CODES OF CONDUCT FOR TRANSNATIONAL CORPORATIONS: AN OVERVIEW
Irene, June 1998

Table of Contents

Introduction

Part I Governmental Attempts to Regulate Transnational Corporations

1.1 Labour Standards & The ILO

1.2 Applying Standards to Companies: The Tripartite Code

1.3 The Reaction of Developed Countries & Industry: The OECD Code

1.4. Broadening the Scope: The UN Code

1.5 Sustainability, UNCED and Agenda 21

1.6 Examples of Current Attempts in the Juridical Sphere

1.7 Moving into the Private Sector

Part II Non-Governmental Initiatives in Export-oriented Manufacturing

2.1 Scope of a Code

2.2 Standards

2.3 Implementation

2.4 Independent Monitoring

2.5 Reaction of Industry: Company Codes

2.6 Criticisms of Company Codes

2.7 Examples of Company-Controlled or Internal Monitoring

2.8 Toward Independent Monitoring: Three Current Approaches

2.9 Conclusions and Key Issues for Other Sectors

Part III Primary Resources: The Oil and Mining Sector

3.1 Issues Associated with Extracting Industries

3.2 Relevant International Principles and Standards

3.3 Non-governmental Initiatives

3.4 Responses

3.5 Outstanding Issues

3.6 Conclusions & Challenges

Appendix 1 ILO Fundamental Human Rights Conventions

Appendix 2 "Code of Labour Practices for the Apparel Industry Including"
published by the Clean Clothes Campaign

Appendix 3 "The ICFTU/ITS Basic Code of Labour Practice"
Adopted by the ICFTU Executive Board, Brussels, December 1997

Appendix 4 "Charter of the Safe Production of Toys"
drafted January 1996 by the Hong Kong Coalition for the Safe Production of Toys

Appendix 5 "Suggestions for a Code of Conduct for the Oil and Gas-Producing Industries"
Drafted November 1997, Freiburg workshop sponsored by Brot fur die Welt

Appendix 6 Excerpt from "Principles for the Conduct of Company Operations within the Minerals Industry "
Prepared by Australian Non-Government Organisations October 1997

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Introduction

This paper provides an overview of attempts to regulate the behaviour of transnational corporations (TNCs) via charters, codes or guidelines. Both governmental bodies and non-governmental organisations have done work in this respect, the former group mainly during the 1970s and 1980s. Part I of this report presents information on these governmental efforts to regulate TNCs. But the current revival of interest in "codes of conduct" for businesses has largely been led by non-governmental organisations (NGOs), including development organisations, trade unions and environmental groups. These initiatives are discussed in Part II. The standards being used, as well as the strategies developed by TNCs and industry associations in reaction to such demands are also dealt with in Part II.

The main focus is on labour issues and the way these have been addressed by NGOs and trade union organizations in the garment, sportswear and toy industries. This is the sector in which work on "model codes" has developed the furthest and, not surprisingly, garment, sportswear and toy companies have been taking the lead in developing their own "company codes." An overview of the current state of affairs regarding both model codes and company codes will be given in Part II.

An important concern of NGOs and trade union organizations is the way in which standards are implemented (or the way in which TNCs fail to implement standards) and how and by whom the implementation is checked or monitored. As a research analyst from a US ethical investment fund once stated: "setting the standards is 5 % of the job, ensuring compliance 95 %."⁽¹⁾

The experiences in the garment and sportswear sector are treated most in depth. Importantly, the developments in the garment, sportswear and toy industries have attracted the interest of NGOs working on issues of corporate behavior in other sectors. While implementation and monitoring systems are best developed on a sector by sector basis, there are common elements and lessons to be learned. Recently, a model code for all sectors of industry regarding labour standards has been developed within the International Confederation of Free Trade Unions (ICFTU).

Nevertheless, NGOs addressing companies "cross-sectorally" or assessing companies on their overall ethical behaviour -- that is on labour, environmental and human rights issues -- remain rare at the moment. This is understandable, given the differences from sector to sector and the varied concerns which can serve to motivate non-governmental attention. An unfortunate result though is that when companies are not viewed more holistically, they are often able to secure an ethical image based on only limited achievements in isolated categories. There is justifiable concern that companies use codes of conduct as a public relations instrument in dealing with accusations from environmental groups or when confronted with other forms of consumer pressure. Keeping in mind the need to develop a more integrated and holistic approach toward corporate responsibility, this report draws upon activities in other sectors. As the general secretary of the International Federation of Chemical, Energy, Mine and General Workers' Union (ICEM) recently told an interviewer: globalisation has functioned as a common denominator across the disparate sectors that union covers. "The oil industry has been controlled by big multinationals for a long time, but this phenomenon now affects other sectors such as glass, ceramics, cement, rubber, etc. Even the coal and electricity industries, once considered to be characteristically national sectors, have gone global -- for the simple reason that capital decided that they should go global. The problems encountered within multinationals are relatively similar."⁽²⁾

Indeed, companies in the oil and mining industries have also been criticized for embracing codes of conduct as a way to deflect criticism. In Part III of this paper the attempts of governments, trade unions and NGOs to regulate the behaviour of TNCs in the oil and mining sectors are addressed. Broadening the scope of analysis to include experiences in the oil and mining sectors regarding codes and other forms of regulation might well help the progress in the above-mentioned sectors of industry. Indeed, it may also prove useful to learn from the experiences in the garment and sportswear industries in which the work on model codes has been developed in more depth.

While it is not possible, or wise, to directly copy the experiences of the export-oriented manufacturing sector in other sectors of industry, certain similarities do exist, mainly in the way companies deal with criticism, and in their attitude towards externally controlled regulation. Child labour, a well-known issue within the context of garment and sports shoe industries is also an issue in mining operations. Should one hold mining companies responsible for this in the same way as is being done with, for example, Nike? Subcontracting, a phenomena well-documented in the manufacture of garments, also takes place in the oil and mining industries, thus making it interesting and important to look at TNC behaviour and the initiatives of NGOs and trade unions in all these sectors. Their suggestions for relevant and applicable international standards, principles and definitions in the oil and mining industries are included. Part III concludes with a summary of outstanding issues and areas for future synthesis and analysis on the topic of codes of conduct.

Part I: Governmental Attempts to Regulate TNCs

The International Labour Organisation (ILO) is a tripartite UN organisation, consisting of governments, employers and employees. Since its establishment in 1919, the ILO has passed over 150 conventions concerning working conditions. There are conventions about working hours, safety, the right to organize, child labour, etc. Some are signed by most UN members, some by almost none.

If a country has signed a convention, they must report back to the ILO on what measures they have taken to implement the convention. If a country violates a convention, another country can file a complaint. An independent committee will then look into the matter and come up with recommendations. The government of the country which the grievance has been filed against must report whether they will follow the recommendations or bring the case to the International Court of Justice. The International Court of Justice will give a binding verdict on the recommendations of the independent committee. However, if the country decides to ignore all verdicts, nothing happens.

A core set of standards exist and are often referred to. Some of these, and other ILO conventions as well, are also categorized as "human rights" under the Universal Declaration of Human Rights. See Appendix 1 for the ILO's fundamental human rights conventions.⁽³⁾

The ILO adopted a special code of conduct for multinational companies in 1977: the "Tripartite Declaration of Principles Concerning Multinational Enterprises and Social Policy." This code was intended to become part of a broader United Nations (UN) code (discussed below). Transnational corporations must guarantee the right to union activity and collective bargaining. In addition, the code is concerned with employment policy, equality, job security, training, health and safety.

This code is voluntary, despite efforts by unions and developing countries to make it binding. The main arguments against a binding code is that governments would be responsible for implementation and the provisions of the code might come into conflict with national legislation. The code could lead to discrimination against TNCs in relation to national businesses, not covered by the code.

The Secretariat of the ILO investigates the practical results of the code by sending governments a questionnaire, which they are required to complete, in cooperation with employers and employees. The Secretariat compiles the results in a report which is then discussed by the Board of Directors of the Committee on Multinational Enterprises. The reports are often incomplete, and, because this code rules out discussion of specific companies, the text is written in general terms only.

There is no real appeals procedure. Governments can submit a request for an interpretation of the code on their own initiative or following a request by a union. If the government turns down such a request, the union, provided that it is recognised, can go directly to the ILO to ask for an interpretation, or do the same through an international trade union federation, if it is a member.

Requests for an interpretation of the code are, in fact, rarely made and are usually judged as inadmissible because the request concerns a specific company. The ILO can make no comment on specific cases.⁽⁴⁾

The code of conduct of the Organisation of Economic Cooperation and Development (OECD), entitled "The Declaration and Decisions on International Investment and Multinational Enterprises" came into existence one year before the ILO code. The Committee for International Investments and Multinational Enterprises (CIME) was established in 1975 to investigate the possibility of codes of conduct for TNCs. It was also charged with looking into shielding TNCs from discrimination and regulation of incentives for investment (i.e. providing protection).

In 1976, the CIME proposed their Declaration. Thanks to the unions, the clause on employment and industrial relations is fairly detailed. It requires that TNCs must:

All of these requirements are voluntary. TNCs are recommended to adhere to these guidelines. Member states, on the other hand, are obliged to treat TNCs on a basis equal to that of their own national companies and to the restriction of investment incentives and restrictions. The code is aimed specifically at improving the climate for investment and to put an end to discrimination against TNCs.

The CIME, on the insistence of the United States, may not comment on specific companies. It can only give an interpretation of the guidelines. TNCs can be invited to give their point of view but this provision is not mandatory.The business world was pleased with this result. The code provides no obstacle to employers and, additionally, takes the wind out of the sails of those who wanted a binding code or attempted to make the ILO Tripartite Code binding.⁽⁵⁾

The development of the United Nations Code of Conduct for Transnational Corporations was a twenty year process and was finally abandoned in 1992.⁽⁶⁾

The same conflict of interests was immediately apparent as in the case of the OECD deliberations: protection versus regulation.

An Intergovernmental Working Party was set up in 1976 which was to draw up the UN code. This was the beginning of years of negotiations that dragged on and on. Developing countries wanted a binding code that applied only to TNCs, while the rich countries did not want a code at all. But if there had to be a code, they wanted one that would apply to all companies and one which dealt with issues like compensation in the case of nationalisation.

Though the code was never finalized due to pressure from TNCs, consensus was reached on about 70% of the text. Given the current interest in codes it proves interesting reading. The text calls upon TNCs to:

	Carry out their activity in harmony with the development policies and priorities set out by the governments of the country in which they operate.
	Provide data needed specifically for the assessment of potential risks to human health and the environment.
	Disclose to the public in the countries in which they operate appropriate information on the structure, policies and operations of the transnational operation as a whole.
	Respect cultural values and traditions of these countries.
	Respect human rights and fundamental freedoms.
	Not discriminate on the base of race, colour, religion, so-cial, national and ethnic origin or opinion.
	Contribute to the material and technical training of nationals of the countries in which they operate.
	The Tripartite Declaration should apply in the field of employment, training, conditions of work and life and industrial relations.(7)

Another interesting element is the definition of a TNC, on which consensus was also reached. TNCs are defined in terms of control rather then ownership.⁽⁸⁾

The events leading up to, as well as the outcome of the United Nations Conference on Environment and Development (UNCED), known as the Earth Summit, held in Rio in 1992, and the simultaneous meeting of non-governmental groups are also relevant to the movement to establish standards of corporate responsibility.

In reaction to the 1987 Brundtland Report "Our Common Future," which promoted long-term strategies for achieving sustainable development (defined as development that meets the needs of the present without compromising future generations' ability to meet theirs), the International Chamber of Commerce (ICC), a group that promotes business at the international level and had been active on this issue for some time,⁽⁹⁾ established a "task force of business officials." This task force created the Business Charter for Sustainable Development which was adopted by the ICC in 1991.

The charter "comprises 16 principles of environmental management which, for business, is a vitally important aspect of sustainable development." The ICC gave a mandate to the International Environmental Bureau to further distribute the charter and support its implementation. Companies can voluntarily adopt the charter and it is not monitored by the ICC.⁽¹⁰⁾

Another important lobby group set up by industry during the UNCED process was the Business Council for Sustainable Development (BCSD) comprised of the Chief Executive Officers (CEOs)of 50 major TNCs,(membership significantly overlaps that of the ICC. Shell, for example, is a member of both). They are still active.

The 1992 NGO Global Forum, the conference held parallel to UNCED, produced a treaty called "TNCs: Democratic Regulation of Their Conduct." A main element of this document is the so-called precautionary approach, which places the burden of proof of no harm on the potential polluter rather than on the environment or potential victim. Meanwhile, those at the NGO forum were shocked to find many standards and guidelines crafted over the years during the process of drafting the UN Code of Conduct erased at UNCED. The lobbying of industry, intent on promoting self-regulation instead of binding conventions, was fierce during the UNCED process.

In the end the long-term plan for development and the environment to be ratified at UNCED, known as Agenda 21, the "action programme for the 21st century," omitted direct references to TNCs or to the UN Code. But some 32 items found in Agenda 21 do relate to what companies (and thus TNCs as well) should do to take global environmental responsibility. These include suggestions to:

	introduce policies and commitments to adopt equivalent or not less stringent standards of operation as in the country of origin;
	report annually on their environmental record as well as on their use of energy and natural resources;
	play a major role in reducing impacts on resource use and the environment through more efficient production processes, preventive strategies, cleaner production technologies and procedures throughout the product life cycle; and to
	undertake research on the phasing-out of those processes which pose the greatest environmental risk based on the hazardous wastes generated.

Clearly, in the UN code and more so in Agenda 21, what we see are principles or starting points for behaviour, rather than standards. This has partly to do with the inability of the different parties to agree on what a certain standard should be, but also with the nature of environmental issues. Setting absolute global standards is often impossible. The environmental impact of a certain type of behaviour depends first of all on the state of the environment. As a result, contextualisation is required. The "translation" of certain principles into standards proves hard when attempted in broad, general terms.

On more specific issues, the work of various intergovernmental bodies can be used. The International Code of Marketing of Breastmilk Substitutes (WHO/UNICEF, 1981) and the International Code of Conduct on the Distribution and Use of Pesticides (FAO, 1985, amended in 1989) are both codes of conduct adopted by intergovernmental bodies. Both are the result of long-term campaigns and were developed within the UN system. They are not legally binding, though governments are urged to implement the standards as national law and companies are urged to adopt them voluntary.

With the breastmilk code, the constant pressure of NGOs was and is needed, both to get countries to translate the code into national law and then, since enforcement usually is weak, to address companies where violations occur.

Other UN bodies, such as the United Nations Environmental Programme (UNEP), provide detailed guidelines and set standards for environmental practices in certain sectors of industry.

Legal possibilities are extremely limited, mainly through lack of (international) enforcement. There is no "UN police" or anything of that sort. There is no international court where one can complain about a TNC's global behaviour. Binding codes would be a step forward, but even so "binding" means that a country would have to translate the code into its national law, leaving it up to the state to determine how to guarantee compliance with their own laws. Labour laws, for example, are quite good in a number of countries (Mexico and Thailand, for example) known for their bad labour situation.

Another problem that immediately surfaces when attempting to use a legal framework is the coherence with agreements of the World Trade Organisation (WTO). It is beyond the scope of this paper to describe this in detail, but some attention should be paid since a discussion as to the possibilities of (international) law inevitably occurs when discussing codes of conduct. Several recent cases that make use of (international) law provide some insight as to the potential scope of impact decisions at that legal level might have. For example:

	On November 13, 1997, a federal district court in New York ruled that it did not have jurisdiction over a suit brought by thousands of Ecuadoran indigenous people against Texaco for pollution of the Ecuadoran Amazon. The court ruled that the case must be heard in Ecuador, if it is to be heard at all. The indigenous people had charged that Texaco dumped more than 3,000 gallons of crude oil a day -- millions of gallons in total -- into the environment during two decades of oil drilling in the Amazon. They asked in the suit that Texaco should compensate them, and clean up their land and waters. Texaco denies the indigenous peoples' allegations, but its defense in the New York court was that the case should be heard in Ecuador, where the pollution took place. The federal judge agreed with Texaco, finding that it would be easier to have the case heard in Ecuador, where many key witnesses and parties are located. No one, least of all Texaco, believes the Ecuadoran indigenous peoples will find justice in Ecuadoran courts, however. Unless the federal judge's decision is reversed on appeal -- a very unlikely prospect -- the Ecuadorans' case is effectively finished.(11)
	The European Union is currently challenging a 1996 Massachusetts law preventing state agencies from purchasing goods or services from companies that do business with Burma. The Massachusetts law violates the WTO rules established in 1996 because it "allows the award of contracts to be based on political instead of economic considerations," such as price and quality. At the WTO, it would be federal officials who would defend the Massachusetts law. If the United States lost, the federal government would have to force Massachusetts to change its law, or accept sanctions or pay fines.(12)
	In December 1994, 118 female employees of Exportadora de Mano de Obra (EMOSA), a Tijuana, Mexico maquiladora, filed a claim in Los Angeles Superior Court against EMOSA's U.S. parent company, American United Global (AUG)/National O-Ring for sexual harassment, illegal firing, and denial of severance pay. This was the first time Mexican workers sued a TNC in U.S. courts for violations of Mexican labor law. In an unprecendented move the judge accepted jurisdiction, ruling that the California-based parent company was the women's employer. During a visit by AUG president John Shahid to the Mexican facility, women workers were forced to wear bikinis and parade around during a company picnic while he videotaped them. The next month at a factory meeting, several of the workers were told by Shahid that they would only receive raises if they had sex with him. Following complaints filed in Tijuna, the factory shut down. Included among their demands filed in the U.S. was three-months severance pay owed to employees under Mexican law. In September 1995 a satisfactory legal settlement was reached out of court. (13)

There is no lack of internationally accepted standards for TNC behaviour. As this brief overview reveals, a great deal of work has been done on both social and environmental issues. Several of the codes give interpretations of principles at the company level or for a certain sector of industry.

Still, the problem of (lack of) corporate compliance with these (voluntary) guidelines remains. The inability of governments to deal with this has led to an increase in "private" activities. Trade unions, development organisations, solidarity groups and environmental organisations now directly approach and address corporations (or industry associations representing corporations) about their social and environmental behaviour.⁽¹⁴⁾ In the words of Shell's CEO Herkströter during the company's 1997 shareholder meeting, "Where people previously called on government to tackle political or environmental problems, they are now directly challenging business to take on those roles."

Today, the process of globalization continues to strengthen this trend:

	General interest in international business and its behaviour has increased.
	In the current growing worldwide competition between corporations market behaviour has become a deciding factor; this means that companies are much more sensitive to public pressure of any kind. In 1994, for example, Bob Haas, CEO of Levi Strauss, the largest brand-name apparel manufacturer in the world, remarked that "In today's world a TV expose on working conditions can undo years of effort to build brand loyalty."(15)
	Corporations have truly started to work globally, instead of regionally, and therefore they need to develop tools to control and monitor their own activities. Taking the above into account, it makes sense to involve "stakeholders," (those parties who are interested and/or impacted by these issues) in the development of these tools.

NGOs are "borrowing" the principles and standards described above and have tried to get corporations to accept and implement them. The "Principals of Global Corporate Responsibility," for example, were drawn up by three faith groups in 1995 to contribute to the discussion of global codes of conduct and to challenge companies to formulate strong, enforceable codes of conduct.⁽¹⁶⁾ But, in general, NGOs and unions see this as a "second best solution" and describe the value of voluntary or self-regulatory codes of conduct (charters, guidelines) as mainly strategic. The value of such codes are in (1) setting minimum standards and raising the level of general TNC behaviour; (2) raising consciousness about the need for standards; and (3) in providing guidance for laws that can be adopted at the national level.

Another benefit lies in work that has started on implementation and monitoring.⁽¹⁷⁾ NGOs that demand corporate compliance with certain standards are unlikely to accept merely a promise from the corporation that "all will be well." When a company offi-cially accepts a certain set of standards as their code or guidelines it is usually considered to be a step in the right direction (depending on the content of course). But, as the experience with the intergovernmental codes demonstrated, further steps are not guaranteed. Therefore, those in the non-governmental sphere quickly recognized the need to begin establishing criteria for implementation of codes and developing ways to measure compliance. Corporations, being directly confronted with questions about their behaviour, also had to start working in this area as it was no longer possible to refer to or rely on a higher, governmental level. The strategies followed by these various actors, largely in the context of the garment, toy and sport shoe industries, is the focus of the next part of this report.

Part II Non-Governmental Initiatives in Export-oriented

An increasing number of product-oriented campaigns are active in Europe at the moment: clothes, carpets, footballs, sports shoes, toys, and flowers, for example. The Clean Clothes Campaign (CCC), a network of organisations that focus on improving working conditions in the global garment industry, started in the Netherlands in 1990 and soon expanded to Belgium, France, Germany and the UK. Campaigns recently started in Switzerland, Sweden, Spain and Italy. Campaigns dealing with the toy industry have been strongly supported by UK organisations, as well as those in Italy and France. A worldwide network focusing on sports shoes was set up around 1995.

All these areas of activity share three broad aims:

1) Giving direct support and solidarity to workers' organizations

2) Educating the general public, using the specific product in an exemplary sense

3) Pressuring corporations to clean up their act and ensure that the products they sell or produce are made according to certain standards.

While it can be useful to split up such work on a product basis, especially when it comes to achieving educational aims, closer cooperation or even integration is needed regarding the first aim. Unions often organize workers both in clothes and shoe industries; free trade zone solidarity organisations try to work for all in the zone. To achieve the third aim coordination also is necessary: corporations in the sportswear industry, for example, often produce both clothes and shoes.

Most campaigns consist of broad coalitions of trade unions, consumer organisations, womens' groups, solidarity organisations, developmental organisations, alternative trade organizations (such as "world shops") and other NGOs. For example, an estimated 150 organisations joined one of the national Clean Clothes Campaign platforms. Within such platforms there is a great deal of overlap with membership in the sports shoe network.

Basically, the campaigns demand that companies clearly define the scope of their responsibility, adopt the right standards (have "a good code"), ensure implementation and provide proof of this and allow outside control or "independent monitoring."

These demands are examined in more detail below, as well as their scope of application.⁽¹⁸⁾

A code should apply not just to the company which sellsproducts, but also to its suppliers, subcontractors and licensees.

Companies accept responsibility for the labour conditions under which the products they sell are produced, down the entire supply chain in their sector. The limits of their sector have to be defined.

	A code of conduct applies to all workers. The definition of a worker should be such that it includes everyone doing work for the company, irrespective of their formal relation. Therefore homeworkers, sweatshop workers, and migrant workers without legal status, for example, would be included.
	A code of conduct applies to 100% of the company's products.
	The implementation of the code should take place within a specified time frame.

Two examples are used to illustrate the type of standards that have been incorporated into codes of conduct that are the result of a dialogue between NGOs and unions in two different sectors. Because these codes were the result of early groundwork, they are also worth mentioning because they will most likely have an impact on subsequent initiatives involving similar actors.
A broad coalition of NGOs and trade union organizations started an informal process in 1996 to develop a single code of conduct for the garment and sportswear (including shoes) industries. Since then a consensus has slowly been achieved on the standards that should be included in a code of conduct and acceptable wording to express these standards.⁽¹⁹⁾

The resulting "Code of Labour Practice for the Apparel Industry Including Sportswear," finalized in October 1997, includes the following standards:

	Freedom of association
	Right to collective bargaining
	No forced labour
	No child labour
	No discrimination
	Maximum hours of work
	Health and safety
	A living wage
	Security of employment

Direct reference to ILO standards is considered a crucial element of this code, as the use of internationally-accepted wording limits the possibilities of misinterpretation.⁽²⁰⁾ For the relevant conventions, see Appendix 1. For the complete text of the "content" of the code, see Appendix 2. Recently, (Dec. 1997) the ICFTU released its "Basic Code of Conduct Covering Labour Practices" which is similar in contents to the Code of Labour Practice for the Apparel Industry Including Sportswear, and also makes reference to the same ILO conventions. For an excerpt from this code, see Appendix 3.

The "Charter of the Safe Production of Toys" of the Hong Kong Coalition for the Safe Production of Toys also stipulates standards regarding health and safety, overtime, child and forced labour and trade union rights. This code though is more detailed on the interpretation of health and safety and includes requirements concerning facilities, as many accidents occur within this sector since toyworkers have to handle chemical products. Requirements concerning accommodation (dormitories) are also included. Actually, what is included is an interpretation of the general ILO standard on health and safety in the context of the toy industry. Such an interpretation also has to be made for the Code of Labour Practices for the Apparel Industry Including Sportswear(text to this effect can be found in the final section ("Specific industry standards") of "Part II. Code of Labour Practice," on page 12 of the code). For the complete text of the toy code see Appendix 4.

Once the scope and standards of a code of conduct have been agreed upon, implementation and monitoring emerge as pressing issues. Detailed information follows regarding these issues in the context of the clothes and sportswear industry. Though some elements also apply to other sectors of export-oriented manufacturing industry, others do not, or have to be adapted first.

Implementation refers to the range of activities that could be taken by a company to put a code into effect. Elements that should be part of any implementation programme include the following:

	The code should be incorporated into the overall philosophy of the company and therefore, responsibility for the code should not be left with a company's public relations department. Instead, responsibility for implementation should be assigned to a more appropriate part of the organisation and implementation duties should also be assigned at each workplace.
	Adherence to the code must be made an enforceable, and enforced, part of any agreement the company enters into when outsourcing. Companies must take into account the ability of subcontractors and suppliers to observe the terms of their code when selecting subcontractors and suppliers. This should be clearly spelled out in all agreements.
	The code (or any section on implementation of the code) must include a mechanism to involve the workers which it is meant to protect. At the minimum, workers must be informed about the terms of the code that apply to them in a language that they can understand. They must be provided with a secure and confidential means of reporting violations of the code. Workers should not be disciplined, dismissed or discriminated against for providing information concerning observance of a code.
	Possible negative consequences to workers must be taken into account. If the implementation of a Code of Conduct has negative effects on individual workers such as displacing child workers or displacing workers in the informal sector with other workers formally employed, programmes must be put in place to compensate or assist the transition of the workers concerned.

The company itself must check to ensure compliance with its own code (via inspections, instructing staff of quality control departments or buying departments, informing management of suppliers in a structured way).(21)

Implementation and monitoring are often confused. Monitoring, which means to watch or check, and in this context to watch or check that the terms of the code are being respected, is one aspect of implementing a code, as indicated in the last point in the previous section. Some companies claim that they monitor subcontractor compliance with their code through their quality control programmes. This is called "internal monitoring" and is actually part of implementing a code. Internal monitoring is contrasted with external monitoring which would be conducted by an organisation other than the company. A prerequisite of independent monitoring is that it is external.⁽²²⁾

Additional core elements of independent monitoring include the following:

	There must be involvement of appropriate trade unions and NGOs in every step of the monitoring process. This does not mean the monitoring itself (the actual spot checks and interviews) must be carried out by trade unions and NGOs. Independent monitoring means that trade unions and NGOs must be involved in how the monitoring is set up, how the monitoring is carried out and what is done with the results of the monitoring, in terms of who should have access to the information collected and what action should be undertaken as a result of the collected information.
	Monitoring must be carried out by the actual observance of working conditions through unannounced inspection visits ("spot checks") to all workplaces covered by the code;
	The frequency of inspections must be established; accredited monitors must be permitted to interview workers on a confidential basis;
	In addition to regular or routine inspections, inspections shall be undertaken at specific locations following substantiated complaints, where there is sufficient reason to be-lieve that the code is not being observed;
	Inspections shall be conducted in a way which does not cause undue disruption to the performance of work on the premises being inspected;
	Written reports shall be provided by accredited monitors to all parties, including the participating company concerned following each visit.

While the elements of independent monitoring, as described here, are agreed upon by the signatories to the two codes discussed previously, detailed policies and procedures relating to independent monitoring are still being discussed. Work remains to be done on reaching a consensus on an independent monitoring protocol. The concerns and challenges associated with arriving at a satisfactory method of independent monitoring are taken up in sections 2.8 and 2.9.

Meanwhile, industry has not looked on passively. Companies have adopted their own codes "voluntarily" or in direct response to publicized scandals. Public relations preservation of brand image and humanitarian concerns have both been cited as motivating factors in the formation of such in-house guidelines. These have come to be called company codes,as these are usually developed by the company themselves and are not written agreements that are endorsed by or overseen by other parties. Numerous examples exist of company codes in the garment, sportswear and toy industries. A few are described below:

C&A (Dutch-based retailer) has a code requires that suppliers must ensure all manufacturing processes are carried out with:

	"proper and adequate regard for the health and safety of those involved";
	wages and benefits must be fully comparable with local norms, comply with local legislation and conform to the general principle of fair and honest trade; and
	suppliers must disclose "all facts and circumstances concerning production, including the use of subcontractors and of other third parties."

In 1996 C&A set up the Belgium-registered company SOCAM (Service Organization for Compliance Audit Management), to monitor their codes. They term SOCAM an "independent auditing company," though C&A is the parent company. Since May 1996 SOCAM is said to have conducted 1.000 unannounced spot checks at production locations for C&A.

In early 1997, Otto Versand (German-based mailorder company) had a code of conduct with demands concerning child labour, minimum wage and waste products dumped in the water. The demands on child labour and the use of AZO-free dyes and the other rules on chemicals are written into their contracts. The contracts also include a clause that calls upon the supplier to comply with local laws, thus covering minimum wage requirements. Otto carries out a sort of audit when they start working with a new factory but "not so that they throw somebody out." Violation of the terms of the contract are grounds for termination of a contract, which does happen in some cases.⁽²³⁾

In addition to individual company codes, industry-wide codes are being drafted, which in turn can be adopted by individual partners. For example, the Toy Manufacturers of Europe(TME)(an industry association) adopted their own code of business practices in reaction to trade union and NGO campaigns, as did the International Council of Toy Industries (ICTI)(US-based industry association) in May 1996.⁽²⁴⁾ The ICTI code focuses on protecting child workers and prison labourers and fails to address the critical issue of the right to organise.

There are four major criticisms of company codes:

1. Vaguely Defined
Corporate codes do not specify precisely the limits of their responsibility. Does the code only apply to the direct employees or also to the employees of the subcontractors and suppliers? And if so, who is considered to be a subcontractor or supplier? Does the code apply to all products? A good code needs to answer these questions. Most company codes do not.

The recognition of responsibility for workers not in their own employ is becoming more and more common among companies. This can be seen as significant progress.

2. Incomplete
Many company codes exclude the right to organize, refer only to child labour or in other ways are not complete.

3. Not Implemented
An important flaw in company codes of conduct is the lack of information on how these codes are being implemented and monitored. Companies often say they instruct their buyers or send special teams to implement and monitor their codes. It is impossible to know if they really do so consistently, because records of these activities are not publically available for scrutiny or follow-up. Research shows that sometimes they do, sometimes they do not. Sometimes only a questionnaire is sent which management is required to fill in. This implies that anything written about company codes could possibly be true: that the code could be nothing more than a piece of paper that serves a public relations function or, the other extreme, that an extensive implementation and monitoring system might have been developed by the company. Often companies do not have a consistent policy in this respect; they check in some places and monitor some issues, while other places and issues are ignored.⁽²⁵⁾

4. Not Independently Monitored
Even if a company has a good code of conduct and it has done its utmost to implement it, company-controlled or internal monitoring assumes a willingness to take the company at its word only. The staff of the company, special division, subsidiary or external company involved in such monitoring efforts only report to the company that has hired them. Those outside of company management have no way of knowing if violations have been found, how many, what kind and what steps have been undertaken to improve the situation, to name just a few obvious questions.

As described earlier, a lot of the current debate has to do with defining independent monitoring. From the trade union/NGO point of view company-controlled or internal monitoring actually forms part of the implementation phase of the code. Industry, not surprisingly, looks at this differently.

Nike hired Ernst & Young (an accounting corporation) to do monitoring at its manufacturers in Indonesia and Vietnam. Later Nike asked an NGO to do an evaluation when Ernst & Young's reports were severely criticized. Walt Disney hired a quality control firm, the Geneva-based SGS (Societe Generale de Surveillance) to being auditing their Chinese toy factories. Some companies have established separate departments to deal with their code and monitoring (Reebok) or have delegated such responsibilities to subsidiaries set-up specifically to deal with such responsibilities, such as C&A's SOCAM.

Nike has the implementation of its code of conduct monitored by Ernst & Young. Ernst & Young has to conduct independent unannounced audits that include employee reviews, research into any grievances filed, and more traditional payroll audits. Ernst & Young has done this in Indonesia and Vietnam. There is not much information on the findings of Ernst & Young other than references in public relations statements released by Nike on wages and working conditions. One of the main issues the campaigns are raising at the moment concerns the fact that reports by Ernst & Young are for the most part kept internal. When findings from their reports were leaked to the public their content contrasted sharply with the "spin" Nike had given to the results of their investigations. Despite continued pressure to adopt independent and more transparent methods of monitoring, Nike maintains that they have already achieved such a goal.⁽²⁶⁾

Disney audits carried out by SGS are limited to the following issues: (a) age (no child labour);(b) wages (minimum wage and no forced overtime); and (c)safety, including safety of the dormitories, and health, though the right of free association is also stipulated in the Disney code.

The audit consists of three parts:

1. Disney made a 10-page questionnaire concerning these issues which the factories have to fill in.

2. The factories are visited by an auditor with a checklist. He/she will observe and ask questions.

3. Based on the questionnaire and the visit the auditor will then give a rating for each of the issues and decide whether the factory meets acceptable levels for each of the issues.

Disney decides what they do with these reports. The idea is that Disney will demand improvements from the factories and have SGS check on the implementation of the improvements. In a 1997 letter to the Dutch Clean Clothes Campaign responding to concerns regarding poor working conditions in Haitian factories producing for Disney, vice president and managing director of Disney Benelux, Didier Varneste stated that "...in the area of monitoring, we believe we have developed a program that is among the most comprehensive and sophisticated among all multinational companies."⁽²⁷⁾

All information collected by SOCAM is only available to C&A, which subsequently decides how to proceed. So far it seems that violations of the code mainly lead to cancelling contracts and not to the improvement of working conditions. Evidence suggests that this is changing: a certain time-frame for improvement is now set. Workers' representatives are not involved in determining this timeframe, nor in determining what procedure should be followed or how improvement can be measured.

There are three current approaches to independent monitoring.

One approach is to involve only trade unions and/or NGOs to check on the company's compliance with a code. An example of this method is found in the agreement between the US apparel company The GAP and trade unions and NGOs. The agreement reached in 1997 in Italy between the unions and toy manufacturer Artsana also follows this approach.

This method gives rise to problems, largely in the area of capacity. In many garment companies trade unions are not active (yet), this is one of the fundamental causes of concern to begin with. NGOs, often set up as a reaction to union repression, run into similar difficulties. Areas exist where the number of suppliers of one company can run into the thousands. Using a company by company approach on the retailer side is effective for campaigning, but when this leads to different monitoring agreements with each company this can be confusing and therefore counterproductive once we get to the shopfloor. Most garment and sportswear suppliers have between 5 and 20 customers.

The second approach is to develop a professional social auditing service, analogous to the accounting profession. This service could be performed by either a commercial or a non-profit organisation. The company would then choose an auditor. This is more or less what is happening currently when companies hire SGS or Ernst & Young, but this approach would require the auditing service to comply with certain standards.

The problem here largely lies with credibility. The translation of the standards into recommendations and procedures which a certain company should follow, would -- in the end -- be made by the auditor and the company together. However, who will certify the monitors in this scenario? And how can proper ways for workers be assured to report violations and to file complaints? By not involving trade unions or NGOs in a structured way a continuation of the campaigns along the same lines becomes inevitable. The Council on Economic Priorities (CEP) (discussed briefly below) plan for an Accreditation Agency is one example of an initiative that takes up the issue of creating a mechanism for certifying auditors.

The third approach is to involve both NGOs and trade unions. The Dutch Clean Clothes Campaign developed a model in which responsibility for monitoring a code rests with a foundation, whose board is made up equally of representatives of trade unions, NGOs, producers and retailers.⁽²⁸⁾ This model has also been used in the "Code of Labour Practices for the Apparel Industry Including Sportswear."⁽²⁹⁾ The foundation would be responsible for monitoring, making use of, among other things, record checks, unannounced spot checks, interviews with workers and a complaints procedure. Within the framework of the foundation model, part of the monitoring could be subcontracted to a certified organisation. The NGOs and trade unions in the monitoring body would be charged with representing a variety of voices, including NGOs,unions and workers in the producing countries (the South) and the interests of consumers. The advice from the foundation to the company is binding; if the company does not follow the advice, the contract between the company and the foundation can be cancelled.

According to the model found in the Code of Labour Practices for the Apparel Industry Including Sportswear, the purpose of the foundation is to:

A) conduct, directly or indirectly through other organisa- tions, the independent monitoring of compliance with the code;

B) assist companies in implementing the code; and

C) provide a means to inform consumers about observance of the code and, more generally, about labour conditions in the industry.

To achieve these ends the foundation would:

	establish standards for independent monitoring and for the accreditation of independent monitors;
	train, or arrange for the training, of independent monitors;
	prepare an auditable checklist of labour practices to be used in monitoring the code and prepare and publish guidelines for participating companies on the implementation of the code;

	provide other technical assistance to companies in implementing the code;
	prepare and publish the code in various languages as required by participating companies;
	establish a means to interpret the provisions of the code, provided that these means are based on the recognised jurisprudence of the International Labour Organisation;
	provide a means by which workers and any others can make confidential reports on the observance of the code;
	establish a certification system concerning labour practices which can be used by consumers and that is based on independent monitoring;
	collect information from all sources on working conditions in the apparel and sportswear industry and make this information available to consumers;
	promote the code of labour practice and encourage all companies operating in the industry to adopt it;

	make effective recommendations with respect to any disputes arising from the implementation or certification processes;
	conduct or otherwise initiate independent monitoring of compliance by specific companies with the code of labour practice;

	receive reports of such independent monitoring and make effective recommendations based on these reports to the companies concerned; and
	investigate any substantiated reports concerning compliance by participating companies and make effective recommendations based on the findings of such investigations.

The big advantage of such a foundation is that it enables direct involvement of all parties in all phases of monitoring. This system also acknowledges the fact that experiences with monitoring are still relatively rare and that any system set up will require constant evaluation, debate and improvement. The foundation can do that. However, it will be complicated to arrange this in a way that is free of stalling practices and endless delays, because agreement must be reached within the Foundation on what action needs to be undertaken.

Other noteworthy initiatives are those put forth by the Apparel Industry Partnership, the Council of Economic Priorities and the Ethical Trade Initiative.

The US-based Apparel Industry Partnership (AIP), formed in 1996, is made up of companies, several trade unions, NGOs and the US Department of Labour. They drafted a "Workplace Code of Conduct" and "Principles of Monitoring." As of April 1997 these have been signed by Nike, Reebok, Liz Claiborne, Warnaco, Nicole Miller, Patagonia, Phillips van Heusen, LL Bean and Kathy Lee.

Positive aspects of the "Workplace Code of Conduct" are the inclusion of trade union rights and the principle of independent monitoring. Criticism of the code focuses mainly on the definition of an acceptable wage (local minimum wage instead of living wage) and allowable hours of work (60 instead of 48). In the preamble of the code it is stated that the companies are determined to "adhere to the Code and to implement as soon as reasonably practicable a monitoring program consistent with the attached "Principles of Monitoring," by adopting an internal monitoring program consistent with such Principles and utilizing an independent external monitor that agrees to conduct its monitoring consistent with such Principles."⁽³⁰⁾ The AIP seems to be developing a model similar to the foundation model, though it is impossible to say anything definite on this as negotiations are ongoing and for now the results are not publicly known.

The Partnership had stated that within six months they would form a non-profit association that would have to deal with some of these matters. Some of its tasks will be to "develop criteria and implement procedures for the qualification of independent external monitors, to design audit and other instruments for the establishment of baseline monitoring practices and to develop means to maximize the ability of member companies to remedy any instances of noncompliance with the Code." This non-profit association will be governed by a board whose members would be nominated by companies, labour unions and consumer, human rights and religious groups. Of course a lot will depend on how this "governing" is set up. Meanwhile, this deadline has come and gone and no such association has been formed.

The US-based Council on Economic Priorities (CEP), a non-profit public service research organization set up in 1969 to analyse the social and environmental records of corporations, recently published a set of standards called SA (Social Accountability) 8000. These are criteria for socially-responsible business on labour issues, applicable to all sectors of industry. These are very similar to the criteria developed by the Clean Clothes Campaigns. The principles for monitoring are to be published in 1998. It is understood that CEP will accredit others to do monitoring (this can be either companies, unions or NGOs) and that an advisory board consisting of companies, unions, NGOs will oversee CEP and have final responsibility. Companies with whom the CEP has been in dialogue are SGS, KPMG (an accounting firm recently merged with Ernst & Young), Avon, Eileen Fisher, Sainsbury, Toys R US and Otto Versand. At the moment CEP is running four pilot programs,located in Mexico, Honduras and in the U.S. (New York and Pennsylvania).

Lastly, the Ethical Trading Initiative (ETI) is a recent UK initiative, started in January 1998, which grew out of an NGO/trade union project and receives funding from the New Labour government. Essentially it is a partnership between companies and NGOs for the improvement of working conditions in supply chains. The companies involved are mainly food and garment retailers (C&A and Littlewoods, for example). In the form of a three-year project ETI will facilitate a dialogue and detail what codes of conduct should contain and how they can be made to work in practice. The ETI secretariat is currently being established and several pilot projects are planned as a means of helping them to narrow-down their objectives.

As noted in the introduction to this report, few NGOs are currently addressing companies from a "cross-sectoral" approach or with regard to their complete performance on ethical issues, that is on labour, environmental and human rights issues.

Where the problems in the export-oriented manufacturing sector are predominantly labour related, oil and mining operations, to be discussed in the next part, have many direct negative impacts on the environment and surrounding communities.⁽³¹⁾ Setting international standards for labour issues is perceived as relatively easy, especially when compared to standards for environmental issues, since a lot of this work has been done by the ILO.

For example, the principle of reasonable hours of work has been translated to 48 hours. But this is indeed relative, since the ILO standards themselves are aimed at governments, as we saw in Part I. They are partly translated to companies (the Tripartite Code) but major areas where this has not been done remain (living wage, health and safety). Also, in cases where standards have been set, their meaning is constantly being debated.⁽³²⁾

Generally, it has been suggested that the best way to clarify such grey areas is to set up a structured mechanism that allows all relevant parties to participate in determining the meaning of a certain standard within a certain context. As we saw in Part II, the crucial issue is: who is involved and what procedures are being set?

Beyond the issue of standards, the experiences highlighted in the sections above demonstrate that other significant questions remain. More specific demands on implementation and monitoring can and should be worked out on a sector by sector basis. Special attention should be given to the following issues:

	certification of auditors;
	complaints procedures;
	communication with partners involved at the local level; and
	procedures in the event of violations.

Additionally, concerns have also been raised at the local and international levels that processes such as independent monitoring are susceptible to co-optation by management. Some scenarios, where so-called independent monitors serve more as in-house consultants for management, shut off from trade unions, workers associations and other NGOS and workers in general, have already been observed. Union activists worry that independent monitors run the risk of becoming a newer version of "yellow" unions. Concerns that codes of conduct could be used to replace collective bargaining have also been raised. Such issues have resonance across all sectors.

It is on the subject of corporate response to demands for responsible behaviour that similarities across sectors have been noted: oil and mining companies have also drafted their own codes and have voiced opposition towards externally-controlled regulation.

Codes of conduct have been used by a variety of companies as ways to defend themselves.⁽³³⁾ And, as mentioned earlier, a narrow view toward regulating TNCs is shortsighted. Far too often a focus on only a limited aspect of corporate behavior (labour issues alone or only environmental issues) enables companies to obtain an overall "ethical" image due to limited achievements in only one area.

But meanwhile, duplicating the strategies used in context of export-oriented manufacturing will not work. One cannot demand independent monitoring overseen by a body made up of unions, NGOs and industry from Shell and feel any sort of certainty that this would contribute to solving problems in Nigeria. Indeed the backgrounds, mandates and ideologies employed in different sectors often vary wildly.

But it is also not wise to sweep aside all experiences in other sectors and state that codes of conduct are no good, because environmental problems are different from labour problems, or because C&A is not Texaco.

A fragmented approach is frustrating and extremely confusing for the general (and not so general) public. Especially because companies themselves generally do not make the distinction between labour, human rights and environmental issues. They claim to work on general ethical or sustainable behaviour. Shell's business principles, discussed in the next part of this paper, are one such example.

The next part of this report takes up the issues of relevance to the oil and mining industries and attempts to formulate appropriate codes of conduct by different actors in the sector are discussed in more detail.

Part III Primary Resources: The Oil and Mining Sectors

This portion of the report focuses on the oil and mining indusries. Both are examples of primary resource development and representative of "extracting" industries, they raise similar concerns. Because of these similarities information relating to initiatives geared toward regulating TNCs operating in these sectors are presented together in this same chapter.

In this part of the paper a description is given of a number of attempts by various actors to formulate standards for the oil and mining sectors (usually based on international standards or principles). Then, suggestions are presented for issues relating to these sectors which require further study, as well as issues to be taken up in a future dialogue on cross-sectoral coordination. While keeping in mind the lessons learned from experiences in the garment and sportswear industries, experiences in the oil and mining sectors regarding codes and other forms of regulation might well help the progress of such initiatives in other industries.

While problems in the export-oriented manufacturing sector are predominantly labour related, the oil and mining industries are immediately associated with additional concerns. Because such operations can have a direct negative impact on the environment and surrounding communities, these industries can influence a broad array of human rights, including but not limited to workers' rights and trade union rights.

Severe, direct environmental impacts brought about by the oil and mining industries include land-clearing, air pollution, water contamination, soil erosion, sedimentation and disturbance of wildlife and habitat. More indirect is the colonization and extensive deforestation that result from the opening of access into the forest via roads and pipeline paths. Social problems at oil and mining operations are often created due to mishandled contacts with indigenous peoples.⁽³⁴⁾

When considering explorations in the oil and mining sectors, the following characteristics must be taken into account:

	Many of the areas targeted for oil development and mining operations directly overlap with threatened ecosystems.
	Many of these areas are also home to indigenous populations.
	The respective countries are often relatively young bureaucracies. For this or other reasons, environmental management systems may lack the capacity to thoroughly implement and enforce effective environmental and social safeguards.
	Exploration often takes place in areas where it is reasonable to expect that the government will not represent the interests of the local communities.

The standards set up at the international level relating to TNC activities, described in Part I, are also applicable to these sectors. But when specifically considering guidelines for corporate behaviour in oil and mining operations, and given the concerns that arise in the context outlined above, several other connections can be made to existing international principles and standards. For example:

A 1989 ILO convention exists on indigenous peoples (169) in-cludes some text on obligations of a state when an investor comes along. The UNCED Biodiversity Convention includes amendments submitted to the Biodiversity Convention Secretariat by the International Alliance of Indigenous Peoples in May 1996.

The United Nations Environmental Programme (UNEP), set up after the 1972 UN Conference on the Human Environment in Stockholm, has established standards for the mining of various substances. For example, in specific relation to the aluminum industry two UN-level standards should be considered: (1) UNEP guidelines for the environmental management of aluminum production, established in 1992. This includes standards for health/safety in the workplace. (2) The United Nations International Development Organization(UNIDO) published Pollution Prevention and Abatement Guidelines for the Alumina Industry in 1994.(35)

As we can see, international-level standards exist which guide the mining and oil sectors, as in the clothing and sport shoe sectors, and do provide some scope for regulation.

Various other non-governmenal actors are at work formulating what they consider to be appropriate standards. A policy paper drafted by Conservation International, for example, offers some standards for oil exploration:

	Prohibition of oil and other resource development projects within national parks
	The operating company should work closely with environmental experts and local and national authorities to ensure that best practices are followed, that the impacts of the oil operation do not extend beyond project boundaries and that the land is fully restored and returned to protected area status upon completion of the project
	Oil operation should avoid areas that are home to isolated indigenous peoples
	Ensure a proper level of environmental awareness and expertise among workers
	Minimize the area of impact
	Use extreme caution when there is a potential for contact with isolated indigenous groups
	Tailor compensation schemes to specific communities
	Conduct environmental and social monitoring and evaluation programs during every phase of the operation
	Return the project site to its pre-operation condition
	Structure oil contracts to provide for maximum government and citizen group supervision.

A range of initiatives have been taken to set up a dialogue between trade unions, NGOs and corporations in these sectors. Dialogue and campaigns often go hand in hand. In the next sec-tion, the activities of several organizations are presented, though this is merely a sample of activities in these sectors and should not be taken as an exhaustive overview.⁽³⁶⁾

The 1995 execution of Ken Saro-Wiwa, the Ogoni activist whose civil rights work placed him in conflict with the Nigerian government and overseas corporate interests, raised global consciousness of the impact of oil production to a community and the struggles waged by people as a result of such forms of development. The German-based NGO Bread for the World (Brot-Fuer-die-Welt) was among them, explaining that "We realised that it is the Northern societies greed for energy that causes the oil companies to penetrate further and further into the Third World in order to exploit oil and gas, and that this process, instead of offering a new momentum for the development of the people in the oil producing areas, creates, quite on the contrary, tremendous social and ecological problems."⁽³⁷⁾ Initiatl contacts with representatives of the Shell company, which dominates the sector in Nigeria, showed them to be well aware of this problem. Though Shell indicated readiness for dialogue, Bread for the World reports that so far, the contacts established with the German national Shell Company have not produced any concrete results.

Meanwhile, partners of Bread for the World, both in Peru, where Shell is planning a large gas project, as well as in Tchad, where Esso together with Shell and ELF are planning to produce oil, have asked the group for support as they negotiate with the oil companies. Their aim is to influence the development at an early stage in such a way that results like those in the Nigerian Ogoni Land can be avoided and instead the social and environmental needs of the people are taken into consideration. The group sees a code of conduct (checklist, best practice schedule, or rules) as a possible instrument of assistance for our partners might be a code of conduct which would allow the activities of the company to be regulated and externally inspected.

In late 1997 the group convened a workshop to discuss the possibilities further and succeeded in producing a draft code, though they categorize it as "incomplete" and invite comments and suggestions. The group adds that they "... would also like to get an early reaction from Shell and the other companies and an indication as to how far they are prepared to actually on their professed willingness to take social interests into consideration."⁽³⁸⁾ See Appendix 5 for excerpts from the text produced at the Frieburg seminar, as well as the questions raised for further investigation.

Friends Of The Earth/ Earth Alarm (an environmental NGO) in the Netherlands also drafted a number of demands to Shell with respect to their behaviour in the Niger Delta:

1. Only undertake activities in those areas where the local communities have given consent in a democratic way

2. Cooperate and support independent research to the environmental and social effects of Shell's operations in the Niger Delta

3. Clean up the environmental damage caused by the company and compensate the affected population

4. Independent verification of the cleaning operations

5. Allow independent monitoring for the current operations, future plans and environmental impact assessments where the monitors get complete access to all environmentally relevant information from Shell.⁽³⁹⁾

Friends of the Earth also drafted a code specifically for mining operations, in 1997:

Draft Model Code for Mining Projects

Preamble: By definition, mining and the input of primary metals into the economy are limited in time. As the richest and most accessible deposits are being depleted, metals are increasingly becoming ecologically scarce: the ecological costs per unit or product are increasing. The metals industry needs to prepare for the future, in which less primary metals will be available. In the meantime, the following criteria shall be applied to mining of primary metal ores:

1. A mining company shall apply "best available technologies" and "best practices" to minimise environmental impacts, and shall try to improve on them. A company shall continuously improve its environmental standards and shall not apply "double standards."

2. Strategies shall be developed to avoid environmental hazards and contingency plans shall be formulated to enable rapid and comprehensive management should emergencies occur.

3. Mining activity, including exploration, is inappropriate in areas of high ecological, social and cult