Human Rights in the Oil and Gas Sector

Last night I attended a panel event hosted by Clifford Chance discussing human rights, and specifically the UN Guiding Principles, in the oil and gas industry. I was yet again impressed by the amount of uptake the Guiding Principles have received thus far, and much credit is due to the handful of dedicated industry and civil society leaders who have pushed the issue to the point that we now regularly engage in open high-level dialogue on the subject. Herewith, a few of the most salient points from the evening:

1) Although the Guiding Principles are not ipso facto legally binding, the consequences of failing to adhere to them are so grave as to impose a de facto penalty for non-compliance, bringing them closer to the realm of genuine obligation. Examples of these adverse consequences include serious reputational loss, retraction of social licenses to operate, and loss of shareholder confidence, among others.

2) The link between climate change and human rights is still insufficiently defined. Although environmental degradation directly impacts human rights, the two concepts are still largely separate in the minds of most business actors. We need to push to change this.

3) State-owned oil and gas companies own 80% of the world’s resources, making them a huge player in the marketplace and a ripe target for advocacy. On a related note, Shell’s legal counsel opined that the balance of power in the industry has shifted dramatically over the last 10 years from being in favor of big oil companies such as Shell, Exxon, and Total, to now resting in the hands of the resource-rich countries themselves, largely due to increasing competition. One might question whether this statement is just another iteration of the usual punt that companies take to try to shift the burden of responsibility for weak human rights governance to the State actors rather than the corporate actors. Either way, it is worth noting in the context of deepening the infiltration of the Guiding Principles: Big Oil has been on board more or less from the beginning, and now is the time to shift our focus to state-owned oil companies, SMEs, and governments themselves.

4) The Guiding Principles set out the corporate responsibility to respect ‘internationally recognized’ human rights, which include, at a minimum, those human rights enshrined in the International Bill of Human Rights and the ILO Declaration on Fundamental Principles and Rights at Work. While this may seem straightforward, the constant evolution of human rights standards means that some rights, such as the right to water, are newly emerging and may not be considered ‘internationally recognized.’ Do corporations then have to respect them? We can get around this ontological query by understanding the corporate responsibility to respect in terms of impacts rather than infringements. Whether a right is universally recognized or not has no bearing on its ability to be negatively impacted, and the Guiding Principles wisely use this characterization to encourage broad-based engagement with the total spectrum of human rights.

I look forward to following the development of the oil and gas sector’s approach to human rights, and I am extremely pleased to be a part of the international legal community here in London which is so vibrant, knowledgeable, and engaged. More on this topic hopefully to come soon!

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