Human rights, due diligence, and CSR
The adoption of a shared value approach to extractive development necessitates, most fundamentally, respect for the human rights of those affected by extractive development. Even for those extractives companies not pursuing shared value, human rights is a critical business consideration, as it is the leading topic that will attract scrutiny at home and abroad if not managed well. There are now several legal claims in Canada alleging tort damages for human rights related harms arising outside of Canada. This reality makes careful consideration of human rights management critical for any competent business leader.
“Human rights” is an often heard but hard to define concept. Human rights are best (and most regularly) defined in relation to international legal instruments, including what is known as the International Bill of Rights (encompassing civil and political rights) and core conventions of the International Labour Organisation (ILO) (addressing topics such as child or forced labour and rights to freedom of association), which define core rights of individuals vis-à-vis states. In recent years these obligations of states are being broadened, through international standard setting, to include responsibilities of corporate actors to respect human rights.
All of the international standards endorsed in the Corporate Social Responsibility (CSR) Strategy for the Extractive Sector promote protection of human rights in some form or another. Most particularly, the CSR Strategy endorses the United Nations Guiding Principles on Business and Human Rights (the “Guiding Principles”). The Guiding Principles address not only the state duty to protect human rights, but also the responsibility of corporations to “respect” human rights. Respect is demonstrated, in part, by undertaken “due diligence” with respect to human rights issues. This includes; (1) developing a human rights policy; (2) assessing actual and potential human rights impacts of company activities and relationships; (3) integrating commitments and assessments into internal control and oversight systems; (4) tracking and reporting human rights performance; (5) transparency and disclosure (protecting confidential and sensitive information). This due diligence process includes, but may well go beyond, compliance with local laws that touch upon human rights. However, risks of gross human rights violations should be treated as a legal compliance issue, wherever they occur.
The IFC Performance Standards on Environmental & Social Sustainability (IFC Performance Standards), also endorsed in the CSR Strategy, encompasses many requirements, particularly in relation to labour standards, indigenous rights, consultation, grievance mechanisms, resettlement, community health, safety and security, and other topics which have clear human rights implications. Importantly, in 2012 the IFC Performance Standards specifically refers to the Guiding Principles, requiring specific human rights due diligence to be conducted in “limited high-risk circumstances”, in addition to the extensive due diligence already required for environmental and social risks more broadly defined.
The Voluntary Principles on Security and Human Rights (the “VP”), also endorsed by the CSR Strategy, focuses on the human rights risks presented by security forces. Due diligence of security providers is a core requirement for compliance with the VP.
A key aspect of the due diligence process is identifying human rights impacts. This means, in the language of the Guiding Principles, understanding whether the corporation is or will be causing, contributing or may be linked to adverse human rights impacts. To identify such impacts, human rights impact assessment is a useful tool, which involves a process of identifying human rights impacts, assessing them and developing mitigation approaches. In pursuing mitigation, the “leverage” of corporations over human rights outcomes is relevant. The more leverage a company has, the more control it has to affect human rights impacts and therefore the more responsibility it has to do so. While many risks or impacts may be identified in an impact assessment, the Guiding Principles acknowledges that prioritization of impacts in light of limited resources is entirely legitimate. The impact assessment and due diligence process is ongoing and should adapt to changing circumstances, rather than be treated as a once and for all process.
There are few CSR topics as important as human rights, and none likely to gain as much attention, positive and negative, from stakeholders. By understanding and applying the principles and approaches to human rights risk management set out in the standards endorsed by the CSR Strategy, particularly the Guiding Principles, Canadian mining companies can get ahead of these risk and capture awaiting opportunities, building shared value along the way.
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