1. June 2003

2. APPLYING LABOUR STANDARDS IN THE WORKPLACE Labour Standards in Development Finance Conference Washington DC, 18 April 2006

3. Content I. Labour practices versus DFI policies II. Client discomfort/ unease III. Private sector buy-in IV. DFI legal leverage over client

4. > Sector: e.g. plantation sector in Africa - historical background (bonded labour) - current working conditions (H&S, wages, migrant labour) - translation of int´l standards into local practice (labour contracts, PPE) > Country: e.g. China - legal limitations to freedom of association - legal limitations to migrant workers rights > Vulnerable Groups: - migrant workers, seasonal workers - workers in export processing zones I. Labour practices vs DFI policies

5. II. Client Discomfort/ Unease > International HR standards and the local context - translation of international standards into practice - cultural sensitivity/ respect for diversity versus this-is-our-culture excuse > Examples - women in garment sector in Bangladesh - Sikhs in the construction sector in Nigeria - private sector client in Afghanistan · culturally ingrained discrimination practices - Gender Apartheid · client to commit to proactive recruitment of women · client to commit to proactive local (out) sourcing of goods and services · focus on women led business

6. III. Private Sector Buy-In > Greenfield in backwaters of Nigeria - Category A including its Associated Facilities > Main risks - Impact on natural resource base (erosion, water sources) - Community relations (influx management, health impacts) - Labour conditions at Contractors (migratory labour from India) > Sponsor strengths & weaknesses - State-of-the-art industrial equipment - 100% Nigerian owned - No clue about impacts outside plant walls - No clue about contractor management

7. Private Sector Buy-In (cont´d) > Intensive E&S coaching trajectory by lead DFIs - CSR training of top management - Repeated visits before and after contracting/ disbursement - Upgrading EIA with adequate SIA - Creation of E&S unit - Development of ESMS > Local youth went for training visits in Niger Delta! > DFI focus on Social-License-to-Operate > Sponsor volunteers recognition and appreciation - buy-in to social management system, including management of labour risk

8. IV. DFI Legal Leverage over Client > FMO SLD Project - English Law/ New York Law - E&S building blocks > E&S Specialist´s Understanding of Legal Documentation - Default/ material adverse effect - Non-compliance on non-core elements - Conditions Precedent to Disbursement (CPs)

9. DFI Legal Leverage over Client (cont´d) > Nature of Financial Product - Loan, equity - Convertible loan (loan shareholders agreement) - Guarantee (recourse agreement) - Risk participation (willingness of lender) - Project finance (finance doc´s - CTA/ project doc´s - EPC) > Position of DFI in the Deal - % of total product - B-loan behind other DFI - Syndicate (voting mechanism on waiving CPs in Intercreditor Agt) - Lead in environmental and social due diligence

10. DFI Legal Leverage over Client (cont´d) > Legal Instruments critical, but not the end-all and be-all > Alignment of Sponsor vision with that of DFI > Green, yellow and red apples

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