Corporations owe a debt to humanitarian NGOs involved in advocacy and human rights. These NGOs have brought important issues to the attention of companies, and have showed them that their corporate practices do not reflect the expectations of their customers or shareholders, or of society at large. This may have been hard for some companies to accept, but the language firms use in their public relations and their willingness to listen to outside opinions reflect the changes that have taken place inside these organisations as a result of NGO pressure.
This is especially the case for companies exploiting natural resources (oil, gas, mining). In this industry, companies have been forced to explore new business opportunities in areas that are politically, economically and socially risky, because deposits in relatively safe and politically stable countries have already been explored. Many new areas overlap with areas where humanitarian actors are active.
The presence of corporations in places of social and political tension or conflict has forced many NGOs to develop policies and approaches for how to deal with them. Companies can be active in a war economy, but they can also be legitimate firms that happen to operate in an area of tension because that is where the resources are. Many legitimate companies are committed to having a positive impact on the communities where they work. They see the need, and are willing, to spend considerable resources to achieve this objective.
Some NGOs have chosen to work with these companies in order to serve the interests of local communities, for example by implementing development projects paid for, and close to, corporate operations. Others feel that the interests of local communities are better served if the NGO supports local communities in applying pressure to get companies to withdraw from such areas.
This article is about the relationship between companies that claim to be concerned about the well-being of local communities and NGOs that claim to represent the development and human security interests of these communities by adopting an anti-corporate stance. It is based on three observations.
- Discussions with many companies in the extractive industries as well as with NGOs that are concerned about the impact of corporate activities show that both groups have shared interests around the well-being of local communities.
- Despite these shared interests, mutual perceptions impede constructive engagement.
- Local communities pay the price for this lack of engagement.
This signals the need for both NGOs and corporations to start a discussion about how they can engage with each other in ways that represent the interests of local communities.
Although the mandates of NGOs and companies differ, they also share many of the same objectives. These revolve around providing a better quality of life for local communities, contributing to increased physical security or to economic development in the areas where they work. Some companies are explicit about this in their vision statement; energy firm Unocals vision statement defines its goal as To improve the lives of people wherever we work, a commitment also noted publicly on the firms website. Some allocate levels of resources (staff and money) to community development that rival or exceed NGO capacities; community engagement is no longer a token activity. For example, the Porgera mine in Papua New Guinea, operated by Canadian gold-mining company Placer Dome, employs no less than 130 people to deal with communities around the mine. The budget for community development of Shell Nigeria and its partners in the Niger Delta was $67 million in 2002. The quantity of resources spent does not necessarily increase the quality of the relationship between a company and the local community. It is, however, an indication of intent and commitment.
Clearly, the increased awareness by companies of their community impact has not happened overnight. There have been both positive and negative incentives for companies to change their approaches. On the negative side, lawsuits, consumer boycotts and shareholder activism have served as wake-up calls for some companies. In addition to activism in their home countries, companies are increasingly confronted with sabotage, assaults on staff, roadblocks or other obstructive behaviour by local communities. Often, these actions are undertaken by local communities because they perceive that this is the only way to attract company or government attention to improve their poor living conditions.
On the positive side, companies increasingly recognise the business case for working with local communities in a way that positively affects the lives of local people. They are aware that, in coming years, society will increasingly expect corporations to have sustained, positive developmental impacts in the areas where they work. Leaving a positive legacy for local communities is becoming vital to obtaining contracts from other governments that wish to avoid social unrest due to corporate practices in their own countries. Sometimes, national governments verify a corporations positive or negative record with local communities in other countries where it has worked.
Because both companies and NGOs claim that they have the interests of local communities at heart, one would assume that they would discuss possibilities for cooperation. A review of some major companies shows that the opposite is the case. With some exceptions (the oil firms Shell, BP and Statoil are examples), there is virtually no regular contact between companies and the NGOs who are critical of their operations. Rather, they meet only when there is an immediate issue at stake. These sparse and often confrontational or defensive contacts lead to set positions and adversarial assumptions.
Companies and advocacy NGOs make essentially the same charges against each other.
- They each accuse the other of having a hidden agenda (anti-globalisation or greedy profit-making).
- They each claim that the other is unaccountable.
- They each see themselves as powerless relative to the other.
- They each assume that it is impossible to change the behaviour of the other.
These perceptions, expressed both by company executives and NGO advocates, demonstrate the gap that exists between the two. They also explain why it is difficult for the two entities to start discussions around shared interests.
There are other obstacles that both groups need to address to overcome their polarised stances. Companies group all NGOs into one category without regard for the differences between them. Thus, they conclude that all NGOs aim to harm corporate interests. Such a narrow perspective feeds into the corporate assumption that it is best to avoid contact with NGOs as much as possible. The defensive tone of corporate web sites, press statements and brochures is not helpful in opening discussions with NGOs, nor does it reflect the concerns and dilemmas that are often thoroughly discussed within a company working in very challenging circumstances.
For their part, NGOs sometimes make claims or allegations on behalf of local communities that justify their own mandates, but that are not necessarily shared by the communities they claim to represent. For example, if international NGOs fund local NGOs it puts these local groups in a vulnerable position when they disagree with their sponsor over its strategy and public statements. Local NGOs are also not always in touch with, or aware of, the opinions of local communities in remote locations that are most affected by corporate activities.
Many NGOs feel more comfortable keeping their distance from companies. They fear that engagement will be interpreted by their constituencies as legitimising the devil. For their part, companies fear that engagement risks giving NGOs information which can then be used against them.
Local communities pay the price
Both of these attitudes are problematic. They do not serve the interests of the communities about whom both groups say they care. Worse, the lack of constructive interaction may actually harm local communities. For example, gas companies in Burma have made an explicit commitment to eradicating forced labour by the Burmese military from a defined area of operation. Some NGOs have information about alleged ongoing forced labour within that area. However, they do not convey the details of such allegations to the company, in part in order to build the case against the continuing presence of the firm in that country. However, this approach does not represent the interests of the local people. If there is ongoing forced labour, it should be stopped (rather than simply reported). If there is not ongoing forced labour because of the companys presence, its withdrawal may increase the risk to local people. In addition, the continuing division between companies and advocacy NGOs may represent a missed opportunity to test the sincerity of the companys broader claim to want to make a positive difference to local communities.
The need for engagement
NGOs have been successful in opening the eyes of some companies to corporate practices that can have negative impacts on local communities. Companies such as oil and chemicals firm Total, gold-mining company Newmont and Unocal are reviewing their practices worldwide in order to respond to, and anticipate, changing social expectations. They are increasingly seeking the advice and input of NGOs to help them work in difficult countries, for which there are no standard approaches. However, most companies find that the NGOs that were instrumental in helping to analyse and voice the problematic aspects of a companys operations have no answers when firms ask their advice.
Four steps, taken by NGOs and companies together, could start constructive engagement.
- Gain agreements over facts that can easily be verified, but that are subject to debate (for example, if a company compound is protected by landmines, or a company makes contractual use of paramilitary security forces). As long as there is no agreement over facts, the more important discussion of what these facts mean in relation to the behaviour of a company cannot occur.
- Ensure that local communities are broadly represented. Public discussions between companies and NGOs held in local villages will increase the accountability of both.
- Agree on mutual expectations. As one of the consequences of the communication gap, companies assume that NGOs expect them to induce significant changes in the countries or areas that they work in; ensuring, for example, that human rights abuse is eradicated. Unable to live up to these expectations, companies often see no point in aspiring to them. In fact, the majority of NGOs realise that such expectations are unrealistic, and instead want to see a company doing its utmost to be a positive force in a given country.
- Agree on how positive corporate impacts can be assured. NGOs have difficulty clarifying exactly what a company should do to make its presence in a certain country acceptable. A focus on grand expectations makes NGOs less sensitive to acknowledging the smaller changes that occur and that can, cumulatively, lead to significant shifts in corporate behaviour. It allows companies to complain that they do not get credit for their efforts, and that NGOs will never be satisfied no matter how hard they try. Establishing agreed benchmarks towards which a company can work could enable firms to develop meaningful plans, and could allow NGOs to hold corporations specifically accountable for programmes that fall short.
Many companies need further encouragement to include the well-being of local communities in their day-to-day decision-making. However, those that do care about the communities with whom they work have difficulty determining where and how to start. Engagement between advocacy NGOs and companies that take social responsibility seriously can help develop innovative tools to use the leverage of companies in ways that benefit local communities, rather than harming them. This may be one way to put a more humanitarian face on an increasingly global corporate presence.
Luc Zandvliet is Director of the Corporate Engagement Project at the Boston-based Collaborative for Development Action (CDA). The Corporate Engagement Project helps companies to identify opportunities for constructive engagement with local communities, governments and NGOs in areas of social or political tension.
Several websites are dedicated to issues around corporate social responsibility and links between firms and NGOs.
NGO Watch: www.ngowatch.org.
Collaborative for Development Action Corporate Engagement Project: www.cdainc.com/cep.