Pillars of Industry

Oil and Gas Industry Efforts on Behalf of Human Rights and Sustainable Development

The oil and gas industry operates in some of the most challenging places in the world and faces complex human-rights related issues in many of those locations. Ensuring good human-rights policy and practice, both internally and externally, has become an important issue, not only for the communities in which the industry operates, but also for the worldwide reputations of the companies within the industry and for their ability to pursue future business opportunities.

Since 1974, IPIECA has brought together oil and gas companies and associations in an open dialogue to address existing and emerging social and environmental issues that arise from oil and gas operations. IPIECA draws on the expertise and experience of its members’ representatives, who come together in specialized work groups. The IPIECA Social Responsibility Working Group (SRWG) helps member companies promote sustainable development by addressing those critical issues surrounding business and human rights.

The Oil and Gas Industry Working Together

Sharing information and experiences on human rights among companies is one valuable way that the oil and gas industry seeks to improve its effectiveness in promoting human rights and encouraging sustainable development. Human rights fall under the jurisdiction of the SRWG, which was formed in 2002 to find ways to address key social responsibility issues including human rights, capacity building, and community outreach. This group provides a forum for IPIECA members to share information and enhance understanding of social responsibility issues, challenges, and implications for the industry; to engage with stakeholders; and to coordinate on joint actions, such as participation in external initiatives and the development of “good practices” guidance on key subjects. The group aims to develop a consistent and credible industry voice on social responsibility issues and, in particular, to develop and share sound business practices for promoting human rights and sustainable development.

How individual companies define the scope and nature of their responsibility when assessing and addressing human-rights issues is being addressed by the industry and through the SRWG. There is no single answer to this question, especially with social and political environments varying greatly among regions of operations. Additionally, there can be differing expectations among stakeholders on what role business should play in influencing human-rights issues—sometimes to the point that certain organizations expect companies to fill the role that only governments have the legitimacy and responsibility to play. It is essential, therefore, that companies make their own assessments of where and when they can be effective in improving social and environmental conditions, and make clear what roles they can play on local, regional, national, and international levels.

Responsibility and Influence

Under the Universal Declaration of Human Rights, governments bear primary responsibility for protecting and promoting respect for human rights. However, the scope, scale, and impact of the industry in many countries can make oil and gas companies influential organs of society. Many people reasonably expect that the companies will use what influence they have to promote respect for human rights.

In the oil and gas industry, human rights issues are raised in differing circumstances with a wide variety of stakeholders. Depending on the stakeholder group, a company’s ability to influence behavior varies.

A useful framework, developed at a stakeholder workshop by IPIECA, looks at companies’ responsibility and influence for promoting human rights in the oil and gas industry on the basis of three categories: direct responsibility, shared responsibility, and indirect influence.

Direct Responsibility. Direct Responsibility refers to responsibilities that relate directly to company operations and to situations in which the company can exert direct influence. Human rights issues of concern to the oil and gas industry in this category include employee behaviors and rights (such as health, safety, and freedom of association), and, in some circumstances, the behaviors and rights of contractors—including security contractors—working at company facilities. The influence and accountability of a company for human rights starts within its immediate operations and extends at lesser levels to communities affected and to regional and national stakeholders. Many believe that promoting human rights where companies have the greatest responsibility and influence often produces the greatest demonstrable results.

The majority of companies operating in the oil and gas sector recognize the importance of putting strong human-rights policies and practices in place—not only regarding employees, but also external stakeholders, such as appropriate suppliers, local partners, local communities, security forces, and governments. Accordingly, oil and gas companies throughout the world are now involved in promoting ethical business practices and human rights in a number of ways. These include carrying out social-impact assessments and human-rights impact assessments, implementing human rights and ethics training programs, and engaging in dialogue with stakeholders.

Shared Responsibility. Shared responsibility refers to responsibilities that relate directly to company operations, but which require joint action by several stakeholders. Shared responsibilities in other social-impact management areas may include working with communities to improve skills development and capacity building, education, and the long-term economic development of the community. Another shared responsibility that oil and gas companies commonly may face is the possibility of influencing the behavior of security forces assigned by the national government to protect facilities.

Particularly, in developing countries, oil and gas company activities can have socio-economic impacts on the surrounding communities. While these impacts stem from the company's activities, they are influenced by a number of stakeholders. Common ways that the industry is addressing some of its shared responsibilities include working with indigenous communities; developing partnerships with stakeholders, such as nongovernmental organizations (NGOs); and, supporting and participating in external initiatives, such as the Voluntary Principles on Security and Human Rights and the Extractive Industries Transparency Initiative.

Indirect Influence. Indirect influence refers to responsibilities that relate indirectly to company operations, but where a company may have an opportunity to support desired outcomes. The area of indirect influence of an oil and gas company may include potential influence at a national or international level to encourage general improvement of the human-rights environment in a country.

The sphere of indirect influence is one of the most complex for oil and gas companies. Various actors within society, who have an interest in an oil and gas project, may have differing views of the potential impact of a company’s indirect influence on human-rights issues in the vicinity of the company's operations or within an entire country. Defining and agreeing on the boundaries of companies’ roles and responsibilities regarding human rights is often difficult. Improving engagement with all stakeholders is critical to achieving a consensus on those issues. As bodies with no electoral or legislative powers, companies have to be aware of the sensitivities of entering into a dialogue with governments on broader human-rights issues.

Going Forward

Although much has been achieved in the last few years, it is recognized that the private sector can continue to build expertise and knowledge to support human rights. In addition, although many companies in the oil and gas industry are implementing sound policies and striving to achieve long-term benefits, a gap remains between what society—especially NGOs—expect of companies, as opposed to governments, and what is realistically within companies’ expertise and capacity to achieve.

Recognizing that fact and responding to continued discussion on the issue of human rights and transnational corporations and other business enterprises, the UN General Secretary in July 2005 appointed Harvard Professor John Ruggie as a Special Representative with a mandate to identify and clarify standards of corporate responsibility and accountability regarding human rights. Ruggie’s early conclusions noted that there is no silver bullet to solve business and human-rights issues and that it is essential to develop a broad multipronged approach involving relevant stakeholders, on the basis of shared responsibility. His final recommendations, supported by extensive research during his 3-year mandate, are being presented in June 2008 and will be instrumental in shaping the future path of business and human rights.

Looking forward, preventing human-rights abuses will continue to be a matter of growing importance for the foreseeable future. Dialogue must continue within the industry and among the industry and governments, multilateral organizations, and NGOs to understand and define the roles and responsibilities of the different sectors (public, private, and nongovernmental) to develop and implement actions and partnerships that promote human rights; and to measure performance in this area.

For Further Background

IPIECA publications (www.ipieca.org)

Special Representative on Business and Human Rights publication (Business and Human Rights Resource Centre: www.business-humanrights.org/Gettingstarted/UNSpecialRepresentative)

In the Pillars of the Industry section, distinguished industry individuals reach out to the young-professionals community and share their expertise, as mentors, with those who will inherit their legacy. In this edition, we have asked Richard Sykes, Executive Secretary, IPIECA, and William Veerkamp, Global Manager of Environmental and Social Performance, Shell, to examine the theme of sustainability and social responsibility. Sykes focuses on the industry role in promoting understanding of human rights and sustainable development (SD), while Veerkamp shares his thoughts on how impact assessment contributes to SD.

J. Shaun Toralde and Luis Ayala, Editors, Pillars of the Industry


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