7.5.4 The country context

Pertaining to the country context, it has been indicated that: "A company should be aware of the human rights issues in the places in which it does business in order to assess what particular challenges such context may pose for them."1 That means that a company is to take the time and effort to study the particularities of the country and its political context before taking the final decision to go there and to become involved. This may sound obvious to a human rights lawyer, but the reader should bear in mind that companies are primarily focussed on business opportunities. It is more probable that attention will be paid to the cost of labour rather than to any local labour-related human rights issues. Even so, it is more likely that a company will invest time in searching for the best quality of a certain material or product than in investigating whether there are any human rights issues concerning the supply chain. Actually, the information is easy to find, as Ruggie points out: "Such information is readily available from reports by workers, NGOs, Governments and international agencies."2

It is useful to illustrate the 'country-context issues'. As regards safety issues, a company feels a responsibility to its employees, especially its expat employees. It hires cars for them with security guards, or it arranges expat housing in special guarded compounds including the provision of schooling facilities for their children.3 Companies usually try to protect their employees from harm whilst living abroad and working for the company. If a company didn t do that and an accident were to occur, it would prove difficult in the future to find employees who would be willing to take on such a challenge. At the same time, companies - in general - are less apprehensive when problems tend to occur concerning local employees or subcontractors. Even less so when human rights abuses occur against local people beyond their visual field.

Imagine the situation in which a company acquires a licence to start a soya or palm oil production on a large area of land, or buys a piece of land for mining or for constructing a factory. At the moment the company obtains the ownership documents or the exploitation rights from the 'competent authorities', the area will supposedly have been 'cleared', and the company will not see any reason to ask 'difficult questions about human rights compliance'. Companies usually consider human rights a public matter. The company will regard its project and the jobs it will generate as a positive contribution to the local economic development. However, the reality in many emerging and developing countries is that former inhabitants of such land have commonly not been asked for their consent to relocate; nor have they been compensated. Also, people of neighbouring areas have typically not been consulted about the new plan to allow factory operations. An assessment of potential risks for neighbours in connection with the future pollution of the soil, water or air, has often not been conducted. The behaviour of the local authorities might even be in violation of existing domestic laws.4 In any case, a possible result for the local people is that they have lost their home and also the possibility to live in a traditional agricultural setting. For them, there is no other choice left than - when lucky -taking up a job in the new factory.5 Consequently, companies can contribute substantially to the reduction of human rights offences by doing their homework and considering local human rights issues to be a part thereof. Getting a better grip on these challenges will pave the way for finding solutions. Dealing in a responsible way with the rights of local communities will help a company in the long run to be appreciated and to maintain its 'licence to operate'.6

The Ruggie Report takes the position that when companies do business in failed states and conflict zones, they need to implement an even more proactive corporate human rights policy. This is required in order to prevent human rights abuses by the company itself or complicity through the involvement of or cooperation with third parties.7 Failed states are characterised by: (i) an absence of the Rule of Law; (ii) generally a governance breakdown; and/or (iii) a pattern of sustained violence.8

Illustrative of the importance to perform a study of the country risks is the case Presbyterian Church of Sudan v. Talisman Energy, Inc. In 1998, the Canadian oil company, Talisman Energy, Inc. ('Talisman') acquired a 25 per cent stake in the Greater Nile Petroleum Operating Company Limited, a joint oil and pipeline development in Sudan, when it purchased the Canadian company Arakis Energy Corporation. Later-on, Talisman was accused of committing gross human rights violations, e.g. complicity with the Sudanese government in forced displacement of non-Muslim Sudanese living in the area of Talisman s oil concession. In 2001, the Presbyterian Church of Sudan and thirteen Sudanese individuals, filed suit in a US court under the Alien Tort Claims Act against Talisman. After a campaign by NGOs targeting institutional investors, Talisman decided to leave Sudan. It sold its stake.9

As Ruggie pointed out in a meeting in the Netherlands where he presented his framework, we are not talking 'rocket science ' .10 With a common sense approach it will soon be clear whether an investment or transaction takes place in a failed state and whether the company s activities will contribute to human rights abuses. He mentioned as an example that if a company furnishes gas to a local military vehicle, it has to question itself if that vehicle could cause any harm to local people. If so, he commented, abstain, cancel the transaction or withdraw your business.