Human rights

Commentary

Context Human Rights issues have been prominent within the bank's Ethical Policy since its launch in 1992. Following the most recent Ethical Policy review (2001), the bank pledged support for fairtrade and the Fundamental International Labour Organisation Conventions. It also undertook not to provide financial services to organisations that demonstrate poor performance in the following areas: the Universal Declaration of Human Rights, the transfer of arms to oppressive regimes, corporate responsibility and global trade. CIS' Responsible Shareholding programme states that it will express serious concern to companies that tolerate oppression. This includes the sale or distribution of offensive weapons for the purposes of oppression and inhumane practices and conditions.

Ethical Policy screening - Bank There were 56 instances when bank Business Development Managers referred finance opportunities in connection with Human Rights. In eleven instances (as described below) a conflict was found and the business declined.

Burma - Bank and CIS There are many oppressive regimes across the world; however, Burma presents a combination of circumstances that make a particularly compelling case for action. The democratically elected government has been denied power by a military junta, and the International Labour Organisation (ILO)i has taken the unprecedented step of calling on national governments and private companies to review their relations with Burma, in order to ensure these do not serve to perpetuate or extend the widespread system of forced labour.ii For a number of years, the bank has classified Burma as an oppressive regime, and has declined to provide financial services to it, or any company with a significant presence there. CIS is a founder member of the Institutional Investor Group on Burma (IIGB), which in 2001 issued a statement calling on companies to justify their involvement in Burma in light of the risks that such activity imposes on shareholders.iii During 2002, as part of the IIGB, CIS engaged further with a number of companies with sizeable concerns in Burma; most significantly, Unocal, British American Tobacco (BAT) and Total Fina Elf. In 2003, CIS disposed of its entire shareholding in Unocal. In addition, in 2003 BAT announced its decision to withdraw from the country. Pressure from the UK Government, together with Investor engagement and reputational concern, all contributed to this development. Total Fina Elf remains highly active in Burma and will be the subject of further engagement in 2004.

Access to medicines - CIS CIS chairs, and is a member of, the Pharmaceutical Shareowners Group (PSG). In April 2003, a Best Practice Frameworkiv was launched, which seeks to promote good risk management and disclosure within the pharmaceutical sector in connection with public health crises in emerging markets. Later in the year, CIS was involved in meetings with four companies - AstraZeneca, GlaxoSmithKline, Novartis and Roche. In its dealings with companies, the PSG has taken a 'comply or explain' approach. It has requested that companies: extend preferential pricing; increase R&D on developing country diseases; improve reporting on lobbying and political donations; and justify patent enforcement. An analysis of progress will be published by the PSG in summer 2004. This will detail areas of strength and weakness, and CIS will consider and act on findings.

Extractive Industries Transparency Initiative (EITI) - CIS The UK Government launched the EITIv in 2002. This followed the launch of the Publish What You Pay (PWYP) campaign in June 2002 vi, which called for stock market and international accounting rules to require oil, gas and mining companies to disclose their net payments to governments for resource access on a country-by-country basis. Legitimate payments such as taxes, royalties and signature bonuses, can, through their large size and confidential nature, be open to misuse, fuelling corruption, poverty and conflict in developing countries. This, in turn, creates unstable and high-cost operating environments for multinational companies. The World Bank has identified corruption as the single greatest obstacle to economic and social development in developing countries. In May 2003, CIS was one of ten UK, Dutch and German investors to issue a statementvii calling on extractive companies to play an active role in the UK Government's EITI and to be more transparent about the payments they make to governments. The initiative has since grown and now represents some $7 trillion of support. During late 2002 and 2003, CIS met with four extractive companies, Anglo American, ChevronTexaco, Rio Tinto and Shell, all of whom have adopted the EITI Statement of Principles and Agreed Actions. Worryingly, there is evidence to suggest that some signatories have lobbied against EITI principles in private, whilst supporting them in public. Future engagement activity in this area will endeavour to guard against this.

Tailored ethical products In May 2003, a bank branded generic affinity card was launched to support the Medical Foundation for the Victims of Torture. A range of Christian Aid Visa credit cards were also launched.

Influence and action

Conflict Diamonds - Bank Illicit trade in diamonds from conflict zones has fuelled many conflicts and civil wars in Africa. After years of campaigning, human rights and development groups have persuaded the diamond industry to establish the Kimberley Process, which seeks to identify and curtail the trade in 'conflict' diamonds. The bank launched a Conflict Diamonds Campaign in September 2003,viii in partnership with Amnesty International, ActionAid and Global Witness. Via a 'Diamond Pledge', public support was sought for impartial monitoring of the Kimberley Process. Some 7,000 individuals registered their support. In October, a partial success was achieved when the industry announced a volunteer system for independent review. The bank will continue to raise awareness in 2004 and secure further pledges, in an effort to progress regular, impartial monitoring of all participants.

Cluster Munitions - Bank Throughout 2002, the bank campaigned with Landmine Action to secure an international agreement, which would make users of cluster bombs and other explosive remnants of war responsible for clearance, once a conflict was ended.ix In 2003, the bank donated a further £25,000 to Landmine Action to fund a temporary campaign/media relations position, enabling Landmine Action to continue to bring pressure to bear on the UK Government, and ensure that the issue of explosive remnants of war remained in the media spotlight. In November 2003, a new protocol on explosive remnants of war was agreed by 92 States party to the convention on coventional weapons.

i www.ilo.org
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ii www.burmacampaign.org.uk/pressreleases/boycott_triumph.html
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iii www.cfs.co.uk/sustainability2003/burma_statement/
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iv www.pharmaproject.org
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v www.dfid.gov.uk
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vi www.publishwhatyoupay.org
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vii www.cfs.co.uk//sustainability2003/extractives_statement/
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viii www.co-operativebank.co.uk/ethics/ethicalpolicy_diamonds.html
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ix www.co-operativebank.co.uk/ethics/partnership2002/pr/special_projects.html
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