Global Policy Forum

Business Leader Says Governments


Interview By Akwe Amosu
September 3, 2002

Are you having a good summit? Yes. There are highs and lows and frustrations. It's an exhausting process.

What's frustrating? Well, I find the whole text negotiation thing an arcane process. It's difficult to get very excited about single words and the meanings of words that, if you read them to any normal mortal, they wouldn't see the difference between them.

But nonetheless business seems to be having an excellent summit; you're getting an unprecedented hearing. Yes, I think that's certainly true and I think that was part of our objective - that business be seen as someone who is not perfect but who you can work with and who needs to work with others in order to achieve things.Yet, if I look at the Political Declaration - which I know is an early draft - it goes on for eight or nine pages and it doesn't anywhere mention the need for small, medium-sized businesses, big businesses to create things. All it's got is a couple of paragraphs saying we've got to control the fellas. You know, If you don't stimulate it there won't be anything to control.

I find that disappointing, and it doesn't really reflect what individual leaders are saying. The whole Nepad process [New Partnership for African Development] is really tremendous, because this is governments taking responsibility for local and national governance in its widest sense. They're saying 'development is our responsibility, but we need help. We need development assistance, and we need business involvement and we need civil society involvement.' That, I think, is great.

There is touch of motherhood and apple pie about it, isn't there though? People have been asking for transparency, accountability and good governance, for some time; and nothing at this summit has changed things. Isn't it possible that two years hence, despite all this weeks' hype, we'll look back and see that leaders didn't change and foreign capital stayed away? What concretely can you point to, apart from the Nepad document, that says we're on the edge of a new era?

Well, I agree with you, there's a serious risk. One of the reasons that we in business keep hammering on about national and local accountability and governance is that we worry about the grandstanding of certain NGOs, take FOE [Friends of the Earth] for example, who say we can fix all this with a high level agreement to control big corporations. Now, I can't object to that. I wouldn't speak against something that compels us to do something I think we ought to be doing anyway. You cannot be against it. That would be like being against motherhood.

The problem is that I think the effort put into that makes people think they've achieved something, when in fact they've achieved nothing. Having those high level agreements doesn't strike at the root of the problem, which is a national and local one - a grinding job of trying to get business and NGOs to work together with labour unions and others in society to try, brick by brick, to build this local governance. It's not done by big agreements. It's done by people working together on the ground. The problem is that, if we're not careful, we distract and antagonize each other on the ground, nationally and locally. That's the pity, I think.

But wouldn't you accept that context does count for something? That where a government, and a set of NGOs or a set of companies are working in a context which says there shall be this kind of accounting for one's actions - so that it can't just be, on the one hand, 'greenwash' or, alternatively, government incompetence - that there has to be some kind of clarity about what has and hasn't been achieved. Doesn't that help all sides to move things forward?

Indeed - if you had a global convention that said these are things that we need to do. Which would be a huge job, to build the [list of] things that governments need to do: civil society access, security, rule of law, etc. But many of those statements exist, and of course they provide useful context. The universal declaration of human rights 50 years ago, signed by everyone, provides context - but it hasn't solved the problem. Whether you're in a developed country or an industrialized country, there are still human rights issues. Half the time people haven't read the damn thing. The problem is: people get the feeling that if you achieve this, your work is done. I'm not saying it's not progress. It's a question of where you want to put the effort.

You often say 'business' doesn't want this or does want that. A lot of people would say to you, well, some business may agree, but an awful lot don't - and appear to be unmoved by the appeal of sustainable development. What do you say to people who are skeptical?

I think that's true, but look at the way progress has been made. If you go back to the last century in Europe and North America and look at labour conditions, for example, they were driven by some responsible businesses - by farsightedness, or ethical sightedness, or moral commitment. In Britain, some of the big chocolate manufacturers were Quakers and so on, but also driven by social activists at the time who were the last century's equivalent of NGOs. So the changes never come just from one player. Change began. It was demonstrated to be possible. Alliances were formed and, at the same time, people saw that actually this is advantageous. It brings benefits. We thought it would just be an expense before, but it brings benefits. At the same time, behind that, comes the ever-increasing march of legislation, which brings in the standards. So in those countries now, there are basic labour standards.

But to go back to my original point: those basic standards may exist, but unless you have the local governance, you get sweatshops in New York, still. I mean, here you have a developed country, with strong social institutions and still failures. Not just Enron, but sweat shops. And people are, rightly,in the US, battling with how to fix that. So I see this as a process of leading a kind of inert middle that is being gradually convinced. At the same time, basic legislation is driving out the laggards and the positively unscrupulous, because crooks and scallywags are fairly evenly distributed in politics, religion, wherever.

But where does that leave a third world country like, say, Nigeria? The checks-and-balances and density of civil society (to use the jargon) in New York, and the United States are one thing; the complete underdevelopment of regulation and checks-and-balances in Nigeria is another. And you know very well the situation in the Niger Delta - that people are having to buy their drinking water; their soil is contaminated; there are pipes running on the surface through villages. People are asking what happens when you want to convince an oil major like Shell that they should fix this? They'll say, "well, why should we?" Where does that leave Nigeria?

Well, that's what different sectors of industry are trying to do with the Global Mining Initiative, with sustainable forestry and so on, is - together with civil society - to hammer out the standards. That serves two purposes. They are the standards against which international business is judged, and they are also the standards which impact on local legislation. But if you go to Nigeria, World Bank reports have ranked the sources of pollution. Oil is number five. A lot of it is sanitation. There are huge problems of revenue distribution and misallocation of revenue.

Now I think the sanctions that you need are international sanctions [reflecting] agreed industry best practices. Fine. Build them into global conventions, if you want to. But I think its much more effective to build them into local laws and try and deliver them. This is not a standard-free thing. But you have to realize that if you take the Global Mining Initiative, for example, you can develop these standards between the big mining companies. You already have trouble with the minor ones, at national level, and you're way out of standard when you come to artisan type mining. The artisan-type mining then becomes a social problem. How do you address this, because you don't want to wipe them out? And that's the point - that, somehow, national governments have to take into account how do they want to address these issues and how fast. I feel strongly that the place to address them is nationally and locally, because that's the place where the voice of local people can be heard.

Ordinary grass-roots people in the Delta would agree with you. They, too, would like to see their government taking responsibility and their local state government setting out standards that everyone can agree to and meet. But I suppose what they'd also say is, in the absence of that right now, what we would like to do is to hold to account one clear corporate perpetrator of our problems. We know we have a sanitation problem - so do they in Lagos or Kano. What they don't have in those place is a chemically polluted water supply.

OK, we're in danger of getting bogged down in the Niger Delta, but I see what you mean. But the huge problem - and this is a very difficult issue to address - is that there are these four revenue streams from economic activity: that to the shareholders; that to the employees; that to suppliers, local and international contractors; and that to the government. And if these things are out of balance, for example, if the government's flow of things is unreasonable, then you get problems. You get the problems of Enron, which was against a background where US society was becoming concerned about the excessive remuneration of chief executives, which damaged trust and the feeling of equity. So if you get these streams out of balance, you get problems. Let's suppose we go in and we operate to high standards. We do consultations, we're operating to global standards, and we pay our money over - and then the government blows it or steals it. I don't know whether you heard Tokyo Sexwale's [businessman and former premier of South Africa's Gauteng] impassioned outburst at the press conference yesterday. It was really deeply moving and very, very tough. He said some of the people taking decisions here at the summit come from countries where they treat the national bank as their personal bank account, as it were, and he's right!

That is part of the Nigeria problem. People say look there's been all this activity, billions of dollars have been generated and where do we see the result of it? In the past, I think, we would have said as a corporation, if we paid it over honestly, if we didn't bribe people - which we didn't - and I would add, if we ran our operation reasonably responsibly - which you might argue with - I would have said this [lack of development] was a national responsibility. But I don't believe that now. I believe a corporation, in its own interest, has a concern - but not a responsibility, because we don't have a mandate to tell governments what to do. In Chad, for example, for the oil pipeline, there's a revenue allocation agreement which has been hammered out with the Chad government and the World Bank. It has a kind of independent supervision, including the Chad parliament, the World Bank, international NGOs. I think we need to look at structures like that.

Look at Angola. Huge funds go in, and what happens? Our business, if we are responsible businesses, will become untenable if people turn round and say 'look, all this stuff done, the company run to high standards, but where did the money go?' You can say ''blame the government' but they'll say 'you were part of that'. And indeed you are part of that. So we have this complex issue. What I would like to say is that I have lived in three countries and watched the development of our industry - in Nigeria, Oman and Malaysia. Same company, same standards, same people, same me. And I have seen three completely different outcomes. I'm not trying to unload responsibility, but I just say, if you look at it as a scientific experiment, the variable is the nature of society and the government that's got something to do with it. That's not to exonerate us, because we do have a responsibility.

One of the biggest challenges for BASD, and for any business person who is committed to a socially responsible role for business, is to try and work out what to do about emissions in the US. What should business do now to try and swing opinion in the US corporate world, and therefore in the government, around to supporting the Kyoto protocol on climate change?

Well, I can tell you what I do. I tramp round the world, and I'm going back to England on Monday and going yet again, for at least the second year running, to weigh in on the IPCC [Intergovernmental Panel on Climate Change] third assessment report - a sound piece of work - and say to people, this is the sort of work on which we must base investment decisions. What we should do in business, and what many energy companies accept, is that they have to do that. Then the question is, what do you do? We have customers who want energy. Our job is to supply that energy. But I'm personally convinced that through a combination of government regulatory frameworks and the sort of technologies we can produce, we can actually [meet those needs], not with no impact on climate change, but somewhere near the lower end.

Are you thinking of the use of renewables?

That's part of it, but there's a huge hydrocarbon piece. If you want some long-term reviews of the role of hydrogen, the role of renewables, different routes, look at Shell's long-term energy scenarios, which go up to 2050. They show how you could arrive at the lower end [in emissions and climate impact] and the sort of frameworks you would need. You need government frameworks, which is why we support Kyoto. There's a big bit of the industry which says either 'we're not convinced' or 'its too expensive to do something'. They're wrong. We keep saying that, and I believe we'll win in the marketplace, because people are concerned. If we say, look we don't have all the answers but we're working to address it, those who are perceived to be opposing it will be damaged in the marketplace, and that will have an effect.

I know of no other technique, because I can't control the US or the US government. We can use what influence we have, but unfortunately, we don't have the influence that people sometimes think we have. I agree with that as a serious problem - and that is one of the reasons that we in business keep hammering on about local accountability and governance.

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