Memorandum submitted by Dr Mika Peck,
University of Sussex
THE DUTY
OF THE
STATE TO
PROTECT HUMAN
RIGHTS
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 (www.decoin.org).
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 http://www.clientearth.org/)
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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