Communities First: Top Human Rights Priorities for Extractives Companies

TUESDAY NOVEMBER 14, 2017

By

OUIDA CHICHESTER, Director, BSR

#Energy and Extractives, #Human Rights,

As former UN Commissioner for Human Rights Mary Robinson once said, “We must understand the role of human rights as empowering of individuals and communities. By protecting these rights, we can help prevent the many conflicts based on poverty, discrimination, and exclusion (social, economic, and political) that continue to plague humanity and destroy decades of development efforts.”

The extractives industry has had a long and complicated relationship with human rights, particularly in relation to transparency and local communities. With the recent announcement of the U.S. withdrawal from the Extractive Industries Transparency Initiative (EITI), a global standard that promotes the open and accountable management of oil, gas, and mineral resources, these issues are once again making headlines around the globe.

At BSR, we strongly believe that transparency is crucial for sustainable business and the protection of human rights, and given the pervasiveness of corruption in large-scale extractive projects, transparency is especially vital for extractives companies.

Bribery and corruption constitute one of the key issues BSR has identified in our new primer on the 10 most salient human rights challenges for the extractives industry. These practices can have a deep and profound impact on vulnerable communities—either by misdirecting funds that could be spent on healthcare, education, or other public goods, or by preventing participation in the democratic process. Because extractives companies have very high exposure to government, the risk of corruption is massive, especially for those projects taking place in autocratic countries, carried out in ventures with state-owned enterprises, or overseen by politically connected individuals.

The UN Guiding Principles on Business and Human Rights prescribe that companies must first and foremost ensure that they take all reasonable measures to avoid human rights harms. For the extractives industry, that means companies should ensure that any engagement in high-corruption contexts proceeds according to international norms of transparency and accountability.

While some companies have led on inclusive approaches that minimize harm to local communities or have pioneered participatory community engagement, the human rights impact from extractives projects can nonetheless be devastating, and the industry often receives heavy criticism for its human rights record.

By identifying and addressing known human rights risks, extractives companies can work to protect the rights of a community and its workers. And in addition to protecting human rights, companies also have the opportunity to champion and defend them. That’s why we outline three top opportunities for the industry to make a positive impact on human rights in our new primer—perhaps not surprisingly, they all relate to including and empowering people in the communities where they operate:

• Community Development: Extractives companies can ensure inclusive socioeconomic development by using participatory development models in their decisions about resettlement, compensation, and community investment. Community consultation and decision-making processes should be inclusive of all groups, and make special allowances for those populations marginalized from decision-making, such as women, minorities, and the rural poor.
• Local Economic Empowerment: While direct employment for local communities is often limited in extractives operations, the industry can be a significant economic multiplier through direct and indirect employment across the value chain. Local supplier policies should be sensitive to the local context, investing in local talent pipelines and taking into account the needs of vulnerable groups, such as female small-business owners.
• Natural Resource Governance: Historically, poor management of natural resources has kept billions of dollars in extractives revenues from supporting public goods, such as health, education, and housing. Extractives companies should support efforts for governments and citizens to exert greater control over natural resources.

We encourage all extractives companies to address the human rights risks that are inherent in their operations and take proactive steps to protect and promote human rights. In both preventing the negative and focusing on the positive, the sector would do well to put communities first in developing its approach.