Introducing a Conflict-Senstitive Business Practice: Lessons From

Colombia

Notre Dame, November, 2006

Table of contentsTable of contents

1. What the CSBP pilots are about

2. The Colombia context and challenges

3. Key preliminary lessons of the pilots

3.1. Occidental

3.2. Cerrejón

1. What the CSBP pilots are about1. What the CSBP pilots are about

In 2004/2005, Bogotá-based think-tank Fundación Ideas

para la Paz and UK conflict-transformation NGO,

International Alert, began each on their own to develop

risk and impact assessment tools to implement the

Voluntary Principles on Security and Human Rights.

They later joined to carry out the CSBP pilots with two

etxractive multinationals in Colombia.

The Oxy and Cerrejón pilots began in 2006 and have been

designed as a hands-on, field testing of an innovative,

conflict-sensitive impact and risk assessment methodology.

•Business case

• Practical series of two-way conflict analysis tools

•Project and national levels

•Overview of regulatory environment

•Flashpoint issues

•Improved stakeholder relations and partnership

CSBPCSBP

1.1.What the CSBP pilots are aboutWhat the CSBP pilots are about

Key objectives have been:

To adjust company analytical capacity in order to

respond better to complex environments, increase

positive influence and minimize potential negative

impacts… … while at the same time addressing possible

risks in human rights. Engage in a trust-building exercise between NGOs

and companies.

On the ground, FIP and IA have introduced CSBP

methodology facilitating meetings and training.

2. Colombia context and challenges2. Colombia context and challenges

From 1960s- 1980s conflict was relatively contained. In the 1980s, drug trafficking expands and in the 1990s

armed conflict escalates. Alongside Marxist guerrillas (ELN

and FARC), right-wing, illegal self defense forces emerge.

Illegal armed groups resort increasingly to extortion, theft, kidnapping, drug trafficking and money laundering as a means to finance the war. Violence increases. The state steps up military response and judicial system targets illegal armed groups for their criminal behaviour.

2. Colombia context and challenges2. Colombia context and challenges

UNLIKE other places with on going conflicts, however,

Colombia is a Western country with a long democratic

tradition, legitimate institutions and empowered civil

society.

Companies are over exposed to transnational advocacy

networks seeking to protect innocent and vulnerable local

populations

Increasing international scrutiny on local dynamics

3. Key preliminary lessons of the 3. Key preliminary lessons of the processprocess

Occidental Engagement

Occidental entered Voluntary Principles 2003Occidental entered Voluntary Principles 2003 2004 issued a Human Rights Policy2004 issued a Human Rights Policy Risks Assessments required by the policy and Risks Assessments required by the policy and

by the VPsby the VPs Stakeholders AnalysisStakeholders Analysis Identification of impacts Identification of impacts Identification of Human Rights RisksIdentification of Human Rights Risks Local Economic ImpactLocal Economic Impact

Need for tools and implementation guidelinesNeed for tools and implementation guidelines

3.1. The Oxy-3.1. The Oxy-Ecopetrol pilot: Ecopetrol pilot: overview overview

Pilot carried out at La

Cira Infantas oil field in the

Middle Magdalena region –

oldest field in Colombia

(1920s)

Home of oil industry

unions (USO) and inhabited

by aprox. 13.000

Middle Mag: high

intensity armed and social

conflict

3.1. The Oxy-3.1. The Oxy-Ecopetrol pilot: Ecopetrol pilot: overview overview

Increasing international presence – foreign aid agencies, UN, international NGOs

Issues for operation include: local communities and utilities (which used to be free), governance, land and relocation and local opposition to foreign multinationals

3.1. The Oxy Pilot: preliminary lessons3.1. The Oxy Pilot: preliminary lessons

Conflict-sensitive risk and impact assessment methodology has changed key concepts and perceptions regarding:

Risk

Understandings of how different factors/variables are connected and how they contribute to conflict

Value of stakeholder engagement

Connection between local issues impacting on global reputation

Understanding civil society/understanding companies

3.1. The Oxy Pilot: preliminary lessons3.1. The Oxy Pilot: preliminary lessons

Other lessons: Need to differentiate Conflict and conflict

- The need for nuance and common understanding of stakeholders, issues and political dynamics

Engineers and Social Scientists can find common ground in Risk Analysis Methodologies

The pace of the project is faster than the pace of PESC

Local partners with special skills play a critical role in interface between companies and international NGOs- A perceptions translator- between company and Intl NGO- A prejudice diffuser

3.1. The Oxy Pilot: preliminary lessons3.1. The Oxy Pilot: preliminary lessons The process in itself is as important as the tool, if not

more:- Alignment- Training- Common Language- Trust building - Awareness

Effective trickling down of concepts and practices (cultural change) is not automatic- Internal transactions in companies need to be considered- Internalizing ideas takes time- Simple language is needed to reach all employees

Delivery design and facilitation enhance effect of a powerful toolkit (a manual is not enough)

3.2. The Cerrejón 3.2. The Cerrejón pilot: overview pilot: overview

Pilot carried out at Cerrejón coal mine: largest mining company in Colombia (4610 direct employees).

Independent operation, owned by BHP Billiton, Anglo American and Xtrata

Behavior Options Behavior Options SOCIAL AND ENVIRONMENTAL VALUE

ECONOMIC VALUE

CHARITYTARGET

SOCIALLY IRRESPONSIBLE

Corporate Social Responsibility PolicyCorporate Social Responsibility Policy

INTERNAL STAKEHOLDERS VALIDATIONCRITICAL AREAS

SAFETYSAFETY

LABORLABOR

COMMUNITYCOMMUNITY

ENVIRONMENTENVIRONMENT

HUMAN RIGHTSPublica Affairs

Environental

Human Resources

Procurement

Comptrollers

VOLUNTARYVOLUNTARY PPLS/CSBPPPLS/CSBP

ISO 14001ISO 14001

SEATSEAT

SA 8000SA 8000

OSHAS 18001OSHAS 18001

Supervision COMMUNICATION: GRI VERIFICATION

TRANSPARENCY

GLOBAL GLOBAL COMPACTCOMPACT

EITI

3.2. The Cerrejón pilot: overview 3.2. The Cerrejón pilot: overview

Guajira region: historical smuggling & contraband corridor, Wayuu indigenous communities, border with Venezuela.

Some guerrilla and paramilitary presence/attacks to infrastructure.

Concerned with conflict and the potential impacts in the region where it operates, Cerrejón started a Human Rights program

3.2. The Cerrejón Pilot: preliminary lessons3.2. The Cerrejón Pilot: preliminary lessons

CSBP has the potential to change corporate culture:

If transmitted in a language that employees/engineers can understand: FIP and IA have had to adapt original manual to make it more user friendly and resort to direct training

If mainstreamed in corporate policy: Cerrejón integrated CSBP in SIO

If well recieved by key employees: staff may react in a defensive manner

If constant top management encouragement is present: initiative approved by company CEO

3.2 Key preliminary lessons of the processA. NGO’s are NOT an enemy.

B. Adopt and follow intenational best practices:• Voluntary Principles

• Global Compact.

• EITI.

• CSBP

C. Top/down, bottom/up• Management leadership.

• Comprehensive communication and training.

D. Make it part of “the system”.

• Identify a corporate driver (operational integrity).

• Formulate a policy.

• Communicate the policy:

• Part of the induction process.

• Regular refreshers.

3.2. The Cerrejón Pilot: preliminary lessons3.2. The Cerrejón Pilot: preliminary lessons

Other lessons:

CSPB mitigates the risks associated with running an operation in the middle of an armed conflict and it is a palpable effort to enhance community well-being.

Furthermore, since private and public security forces assist in Cerrejón’s security, it is important that their behaviour is consistent with the promotion of human rights.

This enhances Cerrejón's reputation risk management, reduces litigation and financial risks and preserves the Company's social licence to operate into the future.