CSR in Colombia Observations and recommendations Commissioned by the Ministry of Foreign Affairs

CSR in Colombia Observations and recommendations

Commissioned by: Authors: Version:

The Netherlands Enterprise Agency Hilke Jansen (BBO) & Petra Veeneman (MVO Nederland) Final, March 2016

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Preface Promoting Corporate Social Responsibility (CSR) is an important aspect of the work of Dutch embassies abroad. The Dutch government expects that Dutch companies follow not only the laws and regulations of the countries in which they do business, but also international CSR guidelines, such as the OECD Guidelines for Multilateral Enterprises and the UN Principles on Business and Human Rights. Embassies help companies find their way in foreign markets, and create awareness about CSR at the same time. The Embassy of the Kingdom of the Netherlands in Bogotá assists Dutch companies in doing business in Colombia. Together with the Netherlands Enterprise Agency (RVO) and our bilateral Chamber of Commerce ‘Holland House’, we provide information about the state of the economy and opportunities in specific sectors, maintain contacts on behalf of the private sector with government and public sector agencies and help solve problems whenever they occur. Maintaining a constant dialogue with Dutch companies about the social, labour and environmental aspects of doing business in Colombia is an important part of our daily work. We also support various initiatives that contribute to a greener and fairer supply chain, for instance in the coffee, flower, palm oil and banana sectors. In order to improve our communication with private sector stakeholders about CSR, we asked MVONederland and BBO to provide us with an up-to-date overview of the most important CSR risks - and opportunities - for Dutch companies in Colombia. We also asked for policy recommendations: how can the Embassy be even more effective in informing companies about issues including business and human rights, labour rights, environmental impact and corporate governance? How can we help Dutch companies to turn their knowledge and experience about such issues into a competitive advantage? We will study the analysis and suggestions MVO-Nederland and BBO put forward carefully. They will help us to refine our activities and to turn government policy into practice.

Robert van Embden Ambassador to the Kingdom of the Netherlands in Bogotá, Colombia

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Table of contents

1.

Introduction.................................................................................................... 4

2.

CSR in the context of Colombia ............................................................................ 5 2.1 Understanding CSR .......................................................................................... 5 2.2. Context of Colombia ....................................................................................... 6 2.3 CSR policy in Colombia ..................................................................................... 7 2.4 Observations during the mission .......................................................................... 8

3.

CSR Challenges in Colombia ............................................................................... 11 3.1 Human Rights .............................................................................................. 11 3.2 Labour rights ............................................................................................... 13 3.3 Environment ............................................................................................... 16 3.4 Corporate governance / corruption .................................................................... 18

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Sector insights and opportunities ........................................................................ 21 4.1 Agriculture ................................................................................................. 21 4.2 Tourism ..................................................................................................... 24 4.3 Other relevant CSR developments in Colombia ...................................................... 26

5.

Conclusions and recommendations ....................................................................... 29

6.

Annex ......................................................................................................... 32

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1. Introduction This report is the result of an exploration (CSR Scan) executed by MVO Nederland (CSR Netherlands) and BBO, commissioned by the Embassy of the Kingdom of the Netherlands in Bogotá, Colombia. The objective of this assignment is threefold: •

To compile a thorough analysis of CSR risks and opportunities for Dutch companies doing business in Colombia, with a specific focus on human rights, labour rights, environment and corporate governance;

•

To formulate policy recommendations as to how the Dutch government through its embassy in Bogotá should communicate such risks and opportunities tot the Dutch business community;

•

To update existing information materials and tools and create new information material accessible to Dutch companies (wanting to be) active on the Colombian market.

When it comes to doing business in Colombia, various sector-specific studies have been conducted over the last few years, that describe the business opportunities in these sectors (a.o. horticulture, dairy, water, urban planning, cycling, biomass). During the desk research phase these reports have been analyzed on the CSR-components and where relevant and of value to the scope of this research, outcomes of these reports are integrated in this analysis as well. In preparation of the factfinding mission Dutch companies with activities or affiliates in Colombia were interviewed to capture their vision on doing business in Colombia and the role of CSR aspects (names are available on request). Next step in the approach was a mission to Colombia, in which the results of the previous were verified during meetings and round tables with representatives from business, government and civil society organisations. Their opinions are incorporated in this report. This is not a conclusive, complete study on the state of art of the level of CSR in Colombia, including all initiatives and developments. The scale of this assignment was a quick scan; it does though provide a deeper understanding on the main CSR themes mentioned above, creates an insight on CSR across the public and private domain and reflects stakeholder visions from both business, government and civil society. Cases discussed and referred to are known as best practices in the area of CSR in Colombia. It is important to mention that many of the human-, labour rights an environment issues in Colombia are related to the extractives/mining industries. In the context of this report, these issues are tackled in a broader sense, as they are relevant for other sectors as well. A separate chapter describes sector-specific CSR issues ánd relevant business opportunities between the Netherlands and Colombia. The report concludes with recommendations and practical tips for businesses doing or planning to business in Colombia.

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2. CSR in the context of Colombia 2.1 Understanding CSR Corporate Social Responsibility refers to the strategic focus of core business activities on long-term value creation in the three dimensions of People, Planet and Profit, combined with the willingness to get into dialogue with society and stakeholders1. By having a CSR-strategy in place a company or organisation is well prepared for the future and acts in line with current guidelines on responsible business. Transparency and involvement of stakeholders are crucial elements in developing a CSR-strategy. By involving business partners, clients, suppliers, but also employees, the neighbouring community and other relevant stakeholders in this process, a company can prepare itself for (future) societal challenges as well. CSR goes beyond corporate philanthropy and charity and also goes beyond complying with laws and regulations. There is not one single approach to CSR. Themes and issues differ per country, sector and enterprise. CSR is a process and should not be seen as a final destination. Ambitions should be adapted over time, as the business context as well as the societal context are continuously subject of change. Normative framework The OECD Guidelines2 are often seen as the ‘normative framework’ for international CSR. These guidelines are the result of consultations with the business community, labour unions and civil society organisations. The government of the Netherlands expects Dutch companies investing and operating abroad to act in accordance with the OECD Guidelines. OECD member countries subscribe the OECD-guidelines and host a National Contact Point (NCP). The NCP has two tasks: informing the business community about the OECD-guidelines and to process cases on violations of the guidelines. (Suspected) cases of companies violating the OECD-guidelines can be brought in at the NCP. Universal human rights Fundamental human rights related to business are described in the UN Guiding Principles on Business and Human Rights (UNGP’s), accorded in 2011 by the UN Human Rights Council. Professor John Ruggie has developed the “Protect, Respect and Remedy”-framework, resting on three pillars: • • •

the state duty to protect against human rights abuses by third parties, including business the corporate responsibility to respect human rights; greater access by victims to effective remedy, both judicial and non-judicial.

Labour rights Labour rights are often integrated in national laws, but compliance and enforcement is often lacking. All labour rights are stipulated in the conventions of the International Labour Organisation (ILO). Environmental protection laws and regulations are normally ratified on a national level (not on a global level). The Paris Agreement might actually lead to global international bonding measures for reduction of global greenhouse emissions.

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SER, Dutch Social Economic Council In Dutch: www.oesorichtlijnen.nl

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Strategies for CSR The following graph shows the continuum of possible CSR strategies (source: MVO Nederland):

Some of these strategies are more ambitious than others, and some focus more on transformational opportunities (do good), than on avoiding risk (do no harm). It is not said that one is better than the other; the appropriateness of the strategy depends on the context and goals of individual companies or entire sectors.

2.2. Context of Colombia Colombia’s economics and business climate Colombia, a country with 48,9 million inhabitants (World Bank) has been ranked 34th (out of 189) in the Ease of Doing Business Indicator on the list of Ranking of economies by the World Bank in 2014, the highest position for any country in the region of Latin America and the Caribbean. Colombia is the third largest economy in the region after Brazil and Mexico. Colombia has been highlighted by the World Bank as a ‘top reformer’ in five of the last eight years, as the top country in Latin America (and 6th in the world) for investor protection. Even though lower oil prices put a strain on economic growth, Colombia is still one of the regions best economic performers. Source: Ephotopix.com

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Politics Colombia has suffered an armed conflict for over 50 years, and this remains the main civil confrontation in the country. The most well-known guerrilla group is the Revolutionary Armed Forces of Colombia (FARC). The conflict has become increasingly complex as paramilitary groups emerged to defend the interests of large landowners. Moreover, the ideological conflict has been to some extent replaced by a struggle for control of the drugs-trafficking business and natural resources. Despite the conflict, Colombia’s democratic system has been resilient and stable. In 2010, Juan Manuel Santos, a former Defence Minister, was elected as President. He has maintained a focus on security, while also looking to broaden economic participation and tackle some of the economic causes underlying the conflict. He pursued reforms on land, education and poverty alleviation. His focus is on strong economic growth through increasing international business and foreign investments, mainly in the oil and mining industries as well as (agro) commodities. In the international arena, Colombia has sought a more prominent profile, for example as one of the founding members of the Pacific Alliance and through candidacy for OECD membership. Inequality is high in Colombia and creates a noticeable gap between the richest and the poorest citizens. Improved economic performance has not always led to equal distribution, and extreme poverty is concentrated in rural areas. The abundance of violent incidents and the confrontational nature of such a struggle have caused the frequent abuse of human rights, both by state’s security forces and illegal armed groups. Human rights activists and unionists have been threatened or killed, which makes their job a dangerous endeavour in so-called red zones3. Peace negotiations In 2012 the Colombian government and the FARC started negotiating a peace agreement. In September 2015 an important partial treaty on Transitional Justice was established between both parties. With this accord it is believed that a final peace agreement can be signed in 2016, but with such precarious political processes no guarantees can be given. In January 2016 the UN Security Council approved a resolution that calls for establishing a UN mission to oversee disarmament. A post conflict process brings new opportunities for the Colombian society and business as well as new challenges to rebuild the country and bring security, justice and prosperity for all. The ongoing armed conflict has severely influenced the process of doing (international) business in Colombia. Violence and security issues are still present in parts of the country, mostly in rural areas. While the conflict is still a fact, it is no longer a significant issue for businesses operating in Colombian cities, although the possibility of indiscriminate attacks still exists. In general, the more remote the area, the greater the potential threat to safety4. Further barriers to the full realisation of potential for business include poverty, corruption, poor infrastructure and the complicated situation of land distribution. Again these are likely to be more acute in remote areas where the government may lack effective control.

2.3 CSR policy in Colombia There is no national integral CSR policy or vision in place in Colombia. Core aspects of CSR like human rights and environment are the responsibility of different ministries and many institutions. Human rights are high on the political agenda, as the Presidential Office for Human Rights has launched a National Plan on Human Rights and Business in line with the UN guidelines on December 18th, 2015. The Dutch government is supporting this plan and has its own National Action Plan to encourage Dutch business to respect human rights in all their operations globally. 3 4

Colombia Country Report, Bertelsmann Stiftung Transformation index (BTI), 2014 Foreign and Commonwealth Office (FCO) of UK government

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Since 2014 Colombia is candidate to join the OECD. This also offers opportunities, for example in the areas of CSR and compliance with OECD guidelines. After all, to become a full OECD member, Colombia must meet a rigorous and comprehensive set of requirements, including compliance and respect for human, environmental and labour rights. A National Contact Point has been established, under the umbrella of the Ministry of Commerce, Industry and Tourism (CIT). Implementation of CSR in Colombia On the level of implementation, there is no organisation or network fulfilling a coordinating role in informing and supporting the business community in CSR. There are various initiatives that intend to support companies on various CSR-related topics, interviewed during the mission: • Icontec, the Colombian normalisation institute, indicates that La Guía Técnica Colombiana (GTC) 180 de Responsabilidad Social is the most appropriate guideline (compared to ISO26000) for companies (active) in Colombia as it fits better to the Colombian context; • Sello de sostenibilidad is a new initiative launched by Icontec. Companies can obtain a sustainability certification in three levels, as a reward for their efforts in the field of people, planet and profit; • B-Corp is (US/Canada based) non-profit organization (B2B) dedicated to using the power of business to solve social and environmental problems. Over 1400 businesses from more than 40 countries have joined this initiative. There are 20 companies (various sectors) in Colombia that have affiliated themselves with B-Corp. One of its members, Thermaflex, was interviewed during the mission; • Mapa Social is an initiative by ANDI (Asocación Nacional de Empresarios de Colombia), private partners and the Colombian government that aims to map social initiatives in Colombia, bundling initiatives and projects by 600 companies, 100 foundations and government initiatives. Mapa Social offers a platform where potential partners for social projects and strategic alliances can find each other. ANDI positions itself as a broker in this case; • Red Pacto Global: the Colombian brench of Global Compact; • Cecodes: an organisation of 40 members form the business sector, mainly multinationals and larger Colombian or Latin American companies; • Global Reporting Initiative (GRI) is active in stimulating companies to report on CSR performance and provides advice and tools on reporting.

2.4 Observations during the mission “The culture of philanthropy in Colombia is an obstacle for true inclusive business” - Santiago Madriñan de la Torre, WBSCD / CECODES As stated above, CSR is about the long-term strategy of the company. This is not yet a familiar approach to many Colombian companies, as most investment decisions are taken based on short term profit aspects only (instead of including people and planet as well). Combined with a shortterm view (no long-term planning), this leads to the fact that the cheaper alternative is often more attractive and real strategic long-term CSR investments are little in Colombia. In addition, CSR is often still interpreted as philanthropy and charity. Apart from the fact it can be seen as a ‘stage in the development of awareness about CSR’, this perception also relates to the long tradition of the role of the private sector in social development in Colombia, which has been moulded by both cultural and contextual circumstances. Nowadays, over 25.000 private social non-profit foundations exist in Colombia, varying in size, focus and level of social impact. RedEAmérica, the Latin American network for private social investments, recognizes an ongoing shift amongst the larger foundations, a shift from traditional ‘doing good’ to social investments

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with focus on creating impact, related to the core business. Red E provides support to foundations in order to define the focus for strategy for social investment in vulnerable communities. “In the past, many companies would create corporate foundations to attend the community relations. This trend has changed and now we see more often companies managing themselves the relations with the communities.” - Margareth Florez, RedEAmérica Perception of CSR in Colombia: During the mission, the following stakeholder visions were captured during the meetings: • Most interviewees use the word “sostenibilidad” (sustainability) instead of CSR. CSR (RSE in Spanish) refers to social responsibility only and links to the strong relation with foundations as described above. However it has been acknowledged that the concept of CSR is currently undergoing a transformation in Colombia, as more and more (large) companies incorporate the concept in their business strategies; • Knowledge of the OECD Guidelines and how to implement them is little; • The group of consumers demanding sustainable products is estimated under 1%. This group of consumers predominantly lives in the capital; • There is a high lack of knowledge and measures and tools for implementing CSR, despite the many institutions; • Sharing information, exchange of experiences on CSR is not common yet for entrepreneurs active in the same sector. • The frontrunners are fairly advanced in CSR, mainly in environmental issues (carbon foot print, water use) and social/gender issues (equal payments, fair wage and training). They develop their own CSR strategy, often under the umbrella of the policies of their international ‘mother’ companies. • Experiences of these ‘frontrunners’ on CSR are not yet shared within sector or business. CSR and SMEs: • CSR is seen as something that large companies have opened their eyes for, while for small and medium sized enterprises (PYMES in Spanish) it is still a new subject. SMEs are not seen yet as actors that can play an innovative role and add value to the Colombian economy (by stakeholders and government), while reality shows the contrary (looking at the best practice of f.e. Thermaflex –see chapter 4- and the crucial role of SMEs in the Netherlands when it comes to CSR); • Long term thinking (in terms of sustainable business strategies) is not yet widespread amongst SMEs; • CSR is called a ‘thing of the capital, only known and used in cities and by larger companies, not as such in rural areas or by SMEs. In fact, the grand majority (95%) of businesses in Colombia can be counted as micro companies (1-10 people) such as small shop owners, family business and farmers, who are at best self-sufficient and initially need credit and/or social security; • The policies on CSR are centred around the bigger companies. Opportunity ánd challenge is to include medium sized enterprises of 50-250 people and support them to become more sustainable; • SMEs (and sectors with many SMEs) are not (yet) subject of critical watchdogs and CSOs and therefore don’t feel any pressure from society as such. So far, since there is no integral CSR or sustainability policy in place in Colombia, CSR is in business’ hands. When you come to Colombia, you should be interested and be open to understanding the internal differences in our country. Not only economic differences, but also cultural and geographical aspects and the fact that Colombia is a country with many different ecosystems. Developing a

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strategy of doing business in a post-conflict country like Colombia, means that the people and environment in the territory should be included. - Santiago Madriñan de la Torre, WBSCD / CECODES

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3. CSR Challenges in Colombia 3.1 Human Rights Laws and regulations in place Colombia has many laws and regulations concerning the protection of human rights and has ratified most international agreements on human rights, as well as specific declarations like the UN Voluntary Principles on Security and Human Rights (VPs) for the extractive sector companies5 and the Free and Prior Informed Consent6 that guarantee extensive rights to indigenous and AfroColombian groups, over their traditional territories and with the aim to protect their culture. However, Colombia has also been criticized for its human rights record. Various stakeholders have referred to Colombia as a country with concerns in the areas of human rights and impunity, especially in the conflict affected areas. 7 Key issues Despite the reduction of homicides and kidnappings over the last decade and progress in the peace process, reducing violence is still one of the country’s main challenges. The abundance of violent incidents and the armed conflict have caused the frequent abuse of human rights, both by state’s security forces and illegal armed groups8. Moreover, high levels of inequality between rural and urban areas are still a character of the country’s social and economic reality9. The benefits of an improved economic performance are not reaped by everyone, and extreme poverty is concentrated in rural areas10. According to the Overseas Business Risk Guidance of the UK government, human rights defenders are frequently victims of violence and intimidation, peasants, indigenous and AfroColombian people suffer displacement and threats, and impunity and injustice levels remain high. Problems are most acute in remote areas where state presence is limited and illegal groups have significant power and/or in areas with high economic value and natural resources. The Universal Periodic Review of the UN (2013) recommended an increase in efforts to investigate and prosecute those responsible for threats and violence against Human Rights Defenders, trade unionists, community leaders and journalists. Land issues in Colombia are complex. According to human rights organisations, land grabbing and forced displacements have in certain cases benefited large-scale infrastructure developments and the agro-industrial, agro-fuel and extractive industries, both domestic and international. The informality of land ownership in Colombia has made it difficult for occupants to defend land claims, in absence of enforceable land titles11. Multinationals or companies that are directly or indirectly operating in conflict-affected areas frequently become – either deliberately or unwittingly – an actor in the conflict12. A Land and Victims law was passed in June 2011. It aims to recognise victims 5

The VPs are a multi-stakeholder initiative involving governments, companies, and non-governmental organizations that promotes implementation of a set of principles that guide oil, gas, and mining companies on providing security for their operations in a manner that respects human rights 6 UN declaration on the rights of Indigenous People, 2008 7 Office of the United Nations High Commissioner for Human Rights (OHCHR)UNHCR concluding observations of human rights committee 2013 8 ‘Colombia has one of the highest rates of homicide, internal forced displacement, and human rights violations in the world’ Colombia Country Report, Bertelsmann Stiftung Transformation index (BTI) 2014 and Amnesty International Colombia Report 2014. 9 OECD review 2015: Gini index in Colombia now shows an income inequality above 50%, higher than early 90’s and higher than comparable peer countries like Argentina, Brazil, Chile. 10 ‘Colombia Country Report, Bertelsmann Stiftung Transformation index (BTI) 2014 and Amnesty International Colombia Report 2014. 11 Amnesty International 2014,“A land title is not enough: Ensuring sustainable land restitution in Colombia” 12 SOMO 2014, Multinationals and Conflict: International principles and guidelines for corporate responsibility in conflict-affected areas

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of the internal armed conflict, to provide them with compensation and to return illegally seized or abandoned land to those who have been forcibly displaced13. Six million people (13% of the population) have been forcibly displaced and an estimated eight million hectares (some 14% of the Colombian territory) have been thought to be illegally acquired over the course of the armed conflict14. Even though the Land law marks an important step forward in land reform and restitution, only a small part of the victims has – so far - been compensated. The government initially estimated that by the end of 2015 there would be judicial rulings in more than 150,000 land restitution cases under the Victims Law. However, as of September 2014, the government had obtained land restitution rulings for just 1,546 of the nearly 68,000 claims it had received. As of September 2013, the government could only confirm three cases of families who had returned to live on their land due to rulings under the law15. Inequitable land distribution, conflicting land use priorities and complex land tenure and title processes (including corruption) are still reality in the country and land restitution claimants and leaders have reported being threatened16. Companies should note that under the law they are expected to not only be able to show that they acquired land legally but also that they carried out the due diligence necessary to establish that it has not previously been illegally acquired. Overall the issues of human rights and land use have the greatest impact on mining, oil and gas and agriculture sectors and firms operating in remote, rural areas17. However, the majority of the economic activity and centres of commerce are close to Colombia's major cities (Bogotá, Medellín, Cali). The main human rights challenges in urban areas do not primarily concern land issues (unless production in rural areas is part of the company’s supply chain). CSR challenges for companies include compliance with (inter)national laws and regulations on human rights (f.e. on child labour, discrimination, social security), as well as providing accountability and transparency on the human rights challenges that they might encounter and determine the scope of their responsibility to respect human rights (due diligence)18. The Colombian National Action Plan The Colombian government has developed a National Action Plan (NAP) for Business & Human rights in line with the UN guiding principles, with the aim to meet the existing human rights obligations and increase business awareness19. The NAP comes at a crucial time for Colombia, as the signing of the final peace agreement between the government and the guerrilla group FARC is foreseen in 2016. The Colombian government is counting on foreign direct investment (FDI) as a vehicle for economic development and is hoping that the private sector – including foreign investors – will play a significant role in financing post-conflict efforts20. Even though a pending tax reform might increase the tax burden for both national and international companies, the post-conflict period will also offer opportunities. This is true in particular for companies and investors who are willing to 13

Colombia trade and export guide, UK Foreign & common Wealth Office and UK Trade & Investment Doing business in Colombia, 2015 14 Amnesty International 2014,”A land title is not enough: Ensuring sustainable land restitution in Colombia” 15 16

https://www.hrw.org/world-report/2015/country-chapters/colombia

Human Rights Watch 2013, “The risk of returning home” Overseas business risks Colombia, UK Government, 2015 18 The UN Global Compact’s overarching expectation of business on human rights is: to respect and support human rights. Respecting human rights means a business should use due diligence to avoid infringing human rights (“do no harm”) and should address adverse human rights impacts with which they are involved. In addition, beyond respecting human rights, business is encouraged to take action to support human rights. 19 PNA de derechos humanos, Consejería DDHH, Presidencia de la República, 2015 20 Investment & Human Rights Project, IHRP issues recommendations on investment for the Colombian National Action Plan on Business and Human Rights, 2015 17

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work with the challenges of a post-conflict situation and who can develop commercial activities that strengthen peace building efforts, with respect for human rights and the environment. “Our country’s postconflict scenario offers the perfect opportunity for companies to redefine their role towards social development. How? By integrating social matters to their core business, this has been proven to be beneficial not only to communities but also to business themselves” Isabella Barrios, ANDI Tools and guidelines Several multi-stakeholder initiatives have developed guidelines for business on minimum standards and human rights due diligence for companies: • The Colombian guidelines of “Guías Colombia en Derechos Humanos y Derecho Internacional Humanitario” is a multi-stakeholder initiative composed of members of the business community and Civil Society Organizations (CSO) in Colombia and the Colombian government. The common purpose is to contribute to the improvement of Human Rights and International Humanitarian Law in relation to business operations in Colombia. With this objective, those who are part of the Colombia Guidelines have taken on the task of developing guidelines and tools that guide the business operations in a way that upholds Human Rights and international humanitarian law. • The Human Rights & Business Country Guide of Colombia gives a very complete overview of the recommendations and information on key issues like: right holders at risk, sector and regional profiles, stakeholder recommendations and engagement opportunities. • Comité Minero Energético en Seguridad y Derechos Humanos (Mining and Energy Committee on Security & Human Rights). • PWC corporate reporting - Spotlight on Human Rights reporting: what can companies do to improve their human rights reporting and the underlying benefits. • GRI is currently improving its tools for companies to report on human right performance. • The UN Global Compact library has extensive information, guides, tools and case examples to support companies in respecting human rights, amongst others on: responsible taxation, business and equality, rights of children and women, respecting right to water and sanitation, benchmarking, Human rights impact assessments, human rights and extractive industries. “Human rights is a sensitive term. As important as human rights, it´s equally important to give a voice to people to stand up for their rights” – Margareth Florez, RedEAmérica

3.2 Labour rights Laws and regulations in place Colombia has ratified 60 ILO conventions including 8 on fundamental labour rights. However, intimidation and violence against trade unionists is still an area of concern. Trade unions are legal but unionisation levels are low and members can be subject to threats and violence. Colombia is the country with the most deaths of anti-union violence. Basic labour protections, including the right to freedom of association and collective bargaining, are violated on a national scale21. Also the ITUC Global Rights Index 2015 scores Colombia to one of the worst countries in the world to work in with no guarantee of rights: While the legislation may spell out certain rights, workers have effectively no access to these rights and are therefore exposed to autocratic regimes and unfair labour practices. Trade union leaders are still victims and anti-union attitude amongst employers is frequent. High rates of violence, threat and murders of unionists are reported by several unions and

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WOLA, Labor rights violations persist in Colombia, 2013

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civil society organisations22. Free Trade Agreements Colombia has signed Free Trade Agreements (FTA) with the USA and the EU, both including a sustainability clause to safeguard human rights and uphold environmental standards under de agreement. In the FTA with the USA, both parties also committed to adopt and maintain the five fundamental ILO labour rights, resulting in an agreed Colombian Action Plan Related to Labour Rights. This plan addresses concerns regarding protections for worker rights, violence against Colombian labour union members, and the prosecution of those who commit such violence23. The implementation of the sustainability clause and the action plan has been criticized by various international bodies, Trade Unions and civil organisations because of the limited monitoring by both the USA, EU and Colombian authorities. Meanwhile, such commentators also mention lack of progress made by the Colombian government on addressing the needs of workers and their unions24. Since the introduction of the Labour Action Plan in 2011, 73 trade unionists have been murdered. That is about a quarter of the number of murders in the previous years, but enough for various actors to conclude that the plan has failed25. It is often mentioned that there is a difference between legislation and planning done by the government and daily practice. Implementation of human rights-related laws and standards remains a challenge. The Trade Union Advisory Committee to the OECD26 concluded in 2013 that more needs to be done to meet internationally recognized labour standards on public governance and regulatory quality in Colombia. They observed: 1) violation of freedom of association and collective bargaining, which are essential forms of regulation of the labour markets, 2) weak enforcement of labour law, 3) high levels of impunity in the police force, public prosecution service and judiciary in cases related to violence against trade union members, 4) the absence of substantive social dialogue between government and trade unions. Labour market Colombia has skilled workers and the second most flexible labour market in Latin America, though with high levels of labour informality27; around 47% of employees work informally according to the Colombian statistics agency (DANE)28. According to the FNV and CUT (Trade Unions) hardly 10% of all employees in Colombia fall under collective labour agreements (CAO in Dutch): 2 million out of the 22,5 million workers in 2014). Subcontractors often pay poorly, only work with temporary contracts and offer workers no certainty.29 Colombia’s minimum wage is set every January and acts as a benchmark for wage bargaining. The minimum wage is applicable to all sectors of the economy. In practice, the organisation Escuela Nacional Sindical reported in 2013 that 49 percent of the working force earned less than the minimum wage and 84 percent less than two minimum wages. Furthermore, temporary worker’s income was 19 percent less per worked hour compared to

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ITUC survey of violations of trade union rights, 2014, WOLA defending workers rights in Colombia, 2015, Justice for Colombia, 2015, FNV-Mondiaal, CNV-Interantionaal, Human Rights Watch, World report 2015 p. 172 23 Office of the United States Trade Representative, overview of the US – Colombia Trade Agreement / full Colombian Action Plan related to labor rights, 2011 24 Trade Union Advisory Committee (TUAC) to the OECD Rule of Law and Labour Rights in Colombia paper 2013: Government of Colombia has made efforts to reduce the power of armed organizations, modernize the economy and attract foreign investment, but made little progress in addressing the needs of workers and their unions. 25 Mondiaal nieuws, 2014 26 Regulatory Policy Committee (RPC) and the Public Governance Committee (PGC) of OECD met in April 2013 to discuss and approve OECD reports on regulatory reform and on public governance in Colombia. 27 Overseas business risks Colombia, UK Government, 2015 28 Departamento Administrativo Nacional de Estadística (DANE), periodic report of informal employment and social security, 2016 29 FNV, 2014

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formal workers30. The OECD concludes in its latest Review of Labour Market and Social Policies in Colombia31 that progress has been made but the challenges remain: ‘Colombia has made major economic and social advances in recent years. The combination of strong economic growth and policies targeted at the most vulnerable groups improved considerably the living standards of the Colombian population. But despite these positive trends, deep structural problems remain. Labour informality is widespread, the rate of self-employment is high and many employees have non-regular contracts. Income inequality is higher than in any OECD country and redistribution through taxes and benefits is almost negligible. In addition, half a century of internal conflict and violence has displaced a significant part of the population, and many of them are living in extreme poverty. Despite considerable progress, violence continues to be a challenge and also affects trade union members and leaders.’ The role of companies Even though the Colombian government has put labour rights on the political agenda, there is still a lot to improve to comply with international union and labour rights. Companies can play a significant role in this, but their impact varies strongly per sector. Particular attention should be paid to labour and union rights when operating in mining & oil sector and agri-industry (plantations of sugarcane, coffee, palm oil, flowers). Poor living conditions, child labour (and forced labour), low salaries (below minimum) and lack of sanitation facilities and health and safety hazards have been brought up in several cases in these sectors32. Larger companies operating in extractives or (agro) commodities or infrastructural sectors have in some cases been accused of severe human rights violations, especially in conflict-affected areas. For frontrunners companies, who were interviewed during the fact finding mission, labour rights issues are defined as: good working conditions for employees, equality between men and women, a healthy and safe work environment and good salary and secondary working conditions (at least a minimum wage) and the responsibility of the employer provide pensions and education. Polarization There seems to be a sentiment present among employers that unions consist mostly of activists wanting to obstruct companies’ interests by organizing strikes. On the other hand, some trade unions have a reluctant attitude to start constructive social dialogues with company management or the government. A polarized environment is present between employers and employees/unions. Laws are in place, the problem of violence against unionists is recognized, however compliance and willingness to work together are challenges. Tools and guidelines The Human Rights and Business Country guide for Colombia provides useful recommendations, information and cases on labour standards, including: occupational health & safety, Trade unions and restrictions of the right of workers to collectively represent their interests and working conditions (employment status, wages, working hours and social security). The ILO Helpdesk for Business on International Labour Standards is a the one-stop shop for company managers and workers on how to better align business operations with international labour standards and build good industrial relations.

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Human rights and business country guide Colombia – hrbcountryguide.org OECD Reviews of Labour Market and Social Policies: Colombia 2016, OECD, January 2016 Human Rights and Business Country Guide, 2014 and www.csrriskcheck.com

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3.3 Environment Laws and regulations in place Colombia is a biodiversity hotspot, as the country’s variety of topographic features enables the existence of a large diversity of fauna and flora. Forests cover over half of the territory and water availability is high. The state has taken measures aimed at the conservation of animals and plants, which are considered the country’s principal assets. Colombia’s impressive economic growth in the last decade is largely driven by a boom in commodity prices (oil, gas, coal and agro-commodities). It now faces the challenge of ensuring that growth is socially equitable and environmentally sustainable. The inclusion of a chapter on environmental sustainability and risk prevention in the National Development Plan (PND) for 2010-14 was an important step forward, as was the country’s adherence to the OECD Green Growth Declaration. But despite these initiatives, the country still lacks a coherent green growth policy framework. There is poor co-ordination between economic sectoral plans and environmental goals, and economic sectors are not accountable for their environmental performance33. Colombia has a long tradition (since 1973!) of environmental laws and policies for environmental management and licences, ranging from the protection of national parks to CO2 reduction, use of chemicals, pollution of air, soil and water and waste management. The main problem is the variety in laws and legislation between sectors and different levels of government which are involved: national, departmental, regional, municipal, community level. The decreto medio ambiente – an umbrella law on environmental management established in 1993 - was defined by the national authorities, including 700 pages of policies and regulations that differ for all 34 regions, ánd the specific zones within these regions. The Law made provisions regarding the management of environmental conservation and renewable natural resources by the public sector. It defined the process to obtain an environmental licence and related responsibilities. The law further created the Ministry of the Environment (now the Ministry of Environment and Sustainable Development). In practice however, local rules are often not in line with the national laws, thus complicating the implementation of environmental precautions, assessments, technical and legal measures. The OECD indicated this in its first Environmental Performance Review (EPR)34 as a main challenge: ‘a complex array of instruments and directives, leading to incoherent policy requirements and uncertainty for enterprises.’ It can be concluded that this lack of institutional uniformity has a negative impact on companies wanting to apply for environmental licenses, due to long and unclear administrative procedures. According to the National association of entrepreneurs ANDI there is one new environmental law being developed that will replace all local policies and give clarity on environmental performance regulations for companies. In order for a company to obtain an environmental license, an Environmental Diagnosis of Alternatives and an Environmental Impact Assessment (EIA) must be submitted to the environmental authority and approved.35 Key issues The overall CO2 emission of the economy is low due to heavy reliance on hydropower, but greenhouse gas emissions are high due to agriculture. The most important environmental challenges putting pressure on the biodiversity and ecosystems are: 33

OECD, Environmental performance review of Colombia, 2014 OECD, Environmental performance review of Colombia, 2014 35 Human rights and business country guide for Colombia – community impacts, participation and access to information and www.csrriskcheck.com 34

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extensive agriculture and livestock grazing (resulting in land degradation, deforestation and greenhouse gas emissions) − poorly-regulated extractive industries damaging human health and the environment − large hydraulic projects, road traffic and urbanisation − climate change vulnerability (floods, draughts) bringing significant economic, environmental and social costs − Poor environmental integration within the national policy framework − Wide disparities in income, landholdings and access to environmental services Until recently, environmental policies and institutions have failed to keep pace with these pressures, and in some cases have weakened over time36. −

The International Relations and Security Network reported in 2011 that a large proportion of Colombia’s natural resources sit beneath environmentally fragile areas, and that the environmental costs of large-scale mining and oil production were potentially catastrophic37. In September 2011, the director of the Observatory of Mining Conflicts in Latin America noted that only a small mining industry is sustainable in environmental terms38. The country’s environmental situation is gradually deteriorating. According to the Environmental Performance Index39, Colombia ranks 57 out of 180 countries worldwide in 2016, where it still was number 27 in 2014 (and the first in the Americas with regard to environmental protection), and in 2008 even top 10 of the world40. The ten years trend in performance shows a slight increase of 10%, due to high performance in waste water and low CO2 emissions that offset low performance in agriculture. According to ProColombia, the country’s industrial greenhouse gas emissions per capita are lower than the world’s average, and the country only produces 0.37% of the world’s emissions total. However, Colombia has shown some major setbacks in terms of environmental protection, the result of unsatisfactory institutional performance41. The OECD environmental performance review 2014 on Colombia42 concludes that ‘Colombia needs to steer its economic development in a direction that is more environmentally sustainable and socially equitable.’ Colombia’s desire to become a member of the OECD is also reinforcing the need to bring environmental policies and institutions in line with good international practices. The role of companies Companies translate the environmental aspects within their CSR policy into sustainability issues. There is a focus on sound water use, energy (CO2 reduction) and waste management (recycling or circular economy). The tools that companies use are: carbon footprint indicators, rainwater harvesting, reduction energy consumption. Employees are informed and asked to cooperate in these targets on environmental improvement. This is mostly done within the company and not within the value chain. Companies in food business (Alpina, Makro) indicate the need for more value chain development on sustainability issues in food production, transportation, processing and the need for technology, knowledge and resources for these developments. It can be concluded that more education and awareness raising on environmental protection and CSR is necessary: the culture and mindset toward this matter has to change and companies can play 36

OECD, Environmental performance review of Colombia, 2014 and OECD, Review of Agricultural Policies: Colombia 2015 37 Human rights and business country guide for Colombia – community impacts and environment 38 Colombia Country Report, Bertelsmann Stiftung 39 Environmental Performance Index 2016, Yale University and Columbia University 40 Overview of Environmental performance indexes 2006 -2016 based on the EPI of Yale University 41 Colombia Country Report, Bertelsmann Stiftung Transformation index (BTI), 2014 42 OECD, Environmental performance review of Colombia, 2014

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an important role in this. Secondly, more technology is needed, and existing international knowledge and guidelines can be used to implement the current policies as well as improve the level of technology. Also economic incentives to stimulate sustainability, (fe tax regulation) and the focus on a circular economy (ANDI Agenda 2020) are relevant developments that will lead to more efforts by the business community regarding the environment. Tools and guidelines Many companies use the Global Compact principles and GRI to give insights in their efforts on environment. The HRB Country Guide recommends: Businesses should raise awareness of and educate their workforce on the relationship between business operations and their potential impact to the environment and human rights. Educational Programmes should be targeted at all levels of management. Businesses should design and formulate indicators on human rights and the environment and subsequently publicly report on these. Businesses should create transparent mechanisms that share information with local communities on the potential environmental impacts of company operations, and enable the effective participation of communities in decisions that impact may them. The Colombian Business Council for Sustainable Development (CECODES) is working with the Ministry of the Environment on projects which aim to spreading environmental leadership programs and development of environmental policy. CECODES also reports on its members' emissions per product unit, and on their environmental investment, expressed in terms of expenditure on goods and services directly related to the production processes. Its members have developed their own sector indicators, as well as business-specific indicators for use by stakeholders. Case studies have been collected illustrating Inclusive Business initiatives and how environmental management has been a source of financial and social value in companies. An extensive overview of the regulations and procedures for the elaboration of an Environmental Impact Assessment in order to obtain an environmental license In Colombia prior to the implementation of projects, works and activities is available at the Netherlands Commission for environmental Assessment (MER).

3.4 Corporate governance / corruption Laws and regulations in place In 2013, Colombia became the 40th Party to the OECD Convention on Combating Bribery of Foreign Public Officials in International Business Transactions. Two years earlier a new Anti-Corruption Statute was approved by the Colombian congress. In spite of these positive developments, Colombia faces risks of corruption. Corruption can be found at several levels of the state apparatus in Colombia. Corruption manifests itself in various forms, including widespread financial and political corruption, patronage, and misuse of power. Both petty and grand forms of corruption are prevalent in the country. An overview of corruption and anti-corruption measures in Colombia is described by Transparency International in 2013. The presence of illegal armed groups is still a threat to the country's institutions through the use of violence, bribery and sometimes kidnappings. In addition, the public procurement system in Colombia is non-transparent and many cases of abuse of office in the awarding of public contracts have surfaced recently43. Opening a private business in Colombia is a straightforward endeavour. According to the World Bank 2013 Doing Business report, the Santos administration has simplified entry regulations which promote the establishment of new firms in the formal sector. As a result, the country has had a “5.2% increase in new firm registrations”. Colombia was praised by the report as a “regional leader 43

Business Anti-Corruption Portal, Colombia overview

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in narrowing the gap with the world’s most efficient regulatory practice” and has managed to improve important activities such as protecting investors and resolving insolvency. Nevertheless, there are still significant obstacles for private enterprises as mentioned above. Key issues According to the Corruption Perceptions Index, the corruption score of Colombia is 37, on a scale of 0 (highly corrupt) to 100 (very clean). This means that the risk of corruption in Colombia is high. Colombia ranks 94th in the world in the 2014 Transparency International corruption perception index - (CPI). Other data from Transparency International suggests that the problem is most serious in the political field, although it is also present in business sector44. A challenge of doing business in Colombia is the bureaucracy and having to take long term approach to business with constantly changing deadlines45. Corruption is a chronic and prominent characteristic in Colombia, and it persists as a troubling feature of politics and businesses that constantly undermine the integrity and the effectiveness of the state. To confront this situation, the Santos administration has tried to implemented laws such as the anti-corruption law. Nevertheless, corruption continues to be a dominant trait as several governmental agencies have been involved in a number of scandals. The measures adopted by the political leadership have not stymied corruption, due to the existence of a culture of tolerance, the absence of adequate and/or effective monitoring mechanisms and structural constraints, including patronage activities and pressure exerted by illegal groups46. GRI and Transparency International report on issues of corruption and some companies even call for GRI or other reporting to be made compulsory by government47. This could set an example for good corporate governance, but will probably not address the root causes of corruption. More public debate, attention and knowledge by the public at large on good policies and positive results on combating corruption need to be build up, both by government and businesses. This directly links with the ongoing impunity on compliance as described with the labour and human rights and environmental laws. Tools and guidelines • The Business Anti-Corruption portal page provides advice and guidance about corruption in Colombia and some basic effective procedures to protect companies. The UK government48 recommends companies doing business in Colombia to have an anti-bribery policy if there is a risk that employees might be exposed to bribery. This policy should be appropriate to the level of risk your business faces and shared with staff. The policy should include: § Company’s approach to reducing and controlling the risks of bribery § rules about accepting gifts, hospitality or donations § guidance on how to conduct your business, eg negotiating contracts § rules on avoiding or stopping conflicts of interest • The U4 Anti-Corruption Resource Centre gives an extended overview of Colombia’s Corruption profile and Anti-Corruption efforts (2013), explaining various forms and extend of corruption, governance structures, legal and institutional frameworks and actors involved. • Transperencia por Colombia is the local department of Transparency International and organizes seminars, dialogues with several actors on fighting corruption and transparency in Colombia. • The Colombia Government has launched a new online system called: Colombia Compra 44

45 46 47 48

www.csrriskcheck.com, 2014 Overseas business risks Colombia, UK Government, 2015 Colombia Country Report, Bertelsmann Stiftung Transformation index (BTI) 2014 Interview with GRI representative in Bogota during mission UK government anti-bribery policy, 2014

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Eficiente. The vision of the programme is to create a system for the National Government that coordinates the all public purchase in Colombia, ensuring optimum value for money, transparency in public procurement and contracting and generating confidence to all participants in the system.

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4. Sector insights and opportunities Within the European Union, the Netherlands is one of the main foreign investors in Colombia. There are frequent Dutch trade missions to the country, often involving businesses specialising in water management. The Netherlands' main imports from Colombia are coal, iron, steel and fruit. Export to Colombia consists of mainly medical products, telecommunications equipment, machinery and vehicles.49 The Dutch embassy in Bogota focuses on the sectors: water, transport & agriculture, agri & horticulture and life science and health. Besides, waste management is an upcoming sector in Colombia: awareness is rising about the fact that ‘normal loss in production’ should not be accepted in business economics, according to many companies and ANDI. In recent years, various studies have been conducted on the business and export opportunities in different sectors between Colombia and the Netherlands, a.o.: horticulture, dairy, water, urban planning, cycling, biomass, commissioned by RVO. The Dutch Centre for Promoting imports - CBI performed extensive value chain analyses on information technology & outsourcing services, tropical & exotic fruits, natural ingredients and garments. All reports are available by weblinks in the list of references. Not all of these reports describe the CSR challenges and opportunities in the examined sector. Therefore most relevant insights from the reports are combined with personal visions and perceptions of the interviewed companies during this mission.

4.1 Agriculture CSR challenges Main CSR issues for the agriculture sector in Colombia are50: • Freedom of association: repression and threatening of trade unionists by third parties. Particular attention should be paid to this issue when operating in agribusiness in Antioquia, Santander and Valle del Cauca51; • Subcontracting in large-scale agriculture has increased severely. The lack of official supply contracts between small farmers and processing companies leads to instability and vulnerability for the farmers52, • Forced (child) labour and bad working conditions, mainly in agriculture and services sector53; • Land use and property rights: apart from the Human Rights related land use and property issues (see chapter 3), there are many plots of land in Colombia that are let remained fallow. Often it is not clear who is the juridical owner of the land. It happens that illegal vendors show up, especially when foreign investors are at stake, resulting in complex situations where foreigners think they have bought a piece of land while they have paid these illegal vendors. It is therefore a common sight in Colombia to see plots of lands with the note: “no se vende este lote” (this land is not for

49

https://www.government.nl/topics/international-relations/contents/colombia www.csrriskcheck.com 51 Human rights and business country guide, 2014 52 Mooooi Dairy Opportunities 53 US Department of Labor, List of goods produced by child labor or forced labor, 2014 and US Department of Labor, 2014 and ILO/IPEC 2001 50

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sale). Make sure you consult juridical expertise before purchasing land. The Dutch Embassy can consult in this; • Environmental impacts on biodiversity and deforestation: particular attention should be paid when operation near natural areas of high conservation value: Los Katíos National Park, Malpelo Fauna and Flora Sanctuary54; • In the Amazon, deforestation (logging or burning) mainly occurs for extensive livestock breeding, building roads, commercial agriculture (mainly soy), logging (80% illegally) and mining; • Soil & (ground)water contamination: the agriculture sector is associated with water pollution through the use of chemicals in crop production. Approximately 70% of Colombia’s drinking water is under serious threat. CSR in practice Alpina has been the leading company in Colombia’s dairy sector for 70 years. Alpina’s sustainability policy is built on 3 focus areas: environment (water, energy, CO2, waste), development of entrepreneurship in the agricultural sector and nutrition (both over-nutrition as malnutrition). The Foundation of Alpina contributes to the construction of a sustainable nutrition model. Reduction of food waste: globally, about 40 to 50% of the produced food is being spilled within the production chain. A growing number of companies is looking for solutions is this field, to reduce the costs of raw material, the impact on the environment and to improve the food security around the world.

S Source: Buen Provecho Campaign, Alpina

“9 billion people (world population by 2050), we can actually feed them. Waste production must be seen from the entire food chain optic. For this reason we have launched the Buen Provecho program and campaign, in which we work on building a better methodology to assign waste in the value chain and to tackle the related operational problems that can exist. Another initiative is our joint participation with Team Foods and Ramo in the Open Innovation Challenge, where we invite other business and experts to come up with solutions” - Cristina de la Vega, Alpina

54

UNESCO world heritage list, 2015

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Another initiative in the area of food waste reduction is taken by Makro Colombia in the project and campaign on ‘sad vegetables’. In cooperation with smallholders they have launched a collection of vegetables that normally are taken out from production as they don’t fulfil the standards on how vegetables should look like. Opportunities in horticulture55: Colombia and the Netherlands are the two leading flower producers in the world. Both countries seem to be complementary in many different fields. There are various opportunities for cooperation: • From Colombian perspective, there is a need for knowledge transfer. A Training Centre could fulfil this need, being the showcase and platform for Dutch innovation and sustainability. Matchmaking, seminars and trade missions can be organized at the training centre; • Tracking and tracing will gain significance in the near future. What happened to the vegetable or flower between the first seed and the final supermarket shelf? The concept of traceability as shown in the Nature & more case gains more attention in the Netherlands and abroad. Opportunities in this field could be explored; • On the aspect of sustainability improvements there is a clear need for support/(IT-)tools and knowledge on: § land use (practices, alternatives and scenarios) § GHG reductions (less pesticides, fertilizers and improved waste management) § social issue/working conditions § use and valorisation of residues and by-products § soil improvement via re-use of biomasss § sustainability assessments and certification

•

Improving soil fertility: a fertile soils offers higher harvest, better quality of the soil and products and contributes to long term supply assurance. Dutch entrepreneurs can make a difference in this field, in collaboration with local growers and traders. Improving soil quality and fertility can be achieved within a few simple steps and can lead to results on the short and long term. Within the working group “Soil Initiative Fruit & Vegetables” growers, traders and retailers exchange experience and work together in developing new projects and techniques, f.e. in turning waste to energy (biogas) and fertilizers (compost), like in the project by Total Produce in Honduras.56

Opportunities in vegetable production57

•

Add value to the vegetable supply chain; there is a demand for higher quality products, but also issues like new varieties, packaging and labelling are increasingly important. By adding value to the product and making life easier for their customers, the farmers can also distinguish themselves from others and improve their competitive advantage;

•

An upcoming industry is processing. Future investments are foreseen in handling, sorting, packaging, processing equipment but also knowledge is required for hygiene, sanitation and safety;

•

Cooperation is key in vegetable farming. When small farmers, who are geographically not far from each other, can be organised and can share knowledge, they can increase purchasing power and invest in joint facilities that could serve the cooperative as a whole. An interesting approach is to cooperate with NGO’s active in Colombia, who have been supporting small holder farmers for decades and built up extensive experience;

55 56 57

Green Opportunities with an Orange Touch, 2014 Hondurese meloenen voeden bodem, MVO Nederland, 2015 (in Dutch) Green Opportunities with an Orange Touch, 2014

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•

There is a need for sustainable expansion (adhering to specific standards). Like in the floricultural sector, increasing labour costs require more technology in order to increase productivity, efficiency, health and safety on the work floor;

•

Related to this, standard programs and software are needed in order to organise, facilitate and improve the supply chain.

“Farmers in Colombia are working inefficiently and can’t yet ensure the high quality that we demand. Because of the Free Trade Agreements between the Americas, import of products has become interesting for us. However, we are exploring a strategic focus of our long term investments in Colombia by developing a circular business model, involving all partners in the value chain, including suppliers, transport, retail and customers. This requires a dialogue with suppliers on the one hand, to involve them in the development of more sustainable products throughout the chain, but also with our buyers on the other, as they should be stimulated to include sustainability targets into their buying practice.” - Andries Govaert, Makro Colombia It is an opportunity to develop inclusive business strategies in Colombia. Companies in the agricultural sector should build long-term relations with smallholders (SMEs) and support them in professionalizing the production. By applying this inclusive approach involving all actors in the supply chain, more sustainable production can be promoted and reduction of informality can be achieved. This can lead to the strengthening of local markets and smallholders and gives opportunity to take into account environmental risks, fair prices and human rights.

4.2 Tourism CSR challenges58:

• • • • • • • •

freedom of association labour conditions (seasonal contracts, long working hours) land use and property rights biodiversity and deforestation water use and pollution (showers, pool facilities, cruises) waste (accommodations and during excursions) wild life protection carbon emissions and energy use: travelling, local transport and accommodations.

Observations The tourism industry in Colombia has been growing rapidly over the last few years, with a 6% growth of inbound trips in 2013. This growth is expected to continue until 2018 at least. (source: Euromonitor)59 It is acknowledged by various stakeholders that the peace negotiations will determine the future of the tourism sector in Colombia: “Peace is a requisite for a flourishing tourism industry in Colombia” – Jean Claude Bessudo, Presidente del Grupo Aviatur Sustainability initiatives in the sector remain on the individual company level. The government has launched a certification program for the sector with the intention to make companies in the sector work more sustainably. In the same time, there is little cooperation in the sector in terms of exchange of knowledge, best practices and joint projects regarding responsible tourism. This is a missed opportunity, as a (multi-stakeholder) tourism platform could be the source for expertise for 58 59

www.csrriskcheck.com Euromonitor, 2014

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innovation in the sector, for developing joint projects regarding vulnerable areas in Colombia and it could be consulted for incremental improvement of the certification scheme as well. “Nobody is working together in the tourism industry when it comes to sustainability” - Thomas Doyer, DE UNA Colombia Tours CSR in practice Grupo Aviatur With almost 4500 employees, Grupo Aviatur is Colombia’s largest company operating in the tourism industry, active in the market for over 58 years. The Foundation of Aviatur is well known and runs various projects, o.a. in Baru and Medellin. The CSR policy of Aviatur involves the following: • • • •

• • • • • •

More members of one family are allowed to work in Aviatur (this is elsewhere forbidden in Colombia); Equal salaries for male and female employees working in the same position; Compliance committee for occupational matters; Aviatur has a collaboration agreement with the “Agencia Colombiana de Reintegración”, meaning that the company offers workplace for the reintegration of ex-combatants into society; There is an active policy on talent development; Aviatur has won the Andesco price for best internal labour policy; Ethical code with suppliers (3400 suppliers); A zero tolerance corruption policy; Active communication towards customers regarding environmental matters; Aviatur has obtained the “Sello de sostenibilidad” (“Sustainability stamp”) by Icontec, being the second company in Colombia after Alpina.

Compensación Nuestro propósito es ofrecer condiciones favorables para nuestros colaboradores, por esto continuamos manteniendo un salario mínimo superior en un 13.5% al salario mínimo legal vigente. En cuanto a la relación entre el salario de hombre Vs. mujer no existe diferencia alguna por discriminación. Las diferencias entre salarios van de acuerdo al cargo y las funciones que desempeñe cada colaborador. Source: Informe de Sostenibilidad 2014, Aviatur

“The companies that survive (crisis) are not the largest companies, but those that can adapt themselves to changing circumstances” - Jean Claude Bessudo, Presidente del Grupo Aviatur

DE UNA Colombia Tours DE UNA Colombia Tours is a SME enterprise set up by Dutch entrepreneurs. With 9 fulltime staff members in the office, they work with 30-50 employees on a local base. DE UNA Colombia Tours has been certified for the sustainability program for the tourism sector by the Colombian government and has a sustainability policy. Besides implementation of CSR in the office (green office materials, water use, people issues), they focus on their relation with locally hired staff (guides, transport), impact on the environment and culture and cooperation with suppliers. They communicate with suppliers about sustainability and stimulate them to get certification as well. The next step for DE UNA Colombia Tours would probably be certification for Travelife. However the certification scheme by the Colombian government was set up with good intentions, it sometimes results in a contradictory, non-sustainable situation, according to DE UNA Colombia Tours. For example, guides are required to fulfill all criteria, while some of the guides DE UNA Colombia Tours works with, are still in the process of getting their degree (taking 3 years) and dependent of their employment with De Una in order to complete their education. It feels

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unsustainable to cut the contracts with these people simply to comply with the criteria by the certification scheme. “CSR for us means taking good care for our people” – Thomas Doyer, DE UNA Colombia Tours Opportunities in tourism For individual companies:

•

Travelife: certification scheme for travel organisations and accommodations. New sustainability criteria have been launched, focussing on energy-, waste- and watermanagement; labour, suppliers, involvement with local community, wild life protection, pollution and landerosion, sustainable procurement and customer communication.

•

CARMATOP: a new CO2 calculator, developed by Dutch touroperators and Breda University of Applied Sciences. Ambition is to develop a calculator to measure tour package carbon footprint and a joint CO2-label for consumers.

•

The Green business tools for accommodations provide companies in the tourism industry (touroperators, travel agents, accommodations, river cruises) with tips, best practices and advice on environmental matters, employment and communication.

On sector level: It was noted during the mission that cooperation, and mutual exchange on sustainability in the tourism industry in Colombia is little. In the Netherlands 24 companies, non-profit institutions, education institutions from the tourism industry and government are working together in the CSR Network Tourism. Within this network the participants share knowledge, exchange best practices on responsible tourism and jointly set up pilot projects on f.e. eliminating child labour, improving environmental impact and new initiatives on the circular economy. International pilot projects are set up as well. This model could serve as an inspiration for the Colombian tourism sector as well.

4.3 Other relevant CSR developments in Colombia Circular economy The circular economy is an economic system that maximizes the re-usability of products and raw materials, and minimizes their devaluation. This system differs from the current linear system, where raw materials are used to manufacture products that are destroyed at the end of their shelf lives. In Colombia, the popularity of circular business models is in an initial stage. ANDI, the employers federation, has included circular economy in its Agenda 2020. One of the companies working according circular principles is Thermaflex. Colombia is developing a strong diversified energy portfolio composed of clean renewable energy sources, including hydroelectric, wind and solar power, and biofuels. The Government of Colombia is also embarking on an ambitious domestic private-public initiative to harness in sustainable ways its vast wealth of energy resources by developing a globally competitive bioindustry sector, including biocommerce, biotechnology, and environmental services.60 Thermaflex One of the companies playing a frontrunner position in this area is the Dutch company Thermaflex, specialised in developing smart solutions for energy and water efficient systems. Their ambition is to actively contribute to a circular economy, focussing on the construction and renovation sector. Demand for circular concepts in Colombia has been little so far, and it has not been easy to find like minded companies. In addition, there is a lack of resources, technology and knowledge in Colombia to redesign and change products. The biggest challenge (and opportunity as well), 60

Colombian Ministry of Mines and Energy, October 2010, “Colombia a country with energy diversity”

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according to Thermaflex, is to involve clients in the process of development of the product. It’s all about building long term relationships with the clients. “It should be clear in your approach what your drivers are, to involve stakeholders and to develop a common discourse.” - Juan Camilo Amaya, Thermaflex However, Colombia has proved to be an interesting market for Thermaflex as the country has a large energy consumption. This means opportunities for their business activities in energy reduction measures and smart environmental solutions. Colombia as a country, as well as its economy, are in the stage of rediscovering itself, according to Thermaflex. Consumption patterns are changing, welfare is growing and the need for a better infrastructure related to energy and water that improve the quality of life. This offers interesting business opportunities on the short and longer term. “The Colombian economy has been growing rapidly over the last years, and is rediscovering itself. Its growing prosperity opens up opportunities for new innovative products. The time is now!” – Juan Camilo Amaya, Thermaflex Also ANDI is working on the circular economy which is integrated in their Agenda 2020. Together with ministries they are working on implementation and knowledge of international agreements and how to improve the national laws and norms in Colombia. Focus is on waste management and re-use of residues. Opportunities When it comes to stimulating the circular economy and innovation in Colombia, Thermaflex addresses the need for room for exchange of knowledge and experiences and more cooperation in this field. At this point there is no network or institution facilitating this. The Netherlands has set high ambitions for 2016 to become a worldwide hotspot for circular economy. MVO Nederland facilitates a fast growing Circular Economy network of companies that jointly work on circular solutions in various sectors (f.e. in the construction sector). Other opportunities related to circular economy:

•

Turning waste of demolished sites (buildings, but also infrastructure site) into new high quality materials. The mobile factory produces bricks out of rubble (in Haiti);

•

Green Deal Concrete Material: over 20 companies in the Netherlands from the construction sector signed the Green Deal Beton. The production of concrete generates a lot of CO2 and the type of used concrete influences the energy-use (research on the environmental impact of concrete – Dutch). CSC-label: The Concrete Sustainability Council is currently working on the development of a CSC-label (a ‘FSC-label for concrete’), involving various Colombian and other South American actors (FICEM-South American cement industry, FIHP-South American concrete producers, FIPASouth American sand and gravel producers). By using the criteria set up in this label, companies in Colombia and the government can stimulate the sustainable building sector (and work on energy reduction and the reduction of CO2-emissions).

•

European and Latin American Business Services and Innovation Network The ELAN Programme is a European Union (EU) initiative that seeks to increase and diversify the EU economic presence in Latin America, by meeting the Latin American demand for knowledge and innovative technology. Companies can join two components of the programme:

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•

•

European and Latin American Business Services (ELAN Biz): whose main objective is to provide up-to-date and comprehensive information services to European SMEs interested in doing business in strategic Latin American countries. European and Latin American Technology based Business Network (ELAN Network): whose main purpose is to generate technology-based business opportunities between European and Latin American SMEs. ELAN Network organises network events in both the EU as in Colombia and other Latin American countries, with special focus on a.o. the sectors Renewable Energies, New Materials, Health and Environmental Technologies.

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5. Conclusions and recommendations There is no national integral CSR policy in place in Colombia. The term CSR (Responsabilidad Social Empresarial) is not widely used. Most companies and stakeholders prefer terms like sustainability, People-Planet-Profit or Human rights & business. However, there is common acknowledgement of a need for a national policy and framework. Legal compliance is a minimum requirement, according to all stakeholders. However, enforcement of laws and regulations and control is still weak. With Colombia’s upcoming membership of the OECD, the public attention for compliance and respect for human, environmental and labour rights will grow. This will lead to the need for awareness raising on the role of the NCP as a compliant mechanism and support to the business community on how to comply with the OECD Guidelines. This also provides opportunities for foreign investors and businesses who are more experienced with CSR implementation and tools to share their knowledge with Colombian partners. Meanwhile, the demand for sustainability and responsible business is growing: the post-conflict situation offers opportunities for the business community to redefine its role towards society and contribute to a sustainable and inclusive economic growth. There is an ongoing shift of the concept of CSR from traditional philanthropy towards CSR as a long term sustainability strategy of the company, focused on creating shared value and impact for its stakeholders. ‘Frontrunners’ in CSR are mostly large companies and multinationals, as these companies often have the resources, capacity and knowledge available. Though the number of innovative SMEs (mainly in the urban areas) with focus on sustainability is increasing, either in the ‘slipstream’ of large companies or by their own motivation. However, all parties acknowledge the need for more information, practical exchange and mutual learning and network on CSR, on a sector level as well as on a national level. Opportunities for future cooperation on CSR in Colombia On national level Core aspects of CSR like human rights and environment are the responsibility of different ministries and many institutions in Colombia. Human rights are high on the political agenda, as the Presidential Office for Human Rights has recently launched a National Plan on Human Rights in line with the UN guidelines. Overall coordination of a national framework or policy for CSR would be the responsibility of the government as well. Other ministries should be involved to ensure an integrated policy approach including commerce, trade, agriculture and industry. International institutions could further support these efforts to bring CSR in Colombia to a higher level. In addition to the development of a national CSR strategy, the government could undertake the following steps to stimulate CSR in the country: • Set up a knowledge centre on CSR, facilitating knowledge exchange, best practices and mutual learning (webinars, courses); • Define CSR challenges and opportunities per sector, by facilitating the exchange of best practices within sectors and networks including opinions on these practices of independent experts, and civil society organisations. The sector approach developed by MVO Nederland could serve as an inspiration; • Facilitate regional (multistakeholder) CSR networks; • Stimulate inclusive investments; • Involve media, f.e. the development of a network of journalists who frequently report on CSR and sustainability, in order to create common awareness on sustainability.

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On sector level Both general and sector specific knowledge on CSR in Colombia could be improved by the exchange of experiences, approaches and best practices within sectors. Sector organisations could contribute to the development of a national CSR strategy, as well as initiating CSR initiatives for the sector itself. On sector level, joint vision and action plans for CSR could be developed. MVO Nederland has broad experience in supporting sector organisations on formulating a CSR vision and strategy, codes of conduct and sector specific CSR tools. These examples could be exchanged on a sector level with Colombia. For example, within the sectors Food & Agribusiness, Construction (a.o. Network Concrete), Tourism en Health Care joint visions, ambition and CSR-projects are being set up, including both companies, sector organisations and NGO’s. On company level: what can you do? 1. When you are a Dutch business and (thinking of) starting a business in Colombia, establish yourself here to get to know, feel and understand the local demand. Your product should add value to the market. Therefore it is crucial to include the Colombian perspective into your proposition. 2. Take your time for developing a relationship with your counterparts and preparing your market entry carefully. Third-party contacts are vital to business success. It is recommended to hire a local distributor, representative, salesperson and/or lawyer. 3. Get informed about the Human Rights situation and social dynamics in the region you will be operating and the possible negative impacts of your business operations. Useful organisations and tools are: • The Danish Institute for Human Rights and their partner in Colombia FIP on due diligence tools, backgrounds and stakeholder recommendations and engagement of all aspects of CSR • The Human Rights & Business Country Guide of Colombia gives a very complete overview of the recommendations and information on key issues like: right holders at risk, sector and regional profiles, stakeholder recommendations and engagement opportunities; • Global Compact Colombia promotes the implementation and disclosure of responsible and sustainable corporate policies and practices through the promotion of the UN Global Compact ten principles, including knowledge management and practical tools; • Colombian Business Council for Sustainable Development CECODES for business-specific environmental and sustainability indicators for use by stakeholders; • The Global Reporting Initiative reporting guidelines. The focal point in Colombia is the authority on sustainability reporting and provider of the world’s most widely used tool for measuring and communicating sustainability impacts. They have developed the Certified Training Program, the Organizational Stakeholder (OS) program (with currently six Colombian members), and Colombian participation in GRI Working Groups; • Trade Unions in The Netherlands who have counterparts in Colombia can inform on labour rights developments and opportunities and provide contacts to partners in Colombia: FNV Mondiaal and CNV Internationaal 4. Prepare yourself for possible situations in which you might get confronted with bribery and/or corruption. RVO provides practical information on this topic; 5. Colombia is a country with large regional differences in terms of population, equality, biodiversity and ecosystems. A CSR policy for operating in Colombia therefore should be both sector specific and region specific. Include both internal (labour conditions and rights, environmental footprint of company) as external CSR issues (compact on community, engagement and transparency, anti corruption policy). 6. Perform due diligence: make sure to have done a risk analysis in your sector on the local situation and CSR issues and prepare a plan to assess these risks: www.csrriskcheck.com Inquire about relevant permits, zoning policy, land use plans etc. Make sure you consult juridical expertise before purchasing land. The Dutch Embassy can consult in informing you on relevant policies and contacts for experts.

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7. Looking for partners for developing social projects? Have a look at www.mapasocial.dps.gov.co 8. When operating your business in Colombia, it is wise to put a people manager in place, to encourage local employees to take their own responsibility (which is not a common thing in Colombia). 9. Before going to Colombia contact other Dutch companies who have experience in Colombia. The Embassy and Holland House, functioning as the Dutch-Colombian Chamber of Commerce, have a good overview of Dutch companies from your sector already active in Colombia. “Sustainability is definitely a way to position and promote your business, especially in Colombia. However, until now, you must do it yourself.” - Andries Govaert, Makro Colombia

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6. Annex During the realisation of this report, additional sector studies and fact sheets were consulted, other than those mentioned in the footnotes in the previous chapters. These studies give insights in specific sector developments and opportunities in Colombia, and are therefore relevant for companies interested in doing business in Colombia. These additional reports are listed here: General / CSR: § Doing Business in Colombia, KPMG (2013) § Reportes de Sostenibilidad en Colombia endencias, retos y oportunidades, Deloitte Sostenibilidad and GRI Hispanoamérica (Informes 2012 y 2013) Sector studies: § Stedelijke ontwikkeling en planning in Colombia, ir. T.C. Huizinga, commissioned by NL Agency (RVO) § Green opportunities with an orange touch in Colombia, Ideavelop S.A. & Verbos Business Development, commissioned by NL Agency (2014) § Mooooi, Dairy Opportunities for Colombia-Dutch Colaboration, fact-finding study by Business Bridge, commissioned by NL Agency (2011). The results of this study have initiated a follow-up in the ‘Colombian-Netherlands Dairy Capacity and Business development project’ by a consortium of Dutch and Colombian partners: DairyCaB (2014) § Zakelijke kansen in Colombia - Resultaat van de ‘Fact finding missie’, THSA, commissioned by NL Agency (2014) § Cycling in Colombia, Dutch Cycling Embassy, commissioned by NL Agency (2013) § Life science and Health sector Colombia, market study by Holand House Colombia and Taskforce Health Care commissioned by NL Agency (2016) § Colombia water sector market survey 2012, Antea Group and Royal Embassy Kingdom of The Netherlands in Bogota 2012 § Colombia, A river of opportunities, Antea Group (2012) § Colombia - The Netherlands; Working together for a resilient future, The Netherlands Water Partnership (2015) § Factsheet Biomass opportunities in Colombia, NL Agency (2013) § Factsheet Garment in Colombia, CBI (2014)

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This is a publication of: Netherlands Enterprise Agency Prinses Beatrixlaan 2 PO Box 93144 | 2509 AC The Hague T +31 (0) 88 042 42 42 E [email protected] www.rvo.nl/tf This publication was commissioned by the ministry of Foreign Affairs © Netherlands Enterprise Agency | May 2016 NL Enterprise Agency is a department of the Dutch ministry of Economic Affairs that implements government policy for agricultural, sustainability, innovation, and international business and cooperation. NL Enterprise Agency is the contact point for businesses, educational institutions and government bodies for information and advice, financing, networking and regulatory matters. Netherlands Enterprise Agency is part of the ministry of Economic Affairs.