Know and show

Effective human rights due diligence in the extractives industry

By Faris Natour, Director, Human Rights, and Jessica Davis Pluess, Manager, Research, BSR. 

Do the community representatives you consult with actually represent the interests of the communities? If project security turns artisanal miners over to the local police, what happens to them in police custody? Are indigenous peoples in the area relying on a waterway impacted by the project for recreational purposes only, or to engage in traditional cultural and religious practices?

If you don’t know the answer to these questions, your project is at risk of infringing on human rights. If you know the answers but have not put in place policies and procedures to mitigate and manage these impacts, your project may also be at risk.

These questions capture only a fraction of what is an increasingly complex human rights landscape for large companies in the extractives industries. Given the substantial physical and economic footprint extractives projects have on host countries, and given the fact that the resources these projects are aiming to access are increasingly located in areas characterised by weak governance systems, these industries face both significant human rights risks and opportunities for positive impact.

With the endorsement of the UN Guiding Principles for Business and Human Rights in 2011, companies and governments now have clarity on the expectations of both states and companies in ensuring respect for human rights. Under the Guiding Principles, companies are expected to “know and show” that they do not infringe on human rights through their operations or business relationships. Human rights impact assessments (HRIAs) represent a key first step in meeting this expectation.

An HRIA aims to simplify the complexity of managing human rights by providing companies with a consistent, efficient and systematic way to identify, prioritise and address human rights risks and opportunities. Operating without infringing on human rights is one of society’s baseline expectations of business. Meeting this expectation is not just an ethical imperative, it also makes business sense. Conducting an HRIA is part of a sound risk-management approach that supports compliance, preserves the company’s reputation, strengthens its social license to operate and prevents operational disruptions that can lead to significant financial losses. It can also help companies prioritise social investments, deliver local benefits and strengthen community engagement.

Four-step approach to HRIAs

BSR has been conducting human rights due diligence with companies since our founding, a little more than 20 years ago. Over the past two years, we have worked with companies in multiple industries conducting HRIAs aligned with the Guiding Principles. Our approach is not intended as an off-the-shelf tool or checklist. Rather, it is designed to be tailored to a company’s unique risk profile and operating context, while taking into account the availability of human and financial resources. At the heart of our approach are eight guidelines (see box) that shape the decisions we make with companies to ensure that the HRIA process is sustainable and provides actionable results. BSR proposes that companies in the extractives industry take a four-step approach to assessing human rights risks and opportunities at project sites.

Before starting an HRIA, there are four critical questions all companies should answer:

Where should we start? Are there projects or sites that have higher or lower risk profiles based on their geography? How should the approaches vary for high- and low-risk sites in terms of depth of research and stakeholder-engagement strategies?

When should the HRIA be conducted? Are there suspected impacts that need immediate attention? Are there key milestones, such as a permit application or approval process, that should be considered as part of the timeline? How will the project phases affect the HRIA results, and how can we ensure that we create a process that can be updated over time?

Who should be involved in the HRIA? Which functions, teams and individuals in the company should be involved in the assessment process at the corporate, site and regional level? How should they be involved? What aspects of the process can be led internally, and where should outside consultants/experts be involved? How should the engagement between headquarters and local teams be managed through the process?

What have we already done and what can we use in the HRIA? What existing tools, recent assessments, or stakeholder-engagement sessions should the HRIA consider? What other data is available to use in the assessment, and where are there gaps?

Step 1: Immersion: The “immersion” step allows both the company and the human rights experts engaged in the HRIA to fully understand the project situation and local context, including the socioeconomic aspects of the communities whose rights are potentially affected by a project. Any company planning a major extractives project is required by local and/or national law to carry out certain levels of due diligence to gain regulatory approval. In some cases, such as for an environmental impact assessment (EIA), due diligence may include some human rights aspects. It is important to gather and analyse information from any relevant previous assessments as early as possible in the HRIA. In a recent HRIA of an energy project in the planning phase, we were able to rely on a significant amount of data from the recently completed EIA and from official communications filed by community groups as part of the regulatory approval process. From this data, we are able to quickly fill in the information gaps through our HRIA, allowing us to focus resources on the most relevant risks.

As part of this step, we encourage companies to:

Create a cross-functional human rights task force or steering committee at the site

Review the nature and scale of current or planned industrial operations in the area

Identify and review current internal policies and external commitments (e.g. voluntary principles)

Understand the existing assessment systems and data-collection practices

Review recent stakeholder and community-engagement outcomes

Study the specific community and local human rights context to develop an initial view of the risks and opportunities

Review data from recent relevant assessments, including country- and site-level assessments, such as EIAs or audit results

Step 2: Mapping: This step aims to help companies identify the most relevant human rights issues for the company by mapping the real and perceived ways the company or project impacts human rights – either through the project lifecycle and/or as a result of the different functions, including procurement, construction and human resources. This helps companies narrow the long list of human rights issues to those that the project could impact, and to identify which project activities are most likely to present human rights risks or opportunities. The mapping step typically includes the following activities:

Review complaints raised and processed through the site’s grievance mechanisms

Review current and recent relevant human rights complaints, cases, and allegations related to the site or to similar business activity in the region

Engage with rights holders – those potentially affected by the company’s operations – and other relevant stakeholders to identify actual and perceived impacts
Map human rights issues based on their significance and the responsible party (e.g. project, contractor, etc.) This can be done using BSR’s HRIA tool mentioned below in Step 3

Step 3: Prioritisation: While the company should address all impacts and risks, limited resources and complex networks of business relationships may require the assessment team to determine the order in which the identified issues should be addressed – which is the focus of this step. The Guiding Principles state that companies should consider the scale, severity and “remediability” of impacts when determining which issues to address first.

BSR has developed a site-level HRIA tool to help prioritise human rights issues across six key categories: land, indigenous peoples, security, labour, economic, and social/cultural and environment. It includes a series of questions to evaluate the risk level and determine the source of the potential impact, whether it is government, the project itself, or a business partner/contractor. Some of the specific activities in this step include:

Analyse the HRIA results to identify existing and potential human rights impacts

Determine who is best positioned to address each impact and assign responsibility accordingly

Prioritise impacts and risks based on their scale, “remediability,” and likelihood

Step 4: Management: Lastly, the HRIA helps companies build a robust approach to addressing impacts, managing risks and maximising opportunities by strengthening the company’s human rights strategy, policies, processes and engagement. Robust management of human rights is part of companies’ larger social performance strategies that include community and stakeholder engagement; strategic social investment; benefit sharing; and health, safety and environmental management. Successful human rights management requires integrating human rights into all relevant decision points in the company and project, and it involves a range of functions across a project, including contracts/procurement; government affairs; community relations; health, safety, and environment; security; communications; and project executives/leadership. This integration is a key determinate of how comprehensively human rights impacts will be managed across a project. For some companies, this may include incorporating the management of risks and opportunities into an existing risk register, which identifies risks by department and then consolidates them into a list of the top 10 risks for the department head to manage directly.

Specifically, this step calls on companies to:

Develop action plans to address specific impacts, risks and opportunities

Integrate HRIA findings into existing policies, management systems and work plans

Introduce new policies and systems, including grievance mechanisms, to mitigate risks

Develop and implement human rights trainings

Monitor ongoing human rights performance

Institutionalise human rights management and ongoing due diligence within site-level governance

Apply lessons to your corporate human rights strategy and policies

Conducting a site-level HRIA is not easy, but identifying and managing human rights risks early is much easier than resolving crises that arise when these issues are not addressed. The guidelines and steps outlined here can help make the HRIA process as efficient and effective as possible.

BSR is a global nonprofit business network and consultancy that works with business on sustainability. It works with its global network of more than 250 member companies to build a just and sustainable world. From its offices in Asia, Europe, and North and South America, BSR develops sustainable business strategies and solutions through consulting, research and cross-sector collaboration. Visit www.bsr.org for more information about BSR’s more than 20 years of leadership in sustainability.

By Faris Natour, Director, Human Rights,
and Jessica Davis Pluess, Manager, Research, BSR

Recent Posts