One of the key observations I’ve made while surveying the extractive companies listed on the Forbes Global 2000 is that the concepts of Corporate Social Responsibility (CSR) and human rights tend to get conflated, if not totally confused. This is unsurprising insofar as my own business model is built around the fact that many companies are still coming to grips with their human rights responsibilities. I believe this is due in part to the relatively recent emergence of a comprehensive legal framework surrounding business and human rights, and also in part to the dominance of CSR and the mistaken belief that the latter somehow begets the former. It’s worth taking a moment to deconstruct the two concepts with a view to clarifying where corporate activity is sufficient to meet the international legal standards and where it may fall short.
First, what do we mean by corporate social responsibility? Traditionally, a corporation’s responsibility did not extend beyond its limited duty to maximize profit for shareholders. And yet, beginning with a wave of divestment in South African companies during Apartheid, the idea began to take hold that corporate actors could, and should, do more. Today, CSR takes many forms, but it usually looks something like one of the following: 1) community investment, whether through infrastructure improvements, education initiatives, health care delivery, or other similar engagements (see, for example, EDF Energy’s Education initiatives; 2) supporting environmental projects as a way of off-setting damage caused by a business’s activity (see BP’s efforts in the Gulf of Mexico for the exemplar); or 3) establishing a corporate foundation or charity to facilitate corporate giving (see the Total Foundation).
Although these voluntary activities undoubtedly have positive impacts, they are not interchangeable with fulfilling the responsibility to human rights. This is not meant to belittle CSR in any way; indeed, I would advise any corporate client which is not yet engaging in CSR to do so, for shareholder benefit as well as that of other stakeholders. And yet, despite my support for CSR generally, I find it important to clarify that under the current international legal framework, CSR is not enough.
So what should a corporation do in order to ensure it is addressing its human rights responsibilities? The existing legal framework provides some clear guidance.
Human rights are universal and inalienable, derived from a set of international treaties which protect individuals against abuse at the hands of the State. From a business perspective, the concept of human rights was once controversial insofar as they are only strictly enforceable against the State. However, following the completion of the mandate of the Special Representative of the Secretary General on Business and Human Rights, Professor John Ruggie, this controversy is no longer salient, as the UN Human Rights Council unanimously endorsed Ruggie’s Guiding Principles on Business and Human Rights, lending them normative value. These principles incorporate Ruggie’s earlier framework, which helpfully breaks down the relationship between human rights and business into three pillars: 1) the State duty to protect against human rights abuse, including by corporations 2) the corporate responsibility to respect human rights, and 3) the State duty to ensure victims of human rights abuse have access to an effective remedy.
It is the second pillar that was the focus of my survey as I sought to determine which extractive companies were on top of their human rights game and which were falling behind. Though nearly all companies had in place some sort of CSR activity or sustainability policy, I found that explicit human rights policies and human rights due diligence processes were less common. Because these activities represent the key actions by which corporations can operationalize their responsibility to respect human rights (see Guiding Principles 15-21), I used them as indicators of whether a corporation had an adequate understanding of the nexus between business and human rights. For 58% of mining companies and 54% of oil and gas companies surveyed, the answer was no.
Corporations need to accept their responsibility to respect human rights by creating robust policies and undertaking human rights due diligence, at a minimum (I will elaborate on the content of these policies and due diligence processes in a later post). Although the numbers of switched-on companies were slightly better than I had expected, an outcome which I attribute to the relentless awareness-raising of the international human rights community and the high profile instances of litigation in the industry, there is still a long way to go. Progress on implementing the Guiding Principles seems to echo an earlier wave of corporate activism which took hold last century with the dawn of the CSR movement. Seeing how embedded CSR now is in the multinational business world, I hope we can look forward to a future where human rights are universally supported by corporate actors across the globe. The extractive sector has a unique opportunity to lead the multinational business community forward by demonstrating how implementing the Guiding Principles through human rights policies and due diligence is becoming the norm and not the exception, and Fair Play Consulting intends to be at the forefront of this movement.