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

Anti-Corruption, CSR, & the Law in
Resource Extraction: Making the
For 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 26000
Associate 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
Bad publicity
Distinctive situation of
indigenous groups
• Re-settlement
• Worker unrest
• Higher insurance
• Lawsuits & liability
• Evolving standards
• De-listing from
Sustainability Indices
• Contractor/supply chain
• 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
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
• In effect, what is needed is a comprehensive
multi-variate ecosystem approach to addressing
the problem (Sagebien, 2011; Webb, 2005)
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
• Responsibilization: when actors accept and
internalize obligations (Foucault)
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
• Political priorities/willpower changes, budgets come & go
More sub-optimal governing
• 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)
• Inter-governmental (e.g., UN, OECD, OAS,
• Governments
• Private Sector (ICMM, MAC, PDAC)
• Civil society (Transparency International,
Revenue Watch, Publish What You Pay)
Institutions and Processes
Anti-corruption integrity pacts
Industry association reviews
Reports on expenditures
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
Thank you! Questions and
comments are welcome:
Dr. Kernaghan Webb
Department of Law and Business
Ted Rogers School of Management
Ryerson University
[email protected]