Anti-Corruption, CSR, & the Law in Resource Extraction: Making the

ConnectionsFor presentation at the “Laws, Institutions & Challenges of Good

Governance” Session of the ISID Resource Extraction Conference, McGill

University, Montreal, Quebec

By Dr. Kernaghan Webb

Transparency International-Canada Bd Member, CSR Centre for Excellence Exec Cttee Member, CBSR Bd Member, CBERN member, UN Global

Compact Special Advisor re: ISO 26000Associate Professor

Department of Law and Business

Ted Rogers School of Management

Director, Ryerson Institute for Study of CSR

Ryerson University

March 30, 2012

Resource Sector CSR issues, risks, challenges

• NGO campaigns• Blockades• Strikes• Referendums• Bad publicity• Violence• Expropriation• Distinctive situation of

indigenous groups • Re-settlement• Worker unrest

• Higher insurance premiums

• Lawsuits & liability• Evolving standards• De-listing from

Sustainability Indices • Contractor/supply chain

problems• Corrupt governments• Political instability• Shareholder actions

SR defined (ISO 26000)• the responsibility of an organization for the impacts of its

decisions and activities on society and the environment, through transparent and ethical behaviour that:– Contributes to sustainable development, health and the

welfare of society;– Takes into account the expectations of stakeholders;– Is in compliance with applicable law and consistent with

international norms of behaviour; and– Is integrated throughout the organization and practiced in

its relationships (e.g., supply chain partners)• benefits: firms with good reputations may more quickly and

easily gain approval of communities and governments, and investor/public support (social licence to operate)

• CSR represents the business contribution to SD

The corruption challenge• Multi-level, multi-agency government and

community approvals are an integral part of resource extraction projects

• CSR = winning over the hearts and minds of affected stakeholders re: value of project

• Especially in developing countries, there are significant problems with poverty, inadequate capacity at the government level, lack of respect for the rule of law, and acceptance of the practice of bribes represent significant challenges for project proponents

• The “Blackfire” example 4

The sustainable governance “ecosystem” approach

• The environmental, social and economic problems we face in the 21st century can only be effectively addressed through a systematic, coordinated use of rule instruments, institutions, and processes, employed by a combination of state, private sector and civil society actors (Webb, 2005; Webb, 2011). – Both collaboration and competition/check-balance

dimensions

• In effect, what is needed is a comprehensive multi-variate ecosystem approach to addressing the problem (Sagebien, 2011; Webb, 2005) 5

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Governance: what is it?

• The sum of the many ways that individuals, institutions (public and private), manage their common affairs– Corporate governance is that subset of

“governance” that pertains to private enterprises

• Responsibilization: when actors accept and internalize obligations (Foucault)

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Sub-optimal governing conditions• Increasingly complex societal problems (environmental,

social, economic) that defy easy solutions• There are rarely enough government financial resources or

inspectors, or sufficiently up-to-date and rigorous standards, to fully and properly address a given public policy problem

• Public wants and expects full protections• Public wants no new taxes, tax reductions• Public wants growing economy, which entails creating

environment attractive to business• Business wants least burdensome regulatory approach

which does not put them at a competitive disadvantage• Civil society is suspicious of government and private

sector• Political priorities/willpower changes, budgets come & go

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More sub-optimal governing realities

• Roller coaster economies• Unpredictable, fast moving situations, growing

importance of international factors• Strong economic inter-dependence• Low levels of trust of governments and others• Rapidly changing technologies forcing public

policy changes• In Canada, considerably more decentralized,

devolved federal-provincial-municipal governing context than ever before

• In developing countries, limits of state capacity particularly apparent

Rule instruments

• International Treaties/Conventions– Extra-territoriality

• International standards, principles, guidelines (UNGC, GRI, ISO 9001, 14001, 26000, IFC Performance Standards, Equator Principles, TI Anti-corruption principles, ICMM)

• Domestic laws (enforcement) and non-law instruments/approaches (MAC, PDAC)

• Disclosure laws (Dodd Frank)

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Actors

• Inter-governmental (e.g., UN, OECD, OAS, EITI)

• Governments• Private Sector (ICMM, MAC, PDAC)• Civil society (Transparency International,

Revenue Watch, Publish What You Pay)

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Institutions and Processes

• Courts• investigations• Anti-corruption integrity pacts• Industry association reviews• Reports on expenditures

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Putting it together

• The combination of international and domestic instruments, actors, processes and institutions creates a sustainable governance ecosystem that surrounds and permeates the corruption issue

• Need for both collaboration (partnerships) and institutionally “designed in” competition/check and balance functions

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Thank you! Questions and comments are welcome:

Dr. Kernaghan WebbDepartment of Law and BusinessTed Rogers School of ManagementRyerson Universitykernaghan.webb@ryerson.ca