In brief: The Federal Government is considering whether Australia should join the Voluntary Principles on Security and Human Rights, an extractives sector initiative that addresses human rights risks associated with the security of companies’ operations. Partner Louise Jenkins (view CV) and Lawyers Catie Shavin and Raquel Dos Santos report on these developments.
HOW DOES IT AFFECT YOU?
- If it becomes a participating government, the Federal Government will be required to implement and promote compliance with the Voluntary Principles on Security and Human Rights (the VPs), both in Australia and internationally.
- The Federal Government may, therefore, take steps to encourage or require companies based or operating in Australia to assess, mitigate, redress and report on human rights issues associated with the safety and security of their operations. The Government may also assist Australian-based companies to meet their commitments under the VPs.
- The guidance the VPs provide regarding risk management may assist companies to access and operate in emerging markets.
WHAT ARE THE VPS?
The VPs are an international, voluntary ‘soft’ law initiative that aims to address human rights-related risks associated with the security of extractives sector assets.1 They were developed by participating business enterprises, governments and NGOs, to assist companies to maintain the security of their operations within an internationally accepted human rights framework.
As a voluntary standard, a company can elect to become a signatory to the VPs. They are not legally binding in their own right.
Participating companies are expected to implement the VPs and share information with other participants by reporting, at least annually, on their progress. This occurs on a non-attribution basis and is subject to a confidentiality regime.
The VPs have four key components:
- Stakeholder engagement: The VPs emphasise the importance of engaging with all stakeholders, and recommend that companies consult, on an ongoing basis, with host governments and local communities.
- Human rights risk assessment: The VPs require companies to conduct human rights risk assessment, and recommend that companies consider relevant political, economic and social factors.
- Relations with public security forces: The VPs encourage companies to communicate human rights policies to public security providers and take steps to ensure compliance with these policies.
- Relations with private security forces: The VPs recommend that companies’ expectations of private security providers be reflected in their contractual arrangements.
RELEVANCE TO BUSINESS
The VPs assist companies to manage a broad range of risks associated with security and human rights-related issues that may arise in a company’s home or host country. These include:
- litigation exposure;
- financier issues and project financing risks;
- shareholder issues; and
- reputational risks.
Alignment with the VPs assists companies to ensure that systems are in place to minimise and manage their exposure to these risks.
SIGNIFICANCE OF AUSTRALIA BECOMING A PARTICIPANT
The Federal Government is currently considering submissions on the value of joining the VPs in light of the participation criteria. If it becomes a participant government, Australia will be expected to:
- promote the VPs and proactively implement or assist in their implementation; and
- share information with, and respond to reasonable requests for information from, other VPs participants (subject to legal, confidentiality, safety, and operational concerns).
If Australia becomes a participant in the VPs, the Federal Government hopes to strengthen support for their implementation in emerging economies and developing countries where Australian businesses are active. The Government also hopes that broad implementation of the VPs will further assist to level the playing field for Australian companies investing in these markets.
CONCLUSION
Many companies already use the VPs, either as formal participants or otherwise, to manage the human rights risks associated with their security arrangements and also their community relations strategies, and to support local political stability. In particular, it is recommended that companies engage with host governments and local communities, and incorporate their expectations regarding human rights into contractual agreements with security providers.
If Australia joins the VPs as a participating government, companies that operate or are domiciled in Australia can expect to be further encouraged to adhere to the standards articulated in the VPs. However, such engagement with the VPs may assist companies to identify, assess and manage legal and other risk exposure associated with the security of their operations.