CRB Hosts White House Dialogue on National Action Plan for Responsible Business Abroad

If the United States government wants to promote or require responsible business practices by American corporations operating abroad, what combination of carrots and sticks should it bring to the task?

That was a core issue on Friday, when the Berkeley-Haas Center for Responsible Business hosted a regional “dialogue” at the request of the White House on President Obama’s call for a National Action Plan for Responsible Business Conduct.

NAP Scott Busby

Scott Busby, Deputy Assistant Secretary of State for Democracy, Human Rights and Labor

The main focus was on US business practices in other nations, though one frequent theme was that the United States must set a strong example with its own domestic policies and practices.

NAP Gathering

The five-hour conference brought together senior officials from the State Department and the Department of Labor; leaders from business and organized labor; international civil-society groups; and scholars in the field from Berkeley-Haas.

The over-arching question: How should the US government promote global business practices that protect human rights, improve workplace safety across global supply chains, and enhance environmental sustainability?

When it is complete, the National Action Plan is expected to provide a blueprint for government policies to address corruption and bribery; human-trafficking and discrimination; labor rights; transparency and accountability in global supply-chains; and environmental sustainability.

The goal of the five-hour conference wasn’t to make specific policy recommendations. Rather, it was to collect divergent views about the scope of a National Action Plan, the tools available for promoting best practices, and the best process for hammering out the actual plan.

“Our mission was to foster the dialogue,’’ explained Robert Strand, Executive Director of the Center for Responsible Business.   The CRB served as the convener to bring together voices from industry, government, and civil society to discuss and debate how policies of the U.S. government can best encourage responsible business.”

Robert Strand, Center for Responsible Business

Robert Strand, Center for Responsible Business

Scott Busby, Deputy Assistant Secretary of State for Democracy, Human Rights and Labor, led the Obama administration’s contingent, along with Melike Yetken, the State Department’s senior advisor for corporate responsibility.

Speaking for international business was Mark Hodge, executive director of the Global Business Initiative for Human Rights. GBI’s members include 18 major multinationals, including General Electric, Chevron, HP and Coca-Cola. Participants also included leaders from major non-governmental organizations and watchdog groups. These included the International Corporate Accountability Roundtable; the Responsible Sourcing Network, Accountability Counsel, and the AFL-CIO. Executives from institutional investors, including CALPERS and Black Rock, participated as well.

In general, the participants all shared a basic agreement about the core priorities, such as combating bribery and corruption; promoting sustainable environmental practices; and protecting human rights down through the supply chain.

But to be effective, several participants emphasized the need for policies to be precise and, where appropriate, to impose accountability. “Responsible business” is a broad and often amorphous goal. But a goal of reducing carbon emissions can be specific, and it can be promoted with both “sticks,” such as a carbon tax, and “carrots,” such as subsidies for alternative energy.
While most participants endorsed a “smart mix” of incentives and hard requirements, they quickly revealed disagreements about what that mix should be.

“The reality around the world is that businesses are often faced with sub-optimal choices,’’ cautioned Mark Hodge, of the Global Business Initiative on Human Rights. Identifying exactly what is happening three tiers down in the supply chain can be very difficult, he noted.

But Amor Mehra, director of the International Corporate Accountability Roundtable, warned that business groups often hang back from discussions about regulations and rules and then sue to overturn regulations they don’t like.

Transparency about supply-chain practices and access to relevant data was a recurring topic. The State Department and Labor Department both keep lists of countries with high violations of human rights and labor rights.

Industry and civil society groups have developed their own databases and tool kits. The Sustainable Apparel Coalition has launched the Higg Index, which assesses the environmental sustainability of materials and packaging. It is also developing a tool to assess the social and labor performance of manufacturing facilities.   The Electronics Industry Citizenship Coalition helped launch the Conflict-Free Smelter Initiative, to prevent the sourcing of metals and minerals produced with forced labor. Cisco Systems has developed an expansive code of conduct on labor and environmental practices for its suppliers around the world.

Many participants called for a higher level of “integrated financial reporting” that includes data on a company’s performance on environmental and social responsibilities.   In a workshop on responsible investment, several participants said that both institutional and individual investors could exert significantly more leverage on companies if they had more access to such data.

The United States is not the first nation to pursue a National Action Plan for Responsible Business Conduct. Denmark, the Netherlands and the United Kingdom have already developed plans, and the Obama administration is studying them closely.

The Obama administration has convened six inter-agency working groups to prepare recommendations on key aspects, from labor rights and procurement practices to anti-corruption measures. But the administration is seeking input from stakeholders on all sides, and the dialogue at Berkeley-Haas was the second of several regional sessions to that end.

The administration is soliciting written comments at each stage in the process, and the next round of comments are due by April 24.

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