Addressing Corporate Activity That Negatively Impacts Natural Resources: Community-Led Engagement as a Path to Rights Compatible Remedies
This article originally appeared in the American Bar Association International Law News, Volume 49, Issue 1 (Fall 2021) and is republished here with permission.
By Katherine McDonnell, Morvarid Bagheri and Shauna Curphey
Companies engaged in agricultural, mining, and other extractive projects may explore and operate on or near land or water belonging to or used by local communities, often in communities that depend on those resources for their livelihoods. In other circumstances, corporate activity may lead directly to negative impacts on human rights. This will become more frequent as climate change, population growth and environmental degradation create more demand for shrinking natural resources.
At the same time, there is wide recognition that corporations have a responsibility to respect human rights. This responsibility is articulated in the UN Guiding Principles on Business and Human Rights (UNGPs), unanimously endorsed by the UN Human Rights Council in 2011 [1], and reflected in the Organization for Economic Cooperation and Development (OECD) Guidelines for Multinational Enterprises [2], as well as a growing list of national laws and international standards. The UNGPs recognize that while states are principal duty bearers in upholding human rights, corporations have a responsibility to: 1) conduct human rights due diligence (HRDD) to avoid causing harm and; 2) enable access to remedy to impacted people when harm does occur. Both HRDD and access to remedy require that companies communicate with impacted communities to understand and mitigate potential human rights risks, and receive and address complaints when operations lead to human rights abuses.[3]
In practice, these responsibilities are often ignored or approached as superficial, tick-the-box compliance exercises without adequate engagement with local communities, resulting in harms not being adequately identified, mitigated, or remedied. There is thus an urgent need to understand and promote processes for mitigating and remedying corporate human rights harms in ways that lead to rights-respecting outcomes for local communities.
This article explores how companies may use remedial mechanisms that appear adequate to fairly address negative impacts on local communities’ enjoyment of natural resources but nonetheless fail to remedy those harms. It begins by outlining existing expectations and standards concerning the effective delivery of remedy through non-judicial mechanisms. It then interrogates whether procedural characteristics are sufficient to ensure that those mechanisms deliver effective remedy and highlights key obstacles to rights-compatible remedy outcomes. It concludes by positing examples of greater local community control as alternative procedural approaches that can help overcome those obstacles.
The UNGPs’ Baseline Expectations for Rights-Respecting Non-Judicial Grievance Mechanisms
Efforts to obtain remedy outside of courts in this context often take place under the auspices of a non-judicial grievance mechanism (NJGM). As defined by the UNGPs, a NJGM is any routine process outside of a formal judicial system for raising complaints and seeking remedy for business-related human rights abuses. While some NJGMs engage in investigation and fact-finding, they often rely on dialogue and mediation, particularly in the context of corporate activity negatively impacting natural resource use.[4] These NJGMs may be created by governments, such as the National Contact Points for OECD member states, or as non-state-based mechanisms, including those created by development finance institutions like the World Bank, multi-stakeholder initiatives, and project-specific, operational level mechanisms.
Principle 29 of the UNGPs requires that businesses “establish or participate in effective operational level grievance mechanisms for individuals and communities who may be adversely impacted” by their activities.[5] The language “or participate in” acknowledges that people outside of the company may create the NJGM. Indeed, even before the endorsement of the UNGPs, a 2008 report by the UN Special Representative on Business and Human Rights stated that a NJGM “should be designed and overseen jointly with representatives of the groups who may need to access it.”[6]
More recently, the UN Working Group on Business and Human Rights also emphasized that “rights holders should be central to the entire remedy process,” and recommended that operational level mechanisms “should be at the service of rights holders, who should be consulted meaningfully in creating, designing, reforming and operating such mechanisms.”[7] The International Commission of Jurists made similar observations in a 2019 report [8], and industry guidance [9] has also followed suit, encouraging a “co-design” process.
Unfortunately, this guidance is rarely followed in practice. Instead, most NJGMs do not involve meaningful input from impacted people, and instead emphasize procedures that appear fair, but fail to deliver rights-respecting outcomes.
Do Procedural Elements Ensure Rights-Respecting Outcomes?
The right to an effective remedy under international law involves a procedural and substantive element.[10] Procedurally, there should be practical and meaningful access to a mechanism that is capable of ending and repairing the violations. [11] The substantive element involves guaranteeing non-repetition, providing compensation for the harm suffered, and restoring affected people to their material situations that existed before the harm.[12]
Although the UNGPs call for remedies that “counteract or make good any human rights harms that have occurred,” and deliver rights-compatible outcomes [13], they lack clear criteria for assessing the effectiveness of remedy outcomes.[14] Principle 31 sets forth eight minimum effectiveness criteria for NJGMs, including that they be accessible, equitable, legitimate, predictable, transparent, a source of continuous learning, rights compatible, and, with regard to operational level mechanisms in particular, based on dialogue and engagement.[15] Rights compatibility is the only effectiveness criterion under Principle 31 that specifically references the “outcomes” of procedures, requiring that they “accord with internationally recognized human rights.” [16] Thus, while Principle 31 provides a list of criteria for the design and practice of NJGMs, they primarily focus on process and not whether the outcome provides an effective remedy, despite that being the most important element for impacted communities.[17]
This is significant because, while process is important, research has shown that NJGMs that formally fulfill the UNGPs’ effectiveness criteria still fall short of effectively remedying the harms suffered by impacted communities.[18] Many experts have observed this trend [19], including the ICJ and UN Office of the High Commissioner for Human Rights, who note that the increase in the creation and use of operational level mechanisms has not correlated with evidence of their effectiveness.[20]
Obstacles to Rights-Compatible Remedy Outcomes
Through our own work as practitioners and informed by a large body of existing research [21], several obstacles have been identified as potential reasons for the stalled progress on outcomes, many of which are particularly relevant to NJGMs used in the context of natural resource issues. Such negotiation-based NJGMs by their very nature involve compromise, which raises concerns over their appropriateness for dealing with human rights harms. The power asymmetries that exist between companies and affected-communities manifest in various ways, and often force communities to accept outcomes that are not rights-compatible, if remedy is offered at all.
The non-exhaustive list of obstacles discussed illustrates how power asymmetries limit NJGMs’ effectiveness, and highlights their connection to the perspectives of impacted communities.
● Inadequate involvement of rights holders. Despite the increasing calls for more rights holder involvement, company-level and multi-stakeholder NJGMs continue to primarily be created and operated by companies. Some have offered limited consultations or included token community representation, but they deny communities any meaningful decision-making power. Input on NJGMs established by states or financial institutions is generally limited to high level policy advocacy efforts. As a result, communities are largely unaware of the existence of available mechanisms, how to use them, or their rights under them. They rarely have opportunities to provide feedback on the NJGM process or monitor the progress of complaints.
● Imbalances in bargaining power. While proponents of NJGMs argue that they are faster, cheaper, and more localized than judicial avenues, NJGMs still require significant time, resources, and trade-offs for communities choosing to participate. Companies have significantly more money, access to information and negotiation experience, while communities tend to have little leverage and much more to lose, as they may have few alternatives to accepting a company’s offer. These challenges are compounded when the mediator or other party facilitating the dialogue interprets their impartiality as “outside of the conflict” rather than ensuring that one party does not have an unfair advantage. This can lend the process an appearance of legitimacy while undermining the rights of community members by failing to confront the imbalances in bargaining power and capacity.
● Contested perceptions of value. The effectiveness of a remedy should be judged by the perspective of the rights holder, but the failure, or refusal, of a company to understand that perspective undermines the possibility of reaching an agreement. This is particularly relevant in the context of land and natural resource-related harms, where calculations must include the social and cultural value attached to the area and the effects on livelihoods and generational losses. When a company fails to understand the rights holders’ perception of the value of the potential loss, it may fail to provide a fair remedy, even where it may have a good faith belief it is doing so.
● Limited scope and mandates of NJGMs. There are limitations on what NJGMs can and will provide in terms of remedy [22] and not all NJGMs perceive provision of remedy as their function or purpose. When a mechanism does not clarify its limitations, it can create false expectations among rights holders, and cause confusion, frustration and material loss for those who have engaged in it. Moreover, while judicial mechanisms are the core of the remedy system and should handle the most serious human rights issues [23], communities have at times been required to waive their rights to future litigation. Other times, judicial avenues are not available, leaving NJGMs as the only option.
● Lack of enforcement. The non-binding, and often voluntary nature of NJGMs means that companies are not obliged to participate in good faith (or at all) and provides little incentive for providing rights-compatible remedies, or following through on remedies that companies may promise to provide.
Emerging Strategies for Overcoming Obstacles to Rights-Compatibility Through Rights-Holder Involvement and Leadership
We posit that addressing power asymmetries is central to overcoming obstacles to NJGMs’ capacity to produce rights-compatible outcomes. This includes ensuring meaningful rights holder involvement in the design and implementation of the NJGM, including monitoring and enforcement processes.
Research has shown a correlation between the level of participation that rights holders have in a remedial process and their satisfaction and trust in it.[24] As the obstacles highlight, this cannot be improved by adding more consultations or simply having rights holders at the table, but rather it requires a shift in the entire approach to company-community engagement, and an explicit focus on rights-compatible remedy outcomes. These can be strengthened through two-way communication, authentic efforts to understand and incorporate the perceptions of the rights holders, adequate space for rights holder decision-making and oversight, and concrete actions to equalize power asymmetries in negotiations. We discuss below two emerging models that offer potential for facilitating that shift.
Impact and Benefit Agreements
Impact and Benefit Agreements (IBAs) offer an example of how to address power asymmetries by ensuring that local communities have more negotiating power.[25] An IBA is a contract in which Indigenous people trade their support for a project in exchange for company compensation or mitigation measures.[26] They are common in Canada as a result of a series of decisions by the Canadian Supreme Court, which establish that the government has an obligation to consult with and, if necessary, accommodate Indigenous people before making a decision that unduly affects their rights. The degree of accommodation depends both on the strength of the Indigenous community’s claim and the severity of the impact. For example, consent--the highest level of consultation and accommodation--is required on land where Indigenous title is established unless the government can present a “compelling and substantial” public purpose that justifies infringement of that title.[27]
While Canadian law places the duty to consult on the government, in practice companies face a potential government refusal to issue permits if they cannot demonstrate that they have consulted with the impacted Indigenous community. In addition, failure to adequately consult can result in court sanctions. As a result, companies seek to reduce the risk of challenges by proactively engaging with Indigenous communities to obtain their support for development projects that could potentially impact their rights. Thus, IBAs address power imbalances because the local community’s lack of support for a project may mean that the project will not proceed, or could be subject to a successful legal challenge.
Even with this added bargaining power, however, positive outcomes often turn on deliberation within a community to reach clarity regarding goals, to remain unified, and to plan collectively. [28] When there is disagreement within a community, companies can try to consult with those more favorable to the project, and isolate and ignore opponents. Without the opportunity to deliberate as a community, and support for doing so, the IBA may fail to address the full gamut of a community's actual concerns.[29] When communities have the resources to deliberate collectively, IBAs offer a promising strategy to address power asymmetries, including in the absence of incentivizing laws, to ensure more rights-compatible outcomes.
Community-Driven Operational Level Grievance Mechanisms
Another emerging strategy for effective NJGMs is the Community-Driven Operational Level Grievance Mechanism (CD-OGM), developed and piloted by EarthRights International in partnership with communities from six villages impacted by the Thilawa Special Economic Zone (TSEZ) in Myanmar. In a CD-OGM, impacted community members lead the decisionmaking on the design, and if they choose, participate in implementation of the mechanism.[30] The CD-OGM model is premised on the ideas that those impacted by a project: 1) have right to a say in the remedial process, and 2) are best placed to identify what processes and outcomes would be adequate and appropriate for their context.[31] This model was informed by the successful Fair Food Program, a worker-driven social responsibility program designed and implemented by the Coalition of Immokalee Workers in the U.S that, over its ten years in operation, eliminated the worst forms of human rights abuses at participating farms.[32]
In a “community-driven” OGM, the impacted right holders play a decision-making role, rather than being passive receivers of company-initiated consultations. They propose the form they want remedial procedures to take, including the specific processes for filing complaints and appeals, conducting investigations, and monitoring. They also propose who would participate and in what capacity, as well as the scope of harms to address and remedies to be offered. The interactions between the community and the company in the design process could take many forms, from a collaborative effort between the company and community, to something designed entirely by the community then shared with the company. Of central importance is that the decisions about both its form and function are made by the rights holders.
In the CD-OGM envisioned for the TSEZ, community leaders designed a mechanism to meet the needs of the impacted communities.[33] It provided detailed procedures for intake, oversight, monitoring, and feedback from the users. The community envisioned the Thilawa CD-OGM as a multi-stakeholder effort, with both the project developer and the community playing roles in its implementation.
A major limitation of any company-level model, however, is that the company has to agree to participate. When companies are reticent, communities may have to campaign to exert external pressure, which can be very challenging. The draft Thilawa CD-OGM was shared with the project developer in late 2016 for feedback.[34] In late 2017, the project developer instead implemented a separate complaints process. However, the parties resumed discussions as the community leaders continued to advocate for the priorities identified in their CD-OGM design to be included in the new grievance mechanism. Given the current situation in Myanmar, that advocacy is on hold.
While the original CD-OGM as drafted has not been, and may not be, accepted in its entirety, it has led to indirect benefits. The advocacy around the CD-OGM convinced the project developer to acknowledge and act upon the need for a grievance mechanism and opened the door to direct company-community dialogue. While still in early development, the CD-OGM model offers another promising strategy for ensuring adequate rights holder participation that is more likely to lead to rights compatible outcomes.
Conclusion
The overemphasis on the UNGPs’ effectiveness criteria without equal attention to outcomes has resulted in NJGMs that may look good on paper but which fail to do what they were intended to do: provide remedy for corporate human rights harms. The two examples discussed above offer insights into how increased rights holder involvement in the remedy process can lead to more rights-compatible outcomes. While these examples offer great potential, they also highlight the obstacles that will remain as long as power asymmetries are unaddressed.
More work is needed to understand how to facilitate rights-compatible outcomes. Such work could include identifying ways to acknowledge rights-holder perceptions of value to understand the actual scope of the harm and to determine an adequate and appropriate remedy. It could include a reorientation of the role of mediators in these negotiations. It will require development and implementation of effective monitoring and enforcement measures as a necessary component of remedy, with consequences for noncompliance.
Finally, NJGMs should serve as a corollary to, not a substitute for, access to justice through the courts. A quote often attributed to Albert Einstein reminds us that “[w]e cannot solve our problems with the same thinking we used when we created them.” While NGJMs have the potential to play a role in providing early warning of potential human rights abuses and allowing for efficient and culturally relevant remedies when such abuses occur, they have largely not lived up to this promise. Rights holder-centered approaches allow for new thinking and merit further exploration of their potential to ensure effective access to remedy for corporate human rights abuses.
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34. Draft CD-OGM for Grievances Arising Out of the Thilawa SEZ.