Human rights compliance programmes in the Energy & Natural Resources sector

The risk of adverse environmental, social or human rights impacts is one that Energy & Natural Resources businesses will be familiar with.

According to the Sustainability Accounting Standards Board, the financially material sustainability issues arising across the 14 Energy & Natural Resources-related industries include emissions and air quality, energy management, water & wastewater management, waste & hazardous materials management, biodiversity, climate resilience, community relations, impacts on indigenous peoples, security risks, labour practices, health & safety, materials sourcing and supply chain management, anti-corruption and anti-competitive behaviour. All of these issues have the potential to create adverse human rights impacts.

Common human rights issues that can arise in the Energy & Natural Resources sector include, for example:

• Inadequate engagement with Indigenous peoples and affected communities
• Impacts on use of and access to land and natural resources
• Use of force and activities of public and private security services
• Environmental degradation and pollution
• Forced evictions and involuntary relocation
• Labour exploitation and modern slavery in the production of hardware and devices, including use of forced and child labour, abuse of migrant labour, gender discrimination, working hours, freedom of association
• Health and safety issues for workers and communities
• Impacts on human rights and environmental defenders

Despite the varied nature of business activities, supply chains and relationships in the Energy & Natural Resources sector, common examples of factors that can elevate these risks include, for example:

• Areas associated with high levels of public and private sector corruption
• Areas with weak rule of law protections, a lack of an independent judiciary or political instability
• High risk, conflict and post-conflict areas or areas affected by international sanctions
• Artisanal or small-scale mining
• Large-scale land acquisition and relocation in areas with weak land governance
• Lack of or inadequate enforcement, implementation or monitoring of health, safety and environmental regulation
• Inadequate climate-risk mitigation or resilience
• Restrictions on civil society or human rights and environmental defenders

Historically, drivers for human rights due diligence have included reputation risk and compliance with best practice and “soft-law” standards. However, the global legal landscape is evolving rapidly and human rights due diligence is a regulatory requirement in a growing number of jurisdictions with a focus on identifying, mitigating and reporting on human rights risks. Mainstream investors’ expectations are converging around a number of common elements in human rights compliance programmes, namely:

• A policy commitment to respect internationally recognised human rights
• Human rights governance structures
• Human rights due diligence and risk assessment processes
• Disclosure and reporting
• Effective grievance mechanisms

The anti-corruption and business human rights agendas both seek to drive attitudes and behaviours that create a rights-respecting culture of integrity – these fundamental objectives are the same and merit integration where possible, appreciating that this may require something of an expanded focus from risks to the business to risks to people. The business benefits of doing so are many, from ensuring a holistic understanding of both types of risk, to making efficient use of compliance budgets and guarding against due diligence fatigue.

Access a copy of our article here outlining some of the points of alignment between the two agendas.