Human rights challenges in business

Dr Jim Wright | 8 years ago

The use of limited resources, such as water, by existing and future projects will result in multiple human rights impacts – how should business respond?

The major human rights challenges facing business today are twofold:

1. Cumulative impacts on valued environmental and social components, due to the effects of existing or future projects;

2.Multiple human rights impacts due to competition for limited resources such as water by other businesses, governments and communities.

There is a close link between cumulative impacts (“those that result from the successive, incremental, and/or combined effects of an action, project, or activity when added to other existing, planned, and/or reasonably anticipated future ones” International Finance Corporation(IFC) page 19) and multiple human rights impacts (the notion that human rights are so interlinked that an adverse impact on one will result in an adverse impact on many others). When several projects compete for, or degrade, limited resources such as water, assimilative capacity, land use or valued ecosystem services, we can anticipate multiple human rights impacts. For example  in a recent report by the World Resources Institute (WRI) it was noted that 38 percent of the world’s shale resources are in areas that face high to extremely high water stress or arid conditions potentially leading to competition between local communities and multiple companies engaged in fracking for oil and gas. Or consider for another example, an arid region with a long history of mining, where changing commodity prices have led to the development of existing mines and new mining operations. Both existing and future mining operations have been, and will be, dependent on water for processing ore. Competition between mining companies, government and the local community, for a limited clean water resource now compounds a long history of discharges of polluted water from ore processing to tailings dams and, usually via water treatment, to surface waters. The cumulative impact of water shortage and degraded water quality may give rise to multiple human rights impacts such as the right to life,  right to liberty and security, right to work, right to an adequate standard of living, right to health, right to equality and others.

The International Finance Corporation (IFC ) provides guidance to the private sector in emerging markets on how to assess cumulative impacts, through a six-step process to identify cumulative impacts and provides guidance in the effective design and implementation of measures to manage such cumulative effects.

However, business may still be tempted to assume that other organisations (competitors, government, communities) are, or will be, more responsible for cumulative impacts and the cost of amelioration. They may consider that they have no meaningful way to reduce the impact through their own activity because they lack the funding or technology or because they have no meaningful control over their own supply chain. Or, using the argument of proportionality, business might argue that others have greater responsibility for the impact and are therefore responsible for its mitigation. In addition to this, a company may not wish to address an impact because it would mean admitting liability for the impact which is otherwise due to the activity of others.

These arguments leave us questioning when, or even why, should companies decide to address cumulative impacts around resource usage? There are strong business arguments for addressing cumulative impacts which include:

  • Improving  profitability by using limited resources more efficiently;
  • Avoiding prosecution by ensuring the assimilative capacity of the environment is not exceeded;
  • Maintaining the social license to operate and invest in community social equity by protecting and improving valued environmental and social components; and
  • Avoiding reputational risk arising from multiple Human rights impacts.
  • Demonstrating to lenders a responsible approach to sustainability

The objectives of the IFC Performance Standard 1 provide clear guidance on a mitigation hierarchy to anticipate and avoid, or where avoidance is not possible, minimize, and, where residual impacts remain, compensate/offset for risks and impacts to workers, affected communities, and the environment.

Although a business can decide to only address their own contribution to cumulative impacts, efficiency considerations indicate that collaboration with others (competitors, business, and communities) could be beneficial. For example a major challenge facing exploration oil and gas activities in the less developed world is the need to manage wastes specific to the oil and gas industry including Naturally Occurring Radioactive Materials (NORM). If NORM is an issue, often the quantities produced by any one operator may be relatively small scale, however when agglomerated across the industry there is a clear need for a centralised facility. This was a key issue in Libya prior to 2011 when the National Oil Company, the Ministry of Health and Environment and operators were coming together to discuss a centralised facility thereby sharing costs and expertise as well as centralising liability in one well managed facility.

However despite the benefits, barriers to collaboration still remain, such as:

  • The entity that adopts a leadership role, because of greater capability, will expend disproportionate effort
  • Collaborating partners may lose some control of their own risks;
  • Competitors may be unwilling to share information that could have a commercial implication.

The Moranbah Cumulative Impacts Group (MCIG) express these difficulties: “For us there is no other way to work with cumulative impacts, the only possible way is to have that collaborative approach. But that is the hard point. Because that means that we need to deal with, different agendas, different perceptions, different interests…” (2013)

Nevertheless, the argument to reduce cumulative impacts around the use of limited resources is a powerful one, given the potential multiplicative effect on human rights impacts.

About the author

Dr Jim Wright

Jim has over 25 years of global experience in environmental, social, health and sustainability issues in the energy and mining sectors. Jim has acted as Lenders Adviser for banks and companies auditing performance against international accounting standards, IFC and Equator Principles. He has also delivered world class Environmental, Social and Health Impact Assessments (ESHIA), and delivered contaminated land assessments and remediation strategies across National Oil Company upstream operations. Jim is qualified with a NEBOSH General Certificate, IOSH Senior Executive and PRINCE2 Practitioner.