The final draft text of the ‘Guidance for the Oil and Gas Sector on implementing the UN Guiding Principles on Business and Human Rights’ was submitted to the European Commission in April. The European Commission is expected to publish the final version shortly. The Guidance is intended to support oil and gas companies in adopting appropriate policies and processes regarding human rights compliance. Although it takes particular account of the situation and experience of EU businesses, it aims to be as globally relevant as possible.
The draft Guidance suggests that, in order to implement the UN Guiding Principles, oil and gas companies will need to:
- articulate and implement a company human rights policy • that is available both internally and externally;
- identify and assess any actual or potential adverse human rights impacts a • company may have through its business activities and/or relationships; and
- provide for or cooperate in remediation processes for any adverse • human rights impacts caused by a company’s activities.
The UN Guiding Principles on Business and Human Rights (sometimes called the ‘Ruggie Principles’) have the potential to change significantly the legal environment of corporate responsibility. They were adopted in 2011 by the UN Human Rights Council, on which 47 states are represented, and formulated by a team led by the UN Secretary-General’s Special Representative, Professor John Ruggie. Freshfields contributed to that process. And in December 2012, we were one of a small group of law firms accredited to attend the first UN Forum on Business and Human Rights to take stock of the progress made in implementing the UN Guiding Principles. We continue to monitor the implementation of the UN Guiding Principles and consider implications for our clients.
Although the UN Guiding Principles are not binding, the UN, the European Union, and a number of governments are already taking steps to implement them through legislation and regulation. A number of multinational corporations are also putting them into practice. As the implementation takes shape it is important for corporations to understand, influence, and meet the fast-evolving expectations of a wide variety of stakeholders (including shareholders, customers and regulators), and also to avoid potential legal liability in the future.
The European Commission’s decision to produce Guidance for the oil and gas sector is part of a broader trend.
- Policy-makers perceive a gap between the appropriate role of corporations • in respecting societal values and requirements set by law and regulation. Recent reports on corporate conduct in the areas of climate change and sustainability, conduct of tax affairs, employee remuneration/bonuses, and anti-bribery and corruption, provide illustrations of this perception. There is pressure to close this gap, and that pressure is only likely to increase.
- The international community has now stated clearly through the • UN Guiding Principles that it views corporations as sharing the responsibility, alongside governments, for delivering solutions to the pressing problems of sustainable development and ethical business.
- The UN Guiding Principles anticipate that more detailed • implementation guidance must be developed, in partnership with corporations. This gives corporations an opportunity to contribute in shaping future, outcome-focused regulation.
The opportunities will be harnessed and the risks will be minimised by corporations that are able to translate the values underpinning the UN Guiding Principles and other similar initiatives into specific operational measures. As the UN Guiding Principles recognise, independent specialist advice will be critical for companies to develop the internal processes best suited for them.
Working in conjunction with Professor Steven Ratner of the University of Michigan Law School, a leading scholar on both foreign investment and human rights who advised Professor Ruggie’s team, we are developing specific responses. We look forward to assisting our clients in the oil and gas sector to develop a strategic approach to these issues and navigate through the new expectations placed upon them.