The need for collaborative investor action on human rights in the extractive industry

Extractive companies face complex human rights risks. They are often confronted with dilemmas rather than clean-cut solutions when it comes to respecting human rights, particularly in emerging markets.

Large extractive companies tend to operate in many different locations, with the differing socio-economic and political circumstances of each increasing the complexity. By sharing expertise and pooling resources, collaborative action allows investors tobetter understand the complex human rights situations across markets. In turn, they can engage companies more effectively by sharing tasks according to shareholdings, expertise and location. Furthermore, collaborative action enables investors to reach more companies and speak with one voice. This is particularly relevant given the quickly evolving landscape of soft law regarding human rights, and the increasing, and often very different, expectations from various stakeholders towards companies.

Why engage now?

Until the 1990s few companies recognised their human rights responsibilities. As a survey by The Economist Intelligence Unit highlights, this has changed dramatically. The group’s survey of more than 800 senior corporate executives found that most companies now recognise both that their operations have an impact on human rights and that their responsibilities towards human rights go beyond abiding by local laws. This acknowledgement from the corporate community offers a significant opportunity for investors to promote meaningful change.

Signatories of the Principles for Responsible Investment identified human rights and community relations as one of the areas of strongest interest for collaborative investor engagement. Furthermore, they decided that the engagement should focus on the extractive sector and reference the UN Guiding Principles.

In 2014, a steering committee of nine global investors was selected to include a broad mix of knowledge, and strong asset owner and regional representation (the “PRI Investor Steering Committee on Human Rights” or “steering committee”). Members have combined assets under management of US$ 1.5 trillion and include Aviva Investors, British Colombia Investment Management Corporation, Calvert Investments, Canada Pension Plan Investment Board, Government Employees Pension Fund of South Africa, Mirova, NEI Investments, PGGM Investments and Standard Life Investments.

In order to leverage and build on existing work, the steering committee engaged with Shift15 and the global industry associations, the International Council on Mining & Metals (ICMM) and IPIECA, the global oil and gas industry association for environmental and social issues. In addition, steering committee members participated in the consultation that led to the development of the UN Guiding Principles Reporting Framework, and in order to develop the collaborative engagement programme, they held investor-company roundtables with 12 extractive companies in London (UK) and Toronto (Canada). The roundtables provided an opportunity for the investor group to explore best practice with regards to implementing the UN Guiding Principles, implementation challenges, and meaningful ways to report. The results from these discussions, written feedback from some of the participating companies, and the research16 of public reporting by 50 large global extractives were used to inform the engagement approach of the group and are summarised below.

Starting in September 2015, a broader group of PRI signatories will start to collectively engage extractive companies on human rights. Appendices 1 and 3 include engagement questions, case studies and resources, which signatories may use when engaging with extractive companies.