Assessing Pressure Points: General Questions
General Question 1: If it is a company, is it public or private?
Whether a company is public or private can affect the amount of information it must disclose, the number of shareholders it is likely to have, and whether information on shareholders is made public. This affects the incentives and decisions made by the company – and therefore the strategies that might be used to influence it.
The difference between public and private companies, and how much information they publish, depends on the country or region where the company is registered. For example, in the European Union, private companies have to publish their financial statements. And in Common Law jurisdictions, private companies generally have to make some basic information public. But in general, private companies tend to have fewer or less demanding disclosure and reporting requirements than publicly listed companies.
If a company is public it is more likely to be sensitive to issues that might damage its reputation. A bad reputation can have a direct impact on the financial returns of a company. If a company attracts negative attention, some shareholders may decide to sell their shares to avoid future financial losses, which can cause the value of shares to fall – meaning the company loses value. This might make it harder or more expensive for the company to borrow money in the future.
For these reasons, a public company is likely to be a stronger pressure point than a private company. You can usually find out whether a company is public or private on the company’s own website: check the “about us” pages or annual report. If the company has PLC at the end of its name, then it is a publicly limited company, meaning it is public. If it ends in LLC (in the United States) it is a limited liability company, which means it is a private company. Often, a company’s website will say if it is listed on a stock exchange. If the company is listed, it is a public company.
General Question 2: Is the company owned by a government or part of a public-private partnership?
Companies can be part or majority owned by governments – either host governments or foreign governments that are investing or buying overseas. Governments might also enter into agreements with private businesses, an arrangement known as a public-private partnership. In such cases, the government is using public funds for these investments or purchases and it may therefore be more sensitive to public scrutiny, especially if the government is democratically elected. Civil society has an important role to play in holding governments and public–private partnerships to account for their investment choices and for adherence to relevant national and international laws. This includes bringing harmful investments to the attention of parliaments, media and citizens. This may make state-owned companies and public-private partnerships relatively strong pressure points.
General Question 3: Does the company have its own internal standards, policies or codes of conducts? Does it have a formal complaints process?
Companies may have their own internal policies on the environment, forests, land rights or human rights that they publicly commit to respecting and implementing. These can be used to hold companies to account. Companies that make public commitments to such standards but do not respect them face losing credibility and damaging their reputations. Some companies have formal grievance mechanisms or complaints processes that can be used if they failed to respect these policies.
The best sources of information on internal policies are company websites, since they commonly advertise these to the public for marketing purposes. Look for pages with titles such as “corporate social responsibility,” “sustainable development,” “our policies,” “our commitments” or “about us.” A company’s annual report may also mention its environmental, social and human rights policies and commitments. Search the website for a form or contact information to submit a complaint, which would indicate that the company has a process in place to deal with complaints.
General Question 4: Does the company have a strong brand and retail or other business component visible to consumers? If so, where and for what type of product or service?
Companies that have a strong brand or business component visible to consumers are more likely to be sensitive to reputational risks and negative publicity, because consumers may decide to stop buying their products or services. It may also be harder for companies to attract investors or lenders or to implement projects in the future.
Even if you are not familiar with the company’s brand because it is not well known in your country, it may be a strong brand in other countries. You may need to Google the brand and ask civil society organizations in the country where the company is based. The company’s own website may also have this information. For example, it might show the logos relevant to its brand or talk about the types of products and services it sells and to whom.
General Question 5: Is the company likely to be concerned about reputational risks because of its public image? Is the CEO or another key executive personally concerned about his or her reputation?
This question is related to questions 3 and 4 above. Some companies have invested significantly in building and maintaining a positive corporate image. For example, they might adopt environmental and social policies and advertising themselves as having ethical and responsible business practices. Publicly listed companies that claim to be “green” and ethical may be included in the portfolios of ethical investment funds, and any challenges to this claim may reduce financing options for the company.
A company’s CEO may be personally concerned about her reputation and about responsible business practices. CEOs are highly influential in dictating business strategy and practice. For example, some CEOs have made public statements that they are environmentalists or are committed to human rights. Some may even have donated large sums to social causes and told the media about it to strengthen their public image. Use Google to search for this sort of information in media reports. Where a company is concerned about corporate image and/or a CEO or other key individual is personally concerned about his reputation, it may offer a strong pressure point.
General Question 6: Is the company registered or based in an OECD country?
The Organization for Economic Co-operation and Development (OECD) is an international economic organization with 34 member countries. The organization’s mission is to promote policies that will improve the economic and social wellbeing of people around the world. The OECD has created a number of standards and guidelines relating to investment and trade, including standards relating to corporate governance and environmental practices. An important one of these is the OECD Guidelines for Multinational Enterprises.
The OECD Guidelines for Multinational Enterprises are recommendations for responsible business conduct. The guidelines are not legally enforceable, but the governments listed below have agreed to encourage businesses based in their countries to observe these guidelines wherever they operate. The OECD Guidelines apply to all the entities within a business group, including a parent company and all of its subsidiaries or branches, that are registered or based in an OECD adhering country.
The guidelines require that “enterprises should: 1) contribute to economic, social and environmental progress with a view to achieving sustainable development; 2) respect the human rights of those affected by their activities consistent with the host government’s international obligations and commitments.”
Compliance with the OECD Guidelines is monitored by National Contact Points (NCPs) – agencies established by adhering governments to promote and implement the Guidelines. The NCPs can hear complaints from people who allege non-compliance with the guidelines. Though the NCPs are not always effective as a grievance mechanism, companies that are registered or based in OECD countries may be a stronger pressure point than those that are not.
Countries with NCPs are:
- Costa Rica
- Czech Republic
- New Zealand
- Slovak Republic
- United States
More information about NCPs is available here.
General Question 7: Does the country where the company is registered and/or operating have strong laws and regulations and an effective court system?
Although a large geographical spread can make the investment chain more complex, it may offer more opportunities for influencing the actors, because you may be able to use different laws and mechanisms, including the courts, in the various countries to apply pressure.
Laws set out the rights and obligations of the different actors involved in an investment chain. They shape the rights and recourse mechanisms that affected people can use. This is the same for both host countries, where the investment project is located, and home countries, where the parent company, investors and buyers might be based. Some of the laws that might be relevant include company law, tax law, anti-corruption laws, investment law, freedom of information laws, environment laws, property and land laws, forestry laws and tort law.
Some countries have strong laws that regulate investments and protect people’s rights and the environment. In some of these countries, the laws are enforced and there are independent and effective court systems that people can access if their rights are violated. In other countries, what is written in the law and what happens in practice can be very different, due to lack of ability within a government to enforce laws, or lack of will to do so. The courts may not be accessible, independent or effective in upholding the law. The potential for pursuing legal action needs to be carefully considered in each situation. (See here for advice on using judicial mechanisms.).
You may need the advice of lawyers based in each country to help you answer this question, but try to do a bit of research and answer as best you can for now. Organizations that may be able to offer free legal advice are listed here.
General Question 8: Is the company a member of, or certified by, an industry certification scheme?
Certification schemes exist to offer a guarantee or an assurance to consumers that companies are investing or producing according to specific environmental, social or economic standards. Buyers might require that their suppliers implement particular standards or use particular guidelines, or investors and lenders might require that any projects they finance implement certain standards. If a business receives certification, it may be able to use a label or logo to advertise its compliances to buyers, consumers or investors.
Some of these schemes also have grievance mechanisms attached to them, which allow people to make complaints if they believe the standards have not been met. This section explains these standards and how you can use grievance mechanisms in your advocacy. For now, if you find an actor along the investment chain that is a member or is certified by one of these schemes, mark this as a potential pressure point. Many such schemes have an online database you can use to search for actors along your investment chain. Companies are also likely to advertise on their own website if it has certification from these schemes. When you are looking at a company website or one of their products, look out for certification logos such as those below:
For example, here are some relevant associations for the agriculture industry. Note that other industries, such as mining, have similar industry associations:
Is the business growing sugar cane? If so, then some of the midstream or downstream actors in your investment chain might be members of Bonsucro.
Is the business cultivating trees (e.g. rubber)? If so, it might have or be in the process of obtaining the Forest Stewardship Council certification.
Is the business producing oil palm? If so, the Roundtable on Sustainable Palm Oil (RSPO) might be relevant.
Is the business producing biofuels, e.g. soybeans or sugarcane? If so, then the Roundtable on Sustainable Biomaterials might be relevant.
Box 3: Relevant certification schemes
An actor is likely to be a stronger pressure point if it is a member of one of these initiatives, and if it is seeking or has achieved certification from one of these schemes.
Bonsucro is a multi-stakeholder organization that requires member organisations to implement a set of objectives and principles. It also offers a certification scheme to businesses that meet a number of criteria regarding sugar production.
You can find out whether the actors on your investment chain are certified by Bonsucro by searching its database.
You can find out if any of the companies that you have identified along the investment chain are members of Bonsucro.
The Forest Stewardship Council has designed a number of principles and criteria for sustainable forestry. Businesses that manufacture, process or trade forest products can apply for certification if they meet the principles and criteria.
You can find out whether the agribusiness company affecting the community you are supporting has Forest Stewardship Council certification with this database.
The Roundtable on Sustainable Palm Oil is a global, multi-stakeholder initiative on sustainable palm oil that has developed a standard, called the Principles and Criteria for Sustainable Palm Oil Production. These principles must be met for palm oil plantations and processors along the supply chain to receive the roundtable’s certification.
You can find out whether the company is a member of the roundtable by searching this database.
The Roundtable on Sustainable Biofuels certification scheme has a set of comprehensive sustainability criteria that allow eligible producers to show buyers and regulators that their products have been produced without harming the environment or violating human rights.
You can find out whether the company is certified by the roundtable here.
General Question 9: Is the actor associated with any other negative projects?
When undertaking campaigns or applying pressure to actors in your investment chain, there may be strength in numbers. If a company is currently involved in other projects that are having negative impacts elsewhere, you may be able to identify other communities and supporters to team up with to apply pressure on the company. That may increase the strength of the pressure point. Media reports will be particularly helpful in identifying whether the actor in your chain has been associated with any other negative projects. A general Google search may help you to find these media reports. Also, see the BankTrack and Business and Human Rights Human Rights Resource Center online databases described earlier.
Understanding Chinese Investors
Since the mid-2000s, Chinese companies and financiers have become increasingly important in global investment and finance. Chinese actors now invest around the world in a range of industries, including mining, infrastructure and agriculture. In recent years, a significant number of Chinese projects have attracted negative attention, and Chinese companies are often criticised for failing to uphold high standards when operating overseas. However, in recent years various Chinese state institutions have issued statements calling on companies to implement appropriate standards when operating overseas, and several guidelines have been issued that apply specifically to overseas projects. Box 6 below contains an overview of some of these guidelines.
Box 6: Do Chinese Investors Make Strong Pressure Points?
- The Ministry of Commerce and State Forestry Administration has issued the Guide on Sustainable Overseas Silviculture and the Guide on Sustainable Overseas Forest Management and Utilisation. These guidelines cover overseas forestry and plantations and include guidance for companies on issues including consultation and community development. These guidelines are currently being revised and improved, and there are also plans to develop specific rubber and palm oil guides.
- The China International Contractors Association has issued the Guide on Social Responsibility for Chinese International Contractors, which provides guidance to contractors on various issues, including environmental protection and community issues.
- China’s Ministry of Commerce and Ministry of Environmental Protection have jointly issued the Guidelines for Environmental Protection in Foreign Investment and Cooperation, which provide guidance to companies active overseas on ensuring that environmental and social impacts are adequately managed.
These guidelines can potentially be utilized in your advocacy with businesses and contractors. However, they are not binding, and there are no grievance mechanisms through which affected people can file complaints. With that said, they specifically address areas of concern such as environmental impacts, public communication and labour rights. You can refer to these guidelines in communications with Chinese actors involved in the investment or in your public statements and call on these actors to uphold the guidelines.
Chinese financial institutions supporting overseas investments are subject to the Green Credit Guidelines, issued by the China Banking Regulatory Commission. These guidelines cover issues including due diligence, compliance review of clients and assessments of project performance. They also state that banking institutions should make sure that project implementers abide by applicable laws and regulations on environmental protection, land, health and safety of the country where the project is located, and make public commitments to align implementation with international practices. As is the case with the industry guidelines discussed above, there is no grievance mechanism or review process attached to these guidelines, but you may be able to refer to them in your advocacy.
Finally, two of China’s state-owned policy banks, the China Development Bank and Export-Import Bank of China (China Eximbank), are highly influential and provide a large amount of finance for overseas projects. These banks both have guidelines for overseas financing. The China Development Bank has never publicly released its guidelines. China Eximbank, on the other hand, has released its guidelines. The Guidelines for Environmental and Social Impact Assessments of the China Export and Import Bank’s Loan Projects are basic, but they include requirements that project implementers first conduct an environmental impact assessment, respect local people’s rights to land and resources, and properly handle resettlement. Once again, there is no grievance mechanism through which to raise complaints, but if you find out that China Eximbank is involved in a problematic project you can call on the bank to follow its own guidelines.
At present, it is still challenging to find pressure points when engaging Chinese companies and financiers. However, the guidelines mentioned here provide a potential tool for assessing the conduct of companies and banks — and calling for improved conduct. Although Chinese companies are still not very strong pressure points, this may change in the coming years as the guidelines and standards adopted by China continue to develop. By referring to and testing these guidelines, campaigners may be able to encourage their implementation and improvement.
For more information about the policies, standards and guidelines that apply to Chinese overseas investments and how to use them in advocacy, see Inclusive Development International’s Safeguarding People and the Environment in Chinese Investments: A Guide for Community Advocates.
The actual policies, standards and guidelines covered in this publication are compiled here.