Senior Associate, Leanne McClurg considers the implications for Australian resources projects of developments in international human rights. There is a relatively new framework for the activities of businesses and their impact on human rights which was endorsed by the United Nations Human Rights Council in 2011. In addition, there have been advances by the Australian Government in relation to its acceptance of the United Nations Declaration on the Rights of Indigenous Peoples.
International developments in the thinking surrounding human rights are an important consideration for resources companies. In this context, human rights relates to a peoples’ relationship with land and resources, as it is precisely those things, land and resources, whether minerals or hydrocarbons, which resource companies affect in the course of going about their business. In order to adequately satisfy their corporate social responsibility (CSR) obligations, companies should be conducting their business activities in accordance with internationally accepted standards. Merely satisfying domestic law may not be enough if that domestic law is lacking. The nature and extent of the risk to resource projects here depends in part upon how well the systems operating within Australia perform in producing outcomes that have companies meeting the requirements set at the international level.
The UN Human Rights Council has endorsed guiding principles on business and human rights as set out in a framework to ensure that human rights are an integral part of doing business. That framework has been dubbed the “Protect, Respect and Remedy” framework. It acknowledges that it is the duty of a State to protect against human rights abuses but it also points out that corporations have a duty to respect human rights. One way corporations can fulfil their obligation to respect human rights is through undertaking a due diligence process that considers these issues prior to the implementation of a project. The final part of the framework relates to the accessing of a remedy and considers that both the State and corporations should have appropriate grievance mechanisms to enable people to seek justice when they believe their human rights have been violated.
In addition to the ‘Protect, Respect and Remedy’ framework (the Framework), the United Nations Declaration on the Rights of Indigenous Peoples (the Declaration), formally supported by Australia in 2009, has significant bearing upon resources projects in Australia as it addresses the rights of indigenous people to use, develop and control their own land.
What both the Framework and Declaration do is provide internationally accepted standards for addressing the risk to human rights associated with undertaking business. By taking action in line with the Framework and the Declaration businesses can display an appropriate level of respect to human rights.
It is also important to recognise that the financial and social sectors may provide a means for the requirements set out in the Framework and the Declaration to be applied to companies within Australia and in particular for the purposes of Australian operations. Commercial banks have incorporated “Equator Principles” into their credit risk management processes that consider the social risk of a project, and are based in part on performance standards related to social and environmental sustainability. As a result such banks will only finance projects that have incorporated the standards encapsulated in the ‘Equator
Principles’ into their risk management process. These principles have a dual role to both help protect the investment by the bank, as well as protect reputation. As evidenced by the action against ANZ as a result of their financing of Whitehaven Coal, there can be increased public scrutiny and damage to reputation by investing in projects that may be seen as not “ethical”. The social influences on projects are also not to be underestimated. The views of investors, the general public and employees about the human rights impact of projects cannot be ignored in this process. Business must comply with core social expectations.
In Australia native title and land rights legislation are the primary means through which our governments (both at commonwealth and state level) seek to address the issues surrounding a peoples’ relationship with land and resources. In this case, obviously Aboriginal peoples’ relationship with land. For most companies operating solely within Australia there is limited market pressure to adhere to wider international human rights standards. Most corporations look to meet the domestic laws, rather than international standards which they may not technically be bound to obey.
Since our domestic legislation on these issues are considered by many to fall short in a number of areas in meeting international standards there is some risk for resources companies. It is therefore prudent for companies to look beyond compliance with domestic laws and specifically to the UN’s Declaration and Framework to avoid being left vulnerable in terms of their corporate social responsibility.
*This is an extract of a paper prepared by Leanne McClurg for the Melbourne Law School to fulfil the requirements of a Master of Laws.