Suppliers and services

The new relationship

If you ask an average member of the public to describe the resource sector, you will probably get a short list of the largest mining and oil & gas companies.

On the other hand, should you enter the exhibitors’ hall of an industry convention or trade show, you will encounter a bewildering array of enterprises that provide the tools, equipment, studies and support that make it possible for the operating companies to dig out minerals or pump oil & gas.  In reality, the resource sector is a mosaic of businesses that are deeply interdependent on each other.

Any attempt to classify the components of the resource sector beyond the operating companies becomes a long list.  There are the equipment suppliers, chemical and reagent manufactures, engineering, environmental and social consultants, contractors, drillers, lawyers, accountants and financial services, etc. etc.  The interrelationships are many and often complex, forming chains and loops that ultimately interact directly with the operating companies.  Shared concerns along the chains and loops relate to quality, timetable for delivery, and cost control.  In very recent times, another item has gained critical importance: human rights.

In June 2011, the United Nations Human Rights Council unanimously endorsed the Guiding Principles on Business and Human Rights, developed to put into action the Protect, Respect and Remedy Framework presented in 2008.  Both were products of work led by Professor John Ruggie, Special Representative to the United Nations General Secretary.  Commonly known as Ruggie’s Rules, the Framework and Guiding Principles effectively create a human rights risk management system for the private sector.

Briefly, for those that are not already fully familiar with Rugggie’s Rules, it is the duty of the State to protect the human rights of its population, the responsibility of corporations to respect human rights, and for both to provide access to remedy for victims of business-related abuse of human rights.  The Guiding Principles make clear that the Framework applies to all business, and that respect means a business does not infringe (create negative consequences) actually or potentially on the human rights of any individual or group.  Further, that each business should be able to know and show that it respects human rights through a process of due diligence, which involves having appropriate policies and procedures, conducting an analysis of risks and opportunities, engaging with rights holders, resolving any issues, and providing access to remedy.  Crucially, the Guiding Principles point out that the responsibility to respect continues outside of an individual business to include ‘any entity with which it has a direct or indirect business relationship’: the supply chain.  

Labour rights are of consequence throughout the supply chain and become highly significant in mining during exploration and mine construction.  Both are areas where there is extensive use of contractors on a temporary basis.  There is a high risk of rights issues with these service providers – not paying just wage, not giving proper health and safety instruction, not providing workers with personal protection devices, not giving normal employment benefits, etc. etc.

There have also been cases of children being employed by sub-contractors, discrimination, intimidation – the list could go on.  Application of Ruggie’s Rules should see a reduction, if not elimination, of these incidents, but that means companies will have to be diligent, investigate as necessary, and incorporate these matters into contracts so that prevention can be enforceable. 

However, while labour issues are likely to be the most common source of human rights concerns, as Ruggie points out in his book, Just Business, the mining industry has too often been implicated with other, often more serious, aspects of human rights.  The use of security forces is one area of particular note.  For example, the release of photographs in March 2009 showing private security forces binding, gagging and hooding local people who had been demonstrating against the Rio Blanco project, Peru, confirmed complicity by the mining company in egregious abuse of human rights. 

To date, there has been relatively little public reference to Ruggie’s Rules in connection with actual problems or complaints; at least those that have appeared in the media.  This may well be the quiet before the storm.  Information about the Framework and Guiding Principles is now reaching the community level around the world and reaction from affected populations should be expected.  Concerned non-governmental organisations that monitor the resource industries, notably mining, are already using the Ruggie Framework to evaluate corporate conduct. 

Hence, all along the supply chain questions now have to be asked about human rights policies and performance, inspections made and assurances sought that all is as it should be.  Human Rights Impact Assessments are becoming a requirement among the larger operating companies.  Organisations have emerged to conduct these investigations as a service. There has been some comment about how this increases costs and takes time away from ‘real’ work, but generally Ruggie’s Rules are seen as prudent risk management measures against human rights infringements and attendant damage to corporate reputation (and that of managers and directors).   Ruggie’s Rules have very quickly become the norm to live by. 

It may seem trivial, but one question that surfaces frequently concerns the romantic adventures of drillers, contractors and other men that are on project sites for a limited period of time.  These are infamous for their ability to rapidly enter into intimate relationships with local women, father children by them, move on and disappear.  Some call this serial monogamy – one relationship at a time.  Others see it as abuse and note that the women are abandoned to raise children single-handed.  Is this a human rights issue?  Some communities are adamant that it is.

By Ian Thomson, On Common Ground Consultants Inc.

Ian Thomson is a Principal and Co-Founder of On Common Ground Consultants Inc., an international consultancy specializing in enhancing social performance and socially sustainable outcomes for the global resource sector.


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