How can human rights impact assessments contribute to responsible business conduct?

Indigenous leader Ailton Krenak discusses the effects of the Mariana mining tragedy on the Krenak community in Brazil.

Sebastião Moreira/EFE.

Business activities can have a wide range of impacts on human rights—ranging from the labour conditions of women workers in supply chains, land use by business restricting indigenous peoples’ access to natural resources, to the effects of trade and investment regulation on agriculture and small-scale farmers.

In 2011, the United Nations Guiding Principles on Business and Human Rights were endorsed by the Human Rights Council, re-enforcing the responsibility of businesses to respect human rights. Since then, human rights impact assessment (HRIA)—an evidence-based process for identifying and addressing the adverse impacts of business activities on people—has gained traction as one of the key tools available to business, government, and civil society actors to contribute to meeting this responsibility.

However, current HRIA practice is characterised by vast divergences in approaches, standards applied, and ultimately the effectiveness of assessments. As noted by the diverse contributions in a recently published “Handbook on Human Rights Impact Assessment” examining the state of the art of HRIA in business and human rights, it should not be presumed that HRIA automatically contributes to the enhanced accountability of businesses. Instead, critical questions must be asked to ensure that HRIA serves those that are ultimately supposed to benefit: rights-holders adversely impacted by business activities.

Critical challenges for HRIA practice: participation, accountability, and industry adaptation

Although there is considerable diversity in current HRIA approaches, common challenges arise across practice that need to be carefully addressed to ensure that HRIA meaningfully contributes to business respect for human rights, not least as business reliance on HRIA expands and new legislation and regulation begins to standardise HRIA expectations.

One central challenge relates to participation. A good practice HRIA should seek the active participation of rights-holders affected by business activities in shaping the objectives, processes, and outcomes of the assessment. However, frequent shortcomings have been noted in practice due to limited time and budget allocated for the assessment, inadequate skills of the assessment team, or difficulties in reaching the relevant rights-holders. In this respect, clear opportunities exist for company-commissioned HRIAs to learn from community-based approaches.

It should not be presumed that HRIA automatically contributes to the enhanced accountability of businesses.

Company-commissioned assessments are carried out for businesses as part of human rights due diligence; whereas, community-based assessments are initiated and driven by civil society on behalf of affected communities. Community-based assessment methodologies often place a greater emphasis on participation as a central aspect of assessment. As such, company-commissioned assessments might usefully draw on the particular tools and methods applied in community-based HRIAs as part of enhancing rights-holder participation. A collaborative approach that envisages the community and company working together in the HRIA from the outset can also be explored as a potential way forward.

A second challenge concerns accountability. A key common factor noted across different HRIA approaches is the limited capacity to compel the different duty-bearers (e.g., government or business actors) responsible for addressing adverse human rights impacts to take action. Company-commissioned assessments, for instance, are still by and large a voluntary exercise and the possibilities for compelling companies to undertake such assessments and act on the findings frequently remains a matter of goodwill.

In contrast, in the case of community-based assessments, implementation of recommendations directed at companies and governments may be hindered where there is limited buy-in of these duty-bearers for the assessment. However, solutions are possible. For instance, legislative and regulatory developments such as emerging mandatory human rights due diligence, modern slavery, or non-financial reporting regulations are driving expectations regarding the conduct of duty-bearers which could be utilised to cohere standards for HRIA practice, as well as strengthening enforceability.

A third challenge is that to be meaningful and effective HRIA must be responsive and adaptable to different industry contexts. Much of HRIA practice has originated in project-based industries, assessing, for instance, the impacts of a particular mine site, agricultural plantation or factory. As such, enhanced reflection is required on how HRIA methodologies are adapted so that they can be meaningfully applied to business activities characterised by different operational realities—such as the complex supply chains of the food and beverage and apparel sectors, or the wide geographical reach of the information communication technologies (ICT) and tourism sectors. HRIA has the potential to identify specific problems in specific situations and develop concrete measures to address these. However, those working with HRIA also need to carefully evaluate what a HRIA can and cannot deliver in terms of addressing human rights flaws that characterise certain business and economic models and recognise that to promote more systemic changes requires interventions that stretch beyond any individual HRIA.

To promote more systemic changes, sector-wide approaches that consider the cumulative impacts as well as legislative and regulatory framework of a business sector as a whole may yield potential. Trade agreement HRIAsassessments that focus on the human rights compliance of the negotiation process and resulting content of trade agreements—may also have potential to this effect, providing that such assessments are sufficiently rights-based, dynamic and associated recommendations are implemented.

Future directions for HRIA

As HRIA is an emerging practice, critical observations are necessary to identify and address flaws and drive theory and practice forward. At the same time, it is useful to reflect on those aspects of HRIA practice that clearly demonstrate the added value of this methodology in fostering responsible business conduct. For example, where properly implemented, HRIA can enhance the ability of rights-holders to understand and claim their rights; enable companies to understand and address human rights impacts in specific project contexts, as well as transfer such learning across the business, and even industry; contribute to governance reform across a whole sector by informing legislative and regulatory reform; and make the human rights dimensions of trade agreement negotiations and content explicit and thereby facilitate enhanced decision-making to shape trade rules that create enabling environments for human rights realisation.