BURMAS SHWE GAS PROJECT AND CORPORATE SOCIAL RESPONSIBILITY (CSR)1 Executive Summary: Burma, re-named Myanmar by the

countrys ruling military junta, is a country where there is a convergence of some of the worlds worst social, political and economic problems. Burma is home to systematic human rights violations and environmental degradation, the worlds longest civil war, severe poverty, poor public health, and a lack of educational opportunities. With a plentiful supply of natural gas, one pipeline to Thailand was completed and is operational, and another to China, the Shwe Gas Project, will be constructed, the money generated from the sale of natural gas further entrenching the ruling military junta, increasing the militarization of the country, and increasing human rights abuses and the destruction of the environment. This paper will briefly explore the meaning of corporate social responsibility and the efficacy of international efforts to control the excesses of transnational corporations. This paper concludes if the Shwe Gas Project is built, that without regime change in Burma, it is likely that the lives of most Burmese citizens will continue to worsen. In the Tenasserim region of Burma, two large multinational oil companies partnered with Burmas military junta, and without an adequate environmental impact assessment (EIA), constructed the Yadana-Yetagun natural gas pipelines in 1996-98. In addition to severe human rights abuses including murder, rape, forced and uncompensated labor and relocation of thousands of local villagers, significant environmental degradation occurred and continues to occur.2 The preconditions for similar human rights violations and environmental degradation currently exist with respect to the proposed Shwe Gas Project to be completed by Daewoo International, a Korean corporation, and its consortium partners.3 The proposed Shwe Gas Project will begin in the Bay of Bengal, which is where the natural gas will be extracted,4 traversing overland to China with no applicable environmental laws or regulations, without any legal protections for the affected citizens, and without regard by Daewoo International and its consortium partners of any sense of social responsibility for their actions.

Corporate social responsibility (CSR) is a concept whereby organizations consider the interests of society and take responsibility for the impact of their activities with respect to the environment and on customers, suppliers, employees, shareholders, communities and other stakeholders, extending beyond any statutory or regulatory requirement whereby organizations voluntarily take further steps to improve the quality of life for employees, their families, the local community and the society at large. See Just Good Business, The Economist, Jan. 15, 2008, available at http://www.economist.com/specialreports/displaystory.cfm?story_id=10491077 (last visited Nov. 16, 2008). 2 See Total Denial Continues, EarthRights International (2003), available at http://www.earthrights.org/files/Reports/TotalDenialCont-2ndEdition.pdf (last visited October 18, 2008). 3 See Supply and Command: Natural Gas in Western Burma Set to Entrench Military Rule, Jul. 2006, available at http://www.shwe.org/media-releases/publications/file/SUPPLYANDCOMMAND.pdf (last visited Nov. 16, 2008); Matthew Smith & Naing Htoo, Another Snake in the Jungle? Shwe Gas Development in Western Burma, Watershed, Vol. II, No.1, 31, 34-36 (July-Oct. 2005); Another Yadana: The Shwe Natural Gas Pipeline Project (BurmaBangladesh-India), EarthRights International (2004), available at http://www.earthrights.org/burmareports/another_yadana_the_shwe_natural_gas_pipeline_project_burma-bangladeshindia.html (last visited Oct. 18, 2008). 4 It was initially expected that the proposed natural gas pipeline would be built through Bangladesh to India with India being the recipient of the gas. See Smith & Htoo, supra note 3, at 34-37. China, however, replaced India as the destination for the Shwe gas pursuant to a Memorandum of Understanding signed on December 7, 2005. See China Replaces India in Deal for Shwe Gas, The Shwe Gas Bulletin, Vol. I, Issue 9 (Dec.-Jan. 2005-06), available at http://www.shwe.org/media-releases/publications (last visited Oct. 18, 2008).

Habitat loss, accidental spills and the creation of hazardous and toxic wastes will be inevitable byproducts of the Shwe Gas Project. In addition, the Bay of Bengal from April to June and September to November is especially prone to severe cyclones. The Bay of Bengals shallow bathymetry and lowlying, heavily populated river deltas make the area the world's most notorious tropical cyclone graveyard.5 More than a million people were left homeless and hundreds of thousands of people died during the storm in 1999.6 Cyclone Nargis struck Burma on May 8, 2008, with an estimated death toll being over 100,000, placing it among the top ten deadliest tropical cyclones of all time.7 Therefore, there is an increased likelihood that the proposed Shwe Gas Project will be badly damaged or will rupture because of the high winds, storm surges including cyclones, and flooding of coastal areas. Corporate social responsibility (CSR) is currently a prominent global issue.8 With increasing globalization, many transnational corporations (TNCs),9 particularly in the extractive and apparel industries, have violated human and labor rights and degraded the environment in Asia, Africa and South America.10 The efforts by some TNCs to secure economic favors from countries have included providing arms, weapons and finances to repressive governments and insurgent groups, facilitating human rights violations and increasing environmental degradation, especially in the extractive industries.11 This was especially true in Burma with respect to the Yadana-Yetagun natural gas pipelines to Thailand.12 However, international law does not presently provide for any binding human rights or environmental obligations on corporations,13 because the United Nations Global Compact (GC) and the UN Norms discussed below are voluntary. This has contributed to the high level of corporate irresponsibility in developing countries such as Burma.

See Jeff Masters, Cyclone Nargis Death Toll May Top 100,000, May 8, 2008, available at http://www.wunderground.com/blog/JeffMasters/comment.html?entrynum=936&tstamp=200805 (last visited Oct. 18, 2008). 6 8 See Bangladesh Country Profile, available at http://web.adrc.or.jp/countryreport/BGD/2005/english.pdf (last visited Oct. 18, 2008). A similar storm in 1991 hit the coast of Bangladesh, killing an estimated 138,000 people. The most significant loss from a storm in the Bay of Bengal occurred in 1970 when the number of people killed was greater than 300,000. See Indian Cyclone Fact Sheet, available at http://www.metoffice.gov.uk/weather/tropicalcyclone/tcbulletins/05b.html (last visited Oct. 18, 2008). 7 See Masters, supra note 5. Human factors helped make the Cyclone Nargis worse. About 80% of the mangrove forests along Burma's coast were destroyed in order to create rice paddies and shrimp farms. Mangroves forests provide tall, gnarly and salt-tolerant trees which would have blunted and slowed down the progress of Cyclone Nargis and would have reduced the wave action of the ocean, thereby lessening the impact of Cyclone Nargis. Id. 8 Hevina S. Dashwood, Corporate Social Responsibility and the Evolution of International Norms, in Hard Choices, Soft Law: Voluntary Standards in Global Trade, Environment and Social Governance, at 193 (John J. Kirton & Michael J. Trebilcock, eds., 2004). 9 TNCs are also referred to as multinational corporations (MNCs) and are corporations or enterprises which manage production or deliver services in more than one country. See, e.g., Isabella D. Bunn, Global Advocacy for Corporate Accountability: Transatlantic Perspectives from the NGO Community, 19 Am. U. Intl. L. Rev. 1265, 1268 (2004); Saman Zia-Zarfi, Suing Multinational Corporations in the U.S. for Violating International Law, 4 UCLA J. IntL & For. Aff. 81 (Spring/Summer 1999). 10 See generally Sweatshop Watch Resource Center, available at http://www.sweatshopwatch.org/index.php?s=43 (last visited Nov. 11, 2008); Human rights Watch, Turning a Blind Eye: Hazardous Child Labor in El Salvadors Sugarcane Cultivation (Jun. 2004), available at http://www.hrw.org/en/reports/2004/06/09/turning-blind-eye (last visited Nov. 11, 2008); Global Witness, The Logs of War: The Timber Trade and Armed Conflict (2002), available at http://www.globalwitness.org/media_library_detail.php/89/en/the_logs_of_war (last visited Nov. 11, 2008); Human Rights Watch, The Price of Oil: Corporate Responsibility and Human Rights Violations in Nigerias Oil Producing Communities (1999) [hereafter Global Witness, The Logs of War], available at http://www.hrw.org/reports/1999/nigeria/ (last visited Nov. 11, 2008).

Maximizing profits is the primary purpose and social responsibility of the modern investor-owned corporation, according to Milton Friedman,14 a view widely endorsed by the CEOs of large TNCs and private sector commentators.15TNCs are economically powerful and strategically important to both developing and developed countries. It has been argued that many countries have not and will not support mandatory international codes of conduct for TNCs because the codes would be contrary to the short-term economic interests of developed countries and also because most developing countries desperately require revenue for their national governments and jobs for their citizens. 16 In 1993, the United Nations abandoned its attempt after twenty years at creating a useful international mandatory code of conduct for corporations.17 Thus the dominant paradigm continued involving the vision of a laissez faire society which believes that market forces and self-regulation will protect common social interests.18 However, in spite of the failed attempt by the United Nations for a mandatory code of conduct and the opposition by TNCs and developed countries, some NGOs, multilateral and international organizations, consumers, social investors, labor and the press have continued to make attempts to regulate and influence the conduct of TNCs.19 For example, the International Labor Organization
11

See Evaristus Oshionebo, The U.N. Global Compact and Accountability of Transnational Corporations: Separating Myth from Realities, 19 Fla. J. Intl Law 1-2 (2007); Global Witness: The Logs of War, supra note 10; Global Witness, All the Presidents Men: The Devastating Story of oil and Banking in Angolas Privatized War (2002), available at http://www.osisa.org/files/transparency_cd/global%20witness/All_the_Presidents_Men.pdf (last visited Nov. 11, 2008). Fourteen Koreans including the former CEO of Daewoo International were convicted in 2006 of illegally exporting weapons technology and equipment to Burma in violation of Korean law. All jail time was suspended and the CEO of Daewoo was fined only $54,550 US. See Fourteen South Koreans Convicted of Illegally Exporting Weapons Technology, Equipment to Myanmar, International Herald Tribune, Nov. 15, 2006, available at http://www.iht.com/articles/ap/2007/11/15/asia/AS-GEN-SKorea-Myanmar-Arms-Export.php (last visited Nov. 15, 2008). Daewoo International was also one of 2,200 companies in the U.N. oil-for-food program which were paid a total of $1.8 billion in kickbacks and illicit surcharges to Saddam Husseins government according to the 623 U.N.-backed investigation report by Paul Volcker and his committee. See Report: U.N. Oil-for-Food Fraud Widespread, Associated Press, Oct. 27, 2005, available at http://www.msnbc.msn.com/id/9833759/ (last visited Nov. 15, 2008); Barbara Schoetzau, Oil-for-Food Final Report Names Powerful Individuals in Corruption Scandal, Oct. 27, 2005, available at http://www.globalsecurity.org/wmd/library/news/iraq/2005/10/iraq-051027-voa03.htm (last visited Nov. 15, 2008); Oilfor-Food Report Names Companies that Bribed Saddam, October 27, 2005, available at http://www.timesonline.co.uk/tol/news/world/article583409.ece (last visited Nov. 15, 2008). 12 See Total Denial Continues, supra note 2. 13 See Steven R. Ratner, Corporations and Human Rights: A Theory of Legal Responsibility, 111 Yale L.J. 443, 449 (2001) (stating that although human rights obligations are imposed by international law on both states and individuals, they are not imposed on corporations but should be); Zia-Zarfi, supra note 9, at 84 (indicating that private corporations which include TNCs bear almost no obligations under public international law). 14 Milton Friedman, The Social Responsibility of Business Is To Increase Its Profits, N.Y. Times Magazine, pp. 32-33 (Sep. 13, 1970). Some writers reference Milton Friedmans comments as meaning that a corporations sole responsibility is toward its shareholders. See Hevina S. Dashwood, Corporate Social Responsibility and the Evolution of International Norms, chap. 10, p. 192 15 See Wesley Cragg, Multinational Corporations, Globalization, and the Challenge of Self-Regulation, Hard Choices, Soft Law, chap. 11, p. 218, fn 6, edited by John J. Kirton and Michael J. Trebilock, 2004, Toronto, Canada 16 See Joshua P. Eaton, The Nigerian Tragedy, Environmental regulation of Transnational Corporations, and the Human Right to a Healthy Environment, 15 B.U. Intl. L.J. 261, 277 (1977). 17 See Draft Code of Conduct on Transnational Corporations, 23 I.L.M. 602 (1984); see also Peter Sanders, Implementing International Codes o f Conduct for Multinational Enterprises, 30 Am. J. Comp. L. 241 (1982). 18 See Oshionebo, supra note 11, at 4. 19 See Bunn, supra note 9, at 1268; Michael Mason, The Governance of Transnational Environmental Harm: Addressing New Modes of Accountability/Responsibility: 8 Global Environmental Politics, No. 3, 8-24 (2008); Ann Florini, Making

(ILO) has two sets of voluntary principles which attempt to influence the labor practices of TNCs and other employers.20 These voluntary principles merely provide a reference point for good practices, but due to their lack of enforceability, they have had limited utility.21 In addition, the Guidelines for Multinational Enterprises (Guidelines), promulgated by the Organization for Economic Cooperation and Development (OECD), provide recommendations which include that the human rights of those affected by the activities of TNCs be respected, all forced labor and child labor be eliminated, and there be no discrimination, and development utilize sustainable standards. However, the Guidelines are not regulatory but merely voluntary recommendations which are not legally enforceable and have no monitoring mechanism.22 In light of the ineffectiveness of the Guidelines and ILO, civil society organizations began devising private governance regimes, seeking to improve the behavior of TNCs by means of disclosure and dissemination of information.23 The Global Compact (GC)24 adopted by the United Nations came into existence in 1999, and was a second attempt by the United Nations to restrain the TNCs. Similar to the proposals of the ILO and OECD, the Global Compact did not adopt compulsory corporate regulations, but instead focused on moral persuasion and voluntary regulation.25 Ongoing arguments continue over the effectiveness of these voluntary initiatives and regulations, often referred to collectively as soft law.26
Transparency Work , 8 Global Environmental Politics, No. 2, 14-16 ( May 2008); Jennifer Clapp, Global Environmental Governance for Corporate Responsibility and Accountability, 5 Environmental Politics, No. 3, 23-34 (2005), available at http://www.mitpressjournals.org/doi/abs/10.1162/1526380054794916 (last visited Nov. 11, 2008). 20 The two instruments are the Tripartite Declaration of Principles Concerning Multinational Enterprises and Social Policy, ILO, 279th Sess. (2001) available at http://training.itcilo.it/actrav/courses/2004/A400359_web/resource/ILO/English/ILO-guidelines-english.pdf (last visited Nov. 12, 2008); and the Declaration on Fundamental Principles and Rights at Work, 86th Sess. (1998), available at http://www.cauxroundtable.org/ILODeclarationofFundamentalPrinciplesandRightsatWork.html (last visited Nov. 12, 2008). 21 See William B. Gould IV, Labor Law for a Global Economy: The Uneasy Case for International Labor Standards, 80 Neb. L. Rev. 715, 741 (2001); John C. Anderson, Respecting Human rights: Multinational Corporations Strike Out, 2 U. Pa. J. Lab. & Emp. L. 463, 475 (2000); Bob Hepple, A Race to the Top?: International Investment Guidelines and Corporate Codes of Conduct, 20 Comp. Lab. L. & Poly J. 347, 354 (1999). 22 See Surya Deva, Human Rights Violations by Multinational Corporations and International Law: Where from Here?, 19 Conn. J. Intl L. 1, 11 (2003); Hepple, supra note 19, at 354; Lance Compa & Tashia Hinchliffe-Darricarrere, Enforcing International Labor Rights Through Corporate Codes of Conduct, 33 Colum. J. Transnatl L. 663, 671 (1995). 23 See Anne-Marie Slaughter, Global Government Networks, Global Information Agencies, and Disaggregated Democracy, 24 Mich. J. Intl L. 1041, 1072 (2003). 24 See Global Compact Website, available at http://www.unglobalcompact.org (last visited Nov. 12, 2008). 25 See Bunn, supra note 11, at 1283. 26 Compare John Gerald Ruggie, Trade, Sustainability and Global Governance, 27 Colum J. Envtl. L. 297 (2002), and Alexis M. Taylor, The U.N. and the Global Compact, 17 N.Y.L. Sch. J. Hum. Rts. 975, 980-82 (2001). In August 2003, UN Norms were adopted by the UN Sub-Commission on the Promotion and Protection of Human Rights. See Norms on Responsibilities of Transnational Corporations and other Business Enterprises with Regard to Human Rights, SubCommission on the Promotion and Protection of Human Rights, 55th Sess., Agenda Item 4, <pmark>, E/CN.4/Sub.2/2003/12/Rev.2 (2003). The UN Norms along with the GC recognize the urgency and necessity of regulating corporate human and environmental rights abused in the new global world order wherein countries no longer monopolize violations of these rights and obligations. The UN Norms encourage TNCs to respect international human rights including all civil, cultural, economic, political and social rights. They oblige TNCs to respect, ensure respect for, prevent abuse of, and promote human rights recognized in international as well as national law. The UN Norms specifically reference the UN Charter, the Universal Declaration of Human Rights (UDHR), and other international

TNCs which sign onto the GC are invited to embrace, support and enact ten core values relating to human rights, the environment, labor standards and anti-corruption. The ten principles are broad and encompass most of the social concerns of the international community, intending to provide a framework for corporations to respond to social concerns. The GC has two goals: first to persuade participating corporations to adopt the ten core principles into their culture and operations, 27 and second to facilitate collective/cooperative problem solving.28 Accountability and transparency arguably are promoted by sharing good governance practices with participating corporations.29 Annual reports are filed by participating corporations, which are then published as a public document. This gives NGOs and private citizens the opportunity to challenge the contents of a TNCs annual report and issue a rebuttal regarding any inaccuracies. 30 However, it is mere speculation whether such rebuttals by NGOs or others pointing out falsehoods would expose a misbehaving corporation to shame, thereby encouraging the corporation to file accurate reports, ultimately resulting in the corporation changing its corporate practices. Public shaming does not necessarily result in corporations making positive behavioral changes, and this certainly has not been true with respect to any TNCs operating in Burma. There is no evidence that shaming has been very effective in the extraction industries, and certainly not in Burma. There are two significant legitimacy problems with the GC: the failure of the governments of many developed countries to explicitly support the GC,31 and the exclusion of the host communities from
treaties. See Commentary on the Norms on the Responsibilities of Transnational Corporations and other Business Enterprises with Regard to Human Rights, UN Sub-Committee on the Promotion and Protection of Human Rights, 55th Sess., Agenda Item 4, at 4, U.N. Doc. ECN.4/Sub.2/2003/38Rev.2; see also Surya Deva, Human Rights Standards and Multinational Corporations: Dilemma Between Home and Rome, 7 Mediterranean J. Hum. Rts. 69, 87-89 (2003). In addition, the UN Norms promote transparent and independent monitoring with verification by national and international mechanisms including the UN. The UN Norms acknowledge the distinction between aspirational standards of human rights, which involve general objectives, and operational standards, which translate the objectives into specific measurable units. The UN Norms only provide the aspirational standards, leaving it to member nations to fashion the enforceable rules and requirements. While the UN Norms provide for both national and international monitoring techniques, they provide no sanctions or other vigorous mechanism to enforce obligations of the TNCs. 27 The emphasis of the GC is on dialogue encouraging compliance with ten core principles. The GC merely acts as a clearinghouse for information and practices regarding good governance for corporations. The ten core principles are only endorsed but not enforced. See Global Compact, The Ten Principles, available at http://www.unglobalcompact.org/AboutTheGC/TheTenPrinciples/index.html (last visited Nov. 15, 2008). 28 Accountability and transparency arguably are promoted by sharing good governance practices with participating corporations. Annual reports are filed by participating corporations, which are then published as a public document, which gives NGOs and private citizens the opportunity to challenge the annual reports contents and issue a rebuttal regarding any inaccuracies. See Global Compact, The Global Compact: A Network of Networks, available at http://209.85.173.132/search?q=cache:JUzpuig1usJ:www.unglobalcompact.org/docs/news_events/8.1/network_paper.pdf+Global+Compact,+The+Global+Compact: +A+Network+of+Networks&hl=en&ct=clnk&cd=1&gl=us (last visited Nov. 15, 2008). 29 See George Kell, The Global Compact: Origins, Operations, Progress, Challenges, 11 J. Corp. Citizenship 35, 40 (2003). 30 See U.N. Global Compact, Communication Progress: Communication on Progress Overview, available at http://www.unglobalcompact.org/CommunicatingProgress/index.html (last visited Nov. 15, 2008). 31 While there are 120 countries and over 4700 corporations listed as participants with GC, these numbers do not include either Burma or Daewoo International. Only a few are North American corporations have signed on with the GC. See United Nations Global Compact: Participants and Stakeholders, Participant Search Results, available at http://unglobalcompact.org/ParticipantsAndStakeholders/search_participant.html?submit_x=page (last visited Nov. 16, 2008); McKinsey & Company, Assessing the Global Compacts Impact (May 11, 2004), at 11, available at

direct participation.32 Developing countries make up more than half of the countries who have embraced the GC.33 The failure of developed countries to embrace the GC likely reflects their desire to shield TNCs from international regulation in spite of the fact that the GC really is not a regulatory mechanism.34 Soft law including the GC and UN Norms potentially may produce positive outcomes elsewhere, but not in Burma. The major TNCs in Burma including Daewoo International and the military junta in Burma have chosen not to follow the precepts of CSR and the UN Norms or sign on with the GC principles for corporate accountability and responsibility. The several attempts by NGOs35 and the United Nations36 through moral persuasion, and the United States Government through sanctions,37 to encourage socially responsible practices by Daewoo International and other TNCs doing business in Burma have thus far failed. Soft law, including the GC initiative and the UN Norms, while well-intentioned, continue to be inadequate to correct the misbehavior of TNCs in Burma and elsewhere. A binding international code of conduct for TNCs must be adopted in place of the voluntary guidelines that currently are in place, because there currently are no international obligations requiring TNCs such as Daewoo International and its consortium partners to change their corporate behavior. If built, the Shwe Gas Project would become Burmas largest gas project, it being estimated that up to US$3 billion in annual revenues would be generated, 38 with a total of up to US$17 billion being generated for Burmas military junta over the life of the project.39 If the Shwe Gas Project is built, until there are mandatory socially responsible guidelines for TNCs, only through regime change and the restoration of political and civil rights in Burma will the conditions of the citizens of Burma improve and will TNCs such as Daewoo International and its consortium partners become responsible corporate citizens in Burma.
http://www.unglobalcompact.org/docs/news_events/9.1_news_archives/2004_06_09/imp_ass.pdf (last visited Nov. 15, 2008); Oliver F. Williams, The U.N. Global Compact: The Challenge and the Promise, 14 Bus. Ethics Q. 755, 758 (2004), available at http://www.ethicalbusiness.nd.edu/documents/Global%20Compact%20Article_final.pdf (last visited Nov. 16, 2008). 32 The GC is only made up of UN agencies, representatives of business, labor, NGOs and academia, but not the host communities who bear the negative burden of the TNCs activities, NGOs often being required to speak for the host communities, at times even without consulting them. See Marina Ottaway, Reluctant Missionaries, 125 Foreign Poly 44, 54 (July/Aug. 2001). 33 See McKinsey & Company, supra note 29, at 11. 34 Most of the TNCs are domiciled in developed countries. See also Ellen Paine, the Road to the Global Compact: Corporate Power and the Battle over Global Public Policy at the United Nations, available at http://www.globalpolicy.org/reform/papers/2000/road.htm (last visited Nov. 16, 2008). 35 Other sections of a much more in-depth paper on this issue will discuss the efforts made by NGOs including EarthRights International and the Shwe Gas Movement. 36 Other sections of a much more in-depth paper on this issue will also discuss the failed efforts by the United Nations to prevent ongoing human rights violations by Burmas military junta. 37 Other sections of a much more in-depth paper on this issue will also discuss the efficacy of sanctions on Burma imposed by the United States, Great Britain and other industrialized countries. 38 The oil and gas sector accounts for about 35% of foreign direct investment in Burma. See Matthew Smith, Focus/Burma: The Hunt for Energy at any Cost, The Bangkok Post, Nov. 15, 2007, available at http://www.earthrights.org/files/Burma%20Project/BKKPost-PoliticsOf...11.15.07.pdf (last visited Nov. 17, 2008). Exports to Thailand in 2006 generated US$2.16 billion. Id. 39 See Supply and Command, supra note 3; Burma: Natural Gas Project Threatens Human Rights, Human Rights Watch, Mar. 24, 2007, available at http://www.hrw.org/english/docs/2007/03/24/burma15557.htm (last visited Nov. 17, 2008).