Mining companies' social licences to operate depend on their ability to respect human rights

Mining companies are well acquainted with the tenets that underpin the social licence to operate. But as the globalised world places more scrutiny on human rights violations – reported within operational boundaries and across supply and value chains – mining companies may need to do more to demonstrate that they respect human rights.

The corporate duty to respect human rights, as entrenched by the United Nations Guiding Principles (UNGPs), is firmly in the spotlight. The UNGPs are the first global standard for preventing and addressing the risk of adverse impacts on human rights linked to business activity, and the internationally accepted framework for enhancing standards and practice regarding business and human rights (BHR). They recognise that States are the primary duty-bearers under international human rights law, and must, in the first instance, respect, protect, promote and fulfil human rights and fundamental freedoms. However, the UNGPs also recognise an independent corporate responsibility to respect human rights, which exists over and above compliance with national laws and regulations which seek to protect human rights.

BHR has evolved beyond theoretical principles into tangible business practice. Geopolitical tensions, climate change-related crises, activist shareholders, and increased stakeholder scrutiny of the daily practices and challenges in the extractives industry are among the factors which have contributed to heightened international expectations of corporate conduct.

Closer to home, South Africa's mining industry is faced with challenges and competing demands in various areas which evidence a need to reposition how risk and impact assessments are conducted – BHR methodology requires that a lens of 'risk to people' be adopted, as opposed to traditional 'risk to business' decision-making methodologies.
One such area is community engagement and participation in development projects, where mining companies must balance their legal obligations under environmental and mining legislation to support sustainable and socio-economic development; preserve host communities' rights to self-determination, cultural heritage and ancestral lands; and prepare and implement meaningful Social and Labour Plans against varying stakeholder expectations; international standards; and intersecting human rights. South Africa also continues to grapple with the legal requirements informing consultation vs consent, which must be assessed and locally contextualised amidst international expectations around Free, Prior and Informed Consent (FPIC).

Another is balancing public and private duties in preventing adverse human rights impacts and remediating human rights violations. Where the government is seen to be failing in its duties to protect, promote and fulfil basic human rights in mining communities (such as the provision of access to water and sanitation, housing, and healthcare services), it is often expected that mining companies will step in. However, understanding the measures required of corporates under the UNGPs as well as law must inform the extent to which mining companies take on such responsibilities.

Understanding how human rights risk and impact assessments are undertaken also sheds light on where multiple human rights may intersect, and how the severity of adverse consequences is likely to increase as a result (severity being the yardstick in BHR assessment methodology, as opposed to traditional corporate probability theory). Business impacts on environmental rights, contextualised by the climate crisis and indigenous uses of biodiversity, for example, may identify alternative measures that a mining company should implement to effectively prevent adverse consequences to host communities beyond adequate resettlement or closure practices. As well as understanding in-migration patterns and the labour rights of migrant workers versus host community members in addressing employment opportunities, working conditions, fair treatment and fair pay.

Not only must corporate risk and impact assessment methodology be adapted to be cognisant of BHR metrics, but mining companies must also recognise the evolving nature of corporate duties of care as they know them. While environmental and fiduciary duties of care are circumscribed by law, expectations and precedent are changing in light of the increasingly severe impacts on people and the planet and how business activity may contribute to or influence them. The UK Companies Act now imposes an express requirement on directors to have regard to the interests of employees as well as matters such as reputation, the community, customers and suppliers, and the environment.

Several counsel opinions have also been published globally, advising that the scope of directors' fiduciary duties has expanded to include a duty to consider climate change impacts on and from the business. Climate change has disastrous consequences on weather patterns, ecosystems and biodiversity; and these impacts directly and indirectly affect all human rights, including the rights to life, food, health and water. The impacts of climate change also exacerbate social and economic inequalities, disproportionately affecting people already in vulnerable situations including children, Indigenous Peoples and persons with disabilities. This invariably means that BHR must feature in corporate decision-making.

Governments in international jurisdictions are implementing and proposing legislation around supply chain due diligence and human rights due diligence. Courts are being asked to adjudicate varying business relationship contexts and the extent of corporate duties of care in light of the UNGPs. Laws, precedents and market practice are fast evolving. The time is now for mining companies to understand the import and application of BHR in their operations, business relationships and value chains, not only to prevent significant risks from eventuating but also to embrace opportunities and positively exert their influence.

Mining companies can improve their implementation of the UNGPs by conducting corporate human rights risk and impact assessments and adopting governance systems and controls to ensure human rights are respected across business operations and relationships. For more insights, listen to our podcasts here and here.


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