Introducing a Conflict-Senstitive Business Practice: Lessons From Colombia Notre Dame, November, 2006

Table 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 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 CSBP

1.What 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 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 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 process

Occidental Engagement Occidental entered Voluntary Principles 2003 Occidental entered Voluntary Principles issued a Human Rights Policy 2004 issued a Human Rights Policy Risks Assessments required by the policy and by the VPs Risks Assessments required by the policy and by the VPs Stakeholders Analysis Stakeholders Analysis Identification of impacts Identification of impacts Identification of Human Rights Risks Identification of Human Rights Risks Local Economic Impact Local Economic Impact Need for tools and implementation guidelines Need for tools and implementation guidelines

3.1. The Oxy- Ecopetrol pilot: 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  Middle Mag: high intensity armed and social conflict

3.1. The Oxy- Ecopetrol pilot: 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 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 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 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 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 SOCIAL AND ENVIRONMENTAL VALUE ECONOMIC VALUE CHARITY TARGET SOCIALLY IRRESPONSIBLE

Corporate Social Responsibility Policy Corporate Social Responsibility Policy INTERNAL STAKEHOLDERS VALIDATIONCRITICAL AREAS SAFETY LABOR COMMUNITY ENVIRONMENT HUMAN RIGHTS Publica Affairs Environental Human Resources Procurement Comptrollers VOLUNTARY PPLS/CSBP ISO SEAT SA 8000 OSHAS Supervision COMMUNICATION: GRI VERIFICATION TRANSPARENCY GLOBAL COMPACT EITI

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 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 process A. 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 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.