University of Bath: Tackling oil and gas sector abuses: new findings show how corporations can do better on human rights
Multinational corporations must go beyond simply adopting human rights policies if they are to stop human rights abuses in their supply chains and avoid charges of ethical window-dressing, new research from the University of Bath School of Management shows.
The study of more than 130 multinational companies in the global oil and gas industry showed that while the very highest quality human rights policies did have some impact on the most serious forms of abuse, more commonly, policy efforts were insufficient to prevent abuses unless the policies were reinforced with concrete measures across the corporation, such as engagement with local communities.
“People are increasingly aware of human rights abuses in the operations of multinational corporations and they expect firms to do better by those subjected to the risk of such abuses. Many oil and gas firms have adopted human rights policies but the abuses continue,” said Annie Snelson-Powell, lecturer at the School of Management and co-author of the study.
“Writing a policy is not enough – firms must also think beyond the policy stipulations to engage with, and respond to, the requirements of the local context, develop their own capabilities to lead on social issues, and engage with global initiatives,” she said.
The research identifies ‘preparedness practices’ that support firms in preventing human rights abuses. These include systemic expertise (a focus on solutions that are specifically responsive to the local context), internalization (embedding social goals more broadly into the corporation), and global engagement (taking part in global multi-stakeholder initiatives – with governments or NGOs).
“Our research shows that companies can succeed in tackling human rights abuses if they take their policy commitments seriously and develop a broader array of activities that strengthen their preparedness to respond to human rights issues,”Snelson-Powell said.
The study focused on the oil and gas industry, which has a global reach, operates in high-risk locations, has complex arrangements with subsidiaries, and a long and controversial history with respect to human rights in developing countries.
“From the Congo and Nigeria, to Brazil, human rights controversies continue and the need for change is clear,” she said. “Some cases have received widespread global attention, such as Shell’s complicity in abuses of the Ogoni people in Nigeria, whereas others are less well-known, such as the multiple reports of serious crimes and ongoing rights violations by local communities impacted by Petrobas’ large projects in Brazil.”
The research examined severe forms of human rights abuse, relating to forced labour, death, illegal detention and torture. The study’s dataset compared firms’ policy efforts on human rights (from a database called Sustainalytics which rates the firm’s policy quality) with Tricia Olsen’s Global Corporations Human Rights Database (GCHRD) of reports of human rights violations (see www.bhrlab.com). This quantitative study provides important insights, where there has been a lack of empirical data on the topic thus far.
“The good news is that firms can succeed – but only if human rights policies are complemented by preparedness practices. Neither are any individual preparedness practices, alone, sufficient. What is important is the combination of consistent human rights policy efforts with preparedness practices, and that these function over time,” Snelson-Powell said.
The study builds on a concept called means-end decoupling which identifies adverse outcomes of policy efforts – in this instance, corporations increasingly set up human rights policies but, perhaps fearful of bad press or adverse consumer reaction, tend to water down their commitments to make them easier to implement and as such, are able to declare compliance publicly.
“Our analysis suggests that companies may be afraid of not being seen to walk the talk, such that they focus attention more on the specifics of policy efforts than developing broader capabilities to learn and to lead on the protection of human rights in practice. This does raise the question of how corporations can be motivated to think more long term to protect vulnerable people within their operations,” Snelson-Powell said.
“Companies involved in rights abuses must be held to account, however the issue is industry-wide and firms have to think ambitiously, beyond merely defending a tight compliance with policies where genuine progress is challenging and takes more time. Our research points to the key ways that oil and gas firms can reinforce their policy commitments and move in the right direction, to prevent human rights abuses,” she said.