Thank you for inviting me to this gathering. I especially welcome this opportunity to discuss with you the linkages between business and human rights and the need for race discrimination legislation in Hong Kong.

People often ask me what is discrimination and whether it is really serious in HK. The best answer that I have come across is this one from a student from Shanghai studying here. He said, "It is like a mosquito. You don't see it. Most times you don't hear it. But when you are stung, you sure know it."

Let me start by saying that human rights have now begun to impact upon global regulatory bodies, international trade negotiations and the corporate boardrooms in a way that will make them not just relevant but, hopefully, binding.

A report of the UN Research Institute for Social Development noted that the annual sales figure of one multinational corporation exceeds the combined gross domestic product of Chile, Costa Rica and Ecuador. Some multinational companies have greater wealth and power than states and their influence in an open border scenario can be enormous.

The weaknesses of globalisation are acknowledged internationally and point to the fact that business can no longer operate without some kind of focus on social accountability. The fact is: business do impact on individuals, communities and the environment.

International acknowledgment of the weaknesses came in the form of the Global Compact initiated by the UN. This Compact is calling upon business to:

• support and respect the protection of human rights within their sphere of influence;
• make sure their own corporations are not complicit in human rights abuses; and
• eliminate discrimination in respect of employment and occupation.

About 400 including 2 from Hong Kong and mainly from the Fortune 500 Group have signed up to join the Global Compact.

Removing trade and investment barriers open up markets and provide new opportunities but the process also leave countries vulnerable to global economic changes. Globalisation brings with it greater vulnerability to external changes and the danger increases with the lack of sophisticated financial, economic and social structures and institutions in developing territories to give them stability.

The World Bank has initiated an institution-building agenda within its aid program for developing nations, such as initiating judicial reforms for the protection of human rights to achieve more sustainable and broad-based economic growth.

The IMF has also accepted the need to alleviate " the social costs of adjustment, including through strengthening the social safety net and encouraging a social dialogue among employers, employees and government."

I understand that the ADB in its aid program to Indonesia stipulated a condition that the loan for basic education must be spent on boys and girls equally.

Measures to alleviate poverty and to sustain development now approach economic development from a rights perspective and international bodies now make human rights, in particular, economic, social and development rights, a component for business and economic development.

International law has also raised the prospect of using international human rights, such as the right to health, to mitigate against the restrictions created by patented drugs for HIV/AIDS treatment and allow generic drugs to be produced . This is one example where international rights covenants can be used as a shield against the encroachment of unmitigated globalisation and patented monopolies.

The right to health has prompted two other actions under international law.

The first relates to hormone beef and the second to asbestos.

In the first case the WTO Appellate Body, although acknowledging that hormone abuse could constitute a health risk, did not agree with the restriction imposed by EC against the importation of hormone beef from Canada and USA. However in a second case, involving asbestos, the Appellate Body ruled that a ban imposed by France on the import and use of white asbestos was legitimate and that the WTO rules allowed countries to impose restriction on trade where necessary to protect human health and the environment.

Although these two decisions may appear contradictory, they do demonstrate clearly that human rights considerations have now begun to impact upon the global regulatory bodies and international trade negotiations. These cases are of relevance to China as it enters WTO.

Social accountability, ethical investment and sustainable development are now topics for serious discussion in the boardrooms as well.

Australia and the US have now started to propose legislation on human rights related corporate responsibilities. These aim to regulate domestic corporations operating overseas.

A very old American statute, the Alien Tort Claims Act of 1789 has now been resurrected to attribute liability to American registered corporations for acts done with foreign governments in violation of human rights obligations. The aggressive courts are now taking the position that corporations cannot practise double standards.

In response to growing investors interest in ethical investment and sustainable development we now have different global indexes and studies tracking sustainability in the world of business.

The Dow Jones Sustainability Group Indexes (1999) track the performance of companies in terms of economic, environmental and social criteria.

According to a study by Covenant Investment Management in 1996 on Standard and Poor's 500, it found that the annualized return for the 100 companies which rated lowest in rights issues averaged 8%, compared to 18% for the top 100 companies.

Social audits of companies are now undertaken to meet the demands of shareholders. Influential, non-aligned watchdogs that scrutinize the social responsibility performances now include Business for Social Responsibility in the US; Corporate Social Responsibility – Europe and specialized units within Amnesty International and the Lawyers Committee for Human Rights. [In the UK, some 700 companies have joined a "business in the Community" campaign and many of these have also formed a network, "Race for Opportunity" (Barclays, BBC, British Telecom, HSBC, Goldman Sachs, Shell Int., Texaco).]

In HK, the Asian Corporate Governance Association and the Association for Sustainable and Responsible Investment in Asia have established themselves here.

Many companies have now incorporated social accountability standards and norms in their corporate governance because social expectations have changed.

Consumers are demanding that the foods they eat, the clothes they wear and the products they use daily are manufactured under ethical working conditions. Market share and brand name value depend on consumer acceptance of a company's employment policy, servicing standards and manufacturing conditions.

The global business can also bring in a large body of policies to benefit the local economy. For instance, a business can upgrade local skills through training on the job. Shell Brazil was honoured as a "Child's Friend Company" for its corporate policy of not doing business with companies that use child labour. Business can require its contractors to adhere to ethical practices.

Workforce diversity can also bring additional market share for business. Several years ago a HK telecom company saw an opportunity to expand its business in Canada because of the vast number of HK people there. The company's market strategy included leaflets in Chinese and a promise to deliver moon cakes during the Mid-Autumn Festival to relatives back in HK. The company did very well. The employees understood the market and weave the needs of the customers into their marketing plan.

Not that long ago the HK government announced it was considering a new employment tendering system that gave 40% weight to working conditions and 60% to prices for all government contracts. This is a step in the right direction. We propose that Government provide incentives to bidders for any contract demonstrating good equal opportunities practice.

I would now like to turn to race discrimination. We have laws dealing with gender, marital status, pregnancy, disabilities and family status. We have no specific legislation covering race discrimination. We do have the BORO covering the public sector with a general prohibition against all forms of discrimination.

During the scrutiny of the BORO in the Legislative Council in the early 90s, it was decided that the bill would drop the private sector. It was felt that specific legislation was necessary for the measures to operate properly in the private sector.

The Covenant on Race, the first major rights covenant to apply to HK, requires the government to prohibit this form of discrimination and to protect the victims. We cannot prohibit or protect without legislation. The UN Committee on Economic, Social and Cultural Rights has in fact made it clear that the government was in default.

The ethnic make up of Hong Kong is an asset. We are home to a diverse range of communities from all over the world. We have many kinds of Chinese. We have many Indian and Jewish families that came to HK as refugees from Shanghai the same way many Chinese families did. The racial diversity provides a unique value. It is our link to our trading partners outside HK and it strengthens HK as a global trader. We need global citizens and this is our gateway to the world.

Race discrimination reflects a state of mind that HK should not be displaying to the world.

Human nature is frail and our minds play tricks on us all the time. I was told a person who was blind disliked people with dark skin. You would ask why so when you cannot see? Well, discrimination is in the mind.

End