U.S. State Department Must Hold U.S. Companies in Burma to International Standards

New investors in Burma should be required to publicly report on their human rights and environmental impacts, land acquisitions, security arrangements, and government payments – as well as those of their subsidiaries and business partners – based on internationally accepted standards and best practices, according to a comment ERI submitted to the State Department last week. 

ERI’s comment feeds into the debate over new U.S. investment in Burma, which the U.S. Government permitted in July for the first time in decades in response to recent political reforms.  Investment restrictions on all sectors of the Burmese economy have been waived, while financial transactions and investments in the military or military-owned companies remain prohibited.  In response to the concerns of Burmese civil society and human rights organizations like ERI, the U.S. Government has also proposed that investors must report on their due diligence policies and procedures on human rights, the environment, labor practices, and land acquisition, as well as payments to the Burmese state, among other requirements. 

While the proposed reporting requirements touch on a number of important issues, ERI and other organizations are concerned that they are insufficient to prevent U.S. investors from contributing to – and being complicit in – human rights and environmental abuses and corruption.  A number of Burmese civil society groups, along with international human rights NGOs and investor groups, have called for the State Department to strengthen and broaden its requirements.

ERI has joined a coalition comment submitted by 17 human rights organizations and investor groups and submitted its own comment, which focuses in greater detail on the creation of a more comprehensive disclosure framework.  ERI hopes that this framework will foster more inclusive information disclosure, educate submitters on relevant international standards of conduct, provide for standardized reporting, and allow for comparability while better promoting respect for human rights.

ERI’s comment primarily addresses the concern that U.S. investors will use the newly permissive investment policy to do business in Burma without abiding by internationally recognized best practices on human rights, environmental performance and financial transparency.  Under ERI’s proposed framework, investors’ reports to the State Department would be mandatorily based on these best practices, which are drawn almost entirely from international codes that the U.S. government has officially endorsed, covering:

  • Due diligence for human rights, worker rights, and the environment;
  • Anti-corruption measures;
  • Companies’ procedures for handling complaints about human rights impacts;
  • Community and stakeholder engagement;
  • Special protections for indigenous peoples, whose free, prior and informed consent (FPIC) is needed for projects that may negatively affect them;
  • Arrangements with security service providers;
  • Policies and procedures relating to property and land acquisition; and
  • Disclosure of the payments investors make to the Burmese government

In addition, ERI’s comment recommends that the State Department strengthen the proposed reporting requirements by eliminating a loophole that allows investors to choose without oversight to withhold information from public disclosure.  The requirements should also make clear that investors must report on the operations of business partners and related entities over which they have significant influence.

ERI has deep concerns about any new investment in Burma that does not practice transparency, guarantee non-involvement with the Burmese military or provide adequate assurances on environmental and human rights responsibility. ERI strongly urges the administration to incorporate internationally recognized best practices to provide more meaningful disclosure and use this opportunity to set a model for responsible investment in Burma.