Issue Paper: Extractive Industries

Sufficient Sustainable Livelihood for All: Extractive Industries

RECOMMENDED by the Advisory Committee for Corporate
Social Responsibility, September 2, 2004
ENDORSED by the Division for Church in Society Board, October 22, 2004
APPROVED by the Church Council, November 11, 2004

Background
“All peoples have the right to their country’s natural resources and wealth without foreign domination,” according to the African Charter on Human and Peoples’ Rights (Article 21).[1] When resources—such as oil, gas, diamonds, and gold, as well as other minerals—are extracted from the earth, they become part of that sector in the economy known as “extractive industries.” Currently over 50 developing countries with a combined population of some 3.5 billion people are involved with this type of resource extraction.[2] The U.S. looks to Africa, South America, and Asia to find these resources. The Evangelical Lutheran Church in America (ELCA) shares a concern in common with these same countries: the need to alleviate hunger, poverty, and international debt. The ELCA also is concerned that this sector is often the venue for environmental degradation, the impingement upon indigenous lands, and a lack of respect for human rights. 

Kofi Annan, Secretary General of the U.N., observed at the third session of the U.N.’s Permanent Forum on Indigenous Issues that indigenous peoples have historically faced assaults on their traditional expressions of culture and religion and been denied access to health and education, sustainable development, and—most critically—control over traditional land and its resources.[3] The members of the Africa Initiative on Mining, Environment, and Society (AIMES) stated in May 2004 that the extractive sector activity “is contradictory to the interest and concerns of local communities and the developmental priorities of African national economies.”[4]

The ELCA’s economic life social statement, “Sufficient, Sustainable Livelihood for All” (ELCA, 1999),[5] gives particular attention to the concepts of sufficiency and sustainability. “Sustainability is the capacity of natural and social systems to survive and thrive together over the long term. What is sufficient in providing for people's wants often is in tension with what can be sustained over time. Sustainability has implications for how we evaluate economic activity in terms of its ongoing effects on the well-being of both nature and human communities. Economic life should help sustain humans and the rest of creation, now and in the future” (pg. 14). The statement also declares that “without appropriate environmental care, economic growth cannot be sustained. Caring for creation means that economic processes should respect environmental limits” (pg. 15).

A Social Policy
In “Sufficient, Sustainable Livelihood for All,” the church’s vision of sufficiency and sustainability is developed with a focus on the economic life of all people, emphasizing those who are poor and disenfranchised. This emphasis often creates a tension with the priorities of our economic system. “While economic growth often is considered an unconditional good, we insist that such growth must be evaluated by its direct, indirect, short-term, and long-term effects on the well-being of all creation and people, especially those who are poor” (pg. 4).  Specific commitments called for in this statement include:

scrutiny of how specific policies and practices affect people and nations that are the poorest, and changes to make policies of economic growth, trade, and investment more beneficial to those who are poor (pg. 6);

reduction of the overwhelming debt burdens in ways that do not impose further deprivations on the poor, and cancellation of some or all debt where severe indebtedness immobilizes a country’s economy;

fuller compensation by companies to pay for the wider social and environmental costs of what they produce (pg. 15);

enforcement of laws to prevent the exercise of inordinate market power by large corporations (pg. 14); and

ending subsidies for economic activities that use up nonrenewable natural resources (pg. 15).

The social statement “Caring for Creation: Vision, Hope, and Justice” (ELCA, 1993)[6] develops this church’s vision of creation, while demonstrating the gift of hope. It observes:

Processes of environmental degradation feed on one another. Decisions affecting an immediate locale often affect the entire planet (pg. 4).

The degradation of the environment occurs where people have little or no voice in decisions—because of racial, gender, or economic discrimination. This degradation aggravates their situation and swells the numbers of those trapped in urban or rural poverty (pg. 7).

Neither economic growth that ignores environmental cost nor conservation of nature that ignores human cost is sustainable. . . . We know that a healthy economy can exist only within a healthy environment, but that it is difficult to promote both in our decisions (pg. 8).

The church is called to seek and promote justice through principles of participation, solidarity, sufficiency, and sustainability. Specifically, this social statement calls the church to engage in dialogue with corporations on how to promote justice for creation (5.E.1-1). This activity includes dialogues about implementing comprehensive environmental principles, healthy environments, and cooperation between the public and private sectors regarding sustainability.

In both 1997 and 1999, the ELCA Churchwide Assembly affirmed the ELCA’s concerns for international debt reduction, alleviation of poverty and hunger in poor countries, and sound economic growth by endorsing the Jubilee 2000 Campaign (CA97.6.47 and CA99.03.06).[7]

Corporate Response
Within the United States, many corporations have been approached by multiple grassroots groups to clean up the environment and protect natural habitats. Groups have also sought the involvement of communities in environmental protection and planning. Laws have been enacted and community needs met through the U.S. legal system, but the governance and legal systems necessary to protect both citizens and the environment are not in place as resource extraction expands in some developing countries. 

Several attempts to address corporate transparency and increase sustainability are being made. The goals of the “Extractive Industries Transparency Initiative,” started by the United Kingdom, are aimed at increasing transparency over payments by companies to governments.[8] In a similar manner, the “Publish What You Pay” campaign seeks to help citizens in resource-rich countries hold their governments accountable for extractive industry revenue.[9] Several companies have responded to requests to increase transparency and are disclosing payments on Web sites or in other public documents.[10] At the second session of the Permanent Forum on Indigenous Issues, the United Nations took the lead to open a discussion on the issue of “free, prior, and informed consent.”[11]  Other intergovernmental bodies are increasingly accepting the extractive sector as a corporate social responsibility issue to be addressed. The World Bank has been involved in the “Extractive Industries Review” and will publish final documents in the upcoming months.[12] The Global Reporting Initiative is in the process of developing industry sector guidelines for the mining and metals sector.[13] The Principles for Global Corporate Responsibility: Bench Marks for Measuring Business Performance, developed by the Interfaith Center on Corporate Responsibility (ICCR) and partners, has an entire section on resource extraction principles.[14]

Shareholder Work History
For over 30 years, the community of faith-based shareholders (mainly through the ICCR) has been urging companies to develop both international and domestic policies concerning their conduct in areas of the environment and social issues. Specifically on the work of extractive industries, shareholders have been concerned about environmental damage, workplace safety, dislocation of communities, and labor rights.

The ELCA has supported shareholder resolutions dealing with the environmental and social impact of extractive industries and has developed both environmental and labor social criteria screens for investments. The ELCA participated in the Jubilee 2000 campaign asking for debt relief. Through Lutheran World Relief and the ELCA hunger program, Lutherans have addressed the impact of the extractive industry, whether in Colombian oil fields or African diamond mines. The Corporate Social Responsibility program has been in dialogue with extractive industry corporations during the last two years through our environmental and human rights work.

Resolution Guidelines for ELCA
We support reports asking companies to assess the profitability and reputation of operations from environmental and social perspectives.

We support resolutions asking companies to report on, assess the impact of, and curtail health, safety, or environmental hazards to communities that result from their activities.

We support asking for formal public written policies on the rights of indigenous peoples, including issues addressing free prior and informed consent, as well as on the rights of local communities to control local natural resources and full participation in business planning and decisions impacting their lands.

We support reports disclosing corporate analysis and steps taken to control operating in culturally or environmentally sensitive areas and/or the impact on sustainability and biodiversity in ecologically unique or sensitive areas, including lobbying efforts for access to such areas.

We support reports of operations for specific projects in specific regions (e.g., Chad-Cameroon pipeline report) including financial, environmental, and social impact.

We support reports detailing the range of financial liability associated with a project, specifying community compensation, environmental impact, and mitigation of loss of natural habitat.

We support reports disclosing policies and management systems to avoid loss of natural habitat.

We support reports reviewing and disclosing underwriting criteria related to the impact of a transaction on the environment, human rights, and risk to a company’s reputation.