Business & human rights: approaching the finishing line

Is the finishing line now getting closer?

Edward Bickham is a Senior Advisor to Critical Resource and also works as an independent consultant. He was formerly Executive Vice President, External Relations at Anglo American plc. He is an EITI board member. He writes here in a personal capacity.

For many years, the extent of corporations’ human rights responsibilities has been a subject of dispute between activists and companies. An attempt to address the issue in the 2000s, through the draft Norms on Business and Human Rights, perished in a firestorm of controversy. A more considered analytical framework is, after six years of painstaking work, approaching fruition. It promises to provide greater clarity for companies on what society expects of them when operating in environments where national laws to protect human rights do not exist or, more frequently, are not enforced.

In 2008, Professor John Ruggie, the UN Secretary General’s Special Representative on Business and Human Rights, proposed a framework setting out: the duty of the State to protect human rights (including against infringements by businesses); the responsibility of companies to respect human rights; and the importance of access to remedies when abuses occur. His mandate was then extended by three years to ‘operationalise’ the ‘Protect, Respect, Remedy’ framework and a draft of the 29 implementing principles for the framework was recently published (comments are invited by January 31st).

Professor Ruggie is insistent that governments should not trade away their ability progressively to realize human rights through overly restrictive investment treaties or fiscal or regulatory stabilization contracts with individual investors – albeit such economic and social rights may not be deliverable if investment is not made in the first place. Such provisions have particular relevance for extractive companies, who make huge upfront investments and have immobile assets. But when negotiating these agreements, companies need to beware of pushing for terms that are overly rigid or cover too many eventualities; otherwise they may be accused of driving an unequal bargain and, thereby, create resentment. Professor Ruggie also urges governments to consider the realisation of such rights when working in international bodies like the World Bank or the World Trade Organisation.

But, away from such high politics, what does the framework mean for how companies should conduct themselves? In general what emerges is pragmatic and implementable.

Evolving the right approach

Human rights are not an easy organizing framework for companies for three reasons. Firstly, businesses are essentially quantitative and driven by financial priorities and find it difficult to relate to ‘rights’ which are, for states, simultaneously both absolute and aspirational. Second,‘rights’ smack of political involvement and of making choices between national laws and international conventions which may not have been endorsed by their host country. Thirdly, they sprawl across professional disciplines and are difficult to implement.

However, stripped of the rhetoric, for a company to come to terms with human rights should involve nothing more radical than understanding and managing its impacts upon individuals and communities and not infringing on basic human dignity. Moreover, many human rights are already reflected in almost all companies’ human resources and safety policies. Thirty years ago the push was around environmental impacts: now social impacts are the focus for improvement – which will not come as a surprise to most extractive companies who have seen the trend for a decade or more.

John Ruggie is not theological about how companies address human rights. He insists that a company should recognize them in their policy framework but is not overly concerned whether there is a specific ‘human rights policy’ as long as such considerations are reflected in function-specific policies and systems such as human resources, health and safety, supply chain or community relations.

The major global employers’ organizations stated in 2006 that “all companies have the same responsibilities in weak governance zones as they do elsewhere…to obey the law even if it is not enforced and to respect the principles of relevant international conventions when national law is absent”. Professor Ruggie embraces this position, whilst balancing the view that companies are not exempt from observing laws just because they are not enforced, with a stipulation that they are also not obliged to substitute for an absent government.

Diligence due on risk

The centrepiece of the Ruggie analysis is the importance of human rights ‘due diligence’. This rests upon a company having the right policies in place and a process for understanding the nature of its impacts. Such due diligence can only work if policies are not mere statements of intent but are delivered through management systems.

Two points are particularly important. The first is the need for deep and continuing engagement with local stakeholders to understand their perspectives and priorities. Secondly, although he is supportive of integrating human rights in mainstream risk management systems, Professor Ruggie insists upon a fundamental change in mindset. Human rights impact assessment requires a company to turn itself inside out and to consider not only what risks it faces but also what risks it poses to the human rights of others and how these should be mitigated. This may not be easy but it is not an unreasonable challenge.

It is noteworthy that several – generally smaller – companies in the extractive sector boast of their appetite for risk and seek to generate higher returns to justify it. But these same companies are often amongst the most poorly prepared for managing this sort of risk. As the report submitted by Professor Ruggie to the UN earlier this year showed, however, social and human rights risks are costing increasingly large amounts to extractive companies from lost or delayed projects (the report suggests losses in the region of $6.5 billion in the oil sector over a two year period from such problems). The Ruggie principles make it explicit what companies should be doing in this sphere – this may be the moment when having the right skills and risk processes for the management of external issues moved from being a luxury to being a necessity.

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