Extractive Industries and Conflict Risk

In what circumstances can the discovery and/or development of large-scale mineral resources bring countries or communities together, consolidating peace rather than driving conflict?

This question is the subject of the recently published Chatham House report 'Investing in Stability' (here).

As co-authors we found this a tricky subject area, filled with counter-factuals, definitional minefields, and serious methodological problems: how do we measure in what ways major resource projects increase or mitigate conflict risk? How do we attribute 'peace-positive' events or processes to the conduct of firms or others? How do we define 'peace' (net peace? local or national? etc) and who gets to do so? And so on.

The report proceeds on the basis that while energy and mining firms have increasingly clear responsibilities in ensuring conflict-sensitive operations and practices, the principal responsibilities are those of governmental authorities.

The tricky fact is that in fragile and contested states and situations -- the topic of this report -- governmental capacity is by definition very low or compromised. This increases the onus on responsible firms (and their financiers and insurers) to decide how, when and indeed whether to pursue large-scale projects in areas where the historical and political context makes it very difficult to see resource extraction and related revenues as capable of contributing to peaceful outcomes and processes. 

Jo

Rana Plaza: business, human rights and regulation

Where are energies best placed in closing the 'governance gap' on preventing and remedying human rights violations related to business activity?

This week came news from Bangladesh of murder charges brought against the owner of Rana Plaza (and some government officials) relating to the 2013 garment factory disaster, which claimed over 1,100 workers' lives.

Since such smaller, local businesses often supply global brands, the disaster gave some momentum to debates on the responsibilities of big brands for ensuring compliance with basic human rights, health and safety standards in their supply chains.

Such debates often ask 'who has responsibility' as if there must be one single actor accountable -- factory owners, local regulators in the production state, regulators in the retail state, brands and buyers (and their financiers), or consumers in more developed countries.

The boring answer is that a just and comprehensive and effective global system on business and human rights must inevitably involve a patchwork of differentiated but related roles and responsibilities.

(The standards against which these responsibilities can be gauged are fairly clear now, certainly in the global garment industry.)

The reasons for poor compliance vary; so must the strategies for promoting systemic practices of continuous improvement.

Unsatisfying as it sounds, a 'smart mix' of regulatory mechanisms and techniques will be required.

These must be grounded in public law, but also engage business actors in positive ways that go with the grain of commercial realities and seek to leverage a range of incentives beyond simple top-down legal commands.

In this context, events such as the Rana charges this week reveal, to my mind, at least three points:

1. Human rights need strong national laws: relying on industry self-regulation of labour standards in global supply-chains is not enough.

2. Global legal schemes for 'business and human rights' will only be as strong as the capacity and will of local authorities to uphold standards.

3. Consumers can be 'regulators' of business human rights compliance, and meeting minimum standards does not necessarily inflate costs.

The third point is a reminder that there is no necessary trade-off between being a responsible business and being a competitive one.

In an ideal world, and perhaps in the world to come (in some sectors, in some places), being a responsible business will be integral to being a competitive one.

If that is to transpire, for all the regulatory power in the world and for all the importance of having mandatory standards, there is no power quite like the power of the market to change business behaviour in society.

This puts the 'regulatory' onus on consumers, ultimately, in relation to human rights issues in retail supply chains.

That is not the same as saying 'let the market decide' without regulatory interventions. It is to recognise that the most powerful incentive for smaller business owners such as Mr Rana and family is a commercial one: comply or fail.

Jo

For previous posts on Business and Human Rights, see here.