Excerpts from Michael H. Posner, Assistant Secretary of State for Human Rights, Democracy, and Labor at the Robert F. Kennedy Compass Conference in Hyannis Port, Massachusetts
[Kerry Kennedy and I] have worked for years together and it’s always been such a treat and pleasure for me because I know and feel her passion and her commitment to people. Many people work in the human rights movement and they forget the words human. Kerry is all about helping real people in real places. People who are the most vulnerable in their societies, and making sure that they’re treated with dignity.
What I want to do tonight if I can, and bear with me, I want to say something about business and human rights. About the relationship between business and human rights. This is a conversation we probably wouldn’t be having 10 years ago, and we certainly wouldn’t be having 25 years ago. The terms didn’t go together but the world is changing and it’s a real tribute to all of you for being here, to allow yourself to think about these issues. I want to push and say something about what’s happening and try to generate a conversation. My perspective as somebody that’s worked in human rights for a long time, as an activist, and now for three years working for Hillary Clinton as a government official. And what I want to talk about is what I see as emerging rules of the road for a global economy that’s changing very quickly, and where the role of issues like the environment, and governance, and human rights are becoming increasingly vital both in terms of doing business in a profitable way, but also doing it in the right way. I’m going to try to do three things, and I’m going to pretty quickly. I want to say something about the global context, the context in which I work. I want to say something about elements of the human rights discussion in different parts of the business world and then I want to say just a few words about how this relates to the investment world and the community you represent. President Obama has said that we are engaging in the world with friends and foes and it is a principled engagement. I’m very proud to serve in this administration, but really proud to be a representative of the US government. We really are the gold standard and as I travel the world I see how much people in the world look to us for leadership. They look to us for leadership because of what we represent as a country. It’s the pursuit of human rights, attention to individual liberty and freedom is something that’s part of the American brand, it’s part of who we are as people, and people all over the world recognize that and they aspire to be in our midst. The Obama Doctrine assumes that we will engage in the world with friend and foe but will do it in a principled way. Human rights and democracy is part of what we do as a government and it’s certainly part of what I do every day. We also believe this is not a question of American values, or American standards, there is a universal standard contained in the Universal Declaration of Human Rights, its one standard for all. And as Hillary Clinton keeps saying and I say, we aim to lead by example- it’s not just about others, it’s also the way we treat each other, and the way we deal with these issues in our home, and I’m very proud again of the things we’ve done in that regard. And finally, our belief is that change occurs from within. We’re talking at dinner about how much influence does the US really have in a place like Egypt; or in China or Russia? Unfortunately, we don’t have as much influence as people think, but we have the ability to help those who are leading the charge. The advocates for human rights in their own societies who are the change agents, they’re the front line. We can amplify their voices, we can provide financial support, training, and we can provide a lifeline of protection when they get in trouble. That’s a lot of what we do.
What I’ve learned in three years in government, is obvious probably to most people but it has really hit me hard being in the government. The United States Government in 2012 is by far the most powerful government in the world, in a world where governments are a lot less powerful. We spend an enormous amount of time trying to deal with the risks posed by terrorist organizations like al-Qaida; they owe no allegiance to a state, to a government. We spend an enormous amount of time trying to figure out how to piggy back on the resources of various non-governmental organizations, many of them formed in the last 20 or 25 years who are doing things that governments used to do. And in the world today, of the hundred biggest economies in the world, 50 are not states. They’re private companies. So we’ve got to readjust in government to the fact that we don’t have the power we once did. What this means is that the private sector, private companies, global companies in this new global economy have a larger role than they had 15 to 20 years ago and the trend is going in the direction saying, “we’ve got to figure out what companies are doing and how they affect global policy.”
Now this takes us in three different directions. We see on one hand that a number of businesses doing things that are good social policy: a drug company providing anti-Malarial drugs to people in Africa revolutionizing medicine in those places. That’s a company doing what it does which serves a social good. There are also places where the private sector is in partnership with government: we have a whole office in the State Department that’s devoted to public private partnerships. And people talk about corporate social responsibility; it can mean charity, it can mean these sorts of private public partnerships, and they are a wonderful thing, vital in this world.
But the piece I want to talk about today is the piece that’s the hardest. It relates to what business do in situations where either voluntarily, or knowingly, or inadvertently; directly or indirectly businesses are causally related to violations of human rights. This is the tough part; this is where we have to ask: What’s the appropriate role for business in a world where businesses have greater power? Where states are less powerful? Often states are doing the wrong thing. What’s the appropriate role for business in trying to address these issues? And I would maintain we’re going to see more and more of these issues come to the fore, in part because of all the changes I’ve described, but also because you have a growing non-governmental civil society that’s paying attention to these issues. You have a growing social media, the internet, and the blogosphere which allows people in real time to record and transmit examples of bad behavior. And because globally at the United Nations now a set of guiding principles on business and human rights, which were pushed through by a man named John Ruggie at Harvard and which were adopted by governments last year and which call on governments to have a duty to protect human rights primary but then say companies have a responsibility to respect human rights.
What does that mean? How does it apply practically? So let me give you some examples. There are five areas where I see this playing itself out and I’m seeing it every single day. The first relates to the extractive industries. There are a range of places in the world where stuff in the ground, whether its oil or whether it’s gold or diamonds, causes conflict. It’s not an accident that there’s violence in the Niger Delta in Nigeria, or that there is violence in Zimbabwe where diamonds are being produced in the Marange mines. Violence and conflict follows resources, especially in poor countries, and so the issue of how to protect and make sure that there aren’t violations by security forces has become a huge issue. Bennett Freeman who you’ll hear from tomorrow worked for years beginning within the Clinton administration to create something called the Voluntary Principles on Security and Human Rights. There are now 19 oil and mining companies that are part of this initiative which has set standards for how to deal with these issues of security violations occurring in the places where stuff is being dug out of the ground. There are seven governments, including the US, the UK, Norway, the Netherlands, and there are 10 non-governmental organizations Oxfam, Amnesty International. Together they’re working to implement principles that say these are minimum standards for oil and extractive industries.
What does this mean practically? Several weeks ago, three weeks ago, I was in Tripoli in Libya and I brought together 12 oil companies and the oil minister of Libya, the British government, the Canadians, and the UN. We had a two hour unbelievably fascinating discussion of how to implement these principles in a place where oil pipelines are being attacked on a daily basis by militias that are outside the control of government. What’s the practical role for business? What’s the practical role for a weak government? What’s the practical role for government like ours? Yesterday we had a discussion at the White House about what do we do now in Burma after 50 years. I was with Secretary Clinton in December when we went to see Aung San Suu Kyi, and we met the government of Burma that’s coming out of a cave after 50 years of basically being completely indifferent to these issues: widespread violations, total social upheaval, and poverty. Now as of May, we’ve begun to ease the economic restrictions on Burma and the questions is what the proper role for business coming into a system where the institutions of government have been corrupted, and where in ministries, like the Ministry of oil, the MOGE is part of the problem, in bed with the military, involved with having child labor and forced labor build pipelines.
How do you have a government policy, how do you have business policy that reacts to those situations? Every day these cases are coming to me on my desk. The Swiss Government initiated a code of conduct for private security contractors, think of Blackwater. There are now 400 companies that have agreed to a set of standards for private security contractors, operating in these contentious violent areas. And we’re now setting up a system to monitor those principles. The US, the UK, the Swiss taking the lead, the best of industry saying we want to be differentiated from the bad guys, we want to see and make this real. So the one area is extractives.
The second area where there’s been a lot of work done and where I’ve spent a lot of time, relates to sourcing of materials and products, the manufacturing sector. We are now having a political debate about outsourcing. Well, the reality is we need rules of the road. What does it mean if a product is produced in China or Bangladesh? What does it mean for an American company that goes to a manufacturer in one of those countries and says I want to produce quality products but I want to produce them cheaply? What does it mean if that country does not have laws in place or enforcement capability? 15 years ago I worked with the Clinton administration to create the Fair Labor Association where we worked with the apparel industry where we set up a way to monitor factories in that supply chain for companies like Nike and Adidas and Liz Claiborne and H&M. For the last 12 years, those monitoring missions have made a huge difference in the way people are treated, mostly young women in factories around the world.
Last month I was in China, and after being part of a strategic and economic dialogue with the Chinese government, I went to Shenzhen where I went to see a factory run by a company called FoxConn, the largest producer of electronic gadgets, the Blackberrys, the iPads, the computers. 50 percent of all the electronic stuff is now produced by FoxConn. The factory I went to had 240,000 employees. I went to see them make the iPad. What’s happening is workers are dissatisfied to say the least, disempowered. 15 workers have jumped off dormitory windows and committed suicide. What happened as part of the fishbowl we live in, a guy named Mike Daisey wandered around China and decided to write a play called the Agony and Ecstasy of Steve Jobs, which has been on Broadway for a year, some of which he made up. It was featured on a NPR show called This American Life. It’s the most popular program they have ever aired, and it reflected badly on Apple and its young consumers. So Apple went to the Fair Labor Association and said we need to figure out what to do at FoxConn which is producing 90 percent of our products. To their credit, Apple, FoxConn, took the bull by the horns, and they said we are going to try to figure out what is going on. They conducted 35,000 surveys of workers and spent 3 weeks in the factories interviewing the workers and the Fair Labor Association came up with a stinging report that said here are the 15 things you need to change. When I went FoxConn, the head of the company flew in from Taiwan to meet me, and sat with me for an hour and a half and said we are committed to doing this and we are going to spend the amount of money it takes; this is part of what it means to be a company in the 21st century.
And the effect of this, and I could go on about this but I am going to say one more word, is everyone today is in a fishbowl. Everyone doing manufacturing has partners like FoxConn, before they did the investigation, and the Mike Daiseys waiting to write the Broadway play, and so all of us have to think about what does it mean to be working with and to be investing with manufacturing companies.
The third area: Information technology. There is a lively debate on how to keep the Internet free. Secretary Clinton has given three major speeches about the notion that a free open Internet is in the world’s best interest. We want an open platform for dissidents, for commerce, for innovation, for education, for people to have fun. We may not be alone in this, but we are leading the charge. And on the other side, you have governments like the Chinese and the Russians who have introduced an international code of conduct for Internet security which is intended to break down the freedom of the Internet that we know and that has served us and the world so well. But companies like Google and Yahoo and Microsoft have come together in an initiative called the Global Network Initiative to address this. They are recognizing that while governments have a major role to play, there also has to be a role for private companies. But everybody is not doing what Google, Yahoo and Microsoft are doing. So the question is for investors how do you identify who is doing the right thing, how do you reward them, and how do you address the companies that aren’t.
The fourth category, and I am almost done, is the agricultural sector. Coffee, cocoa, produced by thousands, tens of thousands on small farms, often kids. If you buy Uzbek cotton, it is picked every year by kids who were taken out of school by the government because it is the cheapest way to get it done. If you buy a candy bar, the cocoa that is coming from Nestle or Mars or wherever is probably coming from West Africa, and again a huge amount of child labor in those fields. Senator Harkin, as part of the Farm Bill 2 years ago, said we have to do something about this. We have to pay attention to the worst parts of child labor. And he mandated a study of this which the U.S. Department of Agriculture did with outside groups including some private industry. Coca-Cola was there and others, some government officials; I was a part of it. We came up with guidelines and now the question is, how do we make that real? We are just at the beginning of that process.
And finally the fifth category is the financial sector, where so many of you in this room work. You are one degree removed from the things I described, but there are clearly things you can and should be thinking about and let me just mention a few and I will come to a close. It is no longer enough for companies and investors to say we are obeying local law. It is clear in many places around the world these universal standards I’ve mentioned are not being abided by and local governments either don’t have the capacity, the willingness, or sometimes they are the ones creating the problems. What can you do? Tomorrow I know you are having a discussion about environmental, social, governance, risks and opportunities that Freeman is going to lead. I just want to say three things about that. While direct financial risks are probably limited in the human rights area, again we are living in a world where all of us are on display 24/7 and the risks are growing exponentially. There are clearly reputational risks, and though it might not affect the bottom line directly, there is a higher degree of consumer interest in these issues, which drains corporate energy, results in litigation, and affects the ability of companies to lead, recruit the best people, to have the best corporate culture. And there is finally an increasing appetite to regulate. And I don’t want to overstate this. I think by and large there is a majority on both sides of the aisle not to overly regulate but we have the example of Dodd-Frank which many of you know in another context. It has provisions which deal with conflict minerals in the area of the Congo, which are about to be implemented, and it also has new reporting requirements. What I do see happening and I see it as an increasing trend is there are going to be more requirements for more companies in more industries to disclose what they are doing, to report, and that increased reporting is going to lead to more scrutiny, greater expose writing, more 60 minutes stories, and more litigation. So what should you do? What should you do when you are looking at companies you are investing in? You can’t be the ones making the decisions and getting in the trenches to figure out how to fix them, but I do think collectively the people in this room and the communities you represent have the ability to drive this discussion in a better way and there are 5 principles I see as guiding what the best companies are doing and they are the kinds of things you ought to be asking, to be discussing, with those with whom you deal.
The first is an acknowledgment of responsibility and developing broad principles to guide a company’s actions. It is the most important step to get in the game for companies to say, ‘okay, if we are manufacturing, we are going to take responsibility for the supply chain. If we are in the extracting industry, we are going to take responsibility for what happens in a conflict zone.’ If you are working for an Internet company, it means worrying about privacy rights, worrying about freedom of expression, and worrying about not being in complicity with the Gaddafis of the world, or the Iranians or others who use technology to suppress their own people. The second thing is for companies to develop internal systems and the systems shouldn’t be run by public relations people or lawyers, they need to be operational, and they need to have the blessing from the top. Are the companies structured in a way to make the principles real? And third, to develop internal benchmarks. We need metrics; we need ways of evaluating; we need ways of reporting. If you have standards, are you taking them seriously? Are you evaluating them? What does that mean in terms of how employees are being evaluated? The fourth thing is collective action. So many companies are afraid of losing control. They want to make a decision on their own or invent a pilot project. You don’t succeed if you don’t engage. There are multiple stakeholders, some represented in this room: NGOs, universities, the social investment funds, like Calvert or Domini, think-tanks. There are a range of people who now have skin in the game. They want to be involved they want to be in engaged; do it. It is the smart way to operate.
And finally, banding together within an industry to figure out how collectively you can make a difference. I have described several examples today, the Fair Labor Association dealing with manufacturing, or the Voluntary Principles dealing with extractive changes, or the Global Network Initiative dealing with information technology. It is interesting to me, and this is an area I know the least about, that over the last several years the UN and perhaps many people in this room have established Principles for Responsible Investment, PRI, six principles devised by your community. Now the question is how to implement them and make them real and I hope and assume that in the days ahead that is going to be part of what you talk about. Let me close with just a last comment. There are people in this room who are highly successful because you are innovative, you’re smart, you are risk takers, you know how to win. I really want to challenge you to take those same attributes, those same wonderful qualities of innovation and intelligence, and apply them not only in the traditional sense of deciding what you invest in, but the ways in which you can invest in businesses that influence the 21st century and the global economy. We are in a moment in the world where we need the best and the brightest minds in the world to be behind a notion of dignity. As I travel the world, and I am about to go to Egypt, there is a demand for dignity. Young people want a job, want economic opportunity, they want a stake in the society’s future politically, and they need and want and deserve our help. So I encourage you to be a part of the solution and to do well and to do good. Thank you very much.