O

bserving human rights such as labor standards and community rights may not necessarily improve business profits but violating them could certainly be costly, as corporate executives learned from a
conference here this week.

Many major companies have incorporated human rights principles into their core business practices, to avoid large sums of money spent unnecessarily said John Ruggie, the Harvard professor who proposed the United Nations guiding principles for multinational corporations (MNC) to better observe human rights.

Speaking at a discussion at the Foreign Ministry on Wednesday, Ruggie said the connection between human rights and business practices were not restricted to labor issues, but also impacted on the local community where it operated, especially when it concerned indigenous people.

Major companies, especially those involved in extractive industries like mining and oil, have had to reach deep into their pockets, due to problems it caused for the locals, he said.

Ruggie served as the UN secretary general special representative for business and human rights from 2006-2011, during which he helped design the guidelines. Earlier this year, he published a book titled Just Business: Multinationals and Human Rights (Norton, 2013).

One of the world'€™s largest oil companies lost over US$6.5 billion over two years because of delays in securing permits, staffers being kidnapped, and disrupted operations, Ruggie said without identifying the name of the company. Mining companies faced the same challenge, he said, noting that some companies with $3 billion to $5 billion in investment could lose as much as $20 million a week because of delays in production.

Workers'€™ safety is another expenditure that companies may want to invest in, after more than 1,100 people died when the building of a garment factory collapsed in Bangladesh last month.

The accident damaged not only the reputation of the factory, but it could also destroyed the country'€™s economy as garments accounted for 80 percent of Bangladesh'€™s exports, Ruggie said.

'€œThere is a risk now that major buyers are moving out, he said.

He also cited an ongoing court case in the United States where Exxon Mobil has been accused of complicity with the Indonesian military for the killings and abuses that took place in Aceh in 2001. Exxon has a large gas production project in Aceh, where the Indonesian military had fought an armed separatist rebellion until they signed a peace deal in 2005.

 '€œThere is an extraterritorial legal risk dimension that goes along with these investments,'€ Ruggie said.

The Indonesian government supported the UN guidelines, I Gusti Agung Wesakapuja, the director general for ASEAN cooperation at the Foreign Ministry, told the discussion. (nai)