Hard Assets On The Line

Glencore, the world's largest commodity trader,  is seeking to merge with Xstrata, a global leader in coal and mining, to form a post-merger company to be valued at nearly $90 billion.  Latest bid .  The proposed merger would become the biggest deal of the year, involving (literally) tons of hard assets.  When we consider the magnitude and impact of this deal, it is hard not to look askance at the other big deal of the year--Facebook.  There, hard assets were tough to quantify in the face of massive valuation estimates. No such problem here, as Glencore's reach expands to aluminum, coal, sugar, grains, and crude oil.  It could not be more brick and mortar.

I don't know what Xstrata's record is on the environment, labor, or human rights.  But as putative partners in one of the biggest mergers of the year, both Glencore and Xstrata might want to shore up their compliance on non-financial matters, which are always problematic in the commodities and extractive sectors. Glencore's IPO was the largest ever on the premium listing of the London Stock Exchange, and this deal will make it an even higher profile target for activists. Plus, the company's provenance as a spin-off from Marc Rich & Company increases its mystique quotient.  A few smart steps by CEO Ivan Glasenberg today can bring reputational, as well as financial, success for the new company going forward tomorrow.

--Adonis Hoffman is a corporate advisor, professor and attorney in Washington, DC. He is the author of Doing Good--The New Rules of Corporate Responsibility, Conscience and Character.

Uphold Human Rights

span style="font-weight:bold;">"We can ignore human rights violations in other countries, or we can take these things on as true leaders ought to and accept the inspiring challenge of America for the future. I am not here as a public official, but as a citizen of a troubled world who finds hope in a growing consensus that the generally accepted goals of society are peace, freedom, human rights, environmental quality, the alleviation of suffering, and the rule of law."

Jimmy Carter, 39th President of the United States


What CEO or company in its right mind could be against human rights, one might ask? Respecting fundamental rights of people throughout the world seems to be a no-brainer. And yet, transnational corporations today are under major scrutiny from corporate watchdogs for violations of human rights.

Activists have sought to bring legal action under the Alien Tort Claims Act, a law that allows citizens of any nationality to sue in US federal courts for violations of international rights or treaties against leading companies for environmental destruction, health violations, water privatization, union busting, aggressively marketing lethal products, and an expanded range of so-called economic and social rights.

In the global economy, companies face far greater challenges in being seen as good corporate citizens. By virtue of their size and dominant presence in many developing countries, a large corporation can be associated with just about any problem that exists in the society. A major oil company has recently come under attack for its investments in Myanmar, a notorious violator of human rights.

As your company develops and maintains its operations internationally, you will want to devote a special degree of care to how you engage these evolving definitions of human rights. The important point is to be aware and proactive.

(c) Adonis E. Hoffman, 2008