Responsible Business & Infrastructure Development in Iran

June 29, 2017
An IBR presentation at the OECD Global Forum

On 29 June 2017, the Iran Business Responsibility (IBR) project gave a presentation to the OECD Global Forum on Responsible Business Conduct on infrastructure development in Iran and responsible business.

Andrea Saldarriaga, co-Director of IBR, discussed the issues companies investing in the infrastructure sector in Iran will face at the Forum’s Responsible Business Conduct and Infrastructure panel, and the challenges to responsible business there. Participants at the Forum included officials from member governments and multilateral institutions, business and company heads and counsels, investment funds, leading civil society and non-governmental organizations, and representatives of trade unions, academics and research institutes.

The Government of Iran has identified infrastructure as one of the key areas in which it is seeking foreign investment, in particular to upgrade the country’s airports, rails, power generation, and water management systems. Such investment is critical to the country’s economic growth, as infrastructure shortcomings have created bottlenecks undermining foreign investment needed in other areas of Iran’s economy. Several major foreign investment deals with European firms have already been signed and others are in the planning stages.

IBR director Saldarriaga noted in her presentation that there are significant challenges to responsible business in Iran that are relevant to infrastructure investment. While most companies are focused on sanctions, business practices that do not conform to responsible business standards are prevalent in the sector. These include weak enforcement of occupational health and safety standards, which has resulted in fatal workplace accidents well above international and developing country averages. Sixty percent of these deaths occur in the construction sector. In addition, refugee and migrant workers are particularly dominant in the construction industry, and are often exploited. An estimated 90% of the formal workforce is employed under temporary contracts where labour protections are weakly enforced, and roughly one-third of the workforce is in the informal economy, with no regulatory protection at all.

Saldarriaga encouraged investors in infrastructure to pay special attention to the welfare of workers in their operations and those of their business partners and suppliers of products and services. She also called on multilateral organisations such as the OECD to spearhead discussions on responsible business conduct in Iran, emphasising that the challenges to responsible business are significant and that there is a need for collective action to ensure investors have the appropriate information and incentives to perform responsibly in the country.