The Compliance Accountability Policy (CAP) is a tool that embeds dialogue between labor and management in the DFI project cycle. This dialogue plays a crucial role in securing the rights of workers and communities affected by project finance by both backstopping DFI due diligence and informing client compliance planning.
DFIs and their clients only begin engaging stakeholders long after DFI due diligence is complete, projects are approved, funds disbursed, and business plans firmly established in contracts. The stakeholder engagement that is then conducted—after the DFI has already committed to financing the project—provides much less value to the project and the financing DFI, limiting the DFI’s ability to achieve compliance.
In the United States, municipalities, states, and the federal government have adopted policies that ensure early, substantive, and effective stakeholder engagement in their project pipelines. The requirements, themselves, help identify contractors that might be unwilling to engage with the interests of the community. The following are a few of the policies that have been adopted to integrate negotiations and agreements between employers and labor stakeholders into public projects:
Project Labor Agreements
When it constructs a large-scale project, the US government requires all employers engaged on that project to agree to a project labor agreement (PLA). Usually negotiated by unions and employers before hiring has begun, PLAs regulate working conditions, establish mechanisms for labor-management communication, and provide a mechanism to safeguard community interests.
Labor Peace Agreements
When it has a financial stake in a hotel development project, the District of Columbia requires that employers on the project enter into labor peace agreements (LPAs) with requesting labor organizations. These agreements likewise establish mechanisms for labor-management communication and conciliation, in this case to protect the District’s proprietary interests.
Community Benefits Agreements
Community benefits agreements (CBAs), sometimes required and sometimes encouraged by municipal policy, perform a similar function. Negotiations between a developer and a community coalition, often embedded in permitting processes, result in a legally binding agreement that details the project’s contributions and obligations to the community while ensuring community support for the project.
Global Framework Agreements
Through global framework agreements (GFAs), global union federations and multinational corporations have established similar frameworks for communication, dispute resolution, and dissemination of best practices. The IUF has signed GFAs with several hotel brands to communicate and cooperate regarding human and trade union rights violations and policy progress. The global union federation for the hotel industry, the IUF has agreements concerning efforts to eradicate gender-based violence in hotel operations with the global hotel brands Accor, AccorInvest, Melia, and RIU Hotels.
Adapting the above to DFIs’ project finance cycle, the CAP establishes a process similar to what these policies require and what GFAs facilitate. Under the CAP, the DFI financing a project plays a convening role, bringing together labor and management to discuss how the project will comply with its labor safeguard obligations before the board approves the project. Like the policies on which it is modeled, the CAP requires labor-management engagement before irrevocable decisions about projects are made. And, like GFAs, the CAP avails commercial projects of the labor rights expertise of a global union federation.
Find out more about the Compliance Accountability Policy.
