Issue No. 52, July 2018
Business and Human Rights - Assurance Under Challenging Circumstances
Much has been written lately about the risks industries and investors face relative to often obscured human rights abuses in their supply chains. Global businesses, government agencies, NGOs and financiers along with their lawyers and expert consultants are quickly building awareness of how to identify potential abuses as well as how to help prevent and remediate them by applying emerging, internationally-accepted good practices and guidance.
This is good news, except when all the best practices don’t work – when circumstances are such that even the emerging body of knowledge and commitment isn’t enough to assure the rights of affected people are respected. This paper looks at how three particularly challenging conditions can thwart effective application of common best practices and what adjustments may be needed to continue to ensure that human rights are respected.
The UN Guiding Principles for Business and Human Rights specify that the role of business is to respect human rights, while governments are responsible for protecting those rights. Many of the world's leading businesses and investors are starting to institute and implement programs to meet their human rights obligations, and some engage independent experts to monitor their performance. Emerging good practices include:
- Transparent engagement of all interested stakeholders, adapted to ensure fair access to different cultural and linguistic groups and to provide for representative participation in monitoring of impacts to affected communities
- Broadly accessible grievance mechanisms that are sensitive, welcoming and user-friendly to all and are demonstrated to be free of concern over possible retribution
- Human rights due diligence and impact assessments that apply lessons learned from roughly a decade of increasingly common practice
- Labor management practices that integrate the commitments from international conventions to prevent discrimination, forced labor, health and safety perils and lack of dignity among contractor and supplier work forces.
These advances are welcome news to human rights observers worldwide who worry that globalization creates opportunities for human rights abuses in countries with weak governance, high unemployment rates and low levels of transparency.
However, lessons from the field indicate that consistently implementing such “best practice” programs can be a challenge, particularly when common social, political and business conditions are under stress. Below we examine lessons learned in how the application of even the best intentioned human rights programs can fail to prevent abuses when challenging circumstances are present.
Our work in assessing and helping industry manage human rights challenges reveals a number of circumstances in which it is often difficult to ensure consistent, effective implementation and management of human rights obligations, even despite best intentions and best practices. Three particular circumstances (“stressors”) stand out:
- Conflict or post-conflict environments (social risk)
- Political pressure and cultural reluctance (political risk)
- Demand spikes on suppliers (business risk)
Let's look at some case studies and lessons learned from each situation.
Conflict or Post-Conflict Environments (Social Risk)
Maslow’s hierarchy1 suggests that our need for safety trumps our need for dignity, sense of fairness and esteem. In social settings where individuals and families are not at an elevated risk of violence, we readily expect and demand a level of fairness and dignity in our interactions with government and business interests. When peaceful governance is overtaken by violent conflict as the order du jour, human rights are too often left exposed and sacrificed.
So it is that in Iraq, that neither the government nor its rebounding oil industry have taken material steps to curb the discrimination and erosion of the indigenous Chaldean Christian culture that has lived for centuries on land now being developed as massive oil fields. International oil companies that have voluntarily developed and applied admirable practices to respect human rights throughout their global markets are perplexed at how to apply the same level of rigor in this area while also dedicating needed attention and resources to maintaining safe operations amidst imminent security threats to their people. Further north in Kurdistan, operators are doing their best to transparently engage diverse community interests, while having to carefully control dialogue with subgroups that have opposing views and are accustomed to settling conflicts with violence.
Other examples abound:
- The Fulani people’s criminal influence over northern Nigeria and threats to project teams curtailed an internationally-financed renewable energy development’s plans for assuring fair representation among all community groups in assigning community liaison officers and granting “livelihood restoration” for those affected by the development.
- Colombia’s increasing gang violence in the vacuum of the FARC peace process requires army presence during “Free, Prior and Informed Consent” engagements in indigenous communities whose residents feel intimidated by the uniformed units to which they attribute the disappearance of their relatives, only a generation ago.
- Cote d’Ivoire’s students feel that their right to peaceful protest of government-sponsored tuition hikes is denied by a police force that, despite Voluntary Principles-inspired training2, has become wary of and wired to squelch group demonstrations after decades of civil war.
In conflict and post-conflict circumstances, the challenge isn’t that companies or governments don’t know how to recognize or manage human rights risks – it is that they are too often constrained by their need to prioritize security concerns over the need to respect their population’s right to demonstrate, for example. Businesses on the other hand are faced with the challenge of finding the right balance between making their business case and upholding their corporation’s values while operating in jurisdictions where the preservation of human rights is not a priority.
Political Pressure and Cultural Reluctance (Political Risk)
Strong democratic governance promotes the exercise of civil liberties by the governed, and the World Bank has found that this linkage is an essential ingredient to successful economic development3. But too often the pendulum that gives power to ruling parties and dominant cultural beliefs can backlash against civil liberties. Through our work as social performance experts, we have struggled to find the right balance in:
- Western Sahara, where the Moroccan government applied a world-class environmental assessment and public consultation program to a population that rejects Morocco’s claim to govern them
- Bangladesh, where government priorities for developing pipeline and energy infrastructure pushed for construction to proceed without broad community engagement or resettlement of those whose land or livelihoods were taken by eminent domain
- Mexico, where northern municipalities have to come to terms with ruling cartels to realistically promote any economic development projects, but then cannot support developers’ efforts to apply international rules4 for preventing discrimination of local indigenous and ejiditario people in the workforce.
In truth, we need look no further than the US for examples of how political pressure and cultural reluctance can threaten human rights. Fortune 50 agri-businesses welcome and depend on large immigrant workforces to power their largely manual labor needs, yet recent visa revocation policies will force some of those workers to leave family behind and return to the dangers from which they legally fled to the US. We with means too often conveniently look the other way when the new infrastructure, prisons and waste facilities that maintain our lifestyles are disproportionately sited in poor and disadvantaged communities, over-riding sensible but weak environmental justice protections. And mediation clauses in employment contracts in the media and other industries prevent women from speaking out when subject to harassment in the workplace.
Where social behavior is under extreme political or cultural pressure, the challenge isn’t that companies lose their commitment to respect human rights risks - it is that they are redirected by host governments and communities (or legal systems) which insist that being well-behaved guests means playing by different rules (or accepting inadequate enforcement of rights protecting frameworks already well in place.)
Demand Spikes on Suppliers (Business Risk)
When supply chains have capacity to adapt to the normal fluctuation of business demands, suppliers are in a strong position to deliver sufficient goods and services with the assurance of both product quality and social responsibility. But we have seen that when demands spike and supply chains are under stress to produce, both buyers and sellers are faced with the choice of either incurring material business losses or relaxing human rights performance expectations. This is when voluntary commitments to fair labor and disclosure practices in supply chains are vulnerable. In these cases, experience has shown that world-class guidance, tools and learnings on respecting human rights may be deemed infeasible to apply. In complex supply chains, second level suppliers look to find help where they can (including to risky third level suppliers), and first level suppliers may look the other way. This conflict places consumers, workers and industries in awkward positions, as we’ve seen when:
- A global rush for affordable technology drove some Chinese industries to crank up the production with limited environmental controls, creating deplorable air and water pollution that left host communities without their rightful access to clean air and water
- Increased demand for protein and shortened seasons for produce harvesting in the US led food industries to offer incentives for overtime, encouraging poorer workers to voluntarily work to near exhaustion - voluntarily but without full awareness and training to cope with the negative effects on their health
- Periodic demand spikes for materials in the Democratic Republic of Congo (cobalt), Cote d’Ivoire and Ghana (cocoa), and Brasil (iron) pushed suppliers to find and add new sources or subcontractors that may not be as committed and well-trained to respect labor rights as core suppliers.
Where demand spikes create pressure on suppliers to either increase their own production or lose market share to those who will, the challenge isn’t that supply chain businesses cannot continue to ensure fair labor conditions for their workforce – it is that they must expand their own supply chains to include providers who may not always meet internationally-accepted labor rights standards.
Conclusion and Recommendations
Much has been written recently about managing human rights in the business supply chain. We at Acorn International like to think we have learned much in the past few years about how to recognize and manage human rights risks in the supply chains of global businesses. But we know from experience that under extreme social, political and market pressures, even the best practices and intentions may fall short. Stress reduces the likelihood of consistent application of the human rights commitments that we know are appropriate and believe should be applied without exception. Global industries and investors who need assurance that human rights obligations are being kept may be surprised to find that, in the extreme circumstances outlined in this paper, that assurance may be undermined.
What can be done to ensure human rights commitments are kept even in extreme circumstances? Lessons from the field have shown us that developing polices and management plans to implement these commitments isn’t enough when investments and operations face challenging social, political or market circumstances. To assure human rights are respected even under extreme social, political and market pressures, all parties need to learn from failures in implementing fast-evolving good international industry practices.
- Governments need to continue to learn and develop stronger systems of governance that ensure both their own commitments to protect human rights and their expectations that business respects those rights no matter how extreme the pressures of each situation are.
- Industries need to hold their government hosts accountable for balancing human rights with security, and must build fair labor management practices that are strong enough to withstand spikes in the demand for resources that are ripe for the incursion of modern slavery.
- Developers need to be more cautious prior to pursuing and starting projects in such contentious environments where they may, despite best intentions and practices, have no chance of successfully promoting economic development while preserving human rights.
- Investors need to continue to build awareness and standards that drive the withholding of funding of otherwise profitable initiatives that involve unacceptable risks or poor performance on human rights.
- NGOs need to continue to be vigilant, especially where the human rights commitments are under social, political and market pressures, and communicate as partners with industry to find solutions.
- Human rights experts and consultants need to recognize that even the best guidance, training, contracts and commitments may not be enough to ensure those commitments can be met under challenging circumstances, and to develop the adjusted skills and tools needed to meet those challenges.
Government, civil society, investors, and the global business community have together made great strides in identifying and addressing human rights risks. Emerging good practices and guidance are not enough when applied in environments with extreme social, political and market pressures. Rather than singular, corporate-level solutions, identifying and addressing human rights challenges in these extremes requires a special level of resources, diligence, collaborative review and problem solving at the most local level.
1 Maslow's hierarchy of needs is a theory in psychology proposed by Abraham Maslow in his 1943 paper “A Theory of Human Motivation” that comprises a five-tier model of human needs, often depicted as hierarchical levels within a pyramid. Needs lower down in the hierarchy must be satisfied before individuals can attend to needs higher up. From the bottom of the hierarchy upwards, the needs are: physiological, safety, love and belonging, esteem and self-actualization.
2 The Voluntary Principles on Security and Human Rights were developed cooperatively in 2000 by governments, extractive and energy industries and non-government organizations to promote respect for human rights by security authorities.
3 See Isham, Jonathan, Daniel Kaufmann and Lant H Pritchett, “Civil Liberties, Democracy and the Performance of Government Projects” in The World Bank Economic Review, Vol. 11, No. 2, 1997.
4 For example, the International Labor Organization (ILO) Convention 111 provides guidance on preventing workforce discrimination of indigenous and vulnerable people.
Acorn International LLC delivers social and environmental risk management consulting services to the extractive industries and investors worldwide. We work with local partners in over 80 countries worldwide. Use of these local specialists is paramount, particularly in developing countries, where information is often scarce, second-hand, and unreliable. We look forward to engaging in continuous improvement for the industry and building capacity with our partners.
Acorn International Notes
Acorn Notes is a series of periodic papers to share ideas regarding EHSS and sustainability management for international industry.
Issue 51 -Transformation at Randalls
Issue 50 -Regional Environmental, Social and Governance (ESG) Trends Affecting Frontier Market Investments
Issue 49 -Dr. Chris Anderson on the Extractives Sector
Issue 48 -Regional Non-Technical Risk Trends Affecting Oil and Gas / Energy Investments
Issue 47 -Social Risk Trends in Mexico's Energy Industry
Issue 46 -Hi-Tech for Non-tech
Issue 45 -Culture – Understanding its Impact on Business and Community EngagementNot Too Technical
Issue 44 -Not Too Technical
Issue 43 -Myanmar – Another step in the transition
Issue 42 -Meeting expectations in human rights reporting - a delicate balance
Issue 41 -FPIC Is Here To Stay
Issue 40 -A Multi-Stakeholder Partnership in Ghana: Marine and Fisheries Management
Issue 39 -The Colombian Social Responsibility Framework: An Evolving Model
Issue 38 -Social Network
Issue 37 -A Community Look-back on Ebola
Issue 36 -Ghana and the Voluntary Principles: Implementing the Human Rights Protection Framework
Issue 35 -Inundation
Issue 34 -Colombia: Local Hiring Requirement for O&G Industry
Issue 33 -Mature and Frontier Mining Geographies: Where does Greater Risk (and Reward) Reside?
Issue 32 -Local Content in Mining: Increasing Expectations and Potential Solutions
Issue 31 -Fast Money Beware: Non-Technical Risk Due Diligence
Issue 30 -Social and Environmental Performance - Considerations for Difficult Commodity Price Environments
Issue 29 -A Window into the Opposing View - Stakeholder Concerns about Oil and Gas in Mexico
Issue 28 -Why Non-Technical Risks Matter to the Mexican Apertura
Issue 27 -Equator Principles:Drivers of Sustainability in the Oil and Gas Industry?
Issue 26 -The Transparency Tightrope: Examining UNEP’s New Access to Information Policy
Issue 25 -July 2014: Bouston
Issue 24 - July 2014: Land Tenure and Property Rights - Where Legal Compliance May Not Be Enough
Issue 23 - May 2014: 3 Things I Learned in Mexico - Non-technical Risks in the Oil Industry
Issue 22 - April 2014: Capacity Building on Stakeholder Engagement
Issue 21 - March 2014: Above-ground Facilities and Stakeholder Engagement: Deploying the 'CAC'
Issue 20 - March 2014: A Starting Point for Shared Equity
Issue 19 - March 2014: What It Takes to Run a Great Consulting Firm
Issue 18 - February 2014: Considering Human Rights - Trends and Lessons in Oil and Gas Impact Assessments
Issue 17 - June 2013: Managing Environmental Health in International Development Projects
Issue 16 - January 2013: Integrating Environmental and Social Performance throughout the Project Lifecycle
Issue 15 - January 2013: The State of Shale Play in 2013
Issue 14 - August 2012: Building Environmental and Social Governance in Host Countries
Issue 13 - May 2012: Human Rights and Business: A New Era
Issue 12 - February 2012: Extractive Industries Confront Pressure for Greater Transparency
Issue 11 - January 2012: Key Updates to the IFC Sustainability Policy and Performance Standards
Issue 10 - June 2011: Oil & Gas and NGOs: New Rules of Engagement?
Issue 9 - February 2010: Annual Study of Sustainable Development Priorities
Issue 8 - January 2009: Annual Study of Sustainable Development Priorities
Issue 7 - May 2008: Top Ten Lessons Learned About Health Impact Assessment
Issue 6 - January 2008: Annual Study of Sustainable Development Priorities
Issue 5 - September 2007: Results of web forum with our International Partners
Issue 4 - January 2007: Annual Study of Sustainable Development Priorities
Issue 3 - May 2006: Suggestions and tips for safe international travel
Issue 2 - January 2006: Annual Study of Sustainable Development Priorities
Issue 1 - November 2005: The Top 10 “unspoken" criteria for determining the success of EIAs
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