September 27, 2012
Extractives Commitment to Human Rights Improving
by Robert Kropp
But research from Oxfam America indicates that policies supporting Free, Prior, and Informed
Consent must include a transition from resource extraction to development partnerships.
Companies in the oil and gas sector have been touting technological advances that have allowed them
to pursue extractive methods such as hydraulic fracturing and deepwater drilling. But the fact
remains that for companies in the sector, and for mining companies as well, the era of relatively
straightforward extraction is over.
In order to keep sufficient reserves
on their balance sheets, companies in the extractives industries are more often locating their
operations in countries "under the regulatory control of host governments that cannot or will not
account for the priorities of local communities," Bugala wrote. To counter inefficient regard by
governments and companies for the rights of local communities, many international organizations
have exerted pressure on behalf of the principle of free, prior, and informed consent (FPIC).
As Paul Bugala of Calvert Investments describes the situation in a new Research
Backgrounder published by Oxfam
America, "Easily-accessible mineral and hydrocarbons deposits are becoming scarcer. Grades of
gold and other minerals maintain their terminal decline. And crude oil sulfur content continues to
grow as the densities of petroleum liquids, API gravities, slide."
Oxfam defines FPIC as "the principle that indigenous peoples and local communities must be
adequately informed about these projects in a timely manner and should be given the opportunity to
approve (or reject) a project prior to the commencement of operations." Its Research Backgrounder
assesses the commitments of 28 companies in the extractives industries to the principle.
Five of the 28 companies—Inmet, Newmont, Talisman Energy, Rio Tinto and Xstrata—have made
explicit commitments to the principle of FPIC, Oxfam found. Another eight companies have made
somewhat more qualified commitment to the principle, while two-thirds of the companies make
reference to concepts such as community support and the social license to operate.
that the number of commitments has increased since Oxfam's 2009 report on the issue, Raymond
Offenheiser, president of Oxfam America, said, "With more than half of the world’s poorest people
living in countries rich in natural resources, the increasing trend of companies incorporating
human rights in their policies is encouraging."
However, "Business as usual is simply not
going to cut it," Offenheiser continued. "In order for oil and mining companies to survive in the
coming decades, they need to transform themselves from primarily resource extractors to development
"How can investors be assured that conflict and resultant project delays will
not affect a new or expanded operation in a country or region where social license to operate has
been difficult to secure in the past?" Bugala of Calvert wrote. "A company's approach to
materiality and transparency helps dictate the type of investors it may attract. Without the
disclosure necessary for investors to substantiate strong long-term assumptions, a company may have
difficulty attracting long-term investors."
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