Inter Press Service August 7, 2001, Tuesday CRITICS FLAY U.N.'S CORPORATE PARTNERS By Danielle Knight WASHINGTON, Aug 7: Multinational corporations that have joined a United Nations program intended to promote responsible business are violating its core principles, charge labor and environmental activists. The Global Compact, initiated by U.N. Secretary-General Kofi Annan, challenges business leaders to enact nine voluntary principles derived from U.N. agreements on labor standards, human rights, and environmental protection. Participating firms are expected to publish their strategies for dealing with these issues on a U.N. website. In exchange, the companies are allowed to promote themselves as good corporate citizens and can use the U.N. emblem to do so. Critics say this arrangement boils down to nothing more than good public relations for the companies because there is no monitoring or enforcement of compliance with the Compact. To prove their point, that legally binding regulations are the only effective way to improve corporate behavior, several labor and environmental groups have done a little monitoring of their own. They argue that three companies -- Aventis, Nike, and Rio Tinto -- have violated several of the Compact's nine principles. The companies deny the accusations. But Joshua Karliner, executive director of the Transnational Resource and Action Center (TRAC), a California-based corporate watchdog, says the discovery of a few violations by these companies highlights the need for independent monitoring. "Without monitoring, these corporations will be able to take advantage of the U.N.'s name and reputation without changing their overall practices," Karliner says. TRAC is distributing a series of reports on the three companies, arguing that each should be suspended from the Global Compact until they demonstrate material improvements. This follows a call from numerous non-governmental groups to scrap the entire Compact. Georg Kell, senior officer in Annan's office, says it is too early to judge the Global Compact. "This is ground zero now," he told a recent news conference at U.N. headquarters in New York last week. By October of November, Kell added, "some of the milestones would be challenged." "There has been a fantastic response in many emerging and developing countries, home to more than half the participating business leaders," he said, noting that the number of companies in the Compact has grown from 50 last year, to several hundred. Responding to suggestions that companies could use the U.N. emblem even if they had not proven they had actually changed their business practices, Kell said the use of the logo was strictly regulated and he had not encountered a single case where it had been abused. Gabriela Flora of the Minnesota-based Institute for Agriculture and Trade Policy disagrees. Flora says that one of the first companies to join the Compact -- Aventis -- violated principle seven, which requires companies to err on the side of caution when faced with evidence of potential for serious harm to the environment or public health. Aventis, a seed and pharmaceutical giant based in France, is the manufacturer of a genetically engineered brand of yellow corn called StarLink. Although it is not approved for human consumption because of possible allergic reactions, StarLink has been found in numerous food products including taco shells and corn flour. Flora accuses the company of rushing the product to market and not properly informing farmers that the corn was to be strictly separated from other varieties. U.S. government regulators have required Aventis to ensure that farmers have a buffer zone of traditional corn planted around StarLink corn to control contamination through cross-pollination. But, Flora says, Aventis has done nothing to monitor the effectiveness of the buffer zones or to test to ensure that contamination was not taking place. Aventis has repeatedly denied any wrongdoing, noting that its corn is planted, processed, and distributed by third parties. Nike, the U.S.-based sporting goods company that has become one of the world's most prominent brands, also is in violation of one of the Compact's core principles, according to Tim Connor, coordinator of NikeWatch, an Australia- based labor campaign. Connor says Nike continually fails to uphold principle number three, which upholds the "freedom of association and the effective recognition of the right to collective bargaining." Some 40 percent of Nike shoes are made in China, where no unions are allowed without government permission, says Connor, who is an associate researcher at the Center for Urban and Regional Studies at Newcastle University in Australia. Nike CEO Phil Knight has said the company is working with its contractors to clean up past wrongs. But Connor says that reports from workers and independent monitors suggest that labor violations -- especially the right to organize -- are "endemic" to Nike's operations in Cambodia, Indonesia, Mexico, and Thailand. "Given that Nike has not kept this pledge, the Secretary-General would best uphold the integrity of the United Nations by asking Nike to leave the Global Compact until it has proven it is adhering to the Compact principles," Connor says. The world's largest mining company, Rio Tinto is accused of violating two of the Compact's principles. Danny Kennedy, former director of Project Underground, a U.S.- based mining industry watchdog, says the British-Australian company "could be a poster child for corporate malfeasance." Kennedy argues that Rio Tinto has violated principle number one, which requests companies to "support and respect the protection of international human rights within their sphere of influence," and principle number eight, which asks businesses to "undertake initiatives to promote greater environmental responsibility." Last year, he adds, the Indonesian government's human rights commission found that the military and company security at Rio Tinto's PT Kelian Equatorial Mine in Kalimantan, Indonesia, have forcibly evicted traditional miners, burned down villages, and arrested and detained protestors since the mine opened in 1992. Local environmentalists also have accused Rio Tinto of contaminating streams and rivers with mine waste. The company has said the water is clean. But Kennedy says the Indonesian Mining Advocacy Network maintains that local people continue to suffer skin rashes from contact with the water and says the company has "consistently manipulated environmental reports."