Human Rights Due Diligence for Corporations: from Voluntary Standards to Hard Law at Last?

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Human Rights Due Diligence for Corporations: from Voluntary Standards to Hard Law at Last?
  Netherlands Quarterly o Human Rights, Vol. 31/4, 44–74, 2013. 44 © Netherlands Institute o Human Rights (SIM), Printed in the Netherlands. HUMAN RIGHTS DUE DILIGENCE FOR CORPORATIONS: FROM VOLUNTARY STANDARDS TO HARD LAW AT LAST? O󰁬󰁧󰁡 M󰁡󰁲󰁴󰁩󰁮-O󰁲󰁴󰁥󰁧󰁡*  Abstract   Multinational corporations may play a signi󿬁cant role in contemporary con󿬂icts both directly or indirectly by contributing to the 󿬁nancing of activities of warring armed groups. Te international attention to this problem has recently been integrated into the efforts to develop the regulatory framework covering activities and working methods of corporate actors that impact negatively on human rights. Tis article analyses the initiatives to develop standards to regulate corporate behaviour affecting human rights in con󿬂ict zones. In particular, it studies the initiatives taken to prevent corporate involvement in the con󿬂ict in the Democratic Republic of the Congo through the exploitation and trade of so-called ‘con󿬂ict minerals’. Its main focus is the developing standard of human rights due diligence for corporations, and how international and State practice may be contributing to its transformation from a voluntary standard to measure corporate compliance with social expectations into a potential normative standard. Keywords : Business and human rights; con󿬂ict minerals; Dodd-Frank Act; due diligence; OECD; Ruggie; the Democratic Republic o the Congo 1. INRODUCION Natural resources have historically played, and continue to play, a signi󿬁cant role in uelling and/or perpetuating armed con󿬂icts and situations o mass abuse o human rights. 1  In act, the abundance o natural resources has been described as a ‘resource *   Dr. Olga Martin-Ortega is Reader in Public International Law at the University o Greenwich ( Te author would like to acknowledge the helpul comments and contributions rom Stephen J. urner and Kristopher Kerstetter during the writing o this article. She would also like to express her gratitude to the anonymous reviewers or their insightul comments. All websites were last visited on 28 July 2013. 1 See, generally, Paul Collier and Anke Hoeffl er, ‘On Economic Causes o Civil War’ (1998) 50 Oxord Economic Papers 563–573; Mats R Berdan and David M Malone (eds), Greed and Grievance,  Human Rights Due Diligence or CorporationsNetherlands Quarterly o Human Rights, Vol. 32/1 (2014) 45curse’. 2  In recent years, attention has ocused on the speci󿬁c role o business, particularly multinational corporations, in this dynamic and how they may directly, through their activities and working methods, or indirectly, through their commercial relations with others, contribute to con󿬂ict by acilitating the 󿬁nancing o warring armed groups. 3  Te international attention to this problem has recently been integrated into the efforts to develop the regulatory ramework covering activities and working methods o corporate actors that impact negatively on human rights. 4  Tis article provides an analysis o the initiatives to develop standards to measure corporate behaviour affecting human rights in con󿬂ict zones and, in particular, in the Democratic Republic o the Congo (DRC) through the exploitation and trade o so-called ‘con󿬂ict minerals’. Tese are minerals or which extraction and trade is directly linked to the 󿬁nancing o armed con󿬂icts and human rights abuses. Unlike in the case o other con󿬂ict resources, there seems to be more momentum and willingness o the international community to address these negative dynamics. o a certain extent, con󿬂ict minerals are providing the ertile ground to develop international standards that may become hard law in the uture.Tis article explores what the regulation o con󿬂ict minerals can teach us about the potential normative development or business and human rights. Corporations do not currently have direct legal obligations in international law. However, through the efforts to regulate corporate contribution to armed con󿬂icts and human rights violations, States are developing practices that demand due diligence rom corporations. Tis article ocuses on this standard o corporate human rights due diligence. Due diligence has traditionally been used in the 󿬁eld o corporate governance as a standard to determine corporate risk and in international human rights law as a standard to measure State compliance with international human rights obligations when addressing the conduct o non-State actors. As a standard to measure corporate behaviour, due diligence has evolved rom an instrument to saeguard corporate interests, to a voluntary standard to measure corporate compliance with social expectations to respect the human rights o those affected by corporate activity. As a standard to measure State compliance with human rights obligations, due diligence has widened to include prevention, protection and redress against harmul corporate activity. Tis article studies the development Economic Agendas in Civil War   (Lynne Rienner Publishers 2000); Karen Ballentine and Jake Sherman, Te Political Economy of Armed Con󿬂ict: Beyond Greed and Grievance  (Lynne Rienner Publishers 2003). For a study on the roles that different natural resources can play in con󿬂ict see, Michael Ross´s chapter in the same volume: ‘Oil, Drugs and Diamonds: Te Varying Roles o Natural Resources in Civil Wars’ 47–70. 2 Te term was used or the 󿬁rst time by Richard Auty in Sustaining Development in Mineral Economics: Te Resource Curse Tesis  (Routledge 1993). See, Gilles Carbonnier, ‘Extractive industries in ragile states and the role o market incentives and regulation’ (2010) 5 Te Economics o Peace and Security Journal 30–31. 3 Olga Martin-Ortega, ‘Business under Fire: ransnational Corporations and Human Rights in Con󿬂ict Zones’ in Noëlle Quenivet and Shilan Shah-Davis (eds), International Law and Armed Con󿬂icts. Challenges in the XXst Century   (CM Asser 2010) 189–207; Olga Martin-Ortega, ‘Business and Human Rights in Con󿬂ict’ (2008) 22 Ethics and International Affairs 273–283. 4 Tis article uses alternatively the terms business, company, corporation and corporate actor.  Olga Martin-Ortega 46 Intersentia o the concept o human rights due diligence as directly applied to companies and the evolving practice o States, mainly in supporting and/or demanding human rights due diligence practices rom corporations, and what it may ultimately mean or States’ own due diligence in the protection o human rights.Te article is divided into three sections. First, it explores the impact o the exploitation and trade o certain minerals on the continuing violence and mass human rights violations in the DRC. Te second section studies the evolving de󿬁nition o human rights due diligence as a standard to measure corporate behaviour with regards to human rights, and its nature as a hybrid straddling international human rights law and corporate governance. In the 󿬁nal section, the article analyses States’ reactions to corporate involvement in the trade and exploitation o con󿬂ict minerals, and its impact on the development o the concept o corporate human rights due diligence and State’s own obligations with regards to corporate conduct. Tis section provides a study o the evolving practice by ocusing on the normative developments in the US, the home country o many companies in the electronics industry, which are the major consumers o these minerals. It also looks at the normative developments in the ramework o the Intergovernmental Conerence on the Great Lakes Region (ICGLR), which encompasses many o the States where this industry operates and/or sources its raw materials. Te conclusion considers the signi󿬁cance o these developments or the consolidation o the concept o corporate human rights due diligence and ultimately or the evolving international ramework o regulation o business behaviour with regard to con󿬂ict zones and, more generally, human rights. 2. CONFLIC MINERALS IN HE DEMOCRAIC REPUBLIC OF HE CONGO Te history o what today is the DRC has been characterised by the link between  violence, human rights abuse and the exploitation o its vast wealth in natural resources. 5  Te control o these resources has played a signi󿬁cant part in the contemporary wars that have decimated the country. From 1998 to 2002, the so-called second Congo War (or Arica’s Great War) saw the intervention o six Arican States, both directly and through the backing o rebel groups on its territory. 6  All parties were motivated in one way or another by access to natural resources, which in turn helped und their ongoing conrontations. 7 5 See, or example, Michael Nest, François Grignon and Emizet F Kisangani, Te Democratic Republic of Congo: Economic Dimensions of War and Peace  (Lynne Rienner Publisher 2006). 6 For a detailed account o the con󿬂ict, human rights violations perpetrated and the peace process see, Chandra Lekha Sriram, Olga Martin-Ortega and Johanna Herman, War and Human Rights  (Routledge 2014) 116–135. 7 Report o the Panel o the Experts on the Illegal Exploitation o Natural Resources and Other Forms o Wealth o the Democratic Republic o the Congo (13 November 2001) UN Doc S/2001/1072, paras 28, 125 [‘2001 Report’].  Human Rights Due Diligence or CorporationsNetherlands Quarterly o Human Rights, Vol. 32/1 (2014) 47Civil society and UN bodies have extensively exposed the direct link between the struggle or the control o natural resources, and human rights and international humanitarian law violations in the DRC. From 2000 to 2003, a UN Security Council (UNSC) authorised Panel o Experts documented the overwhelming impact o the  vicious circle o con󿬂ict and resource exploitation on the humanitarian and social situation in the country. In its reports, it provided evidence o such a link with regards to the activities o States, mainly Rwanda, Uganda and the DRC itsel, 8  and non-State actors. Te latter included armed groups and corporations operating in the area. Te Panel maintained that business entities, directly or indirectly, had been instrumental in the plundering o resources, the prolongation o the war and the commission o human rights abuses. 9  It controversially published a list o these companies and called or sanctions against a number o them. 10  Tese reports have been in part responsible or the consolidation in the international agenda o the issue o the links between the exploitation and trade o natural resources, the commercial activities o companies, and the perpetuation o war and human rights violations.Following the publication o the 2002 Expert Panel Report, the UNSC issued a resolution condemning the illegal exploitation o natural resources in the DRC and has maintained this position in subsequent resolutions. 11  Among the measures it adopted 8 See, or example, Report o the Panel o Experts on the Illegal Exploitation o Natural Resources and Other Forms o Wealth o the Democratic Republic o the Congo (16 October 2002) UN Doc S/2002/1146, paras 22–131. 9 See, or example, 2001 Report (n 7) paras 37–38. Several years later, the Offi ce o the United Nations High Commissioner or Human Rights (OHCHR) documented urther the link between natural resources and human abuses producing a map o one whole decade o violations: Report o the Mapping Exercise Documenting the Most Serious Violations o Human Rights and International Humanitarian Law Committed within the erritory o the Democratic Republic o the Congo between March 1993 and June 2003, August 2010 (Unoffi cial translation rom the French srcinal  version). 10 Te 󿬁rst list was published as Annex I to the 2001 Report (n 7). Te Final Report, in 2003, contains a signi󿬁cantly shorter list o companies, Final Report o the Experts on the Illegal Exploitation o Natural Resources and Other Forms o Wealth o the Democratic Republic o the Congo (23 October 2003) UN Doc 2003/1027, Annex I. Tis was reportedly due to the pressure rom the UNSC and home governments o business to ‘clear’ corporations names in the last report o the Panel, see, Papaioannou Asimina-Manto, ‘Te Illegal Exploitation o Natural Resources in the Democratic Republic o Congo: A Case Study on Corporate Complicity in Human Rights Abuses’, in Olivier de Schutter, ransnational Corporations and Human Rights  (2006) 276, 282. 11 UNSC Res 1457 (24 January 2003) UN Doc S/RES/1457; UNSC Res 1856 (22 December 2008) UN Doc S/RES/1856; UNSC Res 1952 (29 November 2010) UN Doc S/RES/1856, state that the plundering o natural resources is one o the main elements uelling the con󿬂ict. Tis article does not assess whether the exploitation is taking place in a legal or illegal way, but rather ocuses on its connections with armed groups, violence and the horri󿬁c human rights consequences that this brings. It exceeds its scope to analyse the concept o illegal exploitation o natural resources, however, as some o the initiatives to regulate con󿬂ict minerals are taking place in the ramework o the 󿬁ght against this kind o exploitation it is important note the different de󿬁nitions used by the bodies in question. Te UN Expert Panel de󿬁ned illegality o exploitation in the DRC, see, 2001 Report (n 7) para 15 as: a) Violation o sovereignty (activities without the consent o the legitimate government); b) Failure to respect existing national or local regulatory ramework that governs the use or exploitation o  Olga Martin-Ortega 48 Intersentia was the establishment later on o a UN Group o Experts on the DRC to support the Sanctions Committee by monitoring an arms embargo imposed on the armed groups still warring in Eastern DRC. 12 Te work o the UN Group o Experts on due diligence standards or companies operating in the DRC is the object o analysis below.Te minerals that have been the ocus o the regulation analysed in this article are cassiterite, coltan, wolramite, which are respectively the ores o the metals tin, tantalum and tungsten, known as the 3s, and gold. Due to their properties, including conductive and magnetic properties, they are critical or the electronic industry and thus very valuable. 13  Te DRC is neither the only producer o these minerals nor even the main one. 14  Te minerals are mostly obtained through manual artisanal and small mining, which is characterised by manual extraction with simple tools and equipment, and little or no management control. Tereore hard and abusive mining conditions are not exclusive to the DRC, 15  however, it is there where the link between mining and the perpetuation o a con󿬂ict with horri󿬁c human consequences has been most documented and attracted most international attention. Whilst access to the extraction and trade o these minerals provides the necessary 󿬁nancial means or illegal armed groups to continue the conrontation, the control over mines and trade routes has now become central to, and in occasions the sole purpose o, the 󿬁ghting. Most o the mines are located in the eastern part o the DRC, where violence and horri󿬁c violations o human rights continue even afer the 2002 Global and All-inclusive Peace Agreement. 16  Most o the mines are currently under the control o rebel resources; (c) Use and abuse o power by some actors, including orced monopoly in trading, the unilateral 󿬁xing o prices o products by the buyer, the con󿬁scation or looting o products rom armers, and the use o military orces in various zones to protect some interests or to create a situation o monopoly; (d) Violation o international law including sof law. Te ICGLR Protocol on the Illegal Exploitation o Natural Resources, analysed below, de󿬁nes illegal exploitation as ‘any exploration, development, acquisition and disposition o natural resources that is contrary to the law, custom, practice, or principle o permanent sovereignty over natural recourses, as well as the provisions o this Protocol’, art 1. 12 UNSC Res 1533 (13 March 2004) UN Doc S/RES/1533. 13 Te electronic industry is understood broadly to include the producers o a wide range o equipment and products rom industrial to automotive to consumer electronics, see, GHGm, ‘Social and Environmental Responsibility in Metals Supply to the Electronic Industry’ (20 June 2008) 8. For a description o the speci󿬁c uses o each metal see, ibid; Global Witness, Faced with a Gun, What Can You Do? War and the Militarisation of Mining in Eastern Congo  (2009) 20–21; John Prendergast, ‘Can You Hear Congo Now? Cell Phones, Con󿬂ict Minerals, and the Worst Sexual Violence in the World’ (2009) (Te Enough Project). 14 International statistics o the metals production are available rom different sources; see, or example, US Geological Survey, Mineral Commodity Summaries, available at Most o DRC gold is smuggled out o the country and there are hardly any reliable statistics o the amount o production, see, ICGLR, Regional Initiative on Natural Resources Newsletter (February 2012) 1. 15 GHGm (n 13) iv. For mining conditions see also, Global Witness (n 13) 24. 16 See, or example, MONUSCO and UNHCHR ‘Report o the Human Rights Joint Offi ce on Human Rights Violations Perpetrated by Soldiers o the Congolese Army and Combatants o the M-23 in Goma and Sake, North Kivu Province and in and around Minova, South Kivu Province,
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