March 1, 2010
By Krista Hendry
Journal of International Peace Operations (Vol. 5, No. 5)

Extractive companies have come under increasing scrutiny due to their operations in areas with weak or oppressive governments, impoverished communities and overall potential for conflict. Often blamed for creating or exacerbating conditions that could cause violence to erupt or human rights abuses to occur, extractive companies have become more aware of their potential impact on and within communities. To protect their employees, physical assets, ability to operate and international reputations, extractive companies assess not only their own security, but also that of neighboring communities and often the country as a whole.

The extractive industry, however, is increasingly assessing risks beyond those included in traditional security assessments, taking a more holistic view of threats and opportunities. They consider not only how to block access to vulnerabilities, but also how the threat can be diminished in a positive way. For example, a company can address the risk of theft with heightened security in the form of fences, lights and guards. However, it can also combat the same risk by decreasing the number of unemployed male youth in the community through its and its suppliers’ local hiring practices.

Every opportunity to reduce the need for a security response is a reduction in the risk of human rights abuse and a corresponding reduction in the risk profile of the business. As every security manager knows, all the vetting and training in the world cannot guarantee that emotion or human error will not lead to their greatest fear – a serious injury or death on their watch. Developing a holistic approach, which takes into account the entire operating environment, can provide management with the ability to identify opportunities to improve security by understanding all potential impacts, both positive and negative, of the company on the community.

Different departments may be more appropriate to assess different risks or work in coordination with third-party assessors. The resulting information should, however, be brought to all managers for the development of all-encompassing strategies for the project site, allocating responsibility to appropriate departments for implementation and monitoring.

Companies also need to understand what threats exist or could exist for the community. For example, they should evaluate the potential for human rights abuses if there is a protest or an altercation with one of their employees. They should understand whether and how the company’s presence could potentially impact the security and human rights of community members. While the government is ultimately responsible for the security of its citizens, the international community is increasingly holding companies accountable for any abuses that occur in or around their operations. Understanding potential threats to the community can help the company identify ways it can work with others, such as the government, to ensure that its presence has a net positive impact on community security and human rights protection.

Companies must understand not only the reality of their operating environment, but also the perceptions that exist regarding their relationship with the local government. Extractive companies are sometimes viewed as extensions of the government and, therefore, must understand the relationship between the community and the government. When communities are impoverished, undereducated and underserved by their governments, their attitude towards a company – particularly one that is generating wealth in their vicinity for a government with which they have no social contract – can be dangerously negative. In the past, many companies have misinterpreted silent acquiescence and the desire for jobs as evidence that they have community support for their project. The company’s own power, or lack thereof, can have disastrous consequences if not addressed.

The Voluntary Principles on Security and Human Rights (Voluntary Principles) were developed to provide guidance and support for companies in these situations, bringing together extractive security companies with non-governmental organizations and governments to develop practices and tools to reduce the potential for human rights abuses. The Voluntary Principles recognize that security risks can result from political, economic, civil and social factors, and prescribe policies that take these factors, as well as specific conflict risks and the history of human rights, into account.

To successfully assess the potential for risk and abuses, as well as opportunities to mitigate potential consequences, companies should involve the local communities in on-going dialogues concerning a range of issues, including security, but also economic and other social concerns. By working with civil society organizations to develop participatory methods of undertaking assessments, companies are developing mechanisms that foster a stronger understanding of social and economic needs and environmental and political conditions. In the process, they are finding opportunities to increase security by improving the livelihoods of the communities around their operations – based not only on independent assessments of the communities’ needs, but also on assessment and development of projects in which the community is an equal participant, not a dependent recipient.

This is not as simple as a survey of community members or focus groups. For communities that lack education, feel disempowered in relation to the multinational company or just feel that they have little to lose (or potentially much to gain by acquiescence), ensuring that their opinions and needs are voiced requires commitment and a major investment on the part of the company. If a company does not make this investment, however, it will quickly find that a few loud voices, even those not actually from the communities themselves, come out in protest against the company.

Empowering the community so it can give (and take) a social license to the company to operate is one of the most important mechanisms through which a company can protect both itself and the community. The issues that the community will raise as it is empowered to discuss its grievances openly will not be limited to those within the control or responsibility of the company. Most certainly, many grievances will have to do with the lack of infrastructure and public services that should be a part of the social contract between the government and its citizens. This empowerment may threaten the local and even national government and public security forces, so it is crucial that the company works closely with the authorities to gain support for such activities.

While companies may find opportunities to promote greater social well-being by providing some services directly, they must consider carefully the social contract that should exist between the community and its government. If they elect to provide some services that the public sector should be providing, they should work with others to build programs that they can eventually transfer to a public institution, a service provider or a combination of the two. The company’s overall strategy should be to develop programs that allow it, over time, to focus on its appropriate role in the community: an employer, a buyer of goods and services, a taxpayer and a good neighbor supporting social projects and sustainable community development. Assessments (and their resulting programs) designed to mitigate risks, secure the protection of the company and protect the human rights of community members can play a pivotal role in achieving this long-term goal.