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Mitigating Human Rights Risk through Systematic Due Diligence

The Enodo Rights method for human rights impact assessments (HRIAs) aligning with the Guiding Principles on Business and Human Rights.

Enodo Rights

on 26 November 2014

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Transcript of Mitigating Human Rights Risk through Systematic Due Diligence

Systematic Due Diligence to Mitigate
Human Rights Risk

Overview: Designing CSR Strategy around Risk
The emergence of business and human rights standards has broadened the scope of CSR risk facing mining companies. Mitigating this risk efficiently requires a structured approach to due diligence.
Guiding Principles on Business and Human Rights
Underpin Array of Risks
Systematic Due Diligence: Four Stages
Case Study
Precise results, clear strategy
Case study overview
Survey of risks: social, legal, financial
Structured due diligence to mitigate risks comprehensively
Community protest: up to $20 million/week in delayed production costs. (Rachel Davis & Daniel Franks, “Costs of Company-Community Conflict in the Extractive Sector” (2014), 66 Harvard Kennedy School: Corporate Social Responsibility Initiative 8).
NGO-led OECD National Contact Point disputes based on OECD Guidelines on Multinational Enterprises. (See, e.g.,
FIDH et al vs. Corriente Resources Inc.
Potential tort suit by Senegalese plaintiffs if injury: see, e.g.,
Choc v. Hudbay Minerals
Garcia et al. v. Tahoe Resources (Canada); Monterrico Metals (UK).
Denial of concession; denial of permits; nationalization of the resource--
bilateral investment treaty protection necessary and affected by CSR strategy

Financing Risk
Equator Principles III incorporate requirements for social and human rights due diligence.
"[G]lobal financial institutions will demand adherence to the Equator Principles in cases where national compliance standards do not match international best practice." (Mining Journal, Africa Mining Finance Guide 2014)
Stage 1: Baseline Preparation
Purpose is to ensure focus on
marginal impact on rights
rather than pre-existing or government-caused adverse rights impacts.
Stage 2: Preliminary Matrix Analysis
This stage ensures that the focus is on rights impacts rather than undefined grievances, and provides the road map for constructive stakeholder engagement.
Stage 3: Structured Engagement
The focus of stakeholder engagement should be on rights not social grievance. Based on the preliminary analysis, stakeholder engagement can be driven by the
Guiding Principles
to manage expectations and structure dialogue.
Report as you like
System justifiable on objective basis
Design efficient strategy
Stage 4: Final Matrix Analysis
The final report incorporates the rights analysis with the stakeholder engagement results to map rights impacts and social impacts by causal link.
Baseline definitions
Establish definitions of rights using national and international definitions.
Free Prior and Informed Consent is particularly complex, even when applied only to indigenous groups. Economic Community of West African States (ECOWAS) defines as including non-indigenous communities.
National and regional baseline
Understand rights protection history nationally and regionally.
Senegal rated relatively well in Freedom House index, but US State Department still identifies serious existing human rights issues, including on freedom of expression and security of the person.
Project/operation baseline
Review the project or operation stage and government-imposed operating constraints.
Senegal's Mining Law, for instance, provides that exploitation must begin as soon as practicable--this may limit scope of due diligence and remedial steps.
Causal link
Desk review
Internal stakeholders
Materiality Assessment
Stakeholder concerns regarding rights impacts causally linked to company
Rights impacts causally linked to company
Stakeholder concerns
Causal Link
Level of Stakeholder Concern
Rights Impact(s)
Focus on rights
Identify definitions
Engage re definitions
Includes capacity building
Consultation re rights impacts
Existing Procedures
Mid-tier mining company with gold exploration right in Senegal. Exploration successful; project ready for development.
Company seeks debt financing for development.
Government promise of exploitation rights after successful exploration. Company awaits concession and relevant permits.
Elections imminent, with populist, anti-extractive sector party poised to win.
At the same time, community groups concerned about sharing in project development gains.
Company has CSR policy committing to "respect human rights" in the communities where it operates.
Stage 1:
Baseline Preparation
Stage 2: Preliminary Matrix Analysis
Stage 3: Structured Engagement
Stage 4:
Final Matrix Analysis
Preliminary Matrix
Structured Engagement Model
Rights-Driven Stakeholder Map
Potential Rights Impacts
Indigenous groups
For further reading on nature of risks and requirements of
Guiding Principles
, please visit our website or contact me.

web. http://enodorights.com
e-mail. yousuf.aftab@enodorights.com


New York Toronto Vancouver Caracas
Systematic due diligence, incorporating stakeholder engagement, aligned with
Guiding Principles
"Political instability, resource nationalism, uncertainty surrounding mining laws and lack of infrastructure remain the obstacles to the optimism being realized in many African countries."
"The greatest risk of working in Africa's mineral sector today is managing the expectations of communities around mines, as well as the relationship with government--in particular with the agency that is custodian of mineral rights."

Mining Journal, Africa Mining Finance Guide 2014
African Mining: Risks
Comprehensive Risk
CSR strategy increasingly impacts
of these risks.

Identify relevant rights impacts
Manage stakeholder expectations
Justify process to courts, governments, investors/financiers
The Canada-Senegal Foreign Investment Promotion and Protection Agreement includes an article on corporate social responsibility, which Canada now aims to include in all FIPAs.
Stakeholder Engagement
Priority stakeholders based on (1) projected rights impacts and (2) relevance to the business.
Dominant standard for managing corporate human rights impacts.
Resource nationalism
Community conflict
Seven Dimensions of a Final Human Rights Matrix, e.g. Ebola due to in-migration.
CSR Strategy
Financing risk
Ensure information control through privilege
Full transcript