DCSIMG

Responsible Investment Reporting Requirements Frequently Asked Questions



Responsible Investment Reporting Requirements Frequently Asked Questions (FAQs)

These FAQs are intended to provide guidance to individuals or corporations seeking to invest in Burma; they do not constitute binding legal interpretations or legal advice regarding the scope of the Reporting Requirements. Investors may make investments directly in Burma, or via joint-ventures, joint partnerships, through partially- owned or wholly-owned subsidiaries, contracts, subcontracts, franchises, or a range of other investment vehicles. Investors considering whether they are subject to the Reporting Requirements should consult the text of the Reporting Requirements or consult legal counsel.

2. How is publicly reporting information of value to the investor submitting the information?
3. Who needs to report on their activities in Burma?
4. What types of investment could trigger the Reporting Requirements?
5. Is the $500,000 threshold an annual threshold?
6. Does leasing office space constitute a new investment if the office is used for sales of goods or services?
7. Are there penalties associated with not reporting?
8. When and where do I need to report?
9. What information required by the Reporting Requirements may be withheld from the public report under the Freedom of Information Act (FOIA) Exemption 4?
10. What if my company does not have a human rights, worker rights, environmental or anti-corruption policy in place?
11. How should investors respond to question 5(f) on the communication and enforcement of relevant policies and procedures to other entities?
12. Why is it important to disclose arrangements with security service providers?
13. What is the International Code of Conduct for Private Security Service Providers (ICoC”)?
14. Who is considered a “security service provider”?
15. Why is the U.S. Government requesting information on property acquisition and land use?
16. Why do investors have to disclose what payments they made to the Government of Burma?
17. What payments must be reported?
18. Why is the U.S. government interested in knowing what military officials companies are meeting with?
19. Why is the U.S. government interested in information about U.S. investments with Myanma Oil and Gas Enterprise (MOGE)? How will the information be used by the U.S. government?
20. Are investors not involved in the day-to-day decision related to operation in Burma required to report? 

Concepts Related to Risk Prevention and Mitigation

This section is intended to provide guidance to individuals or corporations seeking to invest in Burma; it does not constitute binding legal interpretations or legal advice regarding the scope of the Reporting Requirements or any other issue.

This section contains information relating to risk prevention and mitigation. The listing of principles, guidelines, and initiatives on this page is a sample of such initiatives, should not be taken as comprehensive and does not signify an endorsement of those principles, guidelines, or initiatives by the U.S. Government.

[For comprehensive guidance relevant to the Reporting Requirements see: Earth Rights Checklist: U.S. Investment in Myanmar: Specific Reporting on Policies and Procedures.]

Responsible Investment Reporting Requirements Frequently Asked Questions (FAQs)

1. What purposes do the Reporting Requirements serve?

The Department of State will use information collected to evaluate and better calibrate U.S. policy in light of increased economic engagement with Burma, and to facilitate consultations with the U.S. business community to encourage and assist development of robust policies and procedures to support improvement in the human rights, worker rights, anti-corruption, and environmental situations resulting from their investments and operations in Burma. The Department of State will use the collection of information about new investment with the Myanma Oil and Gas Enterprise (MOGE) to better understand the role of MOGE and to identify investors with whom it may be beneficial to consult. The public, including civil society actors in Burma, may use the information collected to consult with U.S. businesses on their responsible investment policies and procedures.

In the past, the absence of transparency and publicly available information with respect to foreign investment activities in Burma has contributed to corruption and misuse of public funds, the erosion of public trust, and social unrest, particularly in ethnic minority areas, which led to further human rights abuses and repression by the government and military. Public disclosure of information therefore will help new U.S. investment promote transparency and support government reform, a key U.S. foreign policy objective in Burma.

2. How is publicly reporting information of value to the investor submitting the information?

There is a growing trend within the international community toward corporate disclosure of both financial and non-financial information related to company activities. Robust disclosures and information-sharing can identify examples of positive conduct by U.S. corporations, and demonstrate how it is possible to demonstrate corporate responsibility to respect human rights in a challenging operating environment, a best practice under the second pillar of the UN Guiding Principles on Business and Human Rights. Indeed, the U.S. Government expects that through the Reporting Requirements, investors will be able to showcase responsible investment practices and create a platform to discuss challenges in operating in Burma.

Companies that provide information to stakeholders can be more effective in their engagement with local communities; this engagement can reinforce their human rights, worker rights, anti-corruption, and environmental policies. This is particularly important in Burma, where many communities have experienced a destabilizing impact from foreign investment, and others have relatively little experience with foreign investors in any form. Disclosure in this context will help investors to obtain and maintain a “social license to operate,” and to manage community expectations about the benefits their investments may bring. Public disclosures can help increase investor confidence that the company has the necessary tools in place to protect itself from liability and associated risks. Moreover, other countries are encouraging similar types of disclosure by public companies in an array of sectors. [1][2]

3. Who needs to report on their activities in Burma?

Any U.S. person (both individuals and entities) engaging in new investment in Burma pursuant to General License No. 17 whose aggregate new investment, over any period, exceeds $500,000 must provide to the Department of State the information set forth in the Department of State’s “Responsible Investment Reporting Requirements.”

Whether specific activities constitute “new investment” is dependent on the facts and circumstances of each particular situation. U.S. persons considering new investment in Burma should examine any proposed agreement or contract in light of the definition of “new investment” in 31 C.F.R. § 537.311. If investors are uncertain about whether their activities constitute new investment in Burma, we suggest erring on the side of caution and submitting a report.

In addition, U.S. persons undertaking any new investment of any value pursuant to an agreement, or pursuant to the exercise of rights under such an agreement, that is entered into with the Myanma Oil and Gas Enterprise (MOGE) must notify the Department of State within 60 days of such a new investment.

4. What types of investment could trigger the Reporting Requirements?

The Reporting Requirements do not limit disclosure obligations based on the form of an investment or the percentage equity stake held, even when other stakeholders are non-U.S. persons. In determining whether a particular investment triggers the Reporting Requirements, investors should consult the regulatory definition of “New Investment” in 31 C.F.R. 537.311.

U.S. persons whose activities in Burma constitute new investment as defined in 31 C.F.R. § 537.11 and who meet the criteria identified in the answer to question three (Who needs to report on their activities in Burma?) should read each question in the Reporting Requirements carefully and consider how best to answer each question taking into consideration the answers to questions one (What purposes do the Reporting Requirements serve?) and two (How is publicly reporting information of value to the investor submitting the information?) above. In determining what information needs to be provided in order to provide a sufficient response to each question, investors may wish to consider a range of factors, including the size of their investment (in absolute terms and/or the percentage of the total amount invested), their relationship to other investors, and the amount of influence they maintain over the investment vehicle.

5. Is the $500,000 threshold an annual threshold?

No. Annual reports are required of any U.S. person engaging in new investment in Burma, once that person’s aggregate investment, over any period, exceeds $500,000. For example, if a U.S. person’s investment totals $750,000 in year 1 and that investment does not change in year 2, the U.S. person is still required to submit a report in year 2, and for any subsequent year that the aggregate investment exceeds $500,000.

6. Does leasing office space constitute a new investment if the office is used for sales of goods or services?

Whether specific activities constitute a “new investment” is dependent on the facts and circumstances of each particular situation. U.S. persons considering new investment in Burma should examine any proposed agreement or contract in light of the definition of “new investment” in 31 C.F.R. § 537.311. Regardless, new investment in Burma by U.S. persons is now authorized to occur, subject to the limitations and requirements described in General License No. 17.

An annual report is required of any U.S. person engaging in new investment in Burma once that person’s aggregate new investment, over any period, exceeds $500,000.

Investors who are uncertain about whether their activities constitute new investment in Burma may want to err on the side of caution by submitting a report.

7. Are there penalties associated with not reporting?

A U.S. person engaging in new investment in Burma who fails to submit required reports is not in compliance with the conditions of General License No. 17and may be subject to an enforcement action and possible civil and criminal penalties.

Investors who are uncertain about whether their activities constitute new investment in Burma may want to err on the side of caution by submitting a report.

8. When and where do I need to report?

Reports are due 180 days after the $500,000 threshold is reached and thereafter annually on July 1. The U.S. Government report shall be submitted to BurmaUSGReport@state.gov and the Public Report shall be submitted to BurmaPublicReport@state.gov. U.S. persons may choose to report based on their fiscal year or based on their calendar year; in either case, the report is due on the July 1 immediately following the conclusion of that year. Public reports are posted on Embassy Rangoon’s Doing Business in Burma webpage.

U.S. persons must report even if they have not undertaken new investment for a full year. For example, if a U.S. person engages in new investment in Burma in September 2012 and their fiscal year concludes in October 2012, that person must report on their activities in FY12 by July 1, 2013.

A notification of investments undertaken pursuant to an agreement, or pursuant to an exercise of rights under such an agreement, that is entered into with MOGE must be submitted to the Department of State in writing at MOGEnotification@state.gov within 60 days of the new investment.

9. What information required by the Reporting Requirements may be withheld from the public report under the Freedom of Information Act (FOIA) Exemption 4?

FOIA Exemption 4 protects two specific categories of information from public disclosure: (1) Trade Secrets and (2) confidential or privileged commercial or financial information. 5 U.S.C. § 552(b)(4).

The Reporting Requirements seek information related to companies’ policies, practices, and outcomes that generally do not implicate trade secrets or information traditionally considered to be “commercial or financial” information as defined in FOIA exemption 4. Persons will want to carefully scrutinize any designation of information under Exemption 4, as a designating company is required to provide a detailed explanation for doing so. This explanation must include:

  • the reason why the information is designated as exempt, and
  • specific arguments as to why public release of the information would cause substantial harm to the competitive position of the investor.

The Department of Justice, FOIA Guide (2009), Exemption 4 provides detailed guidance on how Exemption 4 has been applied.

10. What if my company does not have a human rights, worker rights, environmental or anti-corruption policy in place?

A company can report that it does not have any human rights, worker rights, anti-corruption or environmental policies and procedures in place so long as this is a factually accurate statement with respect to the reporting period covered. The investor must still submit a full report noting in response to the question(s), where appropriate, that there is no information to report and include a brief explanation. For example, an investor could state that it is not providing a summary of its workers’ rights policies because it does not have policies in place.

11. How should investors respond to question 5(f) on the communication and enforcement of relevant policies and procedures to other entities?

Enterprises can have impacts on local populations both directly and through their business relationships.[3] Because the human rights impacts of U.S. investment in Burma may be direct or indirect, information on business partners, related entities, and supply chains will enable the U.S. Government to evaluate and better calibrate U.S. policy in light of increased economic engagement with Burma, and to encourage and assist businesses to develop robust policies and procedures to address adverse impacts resulting from their operations in Burma.

The Reporting Requirements direct an investor to report on relevant policies and procedures as they relate to the company’s “operations and supply chain in Burma” and to report on the degree to which these policies and procedures are “applied to, required of, or otherwise communicated to related entities in Burma, including but not limited to subsidiaries, subcontractors, and other business partners.”

The requirement to report on policies and procedures as they relate to an investor’s supply chain in Burma reflects the understanding that enterprises may have significant influence over the activities of other entities in its supply chain.[4] Similarly, the requirement to describe the application of policies or procedures to “related entities in Burma” reflects the understanding that investors may have significant influence upon other entities with which they have commercial relationships. This is part of the due diligence process, which emphasizes responsible management of a company’s supply chain and business relationships. Companies are encouraged to make efforts to identify human rights risks in the operations of any entity that is connected to their operations through a business relationship, directly or indirectly, and to develop options for mitigating or otherwise addressing these concerns. Please see the OECD Guidelines for Multinational Enterprises, Chapter Two/General Policies, for a useful reference point.

Relevant information to report may include contractual provisions that the investor may use to oblige business partners to comply with the investor’s standards, vetting processes the investor uses to choose contractors and partners, international codes or relevant industry initiatives in which the investor is a member that audit the investor’s supply chain, and other concrete steps the investor takes to investigate and hold supply chain or other partners accountable to its policies and procedures. The human rights, environmental, worker rights, and anti-corruption policies of an investor’s business partners and related entities are also relevant in this respect.

Investors may explain whether and how related entities have been informed of, have taken up, and are held accountable to the investors’ relevant policies and procedures. Responsive information would include contractual provisions that apply to joint venture partners, contractors, and other entities with contractual relationships to the investor, the degree to which enterprise-level grievance mechanisms are applicable to adverse impacts allegedly committed by related entities, updates on training and education sessions for related entities, repercussions for non-compliance with relevant policies and procedures, and whether partners, contractors and other entities sign a declaration of compliance with these policies.

12. Why is it important to disclose arrangements with security service providers?

The provision of security services has carried heightened human rights risks in many sectors due to the nature of the work involved, particularly when security service providers (armed or unarmed) operate in areas inhabited by vulnerable populations or in conflict areas.

The Reporting Requirements aim to increase public information on security service providers. This information enables members of local communities to monitor security service providers, and helps ensure that client companies make informed choices when hiring security service providers, such as hiring security service providers that have committed to the International Code of Conduct for Private Security Service Providers (“ICoC”), and by structuring contracts so that client companies have a role in hiring/vetting, training, incident management, and remedies, thus increasing both transparency and accountability.

Like the ICoC, the Reporting Requirements seek to identify whether security service providers used by a submitter have been certified to any national or international standards, any due diligence policies or procedures that the submitter has with respect to security service providers, and whether providers are subject to third-party audits. Independent monitoring and verification can encourage more thorough and accurate reporting, and bolster the credibility of the security service provider, the submitter, and the information reported.

With this information, the U.S. Government is better able to track investment to identify and engage with persons or entities on corruption and human rights risks and impacts. The overlap between Burma’s political, business, and military actors remains complex, making it difficult for U.S. companies seeking to invest responsibly in Burma to decipher which persons or entities are implicated in human rights abuses and corruption, and to determine therefore, which are appropriate business partners.

Please note that General License No. 16 does not authorize the export of financial services, in connection with the provision of security services, to the Burmese Ministry of Defense, including the Office of Procurement; any state or non-state armed groups; or any entity in which any of the foregoing own a 50 percent or greater interest.

13. What is the International Code of Conduct for Private Security Service Providers (ICoC”)?

The ICoC is a multi-stakeholder initiative that aims to set forth a commonly-agreed set of principles for security service providers and to establish a foundation to translate those principles into related standards, as well as governance and oversight mechanisms for security service providers operating in complex environments. Companies that meet these standards and commit to on-going monitoring and oversight are eligible to join the ICoC Association. The ICoC may serve as a helpful resource for companies planning their engagement in Burma.

14. Who is considered a “security service provider”?

A security service provider includes any person or entity whose activities include the provision of security services, either “in house” or pursuant to a contract or other arrangement. This includes the guarding and protection (whether armed or unarmed) of persons and objects, such as convoys, facilities, designated sites, property and other places, or any other activity for which the personnel of companies are required to carry or operate a weapon in the performance of their duties.

15. Why is the U.S. Government requesting information on property acquisition and land use?

Property acquisition and land use in Burma, particularly in ethnic and conflict areas, routinely involves land seizures, forced evictions, temporary land abandonment due to conflict, and the involuntary resettlement of vulnerable populations. Property acquisition and land use for investment projects has the potential to adversely affect people using the land for homes, livelihood, or other purposes, and can inhibit return of displaced persons and refugees or result in forced evictions.

New investors in Burma should be aware that forced evictions often occur in order to make way for future foreign investment. Moreover, as a result of years of conflict and uprooting of communities in Burma, there may be overlapping claims to land. Due diligence may include processes for identifying and engaging with the bona fide owners (including customary owners) and/or users of the land, recognizing their rights over the land, and agreeing on appropriate redress. Resettlement should be minimized whenever possible. Investors should be aware that forced evictions may have occurred prior to the investor’s involvement in the project and may have resulted in continuing land tenure disputes for which mitigation strategies should be sought.

Thorough due diligence on financial/material arrangements made to compensate previous users/residents of land or other real property may also help identify those with claims for compensation and/or rights over the land, and determine whether the arrangements were fully implemented, and the entity or entities responsible for delivering compensation.[5]

16. Why do investors have to disclose what payments they made to the Government of Burma?

Information relating to payments made by investors to the Government will enable both civil society and the U.S. government to monitor revenue flows and the ways in which the Government of Burma uses revenue. It will also enable outside investors to assess risks associated with investors’ financial arrangements with the Government of Burma.

17. What payments must be reported?

Investors are required to include total payments made to each Government of Burma entity and any sub-national or administrative entity or non-state group that possesses or claims to possess governmental authority over the investor’s new investment activities in Burma. For example, the investor may report on payments made to the Government of Burma Ministry of Energy, the Government of Kachin State, and to a non-state entity that possesses or claims to possess governmental authority over the investor’s new investment activities in Burma. Government of Burma entities include state-owned enterprises such as the Myanma Oil and Gas Enterprise (MOGE). Reports must also indicate the type of payment made such as: fees, taxes, profit sharing, social payments (both in cash and in-kind), bonuses, royalties, import tariffs, or tax. For example, a company could report that in 2012 it paid $2 million to the Government of Burma ($500,000 in signature bonuses to MOGE, $1 million in taxes to the revenue authority, and $500,000 in import duties to the customs authority).

Investors who are uncertain about whether their circumstances require such reporting may want to err on the side of caution by submitting a report.

18. Why is the U.S. government interested in knowing what military officials companies are meeting with?

The U.S. government has continuing concerns about human rights abuses, particularly in ethnic minority and conflict areas, and about a pattern of abuses linked to military-owned or military-backed foreign investments. Information on the military officials U.S. persons meet with in connection to their investments will help provide the U.S. government with useful information about the extent of military-related entities’ control over the Burmese economy. The overlap between Burma’s political, business, and military actors remains complex; this information will help the U.S. Government track investment to identify and engage with persons or entities on corruption and human rights risks and impacts.

19. Why is the U.S. government interested in information about U.S. investments with Myanma Oil and Gas Enterprise (MOGE)? How will the information be used by the U.S. government?

The oil and gas sector in Burma has been linked to human rights abuses and corruption. The U.S. government continues to have significant concerns about MOGE’s transparency and accountability. Collection of information about U.S. persons entering into new investments with MOGE will help the Department track U.S. investments in this sector, better understand the role of MOGE, and to identify U.S. persons with whom it may be beneficial to consult on related issues.

20. Are investors not involved in the day-to-day decision related to operation in Burma required to report?

Any U.S. person (both individuals and entities) engaging in new investment in Burma whose aggregate new investment, over any period, exceeds $500,000 is required to report, regardless of whether the investor is directly or indirectly involved in carrying out business operations in Burma. For further guidance see the response to question four above (“What types of investment that could trigger the Reporting Requirements?”), and “Concepts Related to Risk Prevention and Mitigation” #3, Human Rights Due Diligence, below.


Concepts Related to Risk Prevention and Mitigation

The UN Office of the High Commissioner for Human Rights describes “human rights” as “rights inherent to all human beings, whatever our nationality, place of residence, sex, national or ethnic origin, color, religion, language, or any other status.”[6] For further information on human rights, please refer to The Universal Declaration of Human Rights, The UN Guiding Principles on Businesses and Human Rights, and the State Department’s Annual Country Report on Human Rights Practices for Burma.

For information on worker rights and key principles please refer to the OECD Guidelines for Multinational Enterprises, the UN Guiding Principles on Business and Human Rights, and the International Labor Organization’s (ILO) Declaration on Fundamental Principles and Rights at Work:

For specific guidance on reducing child labor and forced labor, see the U.S. Department of Labor Toolkit on reducing child labor and forced labor.

The OECD Guidelines for Multinational Enterprises define due diligence as “the process through which enterprises can identify, prevent, mitigate and account for how they address their actual and potential adverse impacts as an integral part of business decision-making and risk management systems.” Due diligence will likely vary based on the size of the company and industry sector and may involve:

(1) a statement of policy articulating the company’s commitment to respect human rights;

(2) risk assessment of actual and potential human rights impacts or risks of company activities and relationships, which is undertaken in consultation with stakeholders;[7]

3) integration of these commitments and assessments into internal control and oversight systems of company operations; and

(4) tracking and reporting on performance.

For those investors operating through or with  other business enterprises, the OECD Guidelines for Multinational Enterprises, Chapter IV, paragraph 3 recommends that enterprises “Seek ways to prevent or mitigate adverse human rights impacts that are directly linked to their business operations, products or services by a business relationship, even if they do not contribute to those impacts.”[8] In the relevant commentary, the OECD provides that “Among the factors that will enter into the determination of the appropriate action in such situations are the enterprise’s leverage over the entity concerned, how crucial the relationship is to the enterprise, the severity of the impact, and whether terminating the relationship with the entity itself would have adverse human rights impacts.”[9] The UN Guiding Principles further provide “If the business enterprise has leverage to prevent or mitigate the adverse impact, it should exercise it.  And if it lacks leverage there may be ways for the enterprise to increase it.”  Where the enterprise is unable to increase its leverage, “the enterprise should consider ending the relationship, taking into account credible assessments of potential adverse human rights impacts of doing so.”[10]

Further information on due diligence also can be found in the UN Guiding Principles on Business and Human Rights, and in Chapter 4 of The OECD Guidelines for Multinational Enterprises, which draw upon the UN Guiding Principles on Business and Human Rights, as well as in the International Finance Corporation’s Performance Standard 1 and the OECD’s Common Approaches for Officially Supported Export Credits and Environmental and Social Due Diligence.  See the Appendix for sector-specific guidance.

There is broad agreement that widespread corruption is costly for business and for local communities, can inhibit democratic processes and hold back economic development, and is often associated with human rights risks.  This is especially true in Burma, which is consistently perceived as one of the most corrupt countries in the world.[11]

Please refer to the U.S. Foreign Corrupt Practices Act (FCPA), which prohibits bribery of foreign officials in order to obtain or retain business.[12] In addition, many investors have established anti-corruption policies and procedures that are commensurate with the corruption risk they may face in their operations, which may include:

  • A clearly articulated and publicly available anti-corruption policy;
  • Internal controls, including but not limited to: an ethics and compliance program for employees, and measures to monitor and re-assess bribery risks in order to review and improve existing procedures;
  • Engagement with stakeholders and the public on measures to fight corruption in a transparent way;
  • Disciplinary mechanisms for employee’s breach of anti-bribery policies;
  • Due diligence procedures for hiring or dealing with agents who may be subject to corruption risks;
  • Due diligence procedures for reviewing business relationships, including entities such as subsidiaries, subcontractors, joint venture and other business partners

Further guidance can be found in A Resource Guide to the U.S. Foreign Corrupt Practices Act, OECD Guidelines for Multinational Enterprises, Ch.VII: Combating Bribery, Bribe Solicitation and Extortion, as well as in the OECD’s Good Practice Guidance on Internal Controls, Ethics, and Compliance.

Transparency is important for businesses in all countries.  Companies that operate transparently with respect to their policies and practices can reduce their risk of involvement in corruption and develop better relationships with local communities, are better able to articulate the benefits their investments bring to foreign countries, and avoid perceptions of corruption or failure to “pay their fair share.”  This is particularly true in countries such as Burma, with a history of corruption and human rights abuses that many perceive to be related to foreign investment.

Transparency should be practiced along the entire “value chain” of a project, including transparency in how and where a company plans to operate, its policies and procedures relating to the issues including in these reporting requirements, and in the financial payments companies make to governments.

In the area of transparency in payments by companies and revenues collected, the Extractive Industries Transparency Initiative (EITI) provides a useful model for companies, governments, and non-governmental organizations in the oil, gas and mining sectors.  Under U.S. law, certain publicly-listed companies must also report payments made to foreign national and sub-national governments for certain activities related to the development of oil, gas, and minerals on a project-by-project basis (see Section 1504 of the Dodd-Frank Wall Street Reform Act).

Environmental issues are closely linked to other concerns, especially in Burma, where many communities are highly dependent on natural resources.

It is important to consider possible environmental impacts, including:

  • Pollution to air, water, and land.
  • Damage to ecosystem services.
  • Restrictions on access to water.
  • Generation of hazardous waste materials.
  • Dangerous use of pesticides.
  • Loss of biodiversity.

Further information on environmental performance can be found in IFC Performance Standards 3, 4, and 6, the World Bank Group’s Environmental, Health and Safety Guidelines, and the OECD Guidelines for Multinational Enterprises, Ch. VI.

Risk prevention and mitigation will vary based on the size of the company and industry sector.  Risk management may include:

(a) collecting baseline information, investigating and assessing possible risks, and following review, determining whether it is appropriate to proceed with the planned operations in view of identified risks, bearing in mind their likelihood and severity; if so,

(b) designing and implementing policies and procedures to reduce the likelihood of such risks being realized and putting in place appropriate measures to address abuses if they nevertheless arise.

Risk management may also include efforts to uncover and to stop practices that may violate U.S. national laws, Burmese national laws, or international law or be inconsistent with non-binding norms.

When investigating and assessing possible risks, a company may want to consider “general” risks posed by operating in Burma as well as the “project-specific” risks associated with operations or activities.  “General” risks are those associated with the baseline conditions in Burma with respect to the environment, human rights, worker protection, and corruption.  For investments that require the large-scale acquisition of land such as extractive projects or plantation agriculture initiatives, an example of a “project-specific” risk is arbitrary and unlawful land-confiscation and forced evictions of members of vulnerable populations by the host government,  company, or contractors.

For more information on risk management, see the IFC Performance Standards on Environmental and Social Sustainability and the UN Guiding Principles on Business and Human Rights, Principles No. 17-21.

Stakeholder engagement gives local communities and other stakeholders an opportunity to comment on the risks they may perceive from investment and to participate in the design of projects in order to minimize such risks and ensure that benefits flow back to the community.  Giving local communities greater access to knowledge enables investors to avoid pitfalls that could endanger the investment – such as the possibility of exacerbating community conflicts – and makes it more likely that communities will support the investment, rather than oppose it.

When indigenous peoples are involved, related concepts include recognition of customary rights over traditional lands, and consultation with regard to relocation for any project affecting use of land of indigenous peoples.  Many ethnic groups in Burma may self-identify as indigenous and/or be characterized by a long-enduring connection to the land and natural resources on which they traditionally rely and the retention of a traditional culture that is distinct from the majority ethnic Burmans.[13]

For more on stakeholder consultation, see the Appendix, as well as the UN Guiding Principles on Business and Human Rights and the IFC’s Performance Standards and Good Practice Handbook for Companies Doing Business in Emerging Markets.[14]

The UN Guiding Principles on Business and Human Rights provide that individuals who have been adversely impacted by business operations should have access to enterprise-level grievance mechanisms in addition to judicial remedies (i.e. access to a national or foreign court system).  In general, this provision is intended to ensure that for every human rights abuse, there is an accessible remedy.  Enterprise-level grievance processes, or mechanisms, may assist a company to monitor and respond to human rights impacts of its operations, provide a path to an acceptable remedy that is more accessible and less burdensome than formal judicial processes, and help to resolve disputes before they escalate into full-blown conflicts.

The Guiding Principles provide that operational-level grievance mechanisms should meet certain “effectiveness criteria,” including:  legitimacy, accessibility to stakeholders, procedural predictability, equitability, transparency, rights-compatibility (i.e. whether they deliver outcomes that are in accord with international human rights), the degree to which they are a source of continuous learning for the enterprise, and whether they are based on engagement and dialogue with the stakeholder groups for whose use they are designed.  The Guiding Principles make clear that enterprise-level grievance mechanisms are not a replacement for access to judicial remedy, nor are they a substitute for broad-based stakeholder engagement.

Measures that mitigate risk around land acquisition include, but are not limited to, community consultation and grievance processes to address concerns and negotiated settlements for displaced persons.

For more information, please see the Appendix, including the IFC’s International Performance Standard 5 and the Voluntary Guidelines on the Responsible Governance of Tenure.

For information on due diligence in conflict settings the following tools and guidance are available:


Footnotes

[7] A stakeholder typically is a person, organization, or group that has an indirect stake in an organization’s operations because it can affect or be affected by an organization’s action.  Stakeholders can include governments, local business partners, and members of civil society such as local communities and non-governmental organizations.
[8] Chapter IV, Para. 3 of the OECD Guidelines.
[9] See id, Commentary on Human Rights, #43.
[10]See Commentary to UN Guiding Principles, #19.
[11] See Transparency International, Corruptions Perception Index 2012

[12] 15 U.S.C. §§ 78dd-1, 78dd-2, 78dd-3, 78m, 78ff.  In general, the FCPA prohibits “offering to pay, paying, promising to pay, or authorizing the payment of money or anything of value to a foreign official in order to influence any act or decision of the foreign official in his or her official capacity or to secure any other improper advantage in order to obtain or retain business.”  See A Resource Guide to the U.S. Foreign Corrupt Practices Act.
[13] For a definition of “indigenous,” see U.N. Subcommission on the Prevention of Discrimination and Protection of Minorities, Study of the Problem of Discrimination against Indigenous Populations, U.N. Doc. E/CN.4/Sub.2/1986/7/Add. 1-4 (March 1986), ¶ 379.
[14] This Handbook does not, however, cover substantial 2012 updates to the IFC Performance Standards.

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