Any of our business? Human Rights and the UK private sector - Human Rights Joint Committee Contents

Memorandum submitted by Dr Mika Peck, University of Sussex


1.  How do the activities of UK businesses affect human rights both positively and negatively?

  The specific example I use is the negative impacts of the mining industry to communities in NW Ecuador that resulted in human rights abuses, threatened over a decade of investments in sustainable alternative livelihoods and threatened the objectives of a UK government funded Darwin Initiative wildlife conservation project. This report also outlines simple, cost effective measures that could be taken to strengthen the Companies Act 2006 to promote a respect for human rights in UK business.

  Between June 2005 and May 2008, based at the University of Sussex, I was the principal investigator of the DEFRA-funded Darwin Initiative project (the PRIMENET project) whose aim was to develop a sustainable network for the conservation of the critically endangered brown-headed spider monkey (Ateles fusciceps) and other primates in NW Ecuador. The project incorporated research, education and identification of sustainable livelihoods in trying to develop and implement a strategy to conserve habitat and wildlife in the biodiversity hotspot of NW Ecuador.

  A key to conservation of the forests of NW Ecuador lies in the development of sustainable livelihoods that minimise deforestation and degradation of its forests, and one aim of the project was to identify and disseminate successful working models of sustainable livelihoods. As a result I was introduced to an impressive number of sustainable livelihood initiatives established by the communities of the Intag region (NW Ecuador) over the last 15 years, supported by local and international NGOs. These initiatives were developed to generate alternative livelihoods to unsustainable activities such as logging and mining.

  The need to develop alternative livelihoods was triggered following the withdrawal of a proposed copper mining operation by Bishi Metals (part of Mitsubishi Group) in the 90's as a result of local resistance to the mine and the results of the Japanese government agency JICA's Environmental Impact Assessment that highlighted the negative impacts to wildlife, forest, and local communities of the region should the mine proceed. A number of new initiatives were established including ecotourism, a successful shade grown organic coffee cooperative and a network ensuring trading of local produce within Intag communities.

  The fact that successful alternative livelihoods had been established in the region meant that many of the communities opposed a new threat to mine the copper deposits in the area. A junior Canadian exploration company, Ascendant Copper Corporation, had bought the exploration concessions, and there were claims this was done illegally. Behind Ascendant Copper Corporation (now renamed Mesa Metals) was Rio Tinto Zinc a UK mining company with the option to buy out the concessions once initial exploration was completed. In my opinion, and the facts bear me out, the role of the junior mining company also included an operation to remove local opposition to mining activity—effectively what took place was the outsourcing of human rights abuses by a UK based multinational company waiting in the wings for Ascendant Copper Corporation (or its paramilitary contractors) to "do its dirty work".

  The conflict resulted in an Amnesty international alert as local community representatives dealt with intimidation and death threats and a great deal of media coverage in Ecuador following a confrontation between a paramilitary force (funded by the community liaison organisation established by the mining company) and local community members in which a member of the local community received a gunshot wound. All the detail of the conflict can be seen on the DECOIN website (

  My role in the PRIMENET project, in addition to project management was to develop a map, using satellite imagery, of remaining forest in NW Ecuador. In the Environmental impact Assessment submitted by Ascendant Copper it claimed that most of the forest within the concession had already been deforested. This came as a great surprise to me as the satellite images show remaining primary forest covering a large proportion of the region—and anyone who actually visits the area knows that it is still renowned for intact forest. The EIA also failed to mention the existence of many endangered species including the spider monkey, which was the subject of the DEFRA sponsored conservation project. I submitted a rebuttal to the Ecuadorian government regarding the statement that the region was largely deforested. Thankfully the Ecuadorian government rejected the EIA and following further investigations the concessions have been annulled. This is a rare good news story for local communities faced by the greater powers wielded by well funded multinational companies.

  Effectively the dynamics of international business allow organisations to partner "invisibly" with other business entities that appear to escape any obligations to adhere to human rights. In this case Rio Tinto Zinc were informed, throughout, of the activities of the company they "supported" in Ecuador but still never made the situation clear to their shareholders or took action to disengage themselves from the future investment in this copper mine. Clear presentation of the social and environmental risks to the shareholders in its reports and at its AGM could have resulted in RTZ pulling out of any support for Ascendant Copper Corporation at an earlier date preventing much of the conflict that occurred. As it stands the concessions were annulled by the Ecuadorian government proving this to be a very poor speculative investment! As quoted by John Browne, former Director of Reputation Assurance (Pricewaterhouse Coopers):

    "[In the next 50 years] successful companies will be those who embed social, environmental, and ethical risk management into their core business processes and performance measures"

  It is the obligation of UK government to provide the guidance and legal framework to ensure companies adhere to human rights directly and indirectly, worldwide.

2.  How do these activities engage the human rights obligations of the UK?

  The company, Ascendant Copper Corporation, was funded, through the Canadian Stock Exchange in part via a UK based hedge fund—effectively UK money was being transferred across borders to commit human rights abuses, and behind this stood a major UK based mining company RTZ ready to "buy in" once exploration and social opposition had been dealt with—outsourcing human rights abuses.

  This process of "outsourcing" activities complicates the legal framework within which UK companies can be held responsible to their covert support of such activities but there are mechanisms as part of the Companies Act 2006 that could be reformed that would increase transparency of such activities without resulting in excessive costs to companies and maintaining the governments "light touch" approach to industry.

3.  Are there any gaps in the current legal and regulatory framework for UK business which need to be addressed, and if so, how?

  The Companies Act of 2006 established the legal framework for companies to present accounts and reports that comply with relevant requirements but in their current form there are major weaknesses—reform is urgently needed to provide adequate scrutiny to the reporting process. In a review commissioned by "Client Earth" it is clear that greater clarity is needed in what companies are legally required to report.

4.  Does the UK Government give adequate guidance to UK businesses to allow them to understand and support the human rights obligations of the UK? If not, who should provide this guidance?

  Currently the answer to the first question is "No", however four key proposals are recommended to enhance the legal framework established by the Companies Act 2006 and are outlined below (Please find detail in the full report presented by Client Earth).

    1) Regarding social and environmental aspects, existing reporting obligations (Companies Act 2006 sections 416 (4), 468(1)) need to be clearer by clearly identifying business factors impacted by social and environmental issues, providing explicit provisions to outline the types of environmental or social issue that can be particularly relevant to companies with a structure as to how they must be reported and, provisions ensuring correct narrative reporting using balanced, reliable and comparable information.

    2) Reformation of the Financial Reporting Review Panel to provide greater capacity and diversity (ie employment of independent experts) to ensure engagement with companies regarding environmental and social reporting.

    3) Enhancing the role of the Annual General Meeting (AGM) as a forum for company scrutiny by legally requiring; i) time for scrutiny of company accounts and reports, ii) access to AGMs to persons negatively impacted by company activities.

    4) Broader transparency in publication generated by companies—especially with respect to internet and meetings with the media.

  For a full review of the Companies Act 2006 and suggested reforms please read the report "Environmental and Social Transparency under the Companies Act 2006: DiggingDeeper" March 2009 prepared by Client Earth (Contact

5.  What role, if any, should be played by individual Government departments or the National Human Rights Institutions of the UK?

  See 3 and 4 above—reform of the Companies Act 2006.

6.  How should UK businesses take into account the human rights impact of their activities (and are there any examples of good or bad practice which the Committee should consider)? How can a culture of respect for human rights in business be encouraged?

  The case presented here is a clear example of bad practise that the committee should address and the fact that the company operates outside the UK should play no role in mitigating their obligations to adhere strictly to human rights.

    "There's a simple fundamental legal point that you shouldn't harm somebody and that you shouldn't use your money to hire someone who you know is likely to do harm."

  Within the existing legal framework established by the Companies Act 2006 simple and effective improvements and cost effective reforms (outlines above) would promote a culture of respect for human rights in business.

7.  Does the existing legal, regulatory and voluntary framework in the UK provide adequate opportunity to seek an appropriate remedy for individuals who allege that their human rights have been breached as a result of the activities of UK businesses?

  People whose human rights have been abused by UK companies in other countries should be able to undertake a legal claim against the company and/or its directors in the UK under UK law. The few cases to reach British courts resulted with out of court settlements with confidentiality agreements so that the UK Company avoided adverse publicity and most UK investors never hear about the problem. The major underlying pattern is that shareholders do not hear of these cases. There needs to be legal obligations to publish environmental and social reports (on the internet for example) including details out of court settlements to claimants, which would play a clearer role in prevention of many current abuses.

  8.  If changes are necessary, should these include:

    See suggestions for enforcement and reform of the Companies Act 2006 above (detailed in the report "Environmental and Social Transparency under the Companies Act 2006: Digging Deeper" published March 2009).

Dr Mika Peck

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Prepared 16 December 2009