The growing focus on human rights goes well beyond the operational realm into the project’s entire upstream and downstream supply chain. Image credit: Annie Spratt | Unsplash
By Vassie Maharaj and Dr Vidette Bester, SRK Consulting
After more than a decade since the United Nations Guiding Principles on Business and Human Rights was ratified, the impact of mining and other industrial projects on human rights has become a centre-stage risk for financial institutions.
Beyond a general concern with how the private sector upholds human rights as part of its environmental, social and governance (ESG) commitment, the issue is increasingly pinpointed in due diligence studies and impact assessments. The studies we conduct often require a ‘deep dive’ into the question of human rights.
Many segments of society have become increasingly mobilised around human rights, labour practice, environmental compliance and anti-corruption measures. This has raised the potential for stakeholder concerns to boil over into the serious disruption and delays, and even collapse of projects.
It is little surprise then that lenders are today much more alert to a slew of human rights-related risks that project developers must carefully analyse and mitigate. A key aspect of identifying and addressing these risks is stakeholder engagement. This is seen, for instance, in the Global Industry Standards on Tailings Management (GISTM), which was fast-tracked in response to the catastrophic tailings dam failure in Brumadinho, Brazil in 2019.
The very first principle in the GISTM requires mining companies to respect the rights of project-affected people and meaningfully engage them at all phases of the tailing facility life cycle. Engagement with communities and other stakeholders – to really hear their voices – has become a vital element of respecting human rights.
Aspects like gender equality are gaining importance in the sustainability space. These concerns relate, for instance, to the reality of women often having less secure land rights. This makes them particularly vulnerable to land grabs, eviction and dispossession that are still associated with some large-scale developments in the extractives and agricultural sectors.
Any injustices in the treatment of project-affected people can raise warning flags about the project’s lack of sustainability – or at least certain strategic weaknesses. These are of course of great concern to everyone who wants the project to succeed, including funders, for whom there are considerable financial interests at stake.
A human rights focus is not new to environmental and social impact assessments (ESIAs). In many ways, people’s rights have always been embedded in our work as ESIA practitioners. When looking at environmental impacts such as water quality, air emissions or noise pollution, we consider how these will impact people’s health and basic needs – essentially their rights.
Lenders will frequently require SRK to include an in-depth assessment of human rights impacts within a due diligence or other study or review. One of their growing concerns is the reputational risk related to borrowers’ non-compliance with key industry benchmarks like the UN’s Guiding Principles and the International Finance Corporation (IFC) performance standards.
Among the foundational principles of the UN’s Guiding Principles is that business enterprises should have in place policies and processes appropriate to their size and circumstances. These would include a policy commitment to meet their responsibility to respect human rights and a human rights due diligence process to identify, prevent, mitigate and account for how they address their impacts on human rights. There should also be processes in place to enable the remediation of any adverse human rights impacts that a business causes or to which it contributes.
The growing focus on human rights goes well beyond the operational realm into the project’s entire upstream and downstream supply chain, said Dr Bester. In Europe, the RE-SOURCING initiative is already paving the way for a common understanding about responsible sourcing between mineral producers and their Europe-based customers. This project, in which SRK is involved, arises from decades of global concern about issues like child labour, slavery and unethical behaviour in the mineral supply chain. RE-SOURCING strives to promote both strategic agenda setting and coherent application of practices for responsible sourcing.
This work links strongly to lenders in the mining sector, for example, as there are minerals like cobalt that are increasingly important to the future of battery and renewable technology. With concerns about human rights in the artisanal mining sectors of countries like the Democratic Republic of Congo – where much of the world’s cobalt is mined – lenders to mining projects need to be fully informed about how projects plan to deal with these issues.
Brief introduction:
 Image supplied by SRK Consulting Vassie Maharaj is a director, partner and principal consultant at SRK Consulting South Africa. She holds a BSc in Biochemistry and Physiology. Vassie has over 24 years’ experience in social risk management and stakeholder engagement. Her experience spans projects in the mining, industrial, infrastructure, agricultural, energy, and oil and gas sectors, as well as for government policy development, environmental permitting, environmental awareness and capacity building, which includes working within specific host-country legislation, financial institution requirements, international standards and good international industry practice. Vassie has led and advised on numerous projects in Southern Africa, Democratic Republic of Congo (DRC), Zanzibar, Sierra Leone, Yemen, Indonesia and Mauritius. She has vast experience in working in diverse and remote locations, across cultural and language boundaries. One of her key focus areas is as a social technical expert in due diligence, competent persons reports and technical reviews mainly on projects in the mining sector.  Image supplied by SRK Consulting Dr Vidette Bester, senior social scientist at SRK Consulting has over eleven years of experience as a social scientist with a background in sociology, psychology, development and management. She holds a PhD in Sociology from the University of Johannesburg. Her doctorate was focused on artisanal mining in South Africa and finding meaningful ways to address this marginalised sector. As part of the thesis, Vidette developed a corporate social responsibility framework that provides practical initiatives to facilitate the regulation and formalisation of artisanal mining in South Africa. Her specialisation includes leading research teams to conduct socio-economic baseline studies (SEBS) for clients to develop sound local economic development (LED) projects, conducting socio-economic impact assessments and developing social management plans. She’s an advisor to clients in the mining industry to comply with requirements specified by the Mineral and Petroleum Resources Development Act (MPRDA) of 2002. This includes advising on mining regulatory frameworks and conditions, such as developing their Social and Labour Plans (SLP) and reporting on the Mining Charter 2018 Scorecard. |