Tackling the business of human rights

Q Could you describe the report you presented to the UN Human Rights Council in 2008 on business and human rights?

A The report puts forward a policy framework based on three core principles. Firstly, that states have a duty to protect people within their jurisdiction from all human rights abuses no matter who commits them  - and this includes business. Secondly, companies are expected to respect human rights wherever they operate. And thirdly, there needs to be far greater access to effective remedy. This means places where people can go to complain and where matters can be dealt with before they become the subject of a global campaign or lawsuit against a company, as well as courts in which cases can be brought when other means do not suffice or serious violations occur.

Q What are the most significant human rights issues for extractive industries like oil and gas?

A The extractive industry has such a large footprint wherever it operates that it tends to generate multiple challenges. One issue is the impact on the community and the rights of communities for fair and equitable treatment – for example, to be properly compensated if their lands are taken over in order to drill a hole or to take the top off a mountain.

Then there is security. Typically, these are large operations that require some form of protection – by private or public security forces. In difficult environments, where governance is weak or where there might even be a civil war, armed forces are often used to protect company assets. Their behaviour can be very problematic. A demonstration may take place, somebody throws a rock, then bullets fly and somebody is killed by security forces, so the company can be accused of being complicit in that act and may end up in court.

Then there is labour – where you recruit from, how you recruit, and how you treat the workforce.

Q The Voluntary Principles on Security and Human Rights¹ were developed in 2000 as a guide for companies – and Shell was a founding member. Were these a step in the right direction?

A I think so, but the shortcoming of the Voluntary Principles is how few participants there are.  A lot of the world has never heard of them. But in Colombia, for example, I went to see the BP operation in Casanare. I visited a human rights training centre used to train the army brigade that protects that part of the country and the BP operations. I talked with community leaders. My impression there was that the Voluntary Principles certainly have made a big difference. There is no longer a climate of fear and distrust and there are far fewer human rights-related complaints. 

Q How do you explain human rights to a project engineer?

A Project engineers understand risk management. If they are in the oil business, they know that certain geological and seismic studies need to be conducted. There are risks involved. There are certain ways in which you do and don’t drill. Managing social risk is a parallel process.

You are often entering an indigenous community in a very remote area. They may not be used to foreigners. They haven't seen all this machinery before – it’s a very alien experience. And you are going to have a significant impact on them, socially, environmentally. The company needs to make itself aware of these issues and avoid bad things happening or getting out of hand, just the way it manages any other risk.

Q  Do you think that a small, very vocal minority that is well connected to the external world is able to stop projects now?

A The concept of free, prior and informed consent² is a difficult one, not only for companies but also for countries. No national government likes to give veto power domestically to anyone – it is in charge of overall economic planning and makes the decision that it is a good investment for an oil rig or a mining operation to be opened. 

At the same time we all recognise that a company requires two licences to operate. One is the legal licence from the state. The other is the social licence from the surrounding communities. These communities can make life very difficult – or they can work in partnership with you. If you are willing to engage in dialogue and are willing to respond to what you hear, your social licence to operate is established and sustained. It is not the company imposing its will, but the community as a whole deciding that working with the company is in its best interests. But for that to happen you have got to establish a relationship of trust. You have got to listen to that community, and you have to have a grievance mechanism that they consider legitimate, not simply a PR exercise.

Q You mentioned grievance mechanisms. Over the coming years do you think most community grievances could be settled outside court through some kind of alternative process?

A At the moment, the routine way is campaigns against companies, or lawsuits. And neither is very productive. So we are pushing to establish or strengthen grievance mechanisms from the ground up - though of course the option of legal recourse is essential, and for some things it is required.

I once visited a troubled gold mine in a South American country where the local community had been trying to get onto the radar screen of the company for some time, but the company paid no attention to it. One day the community organised itself and closed down the only access road to the mine. And then the company paid attention. The lesson you draw from that is that companies don't respond to small problems, so you have to create big ones. That is not the message that companies want to send. It is in their interest to respond to the small problems before they become big problems.

There are national human rights institutions. In many countries they are not yet allowed to address business-related issues, only state-based human rights abuses. It’s not rocket science: you expand their mandate so they can also take up business issues.

At the international level, the Organisation of Economic Cooperation and Development has “Guidelines for Multinational Enterprises”. Under these all of the 40 participating countries are obliged to establish an office where people can bring complaints. These don't work in a uniformly effective manner. The Dutch have recently restructured theirs and are the gold standard at the moment.

Q Human rights have been evolving over the last decades. What are the developments that companies need to be aware of?

A Human rights as such haven't really evolved. The core human rights have been there since the Universal Declaration of Human Rights. For example, we have always had a right of privacy in our countries, domestically as well as under international human rights law.

Two things have evolved. One, there are more avenues for enforcement than in the past. Secondly, the specification of what those rights entail.
 
Companies need to be aware of what this means and of the ways in which those who feel aggrieved can mobilise public opinion or bring lawsuits against them. The web of liability has expanded fairly steadily in the area of human rights. We are trying to explain this to companies, as well as what they can do proactively to manage the risk that results.

Q Some have advocated establishing a right to water. The extractive industry, like others, uses a lot of water. Do you think that in 10 years or so communities may have an enforceable right to water?

A The whole issue of the right to water is a complicated area. The state has the primary duty in relation to human rights, and for most social and economic rights its duty is subject to “progressive realisation” – meaning that poor states can’t snap their fingers and these rights materialise overnight. It is subject to developing the capacity to provide for these rights.

The primary responsibility of business is not to get in the way of that development and the progressive realisation.

Q Do you think industries like oil and gas should carry out human rights impact assessments?

A I very much believe that companies need to do human rights impact assessments but, as long as the human rights experts are brought in as part of the impact assessment team, I don't see a reason why they have to be separate from other forms of impact assessment.

Q How can a company succeed in embedding human rights in its business?

A There is nothing mysterious about doing well in the area of human rights. It’s like running any other area of your business. If you take it seriously, if you have commitment from the leadership and if you put systems and training in place, you’re going to do well.

Q Do you think companies should be adopting a rights-based approach to business?

A The human rights community has spoken in the past about the need for rights-based approaches. I am not absolutely sure what a rights-based approach to business would be. The position that I have taken in my mandate is that business activities should be rights-compliant -as business goes about its business, it ought not to interfere with the enjoyment of rights by others. And it ought to do its best to contribute to the realisation of rights.

Business is a specific social organism. We create companies to make widgets – efficiently, at a profit, without doing harm to society. We don't, or we shouldn’t, expect companies to solve all of our social problems. But we should expect them, at a minimum, not to contribute to social problems or undermine solutions to them.

Q What would you say in response to the suggestion that where companies have influence, they should be responsible for human rights?

A Companies have lots of influence even when they have nothing to do with a particular human rights abuse. What we expect of a company is that it doesn't contribute to those human rights abuses, that it is not complicit in those human rights abuses. But just because it is powerful, because it has influence, we don't hold it responsible for those human rights abuses.

What I tell companies is that they need due diligence in looking at three things: the impact of their own activities on human rights; the human rights impact of their business relationships, their suppliers and their relationship with the government; and thirdly to consider this within the overall context of the human rights risks of the country in which they are operating.

Q In the energy industry around 15% of resources are in private hands, with the rest in the hands of state-owned companies. What progress are you making with state-owned enterprises and human rights?

A There is no question in my mind that, in many instances, the state-owned enterprises lag behind their private counterparts in this area. What we don't know is whether the clear gap in performance is due to a time lag, the fact that they are newcomers, or whether it has something to do with their being state-owned.

But we are working on an answer. We are suggesting to the governments involved in state-owned enterprises that in fact, under existing international human rights law, the state itself is obligated to pay closer attention to what its state-owned enterprises are doing than would be the case for the Dutch government vis-à-vis a Dutch private company. Because it is the state that has ratified the international human rights instruments.

At the same time we are working with state-owned enterprises themselves, in trying to bring them up to speed on what the private companies have learned through trial and error over the past 10 or 15 years.

Q Do you think the current economic downturn will have any direct impact on the area of human rights?

A I think the seismic shift taking place as a result of the financial sector meltdown is going to change prevailing attitudes towards government regulation. And it's going to have spill-over effects in the area of human rights.

For the last 20 years – not as much in European countries but certainly in the United States – we have heard that government is part of the problem, not part of the solution.

That is bound to change. It already has. And I think the reluctance on the part of government to do what it is supposed to, which is to govern in the public interest, is shifting. I think you will see governments revisiting issues related to transparency, for example. It will initially be financial sector transparency, but it will spill over into corporate reporting generally. If companies need to report on their risks, there are social risks that are a by-product of operating in certain environments. So I wouldn't be at all surprised if there were a push towards more mandatory forms of risk reporting which will inevitably include not simply narrowly-defined financial issues, but also broader social issues.

* John Ruggie spoke to Richard Dion.

1.  The Voluntary Principles guide companies in maintaining the safety and security of their operations within a framework that ensures respect for human rights and fundamental freedoms. Shell was a founding member of the principles and in 2007 we included them in our Group Security Standards.

2.  Free, prior and informed consent is a UN principle that recognises indigenous peoples’ inherent and prior rights to their lands and resources and respects their legitimate authority to require that third parties enter into an equal and respectful relationship with them

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