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New reports under the State Department’s Burma reporting requirements underline the importance of thorough due diligence
Commentary by Vicky Bowman, Director of the Myanmar Centre for Responsible Business (MCRB)
Coca Cola’s third report under the US Reporting Requirements for Burma confirms them once again as far ahead of their US and international peers in disclosure of the human rights and business integrity challenges they face in Myanmar.
It provides useful advice based on experience, and should be read closely not just by their international food and beverage peers in Myanmar such as Heineken, Carlsberg, Pepsi, Nestlé and Unilever, but by any company doing business there including local companies.
It's good to see that, since the last report, Coke is making progress on a number of the issues raised in their human rights due diligence and audits. These include improvements in gender equality in their workforce (around 99% of which is from Myanmar), and bearing down on excessive overtime, including in the long journeys across country by their lorry drivers, where overtime has health and safety impacts.
It is also good to see that Coke Myanmar now has functioning trade union relationships in both their plants. This should help demonstrate the value of healthy employer-employee relations and social dialogue, particular to Myanmar businesses who are still distrustful of trade unions and lack knowledge about new Myanmar legal requirements such as the requirement for Workplace Coordinating Committees where a company has more than 30 employees.
Coke is also involved with other Myanmar and international companies such as Gap and H&M, in the multistakeholder Initiative on Labour Law Reform and Institutional Capacity Building involving the Government of Myanmar together with the ILO and the Governments of the United States of America, Japan, Denmark and the European Union.
Another interesting element of Coke’s report is the study they commissioned of child labour in Myanmar's teashops, which are potential outlets for Coke products. This found many examples of working children under 13. This is clearly illegal according to Myanmar law. However, family poverty, and a lack of educational opportunities, drives children, particularly from rural areas, to work in teashops and other informal sector jobs.
Telenor has also publicly discussed the challenges they continue have with child labour in Myanmar despite strong company governance and auditing. Both companies should be congratulated for bringing these issues to the table.
As Coke notes, a company cannot solve this problem alone. It needs a holistic solution with strong government action and a multi-stakeholder approach. Coke reports they are ‘...actively pursuing opportunities to engage with peers and civil society to reduce this practice…. Furthermore, [Coke aims] to address root causes through [the] support of the Swan Yi project and [is] also exploring opportunities for vocational training support for affected young workers’.
While on the subject of fizzy drinks, MCRB is also looking forward to reading the imminent report from Ball under these State Department reporting requirements.
Ball is a US aluminium can company that has set up to supply the drinks sector in Myanmar. Jon Barnes of IHRB and I recently had a chance to visit the construction site for their factory in Thilawa Special Economic Zone (SEZ), an area which was in 1997-1998 the subject of compulsory land acquisition under the former military regime, which appears not to have been conducted in line with either Myanmar law or international standards. Ball have had to come to grips with where a company’s responsibilities lie in such a situation, and I look forward to reading what they say about this in their report.
While plenty of information about the Thilawa SEZ land and resettlement issues is in the public domain, there are many similar risks elsewhere in Myanmar. It is just as important for companies to undertake land and human rights due diligence in lower profile industrial zones through Myanmar. Land due diligence is as important for industrial and manufacturing sites as it is for the extractives, tourism or agriculture.
Coke, in its report, has shared a link to their non-Myanmar-specific human rights due diligence toolkit for site acquisition. MCRB in March published a briefing paper for companies on land issues which gives context- specific advice for Myanmar. A longer analysis is contained in a May 2015 paper by Displacement Solutions, written originally for the International Finance Corporation (IFC), Land Acquisition Law and Practice in Myanmar: Overview, Gap Analysis with IFC PS1 & PS5 and Scope of Due Diligence Recommendations.
In addition to undertaking thorough due diligence, large companies with commitments to international standards of responsible business - who have leverage as Myanmar is keen to bring them in as anchor investors - have an opportunity to encourage better practice on land. They should stress to the Myanmar government that where land has to be compulsorily acquired and communities resettled to create industrial zones – or other infrastructure – this needs to be conducted to international standards such as IFC Performance Standard 5, starting with avoiding forced eviction wherever possible. Since sub-regional governments are often the key players in resettlement, this conversation should also be had with local authorities who are likely to be even less aware of international standards.
Another way a company can help mitigate the impacts of compulsory resettlement is to provide training and jobs to project-affected persons in local communities. On our visit to Ball’s site, we saw prominent signs attached to the fence announcing that their construction subcontractor, a local company SKO Myanmar, was looking for local hires and we met some of the six people from the resettled community that they had already employed.
These actions, and the open and detailed reporting of them to the State Department, help US companies investing in Myanmar to build their social licence to operate. However, trust in business in Myanmar remains low, particular for Myanmar companies. MCRB’s second Transparency in Myanmar Enterprises report (a.k.a. Pwint Thit Sa) will be published later this month. It will show that over a third of the 100 biggest Myanmar companies, including Coke's local partner Pinya Manufacturing, and Pinya’s sister company, Gold Uni, lack corporate websites and do not publish any information about their ownership, activities or corporate governance policies. We hope that Coke's reporting, and the TiME Report 2015, will encourage Pinya and other companies to publish information, and thereby strengthen corporate accountability and trust in business in Myanmar.
