A SEED JAPAN fact sheet
Aug. 23, 2002

Success of WSSD depends on the establishment of the legally binding international rules for corporate accountability.

Background of corporate accountability

It was in the 1970s that the activities of Transnational Corporations (TNCs) came into question. In 1975, the United Nations Centre on Transnational Corporations (UNCTC) was established to monitor the activities of TNCs. In 1976, the OECD Guidelines for Multilateral Enterprises were made, but these were not legally binding.

At the United Nations Conference on Environment and Development (UNCED) a decade ago, negotiations to establish a set of legally binding international rules for corporate accountability and liability failed. In 1993, the UNCTC, which had been monitoring the activities of TNCs was dissolved as a result of financial troubles and structural reform at UN.

During the last decade, TNCs have increasingly expanded their influence. We can see their influence at international conferences on both environmental issues, such as conferences on the United Nations Framework Convention on Climate Change (UNFCCC) or the Convention on Biological Diversity (CBD), and on economic issues, such as the meetings of the World Trade Organization (WTO).

Necessity to establish the legally binding international rules

At present, there are several international rules or guidelines for the activities of TNCs. However, these are voluntary initiatives without the power to sanction violations. Because of the absence of compulsory rules, TNCs are continuing their irresponsible activities around the world. In the lead up to the WSSD, many NGOs are now demanding the legally binding international rules for corporate accountability be developed in order to improve this situation.

In order to achieve this objective, national governments must agree to the rules for the activities of TNCs, establish an international monitoring organization, and lay down sanctions against violations. If there are the international rules, which are fair and transparent, we citizens can get information about cooperate activities, and can make the right decisions in shopping, finding jobs, and saving or investing our money.

What happened during PrepComs

In January 2002, at PrepCom II, the United States, Canada, Mexico and the Republic of Korea demanded that the statement concerning corporate accountability in the consensus document be deleted.

However, on 9 May 2002, "the Chairman's text for negotiation*," provided by Chairperson Salim for PrepCom 4, explicitly discussed the need to "promote corporate responsibility and accountability", which shows progress on this issue. However, it calls not for legally binding rules but for "the exchange of good practices, including through public/private partnerships and voluntary initiatives [building, inter alia, on the United Nations Global Compact and the Organization for Economic Cooperation and Development (OECD) guidelines for multilateral enterprises, as appropriate], as well as by using tools such as environmental management accounting and environmental reporting."

At PrepCom 4, the governments of the developing countries demanded a legally binding international framework for corporate accountability. However, the governments of the developed countries strongly opposed this. As a result, no agreement on the establishment of the framework could be reached at PrepCom4.

Most NGOs are calling for the legally binding international rules rather than voluntary initiatives. At a multi-stakeholder dialogue at PrepCom 4, most representatives from NGOs and the groups of women, indigenous people, farmers, and youth insisted upon the need to establish the legally binding international framework for corporate accountability. On the other hand, on March 2002, the chief of Business Action for Sustainable Development (BASD) Lord Holme expressed opposition to the international rules for corporate accountability. He rejected calls from NGOs for such rules to be a main outcome of the WSSD as demands for the global regulation of TNCs**.

We at A SEED JAPAN (Action for Solidarity, Equality, Environment and Development), an international environmental youth NGO, insist that the legally binding international framework/convention for corporate accountability is needed in order to prevent corporate activities from leading to human rights violations and environmental destruction. At the WSSD in Johannesburg, which will be held in August 2002, we call upon national governments to agree to: Launch international processes to establish the legally binding international framework/convention for corporate accountability and liability. We call upon the following to be included in the framework/convention.

1. Establishment of a system in which TNCs are required to issue environmental reports.
2. Re-establishment of an institution to monitor the activities of TNCs under the UN.
3. Imposition of sanctions against TNC's violations of environmental, labor, and social regulations.

For inquiries please call us at

A SEED JAPAN
Rio Minus 10 campaign : Tanabe,Suzuki
5-4-23 shinjuku shinjuku ward Tokyo 160-0022 JAPAN
Tel: +81-3-5366-7484 Fax: +81-3-3341-6030
e-mail: NH4K-TNB@asahi-net.or.jp
URL: http://www.rio-10.org/