Human Rights Risk Survey Results. Sector Summary Oil & Gas

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1 Human Rights Risk 2013 Survey Results Sector Summary Oil & Gas

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3 Executive Summary 16.4 % of all respondents represented the oil and gas sector 54.5% of respondents are familiar with the UN Guiding Principles on Business and Human Rights Respondents from the oil and gas sector indicated that the industries that are most susceptible to human rights risks and issues include: - Mining 45.5% - Manufacturing and Consumer products 27.3% - Food and beverage 27.3% Respondents perceived their own industry, the oil and gas sector, to be less susceptible to human rights risk is 18.2%. Across all sectors, the food and beverage sector, manufacturing, and infrastructure and utilities stand out as being most familiar with the UN Guiding principles. This could be due to the various existing sector-specific initiatives, raising awareness about business and human rights. Companies identified a number of key human rights challenges within the oil & gas sector of particular focus to business. These include: 1. Gender, opportunities and discrimination at the work place; 2. Environmental pollution or degradation that directly impacts workers and/or communities; 3. Migrant workers, wages, health, safety and mobility; 4. Challenges associated with managing risks arising from relationships with private security contractors and public sector security providers. Challenges associated with competition for land use and/or land acquisition, displacement, the resettlement of populations was not a focus area. Overview As an industry responsible for generating high social and environmental impact, it is surprising that nearly half of all oil & gas companies are not familiar with the UN Guiding Principles on Business and Human Rights (45.5%). This indicates a lack of direct organisational exposure to perceived or actual human rights risks, be it through, regulatory non- compliance or public scrutiny surrounding specific incidents or breeches. 54.5% of respondents from the oil and gas sector are familiar with the UN Guiding Principles on Business and Human Rights. The remaining 45.5% were not sure. Figure 1: Familiarity with the UN Guiding Principles on Business and Human Rights across all sectors All Respondents Infrastructure & Utilities Manufacturing Food & Beverage IT & Communications Oil & Gas

4 UN Guiding Principles - Human Rights Policy Figure 2: Does your organisation have a standalone human rights policy in place? Whilst companies recognise the importance of embedding human rights considerations into corporate strategy, there is a clear gap in translating this intent into policy-making practice. Less than 20% of companies surveyed have a standalone human rights policy in place. This is half of the share compared to other sectors such as food and beverage, infrastructure and utilities, and manufacturing. This implementation gap is in part due to limited organisational capacity to invest time and resources to manage human rights internally. Furthermore, a number of companies use their affiliation with specific initiatives, e.g. UN Global Compact in which respect for human rights is a requirement of association, to demonstrate organisational commitment in replacement of explicit internal human rights statements or policies. However, this is insufficient in the long term. The oil and gas sector clearly differentiates itself as lagging in a cross- sectorial comparison. As less than 20 % have a standalone policy in place, it illustrates an understanding that there is a lack of policy support internally for human rights. However, this may be explained by the fact that a number of companies, across sectors, incorporate respect to human rights into existing social performance policies and codes of conduct, rather than focusing on human rights as a separate, standalone subject matter. Nonetheless, establishing policy commitment is a focal area to embed effective organisational human rights performance and management across business operations. Despite a lack of familiarity with international human rights frameworks and other mechanisms, companies representing the oil and gas sector do recognise the value to business of respecting human rights. Over three quarters of all companies (81.8%) stated that a business corporate strategy should include explicit reference to upholding human rights. This is encouraging and follows a similar trend across the other sectors surveyed. Figure 3: Standalone human rights policy in place across all sectors All Respondents Infrastructure & Utilities Manufacturing Food & Beverage IT & Communications Oil & Gas

5 UN Guiding Principles - Human Rights Due Diligence The development and application of effective due diligence mechanisms for managing potential human rights impacts remains nascent amongst companies in the oil & gas sector. Less than 20% of companies surveyed have processes in place to assess potential human rights impacts. The most common types of processes used to assess potential human rights impacts are primarily in the form of environmental impact assessments. Any inclusion of social or human rights impact assessments is not indicated. In comparison with responses from other sectors, this is the only sector across all respondents that indicate a high lack of processes. Only 10% employ measures to monitor internal human rights performance. This reflects an existing gap in formalising processes and implementing the understanding and intent of organisations corporate responsibility to respect human rights into practice. Across all sectors, there is a clear lack of effective due diligence. However, the sectors that are employing measures to monitor and track its human rights performance include infrastructure and utilities, and IT and communications. This could be due to the customer-facing nature of the business and the inherent requirement to be responsive to stakeholders, as well as achieving compliance in a heavily regulated industry. The oil and gas sector, in comparison, does not indicate a proactive and strong implementation of human rights due diligence measures. Of the companies implementing due diligence mechanisms, the type of measures most commonly used to monitor and track human rights performance across the oil & gas sector include: 1. Auditing and compliance processes; 2. Employee surveys; 3. Key performance indicators; 4. Supplier and partner assessments. As the industry is subject to strong regulation, the use of auditing and compliance processes is not surprising. Nor is the use of supplier and partner assessments, given the industry s complex value chain. Moreover, the use of key performance indicators is encouraging, as this signifies a strategic and proactive approach to manage human rights due diligence. Figure 4: Do organisations across all sectors employ measures to monitor and track its human rights performance? All Respondents Infrastructure & Utilities Manufacturing Food & Beverage IT & Communications Oil & Gas

6 Communication The majority of oil & gas respondents (63.6%) indicated that their organisation s human rights performance was not communicated to stakeholders and shareholders. Only 27.3% of survey respondents in the oil and gas sector communicate its human rights performance to its stakeholders, e.g. shareholders. In an ever increasingly global and interconnected business relationship and supply chain, an explicit policy on Human Rights is needed to ensure that the company s commitment and requirement for human rights compliance can be disseminated clearly and easily throughout its supply chain. Especially when related to employees, and nowadays increasingly towards impacts of supply chain to nearby communities. Survey respondent This signifies a waste of opportunity. Active management of human rights can be driven by building relationships with all relevant stakeholders. Driving a proactive and effective stakeholder dialogue and engagement can not only encourage ways to better manage risk. It can also strengthen a company s social licence to operate and grow. Therefore, receiving feedback from stakeholders and shareholders can effectively help minimise human rights risks and better understand the various levels of impact. The Future The management of potential human rights risk is indicated by more than half of the companies in the oil and gas sector to become more important during the next two years. This echoes the agreed perception of integrating respect to human rights into the corporate business strategy. However, a further 45.5% of companies indicated that they were unsure of what the future held for the business and human rights agenda. Whilst companies within the oil and gas sector may lack clarity on the future of managing human rights, what is clear is the need for effective corporate leadership and proactive management to support and embed human rights within existing business management systems, to build organisational knowledge and capacity to move the sector forward from intent to implement. Figure 6: Do you think that the management of potential human rights risk will become more or less important to your organisation in the next 2 years? All Respondents Infrastructure & Utilities Manufacturing Food & Beverage IT & Communications Oil & Gas

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