Natural Resources and Violent Conflict - WaterWiki.net

266 philippe le billonnature of trade. Mandatory legislation in home countries would providethe legal ground for overturning these financial confidentiality clauses.Applied globally, this would help to create a level playing field for allcompanies. More generally, these instruments would have the advantageof being relatively cheap to implement, since they would rely onavailable accounting data. Such legislation would avoid the charge ofbeing “neocolonial,” since it simply provides information to the public,without dictating the ways in which revenues should be allocated.Given these advantages, such measures should be promoted as anessential element of good governance of the global economy.Disclosure rules, and their consequences for investment, can increasethe social responsibility of companies; however, reporting israrely specific enough to assist in the detection of complicity by companiesin corruption or war economies. This could be improved bymore specific and socially oriented disclosure requirements, such associal impact assessment in countries with a low Human DevelopmentIndex, financial reporting at a country level, and links to more specificassessment reports. Many shareholders also complement companyanalysis by monitoring both the activities of the companies and thecontext in which they operate. This is particularly true of resourcecompanies operating in politically volatile situations where risks arehigh. For most investors, however, the bottom line is more frequentlydefined by share value and dividends and less frequently by ethics. Inthis regard, the work of investigative journalists or advocacy nongovernmentalorganizations can provide fund managers with a detailedanalysis of the practices of companies and their consequencesand result in a general divestment movement. Such measures, however,require global action; many medium-size companies criticizing morestringent rules on the U.S. stock exchange following the Enron scandalthreatened to withdraw to more lenient financial public markets or goprivate altogether.Multilateral and national export credit and investment insurers,such as the World Bank’s Multilateral Investment Guarantee Agency orthe U.S. Overseas Private Investment Corporation, are not mandatedto consider or reduce the impact of their clients on conflict-affectedcountries. Until recently, only the economic and political risk impingingon the ability of firms to perform contracts and the ability of thecountry to service its external debt were taken into consideration.Agencies nevertheless are becoming increasingly aware of the broaderrisks entailed by projects in conflict areas; by making their financialassistance conditional on criteria such as the OECD Guidelines forMultinational Enterprises, these agencies could provide a mechanismfor applying enforcement instruments directed at conflict resources.