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First Peoples Worldwide' Indigenous
Rights Risk Report Finds 94% of US Companies Ignore Rural
Community Impacts
Extractive Industries neglect
community engagement policies, increasing vulnerability of world’s
rural poor
Recent community backlash against the Keystone XL
pipeline, Indigenous protests against
oil and gas concession auctions in Ecuador and Peru, and violent resource
conflicts in Indonesia have
all exposed extractive companies’ poor community engagement practices
– and companies are doing nothing about it. A recent study
from First Peoples Worldwide
found that only 6 percent of publicly-held US oil, gas and mining
companies utilize adequate risk management tools when working
with communities, making people in rural areas increasingly
vulnerable to extractive projects’ negative social and environmental
impacts, and exposing shareholders to financial loss.
According to the Oxford Poverty
and Human Development Initiative, 85% of the world’s poor live in rural areas.
Simultaneously, rural areas are where extractive industries predominantly
operate – and systematically
ignore one of the most marginalized groups in the world. The Indigenous Rights
Risk Report, a
recent study released by First Peoples Worldwide at the 2014 SRI Conference on Sustainable, Responsible, Impact
Investing, investigated 52
U.S. oil, gas, and mining companies with projects operating on or
near Indigenous territories around the globe. While the report
focused on Indigenous communities, it’s findings apply to all
communities in which extractive industries operate - only 8% of
companies had any policy that remotely addressed community relations
or human rights.
The study examined 330 extractive
projects, assessing
companies’ risks based on five indicators: Country Risk, Reputation
Risk, Community Risk, Legal Risk, and Risk Management. Companies’
community engagement risks were assessed in the Risk Management
category, and were based on whether they had a board committee that
addressed community relations or human rights, an advisory entity on
community engagement, incentives for staff to pursue successful
community relations, a public feedback mechanism, a formal agreement
and consultation process with communities, whether they conduct
Social Impact Assessments, and other indicators.
Only four companies (ConocoPhillips,
ExxonMobil, Freeport-McMoRan, and Newmont Mining) had a board
committee with community relations or human rights in its mandate,
and among those, only Exxon Mobil has an active and independent
external body to advise and evaluate its community relations or human
rights performance. Most small extractive companies, including Alpha
Natural Resources, Murphy Oil, and SM Energy, are doing virtually
nothing to mitigate their impacts on rural communities, nor their
risk to community opposition and inevitable profit-loss.
While larger extractive corporations
like ExxonMobil and Chevron are incentivized to have community
engagement policies to avoid negative media exposure (which they’ve
experienced plenty of in the past), smaller companies
attract minuscule (if any) scrutiny from the media and
NGOs – giving them little reason to affect decent policies when
working with rural communities. Companies are mitigating their risk
exposure to negative social impact reactively rather than
proactively, often in response to actual or potential threats to
their reputation. This sends the message that communities need to
"act up" in order for companies to address their concerns.
Extractive industries must start
accounting for the communities in which they work, by implementing
comprehensive policies that respect the right to Free, Prior, and
Informed Consent.
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