Posts Tagged ‘the clarity project’

benefit corporation legislation

August 16, 2011

My article in California Lawyer is up (albeit a shortened version):

GOOD BUSINESS

August 2011
by Jesse Finfrock

California is poised to lead the nation in putting social and environmental good on an equal footing with a business’s profits. Two bills wending their way through Sacramento this summer would allow companies to become a benefit corporation (AB 361) or a flexible purpose corporation (SB 201), fundamentally changing California’s Corporations Code.

Currently if a company wants to undertake a mission other than earning profits, it faces substantial limitations, some say, especially during a merger or acquisition. To get around this, directors rely on the so-called business judgment rule, which permits them to do what they believe is best for shareholders’ long-term interest even at the expense of short-term profits. Yet when a company decides to sell, directors are obligated to take reasonable steps to maximize shareholders’ investment and accept the highest offer, which could put a company’s social benefits practices at risk.

But a new generation of consumers, entrepreneurs, and investors are demanding change. Nationwide, they are pushing legislation that allows for-profit businesses to formally incorporate social and environmental responsibility into their missions. Bills similar to California’s AB 361, have already been passed in Hawaii, Maryland, New Jersey, Vermont, and Virginia, and introduced in five additional states.

The benefit and flexible purpose corporation bills share some basic components, such as ensuring the dissenting rights of shareholders and protecting directors from liability. This has spawned a debate over whether the bills would compliment or compete with each other. “Each of the bills responds to a totally different need,” argues Jonathan S. Storper, a partner at Hanson Bridgett and a drafter of AB 361.

The bill requires a benefit corporation to meet independent, third-party standards of social and environmental responsibility and transparency; a company could lose its benefit corporation status if the requirements are not satisfied. But according to Susan Mac Cormac, cochair of Morrison & Foerster’s Business Department, SB 201 requires a flexible purpose corporation to detail its social purpose and provide shareholders with a progress report (permissibly its own). “There is nothing companies can do through AB 361 that they cannot do through SB 201,” Mac Cormac says.

“There may be issues with each of the bills, and they will be sorted out in the courts over time,” says professor Eric Talley at UC Berkeley School of Law. “We cannot know what forms do and do not work unless we try them.”

photoessay: mining in kono, sierra leone

July 16, 2011

Sierra Leone is a country at a crossroads. Decades of resource exploitation and a brutal ten-year war have taken a deep toll on the environment and the people, which are among the poorest and most uneducated in the world. Yet as the country celebrates its 50th year, Saloneans are appropriately proud of their success with post-war reunification and reconstruction. Children are learning, infrastructure is expanding, and healthcare is improving.

In Kono, the diamond-rich and war-ravaged district along the country’s eastern boarder, mining is a way of life for many people. During the dry season, when it is possible to dig down to the diamond-laden gravel, many young men head to the diamond fields. Some strike out on their own while others are hired by mining companies as short-term laborers, often for less than a dollar a day. With little alternative employment opportunities, most men don’t have a choice but to work in the mines for part of their lives, and many are forced to give up school to do so.

At this critical moment, it is imperative that Sierra Leone attracts the right kind of investors and NGO partners; along with diamonds and gold, the country recently made public discoveries of large deposits of iron and oil. Fortunately Saloneans, all of whom have been affected by the war, are strongly motivated to break free from the resource curse and craft their future to ensure that the value of their precious resources remains within their country and communities.

In May 2011, The Clarity Project, a member of Fair Jewelry Action, joined local miners and officials from Sierra Leone’s Ministry of Minerals to visit diamond and gold mining operations throughout the Kono District. The following photographs, taken during this trip, show artisanal, small-scale, and large-scale diamond mining techniques, conditions, and environmental consequences.

The Clarity Project works directly with miners and their communities to build a more fair and responsible alternative to the conventional diamond industry. We sell high-quality jewelry with only the fairest diamonds and invest all of our profits to build schools and rehabilitate land in mining communities. To learn more, please visit our website (www.clarityproject.com), or view more photos and get engaged at our Facebook page (http://www.facebook.com/TheClarityProject).

[Fair Jewelry Action members are invited to use these photos for their work with proper citation ("Photo by The Clarity Project"). Non-FJA members that would like to use a photo should first contact us to receive permission.]

the kimberley process and angola blood diamonds

June 23, 2010

The Wall Street Journal (bastion of human rights reporting that it is) just published an impressive investigation by Michael Allen on the effectiveness of the Kimberley Process Certification Scheme and the so-called “Conflict Free” label.

Allen’s report, titled “The ‘Blood Diamond’ Resurfaces,” provides good reason to be skeptical of the Kimberley Process, which was supposed to put an end to the violent blood-diamond trade. But in Angola’s diamond heartland, peasant miners are still being exploited—this time by corrupt governments and soldiers. It also includes this video, which I highly recommend.

In Angola, the Blood Diamond Trade Goes On (will open in new window)

As a quick aside, The Clarity Project is a fair jewelry social enterprise started by my friends and I that is dedicated to improving the quality of life for miners and their families. Unlike any other jewelry company, we make every decision based on what will create the most positive impact—we source only fair diamonds, gems, and metals, and invest all profits back into mining communities through our non-profit partners working on the ground. Yeah, we’re a little bit radical, but this is what is needed to push the jewelry industry in the right direction.

In an interesting development, Martin Rapaport is also making radical moves to bring attention to the failures of the Kimberley Process. This week, as the members of the Kimberley Process struggled in vain to come to a consensus on the human rights situation in Zimbabwe, Rapaport, a well-known proponent of Fair Trade certification for diamonds, decided to fast in protest of the continued certification of diamonds from Zimbabwe and Angola. His statement reads in part:

“The Kimberley Process (KP) is aiding and abetting severe human rights violations as it certifies, legalizes and legitimizes blood diamonds. Corrupt governments have turned the KP on its head. Instead of eliminating human rights violations the KP is legitimizing them.”

Anyway, the entire WSJ story is truly worth reading, but here are a few takeaways if you don’t have the time:

  • Here in the sprawling jungle of northeast Angola, a violent economy prevails in which thousands of peasant miners eke out a living searching for diamonds with shovels and sieves. Because they lack government permits, miners and their families say they are routinely beaten and shaken down for bribes by soldiers and private security guards—and, in extreme cases, killed.
  • This sort of violence, which has made headlines in nearby Zimbabwe, is threatening to tear the Kimberley Process apart.
  • [The Kimberley Process] doesn’t take into account human-rights abuses in diamond territory controlled by governments themselves. “The Kimberley Process cut the financial lifeline of rebels, but at the same time it gave legitimacy to corrupt governments that abuse their own people,” says Rafael Marques, a human-rights activist who has worked extensively in northeastern Angola.
  • Much of the recent controversy is focused on Zimbabwe, where the group Human Rights Watch last year reported that government soldiers massacred over 200 people in a fight to control diamond fields in the east of the country, raped local women and press-ganged peasants into mining work.
  • Cecilia Gardner, a former New York federal prosecutor who serves as the general counsel of the World Diamond Council, says the Kimberley Process is a voluntary organization and isn’t equipped to enforce human-rights compliance. “We don’t have an army, we don’t have a police force,” she says.
  • Last August, when a Kimberley Process peer-review team arrived to check the country’s compliance procedures, Angolan forces were just mopping up a major operation to expel some 30,000 illegal Congolese miners from Angolan territory near here. According to a U.S. State Department report citing local media and nongovernmental organizations, military and police “arbitrarily beat and raped detainees” and forced them to march to the border without food or water.
  • More than a million people world-wide earn a living from artisanal mining in alluvial fields, including tens of thousands in Angola alone. …There’s little agriculture here and almost no jobs outside of the mining sector.
  • For Ahmad Mouein, a Lebanese buyer who bills himself as “Boss Mouein,” it’s a great business opportunity despite the recession in the diamond market. “Sometimes a digger here can sell you a $500,000 stone for $5,000, $10,000,” he marvels. He says the Kimberley Process hasn’t succeeded in its primary mission of halting smuggling. “Kimberley or not Kimberley, my friend, for the diamond, you can do what you want.”

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