About CEO
Corporate Europe Observer - Issue 10
  home > observer10 > basd.html

Industry's Rio + 10 Strategy: Banking on Feelgood PR

Captains of industry from around the world gathered in Paris in early October for the first major strategy meeting on the UN's Rio+ 10 summit, hosted by Business Action for Sustainable Development (BASD). The tone of the conference showed that business is feeling the heat from groups campaigning for binding international rules on corporate activities. In defence of 'voluntary action' and 'self-regulation', the BASD is finetuning tools developed by corporate lobby groups in recent years. Handpicked, isolated examples of environment and social initiatives by BASD member corporations will be marketed as 'proof' of corporate commitment to sustainable development. This piecemeal approach will be coupled with a divide-and-rule strategy: a new conciliatory tone, combined with dialogue and 'partnership' with the 'responsible' NGOs, while discrediting the critics of corporateled globalisation.

he conference was the first and only plenary meeting of the BASD before Rio +10 - the UN's World Summit for Sustainable Development (WSSD) - to be held in Johannesburg in September 2002. In the Paris headquarters of the ICC, a stone's throw from the Eiffel Tower, around 140 corporate heavyweights took part in debates about strategies for the Johannesburg Summit, including ways to attract more corporations to the BASD campaign. For proof that the BASD has already stolen the heart of the UN leadership, one need only look at the participation in the conference of such high level officials as UN Under-Secretary General for Economic and Social Affairs Nihn Desai, Commission for Sustainable Development (CSD) President Emil Salim and UN Environment Program (UNEP) Assistant Executive Director Jacqueline Aloisi.

Veterans of 'corporate environmentalism' were prominent, such as Lord Holme of Cheltenham and Bjorn Stigson, from the International Chamber of Commerce (ICC) and the World Business Council for Sustainable Development (WBCSD) respectively, the two groupings that founded the BASD. However, the launch also attracted many representatives of business lobby groups that are known for a less subtle public discourse on environmental and social issues. The Canadian Business Council for National Interests (BCNI), the US Council for International Business as well as the Brussels-based American Chamber of Commerce (Amcham) and the European Roundtable of Industrialists (ERT) were represented there. Although they consist of largely the same member corporations as the ICC and the WBCSD, they generally promote a straightforward and aggressive agenda, centered on adapting public policy to the corporate bottom-line. In their pursuit of global trade and investment deregulation, privatisation, and labour market deregulation, these groups also routinely flirt with 'sustainable development' rhetoric, particularly in the post-Seattle era. Their engagement with the more silver-tongued BASD underlines that international business is determined to influence the outcome of Rio +10.

At a strategy meeting of a new grouping with the name Business Action for Sustainable Development one might have expected some degree of corporate selfreflection. An open debate about the responsibility of transnational corporations for the global social and environmental crisis would have been very appropriate, especially considering the participation of numerous corporate black sheep. These include French oil giant TotalFinaElf, which cooperates with numerous oppressive regimes and denies financial responsibility for the ecological disaster caused by the oil spill from its tanker Erika in December 1999. Many BASD member corporations such as Rio Tinto, Procter and Gamble, Aventis, Fiat, BP and Shell continue to be involved in operations which have environmental, social and human rights impacts that are contradictory to the 'sustainable development' rhetoric, however loose is its definition (see the box for a more detailed description of the misdemeanors of some of these corporations).

Legacy of Sustainability?

The desire to sidestep criticism from NGOs was a recurring theme throughout the conference. An example was the decision not to (directly) fund the Rio+ 10 summit despite requests from the South African government. The BASD wants to avoid, "the compromising situation of appearing to use financial contributions to influence a major UN event, particularly when the focus of much attention is on the so-called 'power' and 'influence' of multinational companies and their impact on globalisation."[1] The BASD also decided not to use the possibility of a commercial exhibition of 'best practices', which has become a regular side-feature at UN summits.

A safer bet, the BASD decided, was to fund so-called 'legacy projects' elsewhere in Johannesburg, South Africa or other parts of Africa. The BASD plans to select urban, agricultural, health, water or energy projects that would form a "lasting memorial" to the Summit. The legacy projects are defined as "grassroots sustainable development projects in the most needy communities in Africa."[2] But a glance at the list of potential projects presented at the conference shows that there is good reason to look beyond the rhetoric. The list not only includes several nuclear energy projects, but also the West African Gas Pipeline, a controversial mega-project designed to transport Chevron's Nigerian gas reserves to neighbouring countries.[3] This project, actively resisted by numerous communities in the region and grassroots groups around the world, would have disastrous consequences, including the legacy of displacing over 50,000 families. The list of projects was presented by Reuel Kheza, Chairman of South African electricity company Eskom and ViceChairman of the recently established South African Business Co-ordination Forum (BCF), a business body that is working closely with the BASD in the preparations for the Summit.

The Paris conference also dealt with very practical decisions on the BASD's activities during the Johannesburg summit. The CEOs are banking on having an impact with a special "business day," early in the second week of the summit, when the Heads of State arrive. BASD boss Sir Mark Moody-Stuart said he was "reasonably confident that during the second week of the summit business leaders who are present will have an opportunity to interact constructively with government leaders."[4] The business center in Johannesburg is to be financed by a contribution of $5,000 US per BASD member, on top of the initial membership fee of $1,000 to $5,000 US.

Marketing 'Corporate Citizenship'

The Paris conference made very clear that the business campaign towards Rio + 10 will focus on case studies of "How Business Contributes to Sustainable Development." In this way, the BASD will essentially be a PR campaign to boost the image of transnational corporations through highlighting isolated examples of social, environmental or human rights initiatives as 'proof' of corporate commitment to sustainable development. The ICC and the WBCSD have eagerly exploited feel-good stories about 'voluntary action', corporate philanthropy and partnerships with 'stakeholders' in the last few years. Whether or not the stories are accurate, they prove nothing about a corporation's overall record. The attraction of the piecemeal approach, however, is clear. Presented in sponsored sections of major international newspapers, in ads in glossy magazines or on corporate web pages, the case studies leave most readers with a positive feeling, but few possibilities to verify or get the complete picture of the corporation's impact on people and the environment.

In workshops, CEOs exchanged examples of 'best practice' and decided on criteria to be applied when selecting the ammunition for the BASD's campaign. Among the cases discussed in Paris were many industry initiatives which have faced critique from campaign groups in the past, such as the Global Mining Initiative, various carbon trading projects and also the involvement of the European Roundtable of Industrialists (ERT) in regional environmental councils in Central and Eastern Europe.

While much of the ambition behind the BASD seems to be little more than an extension of dubious PR practices of the WBCSD and the ICC, both of the parent organisations also have their own initiatives for Rio+ 10. The ICC is building on its cooperation with UNEP and preparing the 'World Summit Business Awards for Sustainable Development Partnerships', to be presented in Johannesburg. The event promises to be very similar to the 'Millennium Business Awards for Environmental Achievement' that were presented in Budapest in May 2000. This saw awards made to, among others, Canadian logging firm Interfor, under siege for clear-cutting, and to Tokyo Electric Power Company (TEPCO), Japan's largest nuclear energy producer, involved in environmentally disastrous tree plantation projects.[5]

Since Spring 2001, the WBCSD has released a flood of 'best practice' stories through its 'Business and the Rio Decade' series, published as sponsored sections in the International Herald Tribune.[6] In October, TEPCO was applauded for its investments in nuclear energy, while water giant Suez Lyonnaisse des Eaux was hailed for its participation in a scheme to provide water in poor neighbourhoods of Buenos Aires. The article makes no mention of how the France-based TNC aggressively pushes for privatisation of water services worldwide, depriving many low-incomee people from access to this basic necessity by turning it into a profit-making activity. South African electricity producer Eskom is praised both for its nuclear energy production and for its (limited) investments in renewable energy. Eskom is currently the target of protests by South African trade unions and community activists due to its plans to raise electricity prices, a means by which the company wants "to attract investors." The protests are part of a larger campaign in South Africa against the privatisation of basic services. In early November, South African union confederation COSATU organised local marches and picket lines all around South Africa.[7]

Sweet Words or Divide-and-Rule?

'Dialogue' and 'partnerships' with civil society 'stakeholders' has become a standard tool for business in dealing with its critics. Business groups use this display of cooperation to provide a cloak of legitimacy. The BASD certainly has embraced this subtler, more diplomatic approach. They applied this softly-softly approach when their conference participants in Paris were met by a delegation of some 50 protesters from different European countries. Accompanied by a samba band, activists fixed banners to the outside wall of the ICC headquarters. Passers-by could read slogans such as "Business is Part of the Problem, Not the Solution" and "No to the Privatisation of the UN". While two activists handcuffed themselves inside the building, others used green paint to 'greenwash' corporate logos, afterwards hanging them to dry on a washing line. Before the arrival of the conference participants via a back door, BASD Chairman Sir Mark Moody-Stuart invited the activists to join in the meeting to explain their critique.

The protestors, however, refused to join the meeting. In a public statement, they recognised the 'dialogue' strategy and said they refused to lend undeserved legitimacy to the BASD by engaging in the conference.[8] The statement pointed out that despite the overdose of corporate environmental rhetoric, BASD member companies continue to violate environmental and social rights around the world. The protestors also underlined the fact that BASD member companies, through fora such as the Transatlantic Business Dialogue (TABD), push for policies that are incompatible with their claims that they are committed to sustainable development.[9]

Since the Paris conference, Moody-Stuart has used the Paris action as an example of why business should engage in partnerships with NGOs. In his opinion, success in Johannesburg means "to demonstrate that business is playing a full part towards the achievement of sustainable development in partnership with other stakeholders."[10] In a recent article in the Financial Times, Moody-Stuart stressed his willingness to exchange views with critics, stating, "If people feel they are excluded from having their point made, they get frustrated -which is extremely dangerous."[11] Underlying the patronising tone is a more worrying strategy of 'divide and rule' in dealing with critics. The BASD has developed a standard set of sound bites referring to civil society groups, which are then aired on various occasions, in different speeches and presentations. These include Moody-Stuart's statement that "the vast majority [of NGOs] are fundamentally constructive and want to contribute."[12] By portraying groups that engage in partnerships or dialogue with industry as the only responsible ones, the BASD wants to draw a line through other groups. Those with a more fundamental critique and who are less ready to compromise their demands are pigeonholed as irresponsible.

The ICC has a particularly troubled history in its relations with critics of the corporate agenda. The self-proclaimed 'world business organisation' routinely goes on the offensive and questions the legitimacy of civil society groups that demand fundamental changes in the global economic system. Recently ICC spokespeople went into overdrive, in an outrageous and opportunistic attempt to manipulate public opinion by linking the so-called antiglobalisation movement with the September 11 attacks on the World Trade Center and the Pentagon. ICC Secretary-General Maria Livanos Cattaui, argued that failing to launch a new round at the WTO summit in Qatar would be "a setback that would be acclaimed by all enemies of freer world trade and investment, including those behind the attacks at the World Trade Center and the Pentagon."[13] Cynically using the same PR opportunity, Dean R. O'Hare of the ICC's US affiliate, made an appeal to for a new WTO round in order to "overcome the forces of terror and anti-globalisation to continue to expand trade and investment."[14]

Rules with Teeth or Self-Regulation?

There can be little doubt that the desire to oppose binding international regulations on corporations is a key motive behind industry campaigns on Rio+ 10. In his opening speech at the Paris conference, Sir Mark Moody-Stuart argued that promoting a positive image of TNCs was urgent, "as others see the need for legislation and codes with teeth to make sure that business, which they regard as unlikely otherwise to pay any attention to anything other than short-term profits, is compelled to adopt certain standards and procedures."[15]

Norine Kennedy, Vice-President and Head of Environment Affairs at the United States Council for International Business (USCIB), made clear in her speech that the objective is to influence the agenda of Rio+ 10 as well as various UN bodies, and to advocate industry selfregulation. USCIB recently put together a survey of global corporate responsibility initiatives, to help business leaders deal with potential demands.[16] The survey examines 20 codes of conduct and similar undertakings, and comes to conclusions that starkly contrast with the BASD's image of responsible corporate citizens. An earlier USCIB position paper on Codes of Conduct concludes that the majority of the business world, "rejects the notion that companies can be held responsible for the overall behaviour and policies of their subcontractors and suppliers". There is also an outright rejection of "demands by outside groups that seek to impose codes and assert the right to independently audit companies' compliance."[17]

With his more subtle approach, BASD chairman MoodyStuart does not openly reject regulation, but argues that it is generally not needed.[18] He warns that: "The damage is in regulations that instead of specifying a desired outcome, tell you what to do. This stifles creativity."[19] In place of regulation, Moody-Stuart advocates the socalled stakeholder model, in which an issue is identified by society and is dealt with in consultation and debate with all stakeholders. Finally, so the theory goes, major companies will take the necessary steps within a 'freemarket framework' and competition will deliver the best solutions.

Moody-Stuart ignores the fact that this model of selfregulation, despite its popularity among governments in the last decade, has proved incapable of solving the social and environmental global crisis. There is mounting evidence that initiatives such as voluntary codes of conduct, self-regulation and market-based pseudosolutions are, at best, inadequate and are certainly no substitute for mandatory and enforceable rules. A series of studies showing the insufficiency of 'voluntary action' by industry has been published by the Chemical Industry Association's 'Responsible Care' program.[20] One such study concludes that "effective industry self-regulation is difficult to maintain without explicit sanctions." The report stresses the "potential for opportunism to overcome the pressures of even powerful self-regulatory institutions."

A crucial factor behind the failings of these programs is that they are most often initiated in a defensive move to avoid government regulation. One illustration of this is the argumentation of David Kerr, CEO of Canadian mining company Noranda, who advocates two programs of the mining industry: the Global Mining Initiative and 'Mining, Minerals and Sustainable Development' (run by the WBCSD). Kerr stressed the importance of the voluntary initiatives by saying that "the fact is we are perceived negatively, and our freedom to operate is increasingly coming under threat."[21]

While corporations are producing feel-good case studies, preparing to give each other awards and choosing 'legacy projects' to sponsor, in order to be seen as part of the solution, a growing number of groups in the North and South demand that the Rio+ 10 summit discuss a UN mechanism with legal powers to force corporations to respect human, environmental and social rights, wherever they operate. Within the UN itself, a working group of the Commission on Human Rights is currently looking at the possibility of establishing a monitoring mechanism to apply sanctions on transnational corporations that violate UN-defined human rights (which includes for instance social and environmental rights).[22] If corporations and lobby groups were truly committed to social and environmental progress, they would surely not hesitate to support such efforts. As Rio +10 comes closer, so does the moment of truth.

Groups campaigning for a global mechanism to hold corporations responsible for their activities around the world include:

Friends of the Earth International: http://www.foei.org
World Development Movement: http://www.wdm.org.uk
Christian Aid: http://www.christian-aid.org
Alliance for a Corporate-Free UN: http://www.corpwatch.org/un

Some Examples of Worst Practice by BASD Member Corporations

This British-Australian corporation has been the target of long-standing campaigns held by coalitions of indigenous peoples, local communities, human right activists and environmental groups, due to its worldwide abuses of human rights and the environment. This includes supporting the Indonesian government with money and staff to suppress opposition to their copper and gold mines in Grasberg, West Papua. This mine has caused irreversible damage to the environment and terrible social upheaval including evictions, tortures and killings. The Kelian gold mine in Kalimantan, Borneo, is another shocking case study of Rio Tinto activities. Since the 80s it has resulted in massive displacement of people, social injustices, loss of livelihoods for the locals and severe pollution in the area. After enduring a long-term campaign against it, the company announced it will close the mine in 2003.[i]

The world's fourth largest oil company, is under investigation by French courts over its responsibility for the disaster in 1999, in which the oil tanker, Erika, sank close to the French coast in December 1999, spilling nearly 20,000 tons of heavy fuel oil, causing black tides that coated over 250 miles of French beaches, created more than 160,000 tons of toxic waste, killed more than 60,000 marine birds and caused massive economic losses. TotalFinaElf is denying financial responsibility. Among other measures, the Court has banned the company from shipping heavy fuel oil in tankers older than 15 years (Erika was 25), but the French giant vowed to fight the ban as discriminatory. TotalFinaElf has also been involved in corruption scandals in France and Germany, and maintains links with numerous oppressive regimes.

Alongside Shell, BP is a key proponent of corporate greenwash within the climate lobby. Despite its sophisticated promotion of its image as a convert to corporate environmental responsibility, and its widely publicised investment in renewables, BP continues to increase its oil production, despite the fact that the use of fossil fuels is recognised as the main cause of global climate change. Recently, through its co-ownership of PetroChina, BP has been (together with TotalFinaElf, OMV, and Lundin) amongst the European-based TNCs involved in oil exploitation in Sudan, thereby fueling the government's displacement campaign and civil war.

Despite its green rhetoric Shell continues to greatly increase its oil exploration and production activities, exacerbating the problem of climate change. The company has been involved in crimes against the Ogoni people in Nigeria through its funding of the former military regime to suppress protest against the devastating impact of its operations there. International outrage came to a head at the time of the execution of Ken Saro Wiwa in 1995. Shell pulled out of the region and started its most sophisticated PR campaign ever. This piece of crisis management to salvage the corporate image suffered a major blow with the recent news that the company is suing two Niger Delta villages for alleged damages. Since the company demands massive compensation from dispossessed people who have seen their livelihoods and environment ruined by Shell's operations, it becomes increasingly difficult to swallow the glossy PR-speak they would like us to believe.[ii]

The company has been exposed for marketing illegal genetically engineered food in the Indian market, with its popular Pringle chips. It has also been accused by the Environmental Research Foundation of threatening environmentalist Steph McAcquire, who was fighting the company's pollution of the Fenhollow river in Florida. For years, Procter and Gamble has dumped 50 metric gallons of dioxincontaminated water daily into the river. In addition to this, it is one of the few corporations that continue business as usual in Burma, despite international campaigns to boycott the country due to its human-rights violations. The company is also guilty of continuing to use cruel techniques for animal testing of products. In May 2001 it announced that it will cut 9,600 jobs in addition to the 15,000 announced in 1999. In the same period, the salary of the company's CEO rose by 46.4%, from $799,100 US to $1.17million US.[iii]

Best known for its automobiles, although it has interests in publishing, robotics and the nuclear industry amongst other things, Fiat has been nurtured by many Italian governments over the years. After a takeover of Valsella in 1984, seven officials of the company were arrested for illegally selling $180 million US of arms to Iraq, including anti-personnel and anti-tank mines, the largest sale ever reported. The company also operates in cooperation with various oppressive regimes.


i: International Federation of Chemical, Energy, Mine and General Workers' Unions -ICEM website  | Back to Text |

ii: Shell is suing the two villages for $25 million in damages as well as more than $800,000 USD per day in lost production since September 27. Shell alleges damage to equipment during an attack by militant youths. BBC News Online, 22 October 2001, 'Shell sues Nigerian villages', by Sola Odunfa in Lagos.  | Back to Text |

iii: See http://www.corpwatch.org    | Back to Text |


1: See http://www.basd-action.net   | Back to Text |

2: BASD Press release, 18 October, 'Leave a legacy in Africa, business meeting decides'.   | Back to Text |

3: 'Draft Concept Paper. Johannesburg Legacy: Millennium Partnerships', by Reuel Khoza.   | Back to Text |

4: Sir Mark Moody-Stuart, opening speech of the BASD strategy session, Paris, 9 October 2001.   | Back to Text |

5: TEPCO was rewarded for destroying 3,000 hectares of native Tasmanian forests and replacing it with fast-growing eucalyptus. In this way, TEPCO earned carbon credits worth 130,000 metric tonnes of CO2 emissions and an award for its contributions to fighting global climate change. See Corporate Europe Observatory Briefing 'ICC: Global Compact Violators', July 2001 at http://www.xs4all.nl/~ceo for more details.  | Back to Text |

6: In Johannesburg, the WBCSD will release a 'Workbook' with 'best practice' stories of member companies. As a follow-up to its 'Sustainability through the market' report, the WBCSD has recently published a new report called 'The Business Case for Sustainable Development'. The last major report in the WBCSD's build-up to Rio+ 10 will be called 'Facts and Trends that Business Cannot Ignore', a joint effort with UNEP and the World Resources Institute, to be distributed by the International Herald Tribune in February 2002.   | Back to Text |

7: Press release issued by the Congress of South African Trade Unions, 6 November 2001.   | Back to Text |

8: See http://www.aseed.net/un-corporated/uncorp-frameset.htm   | Back to Text |

9: See Corporate Europe Observatory briefing 'TABD in Troubled Water', October 2001 at http://www.xs4all.nl/~ceo  | Back to Text |

10: Sir Mark Moody-Stuart, various sources.   | Back to Text |

11: 'A voice of business in the cacophony: Mark Moody Stuart will be heading a business delegation at next year's Sustainable Development Summit and is adamant business does not have to be the usual pariah', by Vanessa Houlder and Mark MoodyStuart, Financial Times, 5 November 2001.   | Back to Text |

12: Ibid. Another example is the statement of WBCSD lobbyist Richard Sykes, who said, "Out of the cacophony of antiglobalisation noises in Seattle it is now clear that quite a lot of people in the anti-globalisation movement are keen to discuss the rules and frameworks governing trade, rather than dismiss the role of trade completely". Intervention by Richard Sykes, WBCSD at the High Level Ministerial Plenary Session, COP-7, Marrakech, 8 November 2001.   | Back to Text |

13: 'What business should do to thwart the terrorists' 18 September 2001. http://www.iccwbo.org   | Back to Text |

14: 'The Future of the Global Trading System: Where to From Here? ' speech at APEC CEO Summit, 20 October 2001.   | Back to Text |

15: Sir Mark Moody-Stuart, opening speech, Paris conference.   | Back to Text |

16: 'Navigating the Waters of Corporate Responsibility', October 2001 Press release by USCIB.  | Back to Text |

17: 'USCIB Position Paper on Codes of Conduct', 21 December 1998. | Back to Text |

18: The BASD admits the need for 'upfront regulation' in some cases, for instance to phase out some substances or to establish targets for certain emissions. As Moody-Stuart puts it, "If we are to be credible we must acknowledge the key role that such legislation can play". A strict condition is that such legislation must be consulted with business and not introduced unilaterally by individual countries. Sir Mark Moody-Stuart, BASD meeting, Paris, October 2001, opening speech. | Back to Text |

19: 'A voice of business in the cacophony: Mark Moody Stuart will be heading a business delegation at next year's Sustainable Development Summit and is adamant business does not have to be the usual pariah', by Vanessa Houlder and Mark MoodyStuart, Financial Times, 5 November 2001. | Back to Text |

20: 'Industry Self-Regulation Without Sanctions: The Chemical Industry's Responsible Care Program', by Andrew King (Stern School of Business New York University) and Michael Lenox (Massachusetts Institute of Technology) , forthcoming in the Academy of Management Journal. | Back to Text |

21: 'Miners to focus on sustainability', Reuters, October 24. David Kerr, Noranda CEO, speech to the London Metal Exchange Annual Dinner. | Back to Text |

22: The UN Subcommission for the Promotion and Protection of Human Rights (an advisory body to the UN Commission on Human Rights) proposes binding norms on transnational corporations. This body has recently extended the mandate of its working group established to examine the activities of transnational corporations for three more years. The Subcommission is, "deeply concerned by the preponderance of transnational corporations in all spheres of life and by the impact of their activities and working methods on human rights", and has mandated the working group to draft binding norms, analyse the possibility of establishing monitoring mechanisms and to consider the scope of state-level regulation of the activities of transnational corporations. (Resolution 2001/ 3, 'The effects of the working methods and activities of transnational corporations on the enjoyment of human rights', UN Subcomission for the Promotion and Protection of Human Rights). | Back to Text |

The same UN body has recently approved three resolutions demanding a detailed study of the effects of globalisation and WTO services (GATS) and intellectual property rights (TRIPS) trade agreements. Asbjorn Eide, a Norwegian expert working in the Subcomission explained that their main concerns about deregulation of international trade in services is the risk that, once privatised, corporations will opt for the most profitable solutions and forget about the most vulnerable sectors of the population. (' Rights: NGOs Back UN Call for Globalisation Impact Study', Gustavo Capdevila, IPS, 20 August 2001). | Back to Text |

—————————— << Back  • Contents  •  Top  •  Next >>-——————————

Paulus Potterstraat 20 1071 DA Amsterdam  Netherlands 
tel/fax: +31-20-612-7023  e-mail: <