, and the multinational parent company has little or no control over its behavior?

A second set of obstacles or issues revolves around the rights of companies against whom complaints have been lodged as well as the rights of individuals or groups who file notices of complaint. Should companies that are charged with violations have a right to confront the evidence against them and to cross-examine their accusers? This would pit small NGOs against some of the worlds' richest companies. But, if unsubstantiated charges are publicized and used to blemish the reputation of a company, does an NCP have a responsibility to protect the company's good name? And, if someone files a complaint, is it the responsibility of the NCP to protect them from any kind of retaliation? The current OECD guidelines are not as explicit as they might be; on the other hand, maybe its better to let each NCP proceed in whatever way makes the most sense in its legal and cultural context. Does fairness require that NCPs all over the world keep a record of their findings and decisions, that repeat (global) offenders be held to higher standards or that similar charges be treated in the same way every where?

The third set of questions focuses on the roles and responsibilities of intermediaries trying to resolve CSR disputes. If the NCP promises confidentiality to get people to talk freely, can it then use what it learns if a voluntary settlement is not reached and it has to issue a statement of findings? What ethical code should govern NCP settlement efforts? Should NCPs try to mediate disputes themselves; or, as is the case in the United Kingdom, should they hire professional mediators who are not government employees? Is it really possible to create a wall between one part of an NCP that is trying to settle a dispute and another that has to pursue its investigatory obligations and issue a formal statement of findings?

As more groups around the world find out about the OECD system, and the number of notifications increases, it will be important to have effective dispute resolution procedures in place. You should contact the NCP in your country. Offer comments and suggestions (by January 25, 2010) that can be incorporated into the upcoming review of the OECD guidelines. You can view the guidelines at You also might want to read the report prepared by OECD Watch entitled Five Years On: A Review of the OECD Guidelines and National Contact Points, 2005 available at