g8

examples of damaging corporate practices from g8 multinational corporations

friends of the earth international briefing

Group of Eight (G8) countries are home to most of the world's multinational corporations.

World leaders meeting at the G8 Summit (June 1-3 in Evian, France) have a special responsibility to address the countless conflicts and impacts associated with damaging corporate behaviour.

Through their lobbying of rich governments and influence over the International Monetary Fund, the World Bank, the World Trade Organisation and other institutions, multinational corporations wield immense power and influence over the global economy and are driving the world away from social and environmental sustainability.

The plethora of corporate voluntary initiatives has clearly failed to deliver responsible corporate behaviour. Last year the United Nations Environment Programme concluded, after 22 industry sectors reported on their efforts to achieve sustainability over the previous 10 years, that a few corporations had embraced sustainability, but for the 'majority' it was 'business as usual'.

Around the world, communities affected by corporate activities continue to have no access to transparent decision making, participation in decisions and means of redress. Friends of the Earth International is demanding governments take action to ensure multinationals can be held to account for their irresponsible activities through the legal empowerment of citizens and communities. see press release

what is the g8 (not) doing ?

The G8 promised to put the role of multinational corporations in the global economy on this year's agenda. But already, as revealed by Friends of the Earth International, French plans for a 'Charter of Principles for Responsible Market Economies' have been rejected by other G8 countries.{1}

The G8 governments are in disarray, because they have no strategy beyond encouraging more toothless voluntary initiatives and abdicating their responsibilities to protect communities to 'the market'. Given only a tiny fraction of multinational corporations in G8 countries operate ethically, this market-led strategy will continue to fail.

Friends of the Earth International also revealed a row between the G8 countries over liability rules for multinationals {2}. The present absurd liability regime for oil spills will result, for example, in paying just €150m for the Prestige Oil spill - an event that has cost the Spanish taxpayer and local economy €1bn and has also affected communities and the environment along the Galician coastline. Some G8 countries were proposing reform, but Japan objected.

case studies

Examples of Damaging Corporate Practices from G8 Multinational Corporations*

canada

Multinational: Manhattan Minerals
Victims: Peruvian communities

The residents of Tambogrande, Peru continue to battle against Canadian Mining company Manhattan Minerals over its plans to develop a US$405 million gold and copper mine in their community.

Manhattan Minerals claims the mine will bring much needed revenue and jobs to the region. But Peruvians are all too familiar with the devastation mineral mining wreaks on the environment while failing to improve their livelihoods, especially for the communities affected most by mining.

The residents are concerned that the mine will divert water away from agricultural production and spoil the region's environment. Tambogrande is a fertile valley, whose mangoes and limes account for 40 per cent of Peru's total production. The mine's construction would also force approximately 1,800 families to relocate to make room for the one-kilometre long open pit mine that will destroy the heart of their community.

In June 2002, 99 percent of voters gave a resounding 'No' to the mine's creation in an informal referendum. Manhattan Minerals claims the vote was flawed, because 27 per cent of eligible voters did not vote.

Despite the community's unrelenting and overwhelming objection to the mine's creation, Manhattan Minerals is still pressing forward. One company official speculated in May 2003 that it expects the mine to be online in 2004, even though Peru's state environmental agency recently made more than 100 preliminary objections to the Environmental Impact Study, casting further doubt on the wisdom of the project.

france

Multinational: Suez/Ondeo
Victims: Poorest inhabitants of Manila and State of Philippines

In 1997, the privatization of Metro Manila's waterworks and sewerage system was the largest water privatization project in the world, affecting a population of 10 million individuals or around 2 million households. The privatization was pushed by the World Bank and 60 per cent of the network awarded to MAYNILAD Water Services Inc., owned by a prominent Filipino business clan, the Lopez family and French multinational Suez Lyonnaise de Eaux, now known as ONDEO.

The Concession Agreement was amended in October 2001, after heavy lobbying by Maynilad-Ondeo and collusion with key officials of the Regulatory Office. The Amendment authorized a series of price increases to cover foreign exchange losses of Maynilad-Ondeo following the Asian financial crisis of 1997-98, which resulted in the devaluation of the Philippine peso by 100 per cent to the American dollar. The Amendment also authorized the lowering of expansion targets, relax performance targets, including NRW targets.

The basic price of water in Maynilad-Ondeo areas is now 19.92 pesos per cubic meter - an increase of 500 per cent from 1997. Plus extra charges to cover forex losses: 8.28 pesos per cubic meter. An average family consuming about 20 cubic meters per month pays about 600 pesos a month, of which 40 per cent is for the extra charges, not for the water they actually consumed. A single-income household in a Maynilad-Ondeo area earning 6,000 pesos a month or about $120 US (a generous estimate) will therefore spend 10 per cent of its income on water costs.

In mid-2002, Maynilad-Ondeo petitioned for a 100 per cent increase in water rates and asked for government guarantees on its loans. It has not paid concession fees since April 2001 and now owes the MWSS over 5.5 billion pesos; it also wanted to defer further payment until 2007. When such demands were rejected by the MWSS and the Regulatory Office, it terminated its contract in December 2002. It then filed an arbitration case before the International Appeals Panel seeking 19 billion pesos in compensation from the Philippine government which it blames for its failures. (text by Bantay Tubig network)

germany

Multinational: Bayer Group
Victims: Farm workers in developing countries

The German multinational Bayer Group has operations around the world with global sales of approximately $30bn. Bayer is the third largest producer of herbicides and the largest producer of insecticides.

Despite promises to the contrary, Bayer is still selling pesticides rated by the World Health Organisation (WHO) as 'extremely' or 'highly' hazardous. The WHO says developing countries spend $3bn a year on pesticides, a third of which 'do not meet internationally accepted standards'. Many of the pesticides have never been sufficiently studied for their effects on human health. The WHO also reports three million acute pesticide poisonings each year and 220,000 deaths - an astounding 99 per cent of them in developing countries.

Most of the toxic substances are sold in developing countries where protection measures are low and justice difficult to obtain for farm workers that cannot read the foreign language labels. Some products manufactured by Bayer are banned in Germany, such as the pesticide 'Methyl-Parathion', which was linked to the deaths of 24 children in a remote village in Peru three years ago. Despite court rulings and expert commission reports, Bayer still refuses to accept liability. The pesticide is still being dumped elsewhere in the world, like many other old, cheap and profitable products that are difficult to sell in developed countries. Bayer claims that it is the responsibility of pesticide users to take precautions, but this is not so easy when you are illiterate, and work as cheap labour on a cash crop farm. Especially as Bayer often markets its pesticides in the South as 'medicine for plants'.

Instead of reforming its business practice, Bayer has heavily lobbied against the European Union's (EU) chemicals policy and legislation that would demand close examination of toxic substances that have never been adequately studied for their effects on human health.

italy

Multinational: ENI-AGIP
Victims: Communities in Ecuador, Azerbaijan, Nigeria and Southern Italy

Italian airwaves and newspapers have been bombarded by ENI-AGIP advertising campaigns that present a reassuring image of corporate social responsibility. The company pays heavily to depict itself in the rosiest terms as an innovative and concerned company that cares about its social and environmental impacts. However, in the places where ENI-AGIP operates, environmental organisations and local communities tell a different story.

In Ecuador, ENI-AGIP is involved in an oil pipeline project crossing primary forests and fragile ecosystems, depriving local communities of their resources and livelihood. The design of the pipeline violates the World Bank's environmental and social guidelines, as demonstrated by the authoritative report written by the World Bank expert, Robert Goodland.

In Azerbaijan, Georgia and Turkey, it is part of a pipeline project that non-governmental organisations (NGOs) contend is in breach of the OECD Guidelines for Multinational Enterprises. Formal complaints have been filed with the British, French, German, Italian, and U.S. governments charging the ENI-AGIP and its consortium partners have circumvented social, labour and environmental legislation by unduly influencing the regulatory framework for the project. The oil consortium has also failed to adequately consult with project-affected communities.

In Nigeria, ENI-AGIP participates in a gas project that local minority ethnic groups oppose. Local observers accuse ENI-AGIP of exacerbating ethnic conflicts and repression in the region. Specific allegations have even involved AGIP security staff.

In Southern Italy, ENI-AGIP's oil exploration and drilling in Val d'Agri (Basilicata) is putting the local communities and environment at risk, as demonstrated by a recent oil spill in Viggiano and by the difficulties the local communities have encountered by trying to establish a park and nature reserves in the area.

russia

Multinational: Alfa Group
Victims: Communities and habitats on the Galician coastline; Spanish taxpayers

The Russian conglomerate Alfa Group owns a company called Crown Resources, which is registered in Zug, Switzerland, but has its biggest office in London and is mostly directed by Britons and Russians.

In 2002, Crown Resources chartered a ship called the Prestige to carry its oil cargo to the Far East. As the Prestige passed Spain, it sank spilling oil along the coast of Galicia. The rich fisheries of the Galician coast and coastal communities are now under threat. The Spanish government estimates the spill has cost it €1bn.

The Prestige was an old, single-hulled tanker, flying a flag of convenience and clearly not up to a standard necessary for carrying such a dangerous cargo. But to Crown Resources, it was good enough.

The international fund that pays out to victims of such disasters has recently indicated it will cover liability of no more than $180m - a tiny fraction of the damage caused. Crown Resources is required to contribute none of this. Multinationals such as Crown Resources are able to get away with using low standard shipping, because they can escape liability. The company is simply not accountable to the people like the Galician fishers affected by its negligence. The Japanese environment minister objected to a G8 proposal to reform the liability regime at the G8 environment minister's' meeting in April.

united kingdom

Multinational: Shell Oil Company
Victims: Communities in Nigeria, Philippines and the U.S.

Shell is associated with controversies around the world.

Communities in Nigeria are attempting to secure justice in U.S. courts for Shell's activities in the Niger Delta under the Alien Torts Claims Act (ATCA), a law that permits victims of international human rights abuses to sue in U.S. courts. Shell executive Phil Watts, as chair of the International Chamber of Commerce-UK, is head of the organisation lobbying to have the ATCA changed, so communities in Nigeria and elsewhere cannot secure justice in American courts.

In the Philippines, Shell's oil and gas depots in the Manilan suburb of Pandacan store 330 million litres of crude oil, diesel and aviation fuel opposite a high school in the heart of the community. Leaks and fires at the depots have resulted in hundreds of residents being hospitalised over the years. Two years ago, the Manila City Council ordered the depots to close. But following negotiations with the council, the depots remain open leaving the community at risk.

In Port Arthur, Texas, Shell's refinery is surrounded by homes, schools and churches in an area known as 'gasoline alley' to locals. The surrounding communities suffer exceptionally high rates of heart disease and respiratory problems. In 2002, Shell reported 56 major accidents, process upsets and fires or explosions at the refinery. This year, one incident resulted in five tons of sulphur dioxide being released with gas flaring and black smoke covering the town for eight hours.

In South Africa, the South African Petroleum Refinery (SAPREF, jointly owned by Shell and BP) is in south Durban, an area that is home to low income black, Indian and mixed-race communities, and where health problems including leukaemia cancer rates are 24 times higher than the national average, and respiratory diseases are 52 per cent of the local school population. The South Africa politicians have been lobbied by Shell to stop government taking legal action against Shell and BP.

united states of america

Multinational: Monsanto Corporation
Victims: Farmers worldwide

American biotechnology, chemical and pesticide giant Monsanto
Corporation has assembled a 75?person legal team with an annual budget of US$10m to enforce its seed patents and licensing agreement. This will prevent farmers from using second generation seeds derived from the company's herbicide-resistant 'Roundup Ready' variety of genetically modified crops.

Monsanto claims it is protecting its intellectual property rights by dispatching full-time investigators to collect crop samples and then hauling farmers into court for alleged patent violations. Farmers feel Monsanto is employing anti-competitive practices and violating anti?trust laws by gaining monopoly control over seed markets. In 2001, the company prevailed in a $1m lawsuit against a Canadian farmer whose crops were contaminated with Monsanto genetically engineered seed.

The aggressive legal stance of Monsanto could have far?reaching and potentially devastating consequences for crop biodiversity and agricultural production worldwide. Farmers around the world, in rich and poor countries alike, could be left with few options but to buy Monsanto's genetically engineered seeds and accompanying herbicides.

G8 governments need to reinforce national controls over mergers and monopolistic behaviour by corporations, like Monsanto, while providing a robust system to prevent the development of monopolies at any scale or over any market, local, national or international. Likewise, communities must be guaranteed rights of access to and control over the resources needed to enjoy a healthy and sustainable life.

Monsanto's practices are of little concern to the pro?biotech Bush administration. Bending to the will of the biotech lobbyists, the administration is challenging the European Union's restrictions on GMO crops at the World Trade Organization. The Bush administration recently blasted European governments and accused them of perpetuating starvation in Africa by objecting to the use of bioengineered crops.

what should be done?

Friends of the Earth International is calling for the governments present at the G8 meeting to take national action and support international action to secure rights for people and rules for big business.

Friends of the Earth International is calling for Rights for People, Rules for Big Business. We are demanding a legally binding international framework that will guarantee communities, citizens and others affected by the damaging practices of multinational corporations the legal right to redress. We made this demand at last year's Johannesburg Earth Summit. While it found a great deal of support amongst civil society and developing country governments, the G8 countries were adamantly opposed.

FRIENDS OF THE EARTH INTERNATIONAL www.foei.org

Briefing footnotes:

*: This briefing does not include a case study from Japan (also a G8 country)

{1} : 'G8 drops plan for business standards, fails developing nations' May 16 release available at : www.foei.org/media/2003/0516.htm {2} : 'Leaked documents reveal G8 Dispute over oil and big business liability' April 24 release available at www.foei.org/media/2003/0424.html