Last month, Canada’s Ethical Funds published a brief called Winning the Social License to Operate.

The focus is on how companies can reduce the risk of local opposition to their extractives operations by making use of the “latest evolving standards” around what is called free, prior and informed consent (FPIC) of indigenous communities.

As the report points out, local opposition to resource extraction has been running high in many areas of the world. Canadian mining and energy companies in particular have run into recent controversies, including in Guatemala, India, and Canada itself.

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There have been at least three interesting developments over the past month in the area of Corporate Social Responsibility (CSR) reporting by companies based in developing countries, or so-called “emerging markets”.

In late January, the Social Investment Research Analyst Network (SIRAN) and KLD launched a report on the state of CSR reporting in these countries, entitled “Sustainability Reporting In Emerging Markets”.

The report, which focused on companies in three sectors in seven countries, was meant not only as a benchmark for the level of corporate disclosure on ESG factors. It was also intended to “create an advocacy campaign to encourage further improvements in sustainability reporting”.

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German footwear producer Adidas has recently begun to disclose its global supplier list publicly.

The company followed a number of other footwear and apparel companies in doing so: in mid-2005, Nike became the first major footwear company to publish a list of all of its suppliers globally on its website, after labor rights groups had pressured the company (and its peers) for several years on this issue. Levi Strauss started publishing its list later that year.

Timberland states in the FAQ section of its website that it releases the names of its supplier factories to “code of conduct specialists and other locally-based NGOs” with which it works. Puma’s website FAQ section says that its list of suppliers is publicly available on the website of the Fair Labor Association (to which Puma provides a link), but after looking on FLA’s site for several minutes, I gave up.

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From within the world of SRI, one gets the impression that a key aspect of global supply chain management is how to uphold and improve labor standards for workers producing the things that you and I use every day.

Human rights groups, labor unions, social investors, international organizations, academics and a number of companies have spent years on this question, and there are now annual conferences devoted entirely to labor rights in supply chain production.

So when I came across a brochure recently for the upcoming Tenth Annual European Supply Chain & Logistics Summit 2008, to be held in Germany in May, I was surprised to find almost no mention of labor standards. I was even more taken aback when I saw that scheduled speakers include company representatives from industries, such as technology and electronics, that have been hit by allegations of supply chain labor violations.

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In September, Burma was on the front pages of global media, the result of the Burmese military junta’s violent crackdown on the peaceful, pro-democracy protests spearheaded by Buddhist monks. Images of soldiers bludgeoning protesters, in one case shooting a Japanese photographer at close range (he later died), held the world’s attention for a number of days.

As of December, the story continued to unfold, mostly without the benefit of front-page coverage, as the media had moved on to other issues. The BBC reported that the UN had confirmed at least 31 deaths in the crackdown.

Later in the month Congress passed a bill aiming to tighten sanctions against Burma. The legislation is meant to close loopholes that allow Burmese gems to be imported through third countries, as well as those that provide the junta access to US banks to launder money in third countries.

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In October, the US Court of Appeals for the Second Circuit ruled that a lawsuit by victims of apartheid in South Africa against 35 US and European companies could proceed.

The ruling reversed the dismissal in 2004 of the case, filed under the Alien Tort Claims Act (ATCA), by the U.S. District Court for the Southern District of New York. Companies involved include BP, Exxon, IBM, Citigroup, General Motors and Ford.

In its decision, the appellate court ruled that the district court had “erred” in ruling that the plaintiffs could not argue under ATCA that the companies had aided and abetted human rights violations by the apartheid government of South Africa.

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An update to Liz Umlas’ July post: Mandatory CSR?

In September 2007, Ethical Corporation noted that Malaysia was also putting laws in place around corporate social responsibility (CSR) (and in September 2006, that country’s stock exchange began requiring public companies to report on CSR-related initiatives). Here is the link to the article in Ethical Corporation.

Two recent articles point to some interesting developments - from some unlikely sources - regarding corporate social responsibility (CSR) and regulation.

In the UK, a report commissioned by Tomorrow’s Company concluded that companies should push for CSR laws. Ethical Performance noted in July that the report says that “while voluntary initiatives are the best way forward, ‘they subsequently need to be translated into national regulation that is then rigorously and uniformly enforced’.” Ethical Performance goes on to emphasize that most of the ten people on the panel that undertook the inquiry were from the business community, not from non-governmental organizations (NGOs).

Also this month, Indonesia passed a law making CSR - broadly understood as the implementation of “environmental and social responsibility programs” - mandatory for companies, apparently becoming the first country to do so. Erin Lyon wrote in CSR Asia Weekly that business opposition to an earlier draft had led to a narrowing of the bill to cover only “companies with an impact on natural resources”.

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Prior to its merger with Chevron in 2001, Texaco was involved in controversial legal proceedings related to its activities in Ecuador between 1969 and 1990. In May 2003, attorneys representing 30,000 indigenous Ecuadorians filed suit against Chevron seeking to collect $1 billion in damages for oil pollution in Ecuadorian forests and rivers 30 years before. The case went to trial in an Ecuadorian court in October 2003, and was pending as of March 2006.

Attorneys for Ecuadorian indigenous peoples appealed a May 2001 decision by a federal judge in New York to dismiss attempts to sue Texaco in U.S. courts. The U.S. courts determined that Ecuador was the appropriate jurisdiction. In August 2002, a U.S. federal appeals court upheld the May 2001 dismissal. Nevertheless, the appeals court ruling allowed that a verdict against the company reached in an Ecuadorian court would be enforced in the U.S. Legal action was originally brought in November 1993 by representatives of Ecuadorian indigenous communities and settlers from eastern Ecuador. The plaintiffs included 100 residents of Ecuador and nearby Peru.

The suit alleged that between 1969 and 1990 the company was responsible for practicing extensive deforestation, depriving local communities of land, contaminating rivers with oil spills and production waste, and polluting the atmosphere by burning off gas. In October 1998, a federal appeals court reinstated the suit against Texaco in a New York federal court after it had been dismissed a first time.

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I just skimmed this report in preparation for the OnValues/Who Cares Wins conference I’m attending this week, which is focusing on emerging market investment.

The report is from Association for Sustainable & Responsible Investment in Asia (ASrIA), and it’s on the lack of disclosure of environmental, social and governance (ESG) factors by Asian companies listing on the Hong Kong Stock Exchange. In addition to being a good overview, the report gives some idea of the proxy ESG indicators one can use when looking at companies that disclose very little information, such as staff turnover, expenditure on pollution control equipment, etc.