SPE 164979

MANAGEMENT SYSTEMS APPROACH TO MANAGING HUMAN RIGHTS

ISSUES
Tam Nguyen, Chevron (Main Author); Bert Fokkema, Shell; Julie Vallat, Total; Roper Cleland, IPIECA
(Contributing Authors)



Copyright 2013, Society of Petroleum Engineers

This paper was prepared for presentation at the SPE European HSE Conference and Exhibition held in London, United Kingdom, 1618 April 2013.

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Abstract
Recently there has been a proliferation of external guidance and guidelines for managing human rights issues. While these are useful tools to
inform the management of potential risk, at best they may offer abstract concepts or normative aspirations of performance. There are a range
of external expectations for companies to demonstrate how they respect human rights, including having business processes in place to
prevent or mitigate potential human rights issues that may be caused by the companys projects or operations. The paper describes how
IPIECA, the global oil and gas industry association for environmental and social issues, has responded to the emergence of external
guidelines in connection to implementing human rights due diligence by improving existing management systems and processes.
I. Background
A. United Nations Guiding Principles on Business and Human Rights

The United Nation Guiding Principles on business and human rights were developed through an iterative process
spanning six years and involving extensive stakeholder consultation.
In the first stage of the work, Professor John Ruggie, United Nations Special Representative to the Secretary
General, undertook three years of research in order to develop the global Protect, Respect and Remedy
Framework on business and human rights. The Special Representative developed the Framework to help clarify
the distinct roles of States and business on human rights issues. It rests on three interdependent pillars: 1) the
state duty to protect against human rights abuses by third parties through regulation/legislation; 2) the corporate
responsibility to respect human rights through due diligence; 3) the need for citizens to have access to effective
remedy, both judicial and non-judicial.
The United Nations Human Rights Council endorsed the Framework in 2008. Upon endorsement, the Special
Representative established the United Nations Guiding Principles (hereafter the Principles). The Principles
supplement the Framework by outlining how governments should meet their duties, and how companies should
2 SPE 164979
demonstrate their responsibilities. The United Nations Human Rights Council unanimously endorsed the
Principles in 2011.
1

To support the implementation and dissemination of the Principles, a new United Nations Working Group on
business and human rights was formed in September 2011. The Group consists of five independent experts and
they are tasked with identifying, exchanging and promoting good practices related to the implementation of the
Principles, as well as offering recommendations for improvement. They organized the first annual multi-
stakeholder forum in December 2012 in Geneva, which will be followed by two additional forums by 2014.
The purpose of the paper is to describe how IPIECA, the global oil and gas industry association for environmental
and social issues, has responded to the business responsibility to respect human rights as laid out in Principles.
In particular, it will explore human rights due diligence, or the reasonable degree of prudence exercised by an
organization. In many respects, existing management systems have the components to address potential human
rights issues, and due diligence is a long-standing practice among IPIECA members. Moreover, there has been a
healthy exchange between IPIECA members and external experts to improve these processes.
B. IPIECAs Business and Human Rights Initiative

IPIECA launched a three-year (2011-2014) Business and Human Rights Project that leverages the collective
experience and practical knowledge of its members. The objectives of the Project are to:
Support the organizational capability of IPIECA members in two focus areas: company due diligence and
community-level grievance mechanisms.
Serve as the authoritative reference body for the oil and gas industry on business and human rights
issues, including the UN Guiding Principles on Business and Human Rights and other relevant external
guidelines.

The project is implemented through the IPIECA Human Rights Task Force, comprised of 38 members from 20 oil
and gas companies and associations. The Task Force implements four distinct programmes:
Collaborative learning: IPIECA organizes technical workshops, with input from external experts, to
support the continuous improvement efforts of its members. The workshops enable members to
exchange experience, innovation and learning on managing complex human rights issues. Workshops
are also convened with other business associations and human rights organizations.
Technical guidance: IPIECA develops and disseminates practical guidance and tools to assist members
in managing human rights issues at an operational level. As part of this process, IPIECA is developing
industry guidance on integrating human rights due diligence and grievance mechanisms into existing
management systems. The grievance mechanism guidance will be based on a series of pilot projects
undertaken by member companies in different operating environments around the world.
Strategic resource: IPIECA provides technical expertise to relevant external initiatives and groups with the
aim of sharing industrys insights, experience and knowledge. For example, IPIECA participates in the
European Commission sector advisory group developing guidance on business and human rights.
Global engagement: IPIECA actively participates in global forums and initiatives to contribute to the
growing body of knowledge and ideas on business and human rights issues. IPIECA also communicates
its efforts to the external business and human rights community. IPIECA members are actively involved in
a range of voluntary initiatives that help promote the respect for human rights, including the UN Working
Group on Business and Human Rights, the Voluntary Principles on Security and Human Rights, the
Extractive Industries Transparency Initiative (EITI) and the UN Global Compact.

1
Report of the Special Representative of the Secretary-General on the issue of human rights and transnational corporations and other
business enterprises: Guiding Principles on Business and Human Rights: Implementing the United Nations Protect, Respect and Remedy
Framework (A/HRC/17/31, March 2011).

SPE 164979 3

The project is a deliberate effort to build upon the advantages of IPIECA members; specifically, their knowledge
and experience with internalizing external issues (e.g. health, environment, safety, social) through organizational
management systems and processes.

II. Human Rights Due Diligence Process
As expressed by Professor John Ruggie, the United Nations special representative, We're glad that you respect
human rights and that you say so. But how do you know? How do you know that you respect human rights? So
what we are doing is we've suggested what you need to have is an adequate and appropriate due diligence
system.
2

Human rights due diligence processes are not a legal requirement, but rather a good industry practice to manage
potential issues and impacts associated with business operations. A summary of the expectations for companies
is below:
Respect human rights in projects or operations;
Seek to prevent or mitigate potential human rights issues that may be directly caused by the companys
projects or operations, or seek to and influence partners and suppliers;
Have in place policies and processes to manage potential human rights issues;
Commitment [to respect human rights] endorsed by senior leadership;
Conduct assessments to identify potential human rights issues in projects or operations; have processes
to manage the issues; and have a means to track the response;
Communicate with stakeholders how issues are being addressed; and,
Establish a grievance mechanism to address issues raised by the community.

The due diligence process described in the Principles represents a shift from explicit normative arguments to
implicit normative arguments and performance-oriented management.
According to the Principles, the due diligence process has four main expectations
3
:
Assessing actual and potential impacts
Integrating and acting upon the findings
Tracking responses
Communicating how impacts are being addressed

To expand the uptake and practice adoption of the due diligence process, there have been efforts by multilateral
institutions and voluntary standards bodies, such as the International Finance Corporation (IFC) Performance
Standards and the Organization for Economic Cooperation and Development (OECD) Guidelines for Multinational
Enterprises to reference the Principles. Disclosure guidelines, including those published by IPIECA and the
Global Reporting Initiative (GRI), have also referenced the Principles. These are indicated in the table below.
External Guidance Summary of References to the Principles
OECD Guidelines for
Multinational Enterprises
Carry out human rights due diligence as appropriate to their size, the nature and context
of operations and the severity of the risks of adverse human rights impacts.
http://www.oecd.org/daf/internationalinvestment/guidelinesformultinationalenterprises/48004323.pdf

2
http://www.carnegiecouncil.org/studio/transcripts/0074.html
3
Principle 17 Guiding Principles on Business and Human Rights: Implementing the United Nations Protect, Respect and Remedy
Framework (A/HRC/17/31, March 2011).

4 SPE 164979
IFC Performance Standards Business should respect human rights, which means to avoid infringing on the human
rights of others and address adverse human rights impacts business may cause or
contribute to. Each of the Performance Standards has elements related to human rights
dimensions that a project may face in the course of its operations. Due diligence against
these Performance Standards will enable the client to address many relevant human rights
issues in its project.
http://www1.ifc.org/wps/wcm/connect/3be1a68049a78dc8b7e4f7a8c6a8312a/PS1_English_2012.pdf?MOD=AJPERES


Global Reporting Initiative In the G3.1 Guidelines, the Human Rights category has an updated introduction, and two
new disclosure topics have been introduced on the application of human rights risk
assessments and grievance remediation in an organizations operations.
https://www.globalreporting.org/reporting/latest-guidelines/g3-1-guidelines/Pages/Human-Rights-and-Reporting.aspx

European Commission Policy
on Corporate Social
Responsibility

Expects all European enterprises to meet the corporate responsibility to respect human
rights, as defined in the UN Guiding Principles.
http://eur-lex.europa.eu/LexUriServ/LexUriServ.do?uri=COM:2011:0681:FIN:EN:PDF


For IPIECA members, human rights due diligence is not necessarily a new concept. It has been an essential part
of many companies overall risk management, especially in countries where human rights issues may be more
prevalent.
The due diligence process builds on the long-standing practice of conducting risk or impact assessments across
the project lifecycle business development, capital project, operations and decommissioning/divestment. There
are many established processes, tools, and practices that have expanded organizational capability over the
years, such as the Environment, Social and Health Impact Assessment (ESHIA) process. Moreover, through
various IPIECA meetings and workshops, there continues to be a constructive exchange of technical issues
between practitioners from IPIECA member companies and external experts to improve these processes and
tools so that they are more robust.
Because human rights can (i) cut across different phases of an oil and gas project lifecycle [Figure 1]; (ii) be
associated with different issues and potential impacts; and (iii) managed by different company functions, roles and
responsibilities, there is no one-size-fits-all approach to implementing human rights due diligence.


The business case for human rights due diligence is simple and straightforward it is good business practice to
know the potential human rights issues and impacts associated with business operations and to factor them into
management plans. This is especially important for oil and gas companies that may operate in countries over
several decades, and where local conditions and circumstances can change.
Some of the business drivers for improving human rights due diligence can be summarized as:
Identification and management of potential impacts on communities positive and negative;
Preventation of disruptions to construction and future disruptions to operations, and improve business
continuity, including providing reliable energy and managing budgets and schedules;
Improved relationships with local employees and communities based on ongoing engagement and
dialogue about project issues and other relevant concerns;
Protection of employees, communities and company assets from potential negative impacts by providing
a safe and secure operating environment;
Creation of positive contributions to host communities, e.g. improving access to health, education and
livelihoods; and,
Protection of the companys reputation in the country and internationally, e.g. by being an employer of
choice, and helping to ensure continued access to new markets and customers.

III. Organizational Reality
Insert Figure 1
SPE 164979 5

The goal or hope of many external guidelines and standards, including the Principles, is that they will be
institutionalized by companies and broader industry. In theory this makes sense, but practice is not so simple.
Two complicating factors, among others, are (1) the structure and complexity of oil and gas companies; and (2)
existing management system and processes for health, safety, environment and other social issues.

If we considering institutionalization as the process whereby a practice becomes adopted by the majority of
organizations in a field, eventually becoming reified as a social fact which guides behavior.
4
the process will likely
undergo three phases: (1) habitualization; (2) objectification; and (3) sedimentation.

Habitualization is a response to a given issue, problem or challenge that may be pertinent to a particular
industry. Sometimes these industry-related issues are drawn from external expectations or an emerging
voluntary standard, such as the UN Guiding Principles on Business and Human Rights, the Equator
Principles, or the Voluntary Principles for Security and Human Rights. The firms internal advocates may
leverage these external trends or drivers to justify practice, adoption and/or to reinforce a business case
for doing so. However, a strong, durable business case may also be needed to support managements
decision to adopt or sustain a practice.

Objectification is when the practice begins to build up a perceived value within the organization. Internal
adopters may seek to validate external expectations or emerging voluntary standards, which can help to
spread the practice farther and deeper inside the organization. Internal adopters may bolster a case
around the practice in relation to the firms costs and benefits. Consistency of a practice may not be a
given within the firm.

Sedimentation occurs when the practice starts to become part of normal business process and systems
governance among different groups within the organization. Over time the practice may be sustained
within the firm by the early adopters and there may be uptake by other potential adopters.

This evolution illustrates the strong case for a management systems approach to managing human rights issues.
Given the abstract nature of external guidelines, a management systems approach can provide a practical way for
oil and gas companies to segment them into implementable elements: (i) the specific issues to be managed; (ii)
the organizational capabilities that exist [or need to be developed] to manage them; (iii) the responsible
function(s) having subject matter expertise and accountability; and (iv) the continuous improvement programmes
to strengthen competencies and capabilities.
Implementing Human Rights Due Diligence Process

For the purposes of this paper, a human rights due dilience process can be framed as a plan-do-check-act
methodology to manage potential human rights issues and impacts. This methodology correlates with the existing
management system processes of many oil and gas companies:



It is a practical approach to implementing a human rights due diligence process for several reasons: it
leverages existing mechanisms and governance structures, such as already established roles and
responsibilities, standards, processes, training, guidance, tools and continuous improvement

4
Adrian Haberberg et al (2010),"Institutionalizing idealism: the adoption of CSR practices", Journal of Global Responsibility, Vol. 1 Issue: 2, pp.
366 381.

Insert Figure 2
6 SPE 164979
programmes. There may be greater opportunities to manage potential human rights issues and create
long-term organizational capacity by working within and enhancing the existing system rather than
working outside it.

It enables interaction with the companys process leads, advisors and other experts, thereby capturing
and spreading relevant experience, technical knowledge and building ongoing support, such as
establishing a community of practice. This also helps to translate human rights issues and relevant
external guidance into operational language, processes and plans.

It minimizes unintended risks, such as identifying potential issues and impacts without having a
systematic way of managing them. The existing management system process enables not only the
identification and assessment of potential issues and impacts, but also a process to manage and close
out.

It helps companies to integrate identified potential human rights issues and impacts with social,
environmental, health and other impacts. This promotes a more efficient and holistic approach to
associated issues, such as fresh water, which can have implications for both peoples access to health,
livelihoods and potable water.

The next few sections describe key aspects of the management system approach to managing human rights
issues: (i) key components of the due diligence process; (ii) potential issues and impacts to manage; (iii) project
lifecycle associated with due diligence processes; and (iv) implementation issues.
V. Key Components of Human Rights Due Diligence

Using the management system process (Figure 2) as the framework for implementation, the core process
components of a human rights due diligence are:
Vision/Objectives: The companys vision and objectives for managing human rights are articulated and
reinforced through a formal Company Code of Conduct, CSR Policy, Human Rights Policy, Human Rights
Statement or some other formal mechanism, e.g. operational policy. The objectives should be anchored in the
companys key business drivers, e.g. protecting people and assets.

Accountability: Because human rights issues cut across different company functions, appropriate roles and
responsibilities, including accountability, are assigned. Company processes, programmes or tools should
specify which function is responsible (who) and the associated roles and tasks (what and how).

Assess/Plan: The assessment and planning includes (i) identifying the phase in the project lifecycle; (ii) taking
inventory of existing processes, programmes, and tools (e.g. Stakeholder Engagement Process, ESHIA
Process, Security Assessments) that can be utilized to assess potential issues and impacts; (iii) collating and
reviewing information from prior assessments or external sources; and (iv) conducting the assessment to
identify, scope and analyse potential issues and impacts. In some cases, it may be necessary to consider
doing a tailored human rights issues or impact assessment which is fit-for-purpose for specific company
needs or operating contexts.

Implementation: Once potential issues and impacts are identified and prioritized, findings should be
incorporated into a management plan, which include communication with internal and external stakeholders
as needed, with the intent to properly address and close-out the issue or impact.

Review: A set of indicators for monitoring, tracking and evaluating the plan is built into the implementation
process. The indicators inform the effectiveness of the process and support opportunities for continuous
improvement. There is no one-size-fits-all approach to the review process; it varies depending on the
companys existing processes and procedures: (i) internal process audits; (ii) internal self-assessments at the
business unit level; (iii) reviews by external third parties. The review has assigned roles and responsibilities,
internal controls on the flow of information and procedures to integrate the findings in order to improve the
process.

SPE 164979 7
Improve: Once the review is completed and the findings properly scoped and analysed, the areas of
improvement serve as an internal engagement mechanism to enhance the existing process, procedures or
programmes, such as internal or process review sessions. The aim of this activity is to improve the process
and foster a culture of learning and innovation.

VI. Issues / Impacts for Human Rights Due Diligence

For the purpose of this paper, there are four human rights areas germane to the industry: Workers, Community,
Security Provision, and Suppliers/Contractors. There are potential issues and impacts associated with these
areas, and moreover, there may be existing processes, programmes and tools to draw from.
5
Examples are
described below:
Area Potential Issues / Impacts Existing Process/ Programmes/Tools
Workers Treatment of workers consistent with the
International Labour Organization (ILO) Core
Labour Standards.

Freedom of association and collective
bargaining
Prohibit hiring of underage workers as
defined in the relevant ILO conventions
Prohibit recruitment, use and practices
of Forced Labour
Prohibit discrimination in hiring
practices
Working conditions

Periodic compliance review of
human resource policy and
procedures
Compliance reviews with national
laws and regulations
Periodic review of employee
feedback (e.g. surveys)
Periodic review of whistleblowing
and incidence reporting processes
and feedback
Workplace HSE risk assessment
process

Community Engagement with communities in a manner that
respects human rights:

Meaningful consultation (e.g. free, prior
informed consultation) regarding project
issues and impacts
Mechanisms to receive and respond to
community issues and concerns

Management of potential project impacts on
communities positive and negative:

Resettlement of communities and
associated physical and economic
displacement
Indigenous populations and other
vulnerable groups requiring special
attention
Altering existing community access to
health, education, clean water,
livelhoods, and cultural assets

Risk assessment processes for new
country entry
ESHIA process
Stakeholder engagement process
Grievance mechanism process and
periodic review of reports
Human rights issue/impact
assessments (see Appendix 1 for
sample of potential issues)
Periodic review of relevant policies
and procedures: managing impacts
related to involuntary resettlement,
interaction with Indigenous Peoples
and interaction with identified
vulnerable populations (e.g. women,
elderly)


Security Provision Protecting people and assets in a manner that
respects human rights and is consistent with the
Voluntary Principles on Security and Human
Rights or UN Use of Force Guidelines:

Use of Force by public security
Use of Force by private security
Company-level equipment transfer and
usage

Periodic security risk assessments
(see Appendix 2 for sample of
potential issues)
Periodic reviews of security
management procedures
Periodic review of compliance with
requirements in private security
contracts

Business
relationships/
Contractors
Engagement with key suppliers to support their
respect for human rights, including consistency
with ILO Core Labour Standards:
Compliance reviews with national
laws and regulations
Periodic review of feedback from

5
The list of areas, issues/impacts, and process/programmes/tools is not exhaustive. Individual IPIECA member companies may have
additional examples on a case-by-case basis, e.g. business relationships.
8 SPE 164979

Freedom of association and collective
bargaining
Prohibit hiring of underage workers as
defined in the relevant ILO conventions
Prohibit recruitment, use and practices
of forced labour
Prohibit discrimination in hiring
practices
Working conditions (e.g. health and
safety)
Impacts on communities (e.g. altering
existing community access to health,
education, clean water, livelhoods, and
cultural assets)

supplier engagement sessions and
forums
Periodic audits of selected suppliers
Pre-qualification supplier screening
processes
Periodic review of compliance with
requirements in supplier contracts
Companys supplier engagement or
management process (e.g. bidding,
pre-qualification, contracting,
training)
Supplier communications materials


VII. Project Lifecycle Associated with Human Rights Due Diligence

The potential issues and impacts may also be associated with specific project lifecycle phases (Figure 3), and
moreover, there may be existing processes, programmes and tools designated for those phases.




VIII. Implementation Issues to Consider with Human Rights Due Diligence

There are several implementation issues for conducting due dilgence that should be carefully considered,
including:
Clear and appropriate roles and local responsibilities: In oil and gas companies, there may be no single
entity that is charged with managing all potential human rights issues and impacts or possesses the
subject matter expertise. Because human rights may require cross-functional engagement, clear and
appropriate roles, responsibilities and accountability should be designated.

Legal and regulatory issues associated with human right issues. IPIECA members are recommended to
work in close consultation with key functions (e.g. Legal, Public Affairs/Government Affairs) to properly
assess the legal and regulatory context and inform implementation of their due diligence.

Handling sensitive information: Implementing due diligence can uncover sensitive, personal and
confidential information that should be handled carefully. Internal procedures for controlling
documentation and the exchange of information is recommended. Companies should bear in mind that
publishing some sorts of data may create risks for community members and the workforce.

Prioritizing potential issues and impacts. Companies should consider prioritizing potential issues and
impacts to inform their management plans. To inform the prioritization, special consideration should be
given to: whether the potential impact is attributed to third parties or other circumstances that may not be
controlled by the company:

Whether the potential impact is severe;
Whether the potential impact is permanent or reversible;
Whether the potential impact is local versus dispersed;
Whether the potential impact has direct impacts versus indirect effects;
The resilience of the impacted people;
Whether the potential impact is reversible versus irreversible; and,
Whether the potential impact is positive or negative.

Insert Figure 3
Potential Issues/Impact Assessment Processes and Management Plans for Communities, Security
Provision, Suppliers/Contractors
Human Resource Policy and Procedure Compliance Reviews
SPE 164979 9
Engagement and Communication: The assessment of potential human rights issues and mitigation
measures should involve ongoing engagement and communications with potentially affected / concerned
stakeholders, e.g. communities, vulnerable groups. It is good practice to leverage stakeholder
engagement process to build trust and two-way dialogue, as well as continuously identify, assess and
input key issues and insights into management plans.

Fit-for-Purpose approach. Implementing a due diligence process may vary according to prevailing
business processes of the company, size of the project, the prevalance of human rights issues and the
local context of the operations. Some companies may choose to utilize existing processes and tools to
assess issues and impacts, while others may opt for a customized human rights assessment tool. In all
cases, the due diligence process should be ongoing and iterative.

IX. Ongoing Learning and Improvement

Additional work is being progressed under IPIECAs Business and Human Rights project with a focus on
embedding and aligning good practices within existing company systems and processes:
Guidance on integration of human rights into environmental, social and health impact assessments
(ESHIA). Using the ESHIA process cycle as an organising framework, the guidance will outline the critera
for integrating human rights into impact assessments and the linkages to other company due diligence
processes to consider potential human rights issues.

Guidance on developing detailed operational-level guidance on grievance mechanisms. Informed by a
series of pilot projects involving IPIECA members, the work will use field data and information to improve
the process of identifying and addressing community issues.

The growing body of guidance publications are informed by the ongoing learning and improvements of IPIECA
members who generously share data and information from diverse operations and contextual issues. Information
and resources are available though IPIECAs website: www.ipieca.org/human-rights.