KGOU

State Department’s Melike Yetken Explains U.S. Plan For Corporate Responsibility Abroad

Oct 9, 2015

Last year President Obama announced a National Action Plan that would follow United Nations guidelines to promote responsible business practices and human rights around the world.

Melike Yetken is the Senior Advisor on Corporate Responsibility for the Bureau of Economic and Business Affairs at the U.S. Department of State. She told KGOU’s World Views the National Action Plan evolved from a September 2014 summit with African leaders, where many of them wanted to find ways to bring U.S. businesses to the continent.

“They wanted the innovation, the training, the skillsets, the jobs it creates,” Yetkin said. “They asked what they can do with their governments, what they can do as African companies to attract that business, and we realized this is absolutely not exclusive to Africa. This is a global issue.”

Yetkin says it’s no secret ethical business has been a problem in the past, especially in places like Bangladesh where a massive building collapse raised questions about safety issues and regulations in 2013. Problems like these and the eagerness of other countries to host U.S. companies spurred the U.S. to encourage transparency in offshore business, proper acquisition of land, better environmental standards and ethical treatment of women.

“We see this in large part in extractive industries abroad with local communities having concerns about operations or lack of information or such and making sure that those types of rights and rule of law are upheld,” Yetkin said.

According to Yetken, the key is a partnership between government, business, and civil society. She says companies should encourage communication about business practices, culture and the local community.

To do that, the U.S. requires reports about companies’ work with human rights and their own responsible business practices. An even stronger accountability measure is the U.S. Foreign Corrupt Practices Act of 1977, which makes bribery to foreign officials unlawful.

These requirements along with voluntary actions are meant to encourage and sustain responsible business practices.

“Governments and companies are both trying to do their best to squash the corruption that's happening around the world and do so in a responsible way,” Yetken said. “It's very complicated and human error sometimes conquers.”

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FULL TRANSCRIPT

GRILLOT: Melike Yetken, welcome to World Views.

YETKEN: Thank you. Pleasure to be here.

GRILLOT: Well, Melike you've done some very interesting work on a national action plan on responsible business focusing on corporate responsibility. So we're going to get into that. Can you tell us a little bit, first, just kind of what we mean by corporate responsibility or responsible business. What does responsibility mean?

YETKEN: Well, coming from the United States government, we're looking to partner with U.S. companies and how they promote, encourage and sustain responsible investment, responsible business practices abroad. So, that means looking clearly within their supply chains at their labor practices, how they employ and promote human rights within their complex supply chains, looking at transparency, how they report on what they do, policies and procedures they have in place and how they work with local communities. Our emphasis right now, as I'm from the State Department, is looking at corporate responsibility and overseas implementations of high standards of ethical sourcing.

GRILLOT: So, when you talk about labor practices and human rights - so, obviously treatment of one's workers, hiring practices, making sure that they're working reasonable hours of the day, that their working standards are up to par, but what, beyond labor, in terms of human rights respect, where would you focus in terms of corporate responsibility on human rights?

YETKEN: In terms of human rights we're looking at things like violence against women, making sure women are not unlawfully targeted, looking at making sure that protests that happen are free and fair if there are protests outside of operations. We see this in large part in extractive industries abroad with local communities having concerns about operations or lack of information or such and making sure that those type of rights and rule of law are upheld. 

GRILLOT: What about the responsible use of land? Is that part of your action plan as well in terms of the environmental consequences of business practices?

YETKEN: So we're looking at environmental sustainability as part of the national action plan and also a key issue is land tenure and land acquisition, so how companies are acquiring the land that they're using when operating abroad and ensuring that large populations and large communities are not being driven off their land so a company can build its factory or build its pipeline or what have you, and working with local communities, working with local governments, working with the federal government that's in place are all part of the outreach and the engagement and learning upon what we've gone through in our own country in these lands.

GRILLOT: I assume that there's also some sort of discussion about business practice regarding their relationships with governments in terms of making sure that there aren't corrupt practices with governments and with other businesses abroad that they're not engaging in corruptive practices or kickback scandals and those types of things, that they're transparent in what they do. That's one of the areas in the corporate world, in the private sector it's not as transparent as in the government sector or public sector. So, how can you manage that as well within this corporate responsibility framework?

YETKEN: So transparency is a key issue that the United States government is supportive of. It's a key national interest. It's something that we, as a government, try and pursue at all times and it's certainly a key value and priority that we encourage responsible U.S. businesses and international businesses to undertake when they're operating abroad. That takes a lot of different approaches that looks different in different places. For example, it could be writing a report on corporate responsibility and all the type of things you do as a company. It could be working with local communities and local stakeholders. It could be making sure you work with the U.S. federal government as we work with the host government on their anti-bribery laws and on corruption issues. All of that is related. Corruption is a huge international issue. We have a number of international conventions that are required for governments to create an enabling environment and to foster and protect against corruption, but it's complicated and it's really tough and there's no one-size-fits-all approach to this. Governments and companies are both trying to do their best to squash the corruption that's happening around the world and do so in a responsible way. It's very complicated and human error sometimes conquers.

GRILLOT: Well, I'm going to get to the subject of compliance and enforceability and accountability in a minute, but before that I'd like to ask about the origins of this National Action Plan. You've been working on it for some time, but where did it come from? Who all of a sudden decided we need to have a national plan to enhance corporate responsibility and responsible business practices.

YETKEN: At the end of September President Obama hosted an event around the United Nations General Assembly high level weeks. It's when all of the heads of state from around the world get together in New York and take over Midtown Manhattan. And he hosted an event on transparency where he launched the intention of the United States government to write a national action plan on responsible business practices and it's to look at how do we as a government to encourage responsible practices overseas, what do we as a government do, what commitments do we make, what have we done, what type of things are we striving to do and then what do we expect of companies operating overseas and how do we partner with them to spotlight their good practices. I was at the National Security Council at the White House for the past year working on the President's U.S. - Africa Leaders Summit, and something we heard from businesses that we talked to, African businesses all the time was they wanted more U.S. businesses to come to Africa. They wanted the innovation, the training, the skillsets, the jobs it creates. They asked what they can do with their governments, what they can do as African companies to attract that business, and we realized this is absolutely not exclusive to Africa. This is a global issue. So the President then announced our intention to write this global national action plan - what we as a government are doing, how we're touting and supporting our businesses, and what a proper enabling environment looks like in a country where we're operating, where a business is operating. Part of that is government responsibility, government to government. Part of that is business to business, and part of it is multi-stakeholder where you have governments and business in an active civil society in a country discussing the challenges and collectively building solutions to that.

GRILLOT: Well I was going to ask about civil society. I'm glad you raised that, that there must be some sort of, for lack of a better term, pressure or at least involvement of civil society pressure coming from civil society as individuals see, perhaps, irresponsible practices that don't benefit local communities or that are not protecting labor practices. I would imagine there has to be a pretty significant role for civil society to play in this area.

YETKEN: Absolutely and I would say international civil society and local civil society are key in the endeavor, in operating responsibly, in working with local communities, in talking about cultural issues on the ground. They have strong roots in the country itself or in the region itself and it behooves both government and business to help support an active civil society in the country and there's many examples of public-private partnerships which have started all over the world in large part through our government where you have three pillars: government, business and civil society. And those are all equal in partnership and equal in importance. And certainly, in terms of corporate responsibility and discussions around how companies operate and what that looks like. Civil society and governments are right there in partnership. 
GRILLOT:  I want to get back to that partnership and how it works in terms of accountability in a minute, but you mentioned Africa, work that you've done in Africa. You said it's a global issue obviously, responsible business practices, but are there some parts of the world where this is most problematic? Where you see more cases of these types of things happening? Or even beyond region, are there certain industries where you find these types of practices being most problematic? You mentioned earlier in the conversation extractive businesses for example. Can you tell that this is kind of across the board we have this issue, or are there certain places or industries where it's most of an issue?

YETKEN: Operating abroad is tough no matter what. Obviously there are different circumstances in different regions, different countries that provide more complex environments. Some of those will be environmental. Some of those will be the society, culture. Some of them will be climate. Some are other things. So, I think extractive industries is one of those where it's a really tough area. You can't choose where you're going to extract oil or gas. You go where it exists. Versus textile and garment, you can choose where a factory goes. You can choose the environment that you're going into. Each of those provides different opportunities. In the news over the past few years we've seen, obviously there's always extractive industries issues, concerns, local community engagement. Over the past few years in Bangladesh we've seen a lot in the news with U.S. textile and garment companies: your Walmart, your Gaps, your Target etc. - with fires in factories in Bangladesh because of poor labor standards. There are problems all over the place. It's a difficult area, but there are some industries which have it tougher.
GRILLOT: So when we're talking about this public - private relationship and the role that civil society and the corporate world and government have to play and that they play those roles together often in order to address these issues. This leads me to think about accountability and how these three sectors really do have to play a role in terms of accountability, but, at the same time, governments are really the ones that are going to have to hold these businesses responsible. Now from what I understand, this national action plan and these types of activities are voluntary in nature and that businesses - governments create the frameworks and civil society puts the pressure on and then businesses decide whether it's in their interest, I presume, financially and otherwise to comply or at least to change their practices, promote good standards. But are they ever really held accountable? How is it that you can move from voluntary action you must comply with these rules? Are we in a place, or will we always be in a place where corporate entities have to volunteer to behave responsibly? 

YETKEN: As the U.S. government we have a number of levers at our disposal, a number of opportunities of how we can engage. You have the stick and the carrot and there's a whole spectrum in between, and we've looked at many of these opportunities depending on the issues. For example, the national action plan for responsible business conduct is going to be focusing on international guidance to companies, and what we as a U.S. government commit to and what we've done in the past and then what we expect of companies. And it will likely comment on some of the stronger levers that we have. For example, in 2012 when Burma had free and fair elections that were deemed free and fair, and the international community saw a number of political prisoners released, the United States government had a decision to make at that time about easing sanctions that we'd had on the books for a long time. And, even though there were free and fair elections, we wanted to make sure that businesses went in and knew the type of environment they were going back into. And there were still significant human rights concerns on the ground, labor concerns and land acquisition and land tender issues. And so what we were able to do there is creatively devise a system of reporting requirements connected to the sanctions received. So companies can go back in. They can operate. They can seek new investment in this area, but they had to report. They had to publicly provide a report which describes the due diligence they've done in human rights, which describes the work they've done with local community, and it didn't say specifically what we required of their due diligence, but it made the opportunity for every company - your electronics company is very different than your extractives company than your clothing company. And they were all able to provide public reports so that Burmese citizens are aware of what U.S. companies are doing and can talk to their government and can talk to the companies and all the while those are publically available. It gets back to the transparency issue we were speaking about earlier. So that's one area of a requirement that companies have to comply with in order to get a general license to operate in that country, but has the flexibility that each company can decide for itself - A. whether they go back into that environment, they choose that, and B. if they do they provide this report. So I think that's a creative example of the type of things that we're looking at in terms of accountability. Now there are stronger regimes out there. The foreign practices act exists, a federal law prohibiting the payment of bribes to government officials. That has very strong repercussions of it, and businesses take it extremely seriously and it's completely changed the direction of addressing anti-bribery and corruption internationally. And then there's a number of voluntary standards. 

GRILLOT: Well Melike, thank you so much for being here today and sharing your insight about this important issue, something we don't regularly think about. So thank you. 

YETKEN: Thank you very much. This was terrific. 

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