Natural Resources and Violent Conflict - WaterWiki.net

getting it done 265ethical investment and pension funds specifically integrating environmentalor social responsibility as investment selection criteria. Likeother ethically minded investors, these funds use their financial influenceto encourage greater corporate social responsibility among thefirms in which they have invested. Some advocacy groups have purchasedshares only to be able to propose ethically driven resolutions.Specific indexes assessing the ethical responsibility of listed companies,such as the FSTE4Good Index or the Dow Jones Sustainability Index,also facilitate the choice of investors and could play a greater role in thefuture—although these indexes remain financially marginal and arecriticized for requiring low ethical standards.Several recent initiatives relate to the financial transparency ofresource sectors in relation to armed conflicts. The G-8 promotes thetransparency principle through its 2002 Africa Action Plan (box 6.2).U.K. Prime Minister Tony Blair launched at the World Summit onSustainable Development meeting in Johannesburg the ExtractiveIndustries Transparency Project, which is being backed by a number ofgovernments and major companies and could lead to either a voluntaryor a mandatory transparency instrument. A coalition of nongovernmentalorganizations led by George Soros and Global Witness is alsoseeking to improve the transparency of fiscal reporting through theirPublish What You Pay campaign, which aims to make the disclosureof all payments by oil, gas, and mining companies to host governmentsa mandatory condition for being listed on international stockexchanges. 56 Because this measure would not affect unlisted companies,such as privately owned or state companies, the campaign alsoaims to set similar obligations of public disclosure under national orregional company law. A further loophole that will prove even moredifficult to close concerns the regulation of international brokers registeredin offshore jurisdictions and state companies in host countries.Such brokers specialize in carrying out the “dirty work” of obtainingresource concessions (often through corrupt deals), before selling themin a “clean” manner to resource companies. Local “sleeping partners”associated with the operations of resource companies, in the form ofboard directors or state companies in charge of some subcontractingoperations, also act as vehicles for corruption by diverting large cashbonuses, commissions, or profit shares. 57 A system of mandatory disclosure,peer review, and industry certification associated with financialincentives and possibly market access thus needs to be extended tothese types of companies.There is a strong argument in favor of global and mandatory instrumentsgiven the financial confidentiality clauses imposed by many hostgovernments on resource exploitation contracts and the competitive