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NGOs Demand Oversight for Multinationals
By Haider Rizvi

The "Rio+10" Summit in August must establish clear environmental and social limits for the economic globalization process, said civil society organizations at the second preparatory round for the world conference.

UNITED NATIONS, (Tierramérica).- Sustainable development will not be possible without a legal mechanism to hold multinational corporations responsible for their actions, warned activists at the second preparatory meeting for the World Summit on Sustainable Development, to take place in South Africa Aug 26-Sep 4.

This second round of UN-sponsored dialogue on the agenda for the Summit, which is also known as Rio+10, concluded at the New York headquarters Feb 8 with a mix of optimism and concern.

"We have made very good progress," said Netan Desai, secretary general of the Summit, at the end of the two-week meet. "Now we have a clear idea of what this summit is about."

But leaders of various non-governmental organizations (NGOs) that closely observed the negotiation process challenged his assertion and doubted if the course of debate was headed in the right direction to achieve meaningful results at Johannesburg.

"Governments are as undecided as ever," said Michael Dorsey, a director of Sierra Club, an influential US-based environmental group.

"It’s very disappointing because the governments are not letting difficult issues onto the agenda, " added Daniel Mittler, a senior campaigner with Friends of the Earth, the world’s largest network of environmental groups.

Many industrialized countries want to exclude a binding legal mechanism for corporate accountability from debate on sustainable development, but the Group of 77 (G77), developing countries, endorse it.

"The transnational corporations (TNCs) have grown out of control," said Dorsey, noting that since the Earth Summit was held in Rio de Janeiro in 1992, the profits for TNCs have risen 300 percent, compared to an increase in jobs of a mere 15 percent.

The increasing global mobility of TNCs is making it hard for developing countries, which lack monitoring mechanisms, to hold corporations accountable for violations of human and environmental rights, said Mittler.

Mittler and others said they feared the negotiators’ vision is one that would basically ensure that any outcome at Johannesburg would be subservient to the existing international trade regime.

"The theme of making globalization work for sustainable development is on the table for Johannesburg," said Desai. "But that does not mean that Johannesburg is about trying to redesign the entire structure and framework of every institution. You cannot expect Johannesburg to change the macroeconomic framework of how countries work."

Desai said the issue of corporate accountability was already "on the table" but avoided comment on whether the issue of a binding legal framework would be included in the discussion.

But NGO leaders insisted that there must be a definite answer. "We can’t continue to rely on voluntary initiatives of corporations," said Dorsey. "The level of regulation has to be increased."

Organized civil society is demanding a kind of binding framework that must include corporate duties and obligations, community rights, support for socially and environmentally responsible government initiatives, and liability and implementation mechanisms.

Corporate obligations would include conducting social and environmental assessments, reporting on human rights, environmental and labor conditions, and community participation in decision-making.

The growing deficit in the governance of international business activity has become more acute since the 1992 Rio Summit, activists say.

In 2000, foreign direct investment grew to 1.3 trillion dollars. This was driven by more than 60,000 transnational corporations with over 800,000 affiliates abroad.

The sales of the top 200 TNCs are now equivalent to more than one quarter of world economic activity, according to Friends of the Earth.

Although the last decade was an unprecedented period of growing productivity and capital accumulation, each year about 10 million people fall into poverty, says a draft declaration prepared by the preparatory committee.

The draft paper calls on governments to focus on poverty eradication, changing the existing patterns of production and consumption and sustainable management of resources and ecosystems.

"We are not changing Agenda 21 (the declaration issued at the 1992 Rio Summit). We are building it up," said Amil Salim, Summit chairman.

The issues of finance and international trade would be discussed on the basis of the outcomes of the World Trade Organization (WTO) meeting held in Doha, Qatar last November, and the UN Summit on Development Financing taking place in Monterrey, Mexico in April.

"Now we can say that the spirit of Johannesburg is: let us do it together, the rich and the poor," Salim said.

But his words failed to make any impact on independent environmentalists like Dorsey and Mittler, who say that the Doha Declaration gave the WTO new powers to restrain governments from regulating corporate behavior.

"The Sustainable Development Summit must be clear about setting ecological and social limits on the economic globalization process," said Mittler. "That’s what Johannesburg must be about."

* Haider Rizvi is an IPS correspondent.