Magna Carta: Magna Negotium

magna carta

800 years after the signing of the Magna Carta (“the great charter”) in the water meadows of Runnymede, England, what would we include in a modern day version: businesses perhaps? Business, and other powerful non-state actors, risk being overlooked in the development of new international law despite recent efforts. This commentary argues that whilst working towards the next Magna Carta moment, we are missing some significant opportunities along the way.

As we approach May 2015, there will be increasing focus on what the Magna Carta meant in 1215. To misquote the Monty Python team: “What has the Magna Carta ever done for us?” I will leave it to historians to answer this question. Perhaps the elevator version is that it was a historic settlement between the English barons and their King (John), not honoured at the time but which has become symbolic for the rights of individuals more generally – largely because it was repeatedly evoked by reformers between the seventeenth and nineteenth centuries as “fundamental law”. This is nowhere more the case than in the 13 former English colonies in North America and as an inspiration for the US Constitution itself. Some comfort perhaps for the Eton educated British Prime Minister, David Cameron, who when asked on the David Letterman TV show in September 2012 to translate the words from Latin in English – failed, as many of us Brits would, to do so.

But perhaps the more important question is what would a modern fundamental law such as the Magna Carta include today, or is it already happening? In some ways we know the answer, as the 1948 Universal Declaration of Human Rights (and all that followed) delineates that which the Magna Carta did not – the rights of all peoples against the power of every state. But would we stop there? It is often said that there are others in society that have as much power as some governments and therefore they too need to be constrained in the same way as the barons did to King John. We might consider powerful non-state actors such as religious groups, de-facto sub-national governments, powerful NGOs or, of course, business enterprises. And here I don’t just mean accountability under existing national laws, I mean international standards that strengthen national legal and non-legal accountability, but also hold non-state actors to account when their own states cannot or will not. This is perhaps not what libertarians in the US have in mind when they evoke the Magna Carta, but from a social contract perspective the question needs to be asked and answered.

Lets take one of these powerful non-state actors: business. It is often stated that big businesses are more powerful than many governments – that business represents over half of the world’s top 100 economies outstripping the GDP of many states. This sounds impressive and in some ways it is true: some businesses can leverage significant capital, large companies can move markets and strategic business sectors (such as commodities, ICT, finance or labour providers) can indeed impact – positively or negatively – on the ability of governments to provide for the basic needs of their populations.

But it is easy to overstate the power of large business. Unlike in the days of the East India Trading Company, large companies today do not have unbridled power. They do not have their own armies and cannot easily annex territory or assets by force without the connivance of a government. Publicly listed companies are constrained by shareholders and markets. Private companies are more independent but are rarely of the size and scale needed to rank in the top 100 economies. And state-owned companies, such as many of the titans of China or India, are exactly that – controlled at least in part by governmental interests. No one can seriously maintain that the governments of the USA, China or Russia are run by big business – influenced, yes, but sovereign power is still firmly in place.

But the events of the past thirty years, and in particular following the financial crisis within OECD member states, suggests that big business does have a case to answer at least in part, and we might well expect CEOs to be at the table in Runnymede to account for their power. The Rana Plaza factory collapse in Bangladesh two years ago was one such moment, killing over 1,100, but so too was the Bhopal disaster in India thirty years ago and scores of others in between. Each time big business is asked to account for its actions, or its negligence, and then things move on, much as they were before. If the recent allegations against HSBC relating to tax avoidance are found to be true, then we can have little faith in the maxim that “we are all in it together” when it comes to austerity.

Lets be clear, there are many good CEOs out there, and many large companies trying to use their leverage for the good of society, but there also remain systemic problems including those to do with unaccountable power. It is an unavoidable fact that transnational companies have certain advantages due to their supra-national scale, when it comes to transfer pricing between markets or moving production or supply chains between low-cost sources – where perhaps social and environmental protections are not what they should be. Some of these advantages are borderline anti-competitive and privilege large companies over small. But, of course, small companies too can behave recklessly if they choose to do so with bad consequences – think about the power of ICT security providers (note the recent UK Government ruling on “Gamma International” in Bahrain), cut throat recruitment agencies worldwide or rogue mining exploration companies in unstable countries as examples.

At the moment, Governments are divided as to how best approach the thorny issue of extraterritoriality and business – the extent to which companies should be accountable in the legal systems of “home countries” for their actions across borders and particularly in “weak governance” zones around the world. For some, the central issue is impunity – how large companies can sometimes shift assets and money across borders to escape a particular national jurisdiction. For other governments, the central issue is the creation of a leveller playing field for all business – so that those companies registered in weaker or more corrupt jurisdictions are also held to the same environmental and social standards as those based in well-regulated markets. And for some other governments, it is more about hegemony and an effort to prise open market share from the existing main players.

It is unlikely that there will ever be special rules for large companies, but it is likely that we will see more and more international norms for business more generally, particularly those in high-risk sectors or operating in fragile states. It will not be so much “Magna Negotium” as “Omnibus Negotiis” – all businesses – and in particular those businesses that present the greatest potential risk to human welfare. And there will be no single “Magna Carta” moment – instead there are various Runnymede water meadows at which the role of non-state actors needs to be closely examined. Lets just take two examples.

The UK’s Modern Day Slavery Bill will hopefully gain parliamentary assent in March 2015 before Westminster closes for the forthcoming election. Given the undeniable importance of the market and supply chains in perpetuating many aspects of modern-day slavery it seems inconceivable that the original version of the Bill was first introduced into the House of Commons with no reference to business at all. The disclosure requirement that is now in the Bill is the result of committee work in Parliament, and not directly the UK Government itself – the first to develop a national action plan on business and human rights!

And, beyond the UK, the 2014 Protocol to the International Labour Organization’s Convention on Forced Labour, the first since 1930, was agreed by all but one government with only a very weak reference to business due diligence (a reference that some governments and business associations resisted). It will now be up to individual governments to interpret what the business due diligence requirement should actually look like in their domestic law, if they do so at all.

These two examples were important Runnymede moments where businesses were almost missing conceptually and where governments and much civil society seemed unwilling or unable to bring direct corporate responsibility into the tent.

So, for all of those that wait for the next Magna Carta, the time will come – such as in 1215 or 1948 – but things will need to get worse before power will shift in such fundamental terms. In the meantime, do not miss all the other water meadows along the way.

Has “fracking” lost its social licence?

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As we approach the next general election, will the UK ever develop an impartial national debate on hydraulic fracturing?

The first time I came across hydraulic fracturing (or “fracking”) was when interviewing geologists at test sites in the north of South Africa and Botswana seven years ago. I was looking at how such technologies might affect fragile populations where water is already scarce and where nomadic communities, as well as farmers, rely on shallow aquifers for their livelihoods, as does wildlife for its survival. I came away with a range of questions and have followed the debate since. Frequent reference was made then to the “fracking debate” in the USA but little did I know we also had hydraulic fracturing in the UK even then and had done so for decades, albeit mainly off-shore.

Now, several years later, we do have a national debate in the UK but it is far from being impartial or arriving at any consensus. It seems rooted in mistrust, conflicting information and entrenched positions: like the debate on Genetically-Modified Crops twenty years ago. Why did our policy-makers allow this to happen again?

There are very good reasons, even at a time of falling oil and gas prices, why the UK should be more self-sufficient in its energy supply. Issues surrounding pipelines from Russia receive a lot of publicity as do human rights in Saudi Arabia. By comparison, much less attention is given to Qatar (one the UK’s major overseas gas suppliers). There are good geo-political reasons, at a time when the North Sea Oil Fields resources are declining – or at least the UK’s bit of them, to look seriously at other sources of UK energy production. There are also very good environmental reasons why we should be shifting away from coal and oil to gas for our power generation in the medium term, whilst also building a solid base of renewables and possibly nuclear energy.

There are good arguments, but have they been heard by the British people? Public opinion polls suggest a low baseline of awareness as to what hydraulic fracturing actually is. The Government’s own research suggests that whilst three quarters of the population have heard about “fracking shale gas” about half of the population do not have an opinion either way about its efficacy, whilst those in opposition represent less than a quarter. Other polls suggest that opposition continues to grow to about 30% of those questioned, rising to 40% if it relates to a local area or up to 70% if in a National Park.

In my book on the “social licence” of activities, I define the concept as having three core definitional elements: legitimacy, trust and consent. The first is notoriously difficult to define but vested interests must be seen as part of it – is the case for fracking objectively made or do some stand to profit more than others. The ownership structure of the companies that hold the exploration licenses is perhaps a surprise to those outside of the industry and can raise concerns over potential or perceived conflicts of interest. There are hundreds of oil and gas exploration companies registered in London and operating across Africa and parts of Asia. It is possibly only those operating in the UK that have received scrutiny. It is not surprising that these companies employ former government officials or former captains of industry – they bring expertise but they also bring access. Cuadrilla, one of the leading UK fracking companies, is chaired by Lord Browne (a man I happen to admire greatly), the former BP boss but also an advisor to Government and there are number of former government ministers connected to the industry. There is of course nothing wrong with this necessarily but the state-energy nexus will need careful explaining to the public for the industry to maintain its legitimacy. It is one thing for BP or Shell to hire former government bods for their global operations, quite another when the drilling is in Sussex or Lancashire it would seem.

When it comes to “trust”, the polling suggests there is a significant way to go and that it is Greenpeace and the Green Party that are currently winning the national debate. And “consent”, well although exploration licenses have been granted by central government, local authorities seem increasingly willing to deny or delay planning permission in the face of local concerns. The protests in Balcombe during 2013 might only be the start of what is to come. All of this seems out of kilter when the real risks are considered. It seems the British people are more than willing to allow those in the Middle East or Africa to face environmental degradation or human rights abuses (such as those in the Niger Delta that have gone on for decades) but much more squeamish about drilling in their own leafy backyard – even if the impacts of which will be incomparably less. This Nimby-ism has rarely been called out (which politician, NGO or business sees it in their interests to do so?) but is clearly a strong component of the UK debate.

It might not be too late for the next UK Government to lead a national debate on the future of our energy supply and the many advantages of domestic energy production. And yes, as much of this as possible should be renewable in the short to medium-term with renewables dominating in the long-term. If there is no need for gas over the medium–term – and I mean really no foreseeable need – then fine, but I have yet to read any compelling evidence of this. Rather, if part of our national strategy is to move from oil and coal to gas over the shorter term – then the UK’s own gas should be part of the mix, surely, and not just that from Qatar and Norway. There are clearly environmental risks associated with fracking in the UK but the impacts of these will be far less than those in drought-prone parts of Africa where British companies are also leading the charge and the British public asks no questions. If the UK wants gas, then why not shoulder some of the risk at home, where it can be better managed and is subject to the full force of British law? We have for decades exported the environmental and human rights impacts of our energy demands.

The next government, likely to be a coalition of some kind, would do well to make Britain’s future energy policy as non-partisan and transparent as possible. Perhaps a multi-stakeholder approach could be developed where government, industry and civil society sit down together to identify and manage the risks of which ever energy sources are exploited here at home. The UK has led on such approaches internationally in relation to revenue transparency in the extractive sectors (the Extractive Industries Transparency Initiative currently chaired by Claire Short and which now has 48 member countries) and also in relation to the use of public and private security forces (the Voluntary Principles on Security and Human Rights which the UK currently chairs). Why not a multi-stakeholder approach relating to energy exploration here at home? This might, just might, ensure that that communities can give informed consent to whatever comes next energy wise.