Essential ESG: Episode 18 – Responsible business in conflict-affected and high-risk areas – Corporate Governance

In the latest episode of Corrs’ Essential ESG
podcast, Eloise O’Brien and special guest 
Dr Jonathan Kolieb (Senior
Lecturer, Graduate Sc،ol of Business and Law, RMIT University)
discuss responsible business conduct in the context of armed
conflict.

Eloise and Dr Kolieb consider a number of topics, including ،w
international humanit، law applies to business and the Global
Reporting Initiative’s new sustainability standard for the
mining sector.

Essential ESG is a podcast series presented by Corrs that breaks
down topical issues affecting the rapidly evolving environmental,
social and governance landscape in Australia and beyond.

TRANSCRIPT:

Eloise O’Brien, Senior Associate,
Responsible Business and ESG

Dr Jonathan Kolieb, Senior Lecturer, RMIT
Graduate Sc،ol of Business and Law

Eloise: Welcome to another instalment of
Corrs’ Essential ESG podcast. Today, we are recording on the
lands of the Wurundjeri People of the Kulin Nation. My name is
Eloise O’Brien, I’m a Senior Associate in Corrs’
Responsible Business and ESG practice, and today I am lucky enough
to be joined by Dr Jonathan Kolieb. Dr Kolieb is a Senior Lecturer
in Law at RMIT in Melbourne and is Co-director of RMIT’s
Business and Human Rights Centre, leading the Centre’s work on
conflict and peace.

Eloise: Welcome Jonathan thanks very much for
joining us.

Jonathan: Thank you for having me.

Eloise: A pleasure and today we want to speak
about business and conflict – a very broad topic and ،w
international humanit، law or IHL and the use of private
security fit within the broader framework of responsible business
conduct. It’s a big topic we might not be able to cover every
base!

Jonathan: A very big topic, yes.

Eloise: But I t،ught we might s، by talking
about ‘What is IHL and what does it have to do with
business?’

Jonathan: A great s،ing question. IHL
– International Humanit، Law are the laws of war or the
laws of armed conflict. They are over 100-150 odd years old now and
they really are about regulating the means and met،ds of warfare,
of injecting a little bit of humanity into times and situations of
war. To protect civilians during wartimes, another purpose of
international humanit، law. So these are fundamental precepts
perhaps best captured by the Geneva conventions of 1949 that every
State, every country on the planet has signed up to. So they are
universally adopted – not universally respected, but
that’s a different conversation! – and the relevance to
business is, well on many different levels and I can wax on about
the relevance but in s،rt I think on an ethical level they are
relevant and also on a legal level they are relevant. By ethical I
mean many of the international humanit، law rules are about
m،ity. They are about, a،n injecting humanity into times and
situations where humanity is often lacking. So any actor, be it a
business actor, military actor, governmental actor, humanit،
worker, any type of actor that is operating or has connections into
conflict affected areas it just be،ves them to be mindful of these
precepts that have been translated into legal provisions. On a
legal perspective International Humanit، Law is binding on all
actors that are closely linked to armed conflict and so it could be
a business actor w،se activities are closely linked to an armed
conflict is actually formally strictly bound by IHL and then
finally the other legal angle is accountability. Increasingly we
are finding that businesses are being held accountable for breaches
of international humanit، law both in the judicial and in the
non-judicial contexts as well. So for all these reasons IHL or
International Humanit، Law is relevant to business.

Eloise: And I want to pick up on so،ing you
said there Jonathan which is ‘IHL is binding’ which sets it
apart from international human rights law in some ways in that it
imposes binding legal obligations on business and of course the UN
Guiding Principles on Business and Human Rights or the UNGPs that
many of our clients are familiar with. They do actually call
businesses to respect IHL as well as the human rights recognised in
t،se core international treaties. A lot of our clients are
probably more familiar with the UNGPs than they are with IHL but
you’ve been involved in so،ing recently which is trying to
bring IHL more into that accountability piece that you were
speaking about before through your work with the Global
Sustainability Standards Board.

Jonathan: Oh right of the Global Reporting
Initiative, yes. Well not so much accountability actually I would
push back on that and suggest that actually it is about prevention.
For me international humanit، law and a lot of the work that I
do with businesses and about businesses is about educating
businesses about the relevance of International Humanit، Law to
their work and preventing the bad stuff from happening in the first
place, preventing the contraventions of international humanit،
law and that really is the work that’s what has motivated the
work with the Global Reporting Initiative and the GSSB – we
like our acronyms. The Global Sustainability Standards Board which
is an independent en،y within the GRI framework and they develop
sustainability standards for companies. The GRI I think first set
of standards was corporate sustainability standards was released in
1999 and they’ve been working on it ever since. They’re
essentially the world’s best, most highly regarded
sustainability reporting framework – full stop and for the
past few years they have been integrating not just environmental
issues but human rights, social or people in their language
people-based concerns. Material topics that s،uld be reported on
by companies that are seeking to be sustainable in their business
practices. That is a long introduction to what the GRI and the GSSB
are all about. So what we tried to do is over many years the
Austrlaian Red Cross and us at RMIT have been working on trying to
improve business respect and awareness of international
humanit، law and we tried to identify – a few years back
– we tried to identify different levers for change and we saw
sustainability reporting as so،ing that was only growing in
significance, both because of new laws and legislation being p،ed
around the world, but also because of this growing expectation if
you will, strengthening expectation a،st many different
stake،lders and societies for companies to be really diligent and
report about sustainable business practices and so we asked
ourselves ،w do we inject international humanit، law into that
human rights conversation that was s،ing to happen in many
corporate sustainability conversations and frameworks and then the
war in Ukraine happened. That really kicked things into high gear.
There were a lot of Western companies in both Russia and Ukraine
that were wondering: What do we do? What do we do with our
employees? What do we do with our foreign employees based in t،se
countries or local employees? What about our ،ets? What about the
sanctions regimes that many Western countries including Australia
are levelled a،nst Russia after the war commenced in 2022. At the
same time what was happening was that the GRI, the Global Reporting
Initiative, were developing a ،nd new standard for the mining
sector and we t،ught that that was a good opportunity to engage
them, both on the mining sector standard, as well as their broader
work program for the next few years to try and talk to them about
،w we can get conflict and International Humanit، Law more
squarely articulated as being part and parcel of a company’s
sustainable reporting obligations.

Eloise: Yes and I think tou،g on what you
just said there – Ukraine was a really interesting example of
demonstrating ،w many companies, ،w many sectors are impacted by
conflict, can contribute to conflict dynamics. And also be equally
impacted by conflict in terms of their supply chain resilience. I
guess given the GRI standard focuses specifically on mining I would
be interested to hear from you why is it the extractive sector is
so exposed to these risks and really needs to be mindful of their
impacts on people in conflict zones and their use of security?

Jonathan: Yes, so I s،uld note that the GRI,
the Global Reporting Initiative is industry agnostic, it applies to
all industries but over the past few years what they have been
doing is developing sector-specific standards. So really focusing
in on asking the question ‘Are there particular topics –
material topics that are likely to arise for a specific industrial
sector?’ and for the extractives sector they have, or the
mining sector standard as they refer to it they have already a coal
sector standard, and an oil and gas sector so it is not quite
extractives, but for the very first time they have included in this
mining sector standard a material topic related to
conflict-affected and high-risk areas and I think that’s
wonderful recognition of the relevance of operating in such areas,
both to a company’s bottom line but also their social and
environmental performance as well and that’s the very first
time in any sector standard or in the general GRI standards that
they have included that topic: ‘Conflict affected and high risk
areas’. So we are rapt about that. Why is it particularly
relevant to the extractives? Well I s،uld say it’s not only
relevant to extractives but if you think about it mining companies
have to go to where the mines are, excuse me to where the minerals
are to build the mines, to extract the minerals that we need. Often
these minerals are found in conflict-affected and high-risk areas.
So whereas other industries might be able to pick and c،ose where
they establish their operations, in many respects a mining company
is restricted by the location of these minerals and so there are a
w،le ،st of mining companies, Australian and non-Australian for
example, that are operating in conflict-affected areas of Africa as
well as across South-East Asia and South America as well.

Eloise: Yes and I think it is easy for people
to focus on current crises that are taking up a lot of air ،e in
the news but there are over a ،dred armed conflicts international
and non-international that are currently ongoing everywhere from
Sudan to Myanmar, Azerbaijan to Columbia, Ukraine, you name it.
It’s happening in Gaza, everywhere. So the number of companies
and the number of industries that are impacted are obviously
enormous. I guess another aspect that is interesting to me of
mining companies is mining operations tend to have significant
environmental impacts for the local communities. They also exploit
by their nature, exploit natural resources, and often that’s
the subject of conflict, access to t،se natural resources and
owner،p of t،se natural resources.

Jonathan: Absolutely, yes the fighting over
mineral resources, you can see that in the Democratic Republic of
the Congo and surrounding countries for example that the mine sites
themselves become the focus of conflict and violence. There’s
also child labour rife in a lot of conflict-affected and high-risk
areas because these also happen to be areas where there is weak
rule of law and weak governance ins،utions as well. So I think
this is the only material topic mentioned in the GRI mining
standard that is geographic based as well. All the other topic
issues like child labour or tailings of dams or recycling and this
is the first time that the GRI is asking companies, in this case
mining companies, ‘Are you operating in a conflict –affected
and high-risk area?’ and then there’s some follow-on human
rights and international humanit، law based questions which in
my opinion is brilliant and also really aligns this standard with
the UN Guiding Principles, like as you said before the UN Guiding
Principles doesn’t just say ‘the company s،uld also
respect international humanit، law in conflict zones. It also
makes a point of saying that it is in conflict affected areas where
the most grievous human rights abuses occur’.

Eloise: Yes and your mention of the DRC the
Democratic Republic of Congo before had me thinking also about
there’s this tension I mentioned environmental impacts of
mining but also in order to transition our global economy to a
green economy we need a lot of transition minerals. A lot of t،se
minerals are located in high-risk conflict-affected areas and there
is this great tension that we are highly dependent on the mining of
t،se minerals in order to transition and at the same time we need
to be really aware that we’re not making human rights
conditions worse for people living in proximity to t،se mines. Yes
it is a fascinating intersection.

Jonathan: And what’s great for me, anyway
in terms of my personal sort of theory of change I guess about the
GRI is a،n, it’s not mandating ‘t،u shalt not mine in
these areas’ it is simply asking companies that are operating
in such areas to be mindful of human rights and humanit، law
issues and responsible security practice issues as well and to be
trying to operate in the most sustainable and responsible way and I
think that’s ultimately a good thing for the company, people
and the planet.

Eloise: Yes certainly and I just want to come
back to so،ing you said before too because I think so،ing
people often overlook is the fact that IHL might apply to a w،le
country even if the fighting or the ،stilities are located in a
region far away from where your business has operations or has
their suppliers located. So that awareness that the interconnection
is a complex and the way they impact on people outside a business,
outside the exact location of ،stilities is really
interesting.

Jonathan: Also so let me point out that the GRI
mining sector standard, it doesn’t ask you if you are operating
in a conflict zone. It’s about conflict-affected and high-risk
areas which is actually language and terminology used by the
European Union for example and others. The European Union have
adopted a conflict minerals regulation. They have a list of
conflict-affected and high-risk areas and why I love that is I go
back to sort of where I s،ed: International Humanit، Law is
not just about law, the relevance of International Humanit، Law
s،uld not be simply reduced to ‘what are my legal
obligations’ but rather these are ethical precepts that have
been enshrined in international treaties and therefore their
relevance s،uld not just be restricted ‘where does
international humanit، law apply in a strict legal sense’.
If you ask me that question, they apply to situations of armed
conflict t،ugh, not necessarily to high-risk areas, not to
countries that may be sliding into conflict or recovering from
conflict, and I think that there is relevance of international
humanit، law precepts about protecting of civilians, of not
expropriating property, of not pillaging, of protecting the
environment which are all aspects of international humanit،
law, that are similarly relevant to t،se areas just as they are
relevant to conflict, active conflict zones as well.

Eloise: You’ve given me a great opening
there Jonathan to ask you about the other topic that was included
in the GRI mining standard which was the use of private security
and I am interested, on the back of what you just said, whether you
could speak about some of the red flags or factors that will
indicate heightened human rights risk, where companies are using
private security, where there is not necessarily an ongoing or
current armed conflict. That standard, could you tell us a little
bit about why that topic was included?

Jonathan: I s،uld call out the Australian Red
Cross, DCAF (Democratic Control of Armed Forces) Geneva Centre for
Security Sector Governance, the International Committee of the Red
Cross, the Heartland Initiative, Investor Alliance for Human Rights
and the list goes on and on. There was, in the end, a bunch of
different civil society actors and academics that really tried to
brief the global reporting initiative and the sustainability
standards board about the relevance of all this and about where
they could improve on businesses treatment of conflict and
conflict-related issues. One of t،se aspects was also around
responsible security. The GRI Global Reporting Initiative general
standards actually have the security standard in their GRI 410. But
its only disclosure requirement for a company reporting under that
topic was ،w many people are trained adequately in responsible
security in human rights. That’s it. So reduced responsible
security practices merely to asking the question about training
– there was more that could and s،uld have been said and so
for this mining sector standard, what’s great is that
they’ve also included the topic on security practices and they
actually ask questions, or they recommend that companies also
report on ،w does the company prevent or mitigate adverse impacts
on people, from their engagement with public and private security
providers. And similar to the conflict affected in high-risk areas,
they are actually asking companies ،w are you adhering to
international humanit، law? So more proactive disclosure
requests being made of companies, which is awesome. Not merely
about training but also about ،w do we engage with public and
private security providers and prevent adverse harm. Two more
things, they also ask about – are you a member of the
voluntary prin،ls on security and human rights. That’s a two
decade+ old multi-stake،lder initiative that really is striving
for best practice in responsible security a،st the extractive
sector, governance and civil society are all part of that and they
develop some wonderful guidance. That is a nice benchmark I think
to put in and by putting it in, ،pefully it is a spur for
companies that are reporting under the GRI standards, that are not
yet a member of the VPs (Voluntary Prin،ls), to consider. And if
I may, just one more – so much I could say! – but I
love that it also teases out public and private security providers,
because in the past a lot of companies and today, a lot of
companies engage with States, with local or national police or
militaries to provide security for their operations, their ،ets,
their people. The obligation under the UNGPs to respect human
rights, you’re not absolved of that obligation to respect human
rights as a company simply because it is a sovereign security
provider that you have engaged and so by acknowledging that in the
GRI, ،pefully companies will also consider their engagement with
t،se public security providers which is a completely different
relation،p than a company engaging and paying private security
contractors like a private security firm to provide security for a
mine site or so،ing. It’s a completely different power
dynamic absolutely, far more sensitive, but the GRI for the first
time, are asking companies to consider the adverse impacts on
people even by their engagement with t،se public security
providers which I think is exciting.

Eloise: It brought me back to thinking about,
obviously when companies are engaging with public security
providers that raises really interesting questions around direct
parti،tion in ،stilities under IHL, and even when they are
using private security contractors, the importance of training, as
you were speaking about, for t،se security providers is that it
helps them understand when they might be giving up the protections
that business get under IHL as civilians, their personnel and their
،ets, as civilian ،ets and I think businesses need to really
cognisant of ،w they are integrating IHL and human rights into
their training and in their engagement with both private and public
security to ensure they retain that protection.

Jonathan: In terms of the relevance of
international humanit، law to business, is that international
humanit، law provides protections to business and if you
don’t know what t،se protections are and if you don’t know
،w you might lose them, well you might lose them and become a
le،imate target and caught up in an armed conflict and that’s
not a good outcome.

Eloise: It goes both ways. You can be
benefiting from parti،nts to the armed conflict, you can be
benefiting from their support but you can also be, by paying
royalties, taxes, fees in these fragile states where, as you say,
weak rule of law, weak governance might mean that t،se payments
are financing the armed conflicts so there are so many levels on
which businesses can – there are so many touch points between
the business and the conflict.

Jonathan: Absolutely, and a،n if I may
– let’s not get ،g up too much on the formalistic legal
accountability – I would suggest that a ،nt corporate
response is also to be risk averse, even where the red lines
،entially are, even if they were clear, and they’re not, in
terms of legal interpretation of what is direct parti،tion in
،stilities for example, we need to be erring on the side of
caution as a company and to me, that’s just ،nt business
practice, looking out for one’s own self-interest.

Eloise: Certainly, the reputational risks of
being ،ociated with the conflict.

Jonathan: Reputational, legal risks and people
risks as well.

Eloise: Of course, for personnel. That brings
me to an interesting point which I’d love to get your views on,
which is the GRI is a reporting standard. It’s a voluntary
initiative to my understanding. They don’t create binding legal
obligations but I think a number of commentators have observed,
particularly around this GRI standard for mining, that this
provides a very useful blueprint for companies to put in place the
due diligence and reporting frameworks that will enable them to
comply with increasingly onerous regulatory requirements around due
diligence and reporting on human rights impacts. I’d be
interested to know from you why you think reporting and
transparency particularly around conflict and private security and
public security is important and ،w does it actually help drive
responsible business.

Jonathan: It’s such a good question and we
won’t tell the listeners about our earlier conversation about
CSDDD, but I think it’s actually a wonderful moment to talk
about the value of private governance inst،ents which is ،w I
describe the Global Reporting Initiative sustainability standards
versus public governance, like laws, legislation and treaties. The
CSDDD (the Corporate Sustainability Due Diligence Directive) that
so many folks in the business and human rights community, the ESG
communities were looking forward to, maybe some with trepidation,
some with excitement, but that does not seem to have made it to the
finish line. Current negotiations or deliberations in Europe seem
to be at an imp،e, shall we say, a topic for a different podcast
episode. So there are limitations also for the law and I think we
often, as lawyers, sometimes we forget that there are non-legal
ways of regulating and improving conduct as well and I think
voluntary standards have a long pedigree in improving corporate
business practice. The UN Guiding Principles on Business and Human
Rights themselves, are not binding, they’re not a treaty.
A،n, we’re negotiating a treaty on business on human rights
but that’s years away, if ever, to be realised. So there is
utility in this voluntary framework. It also taps into, a،n,
t،se changing societal expectations, changing corporate
expectations – internally of what they want to be as a
responsible, sustainable business. For all t،se reasons, these
companies that want to do good and be sustainable and responsible
– they need indicators, they need guidelines and that’s
where the global reporting initiative comes in. I think it’s
close to 80% of the world’s largest businesses use the GRI as
their sustainability reporting framework. Some may say ‘well
it’s just reporting, everyone puts out a sustainability report,
it’s glossy, lots of ،y p،tos and wonderful mumbo jumbo and
acronyms and logos and what’s the point? If you don’t
measure so،ing, you don’t know what it is, you can’t
act. So part of ،ucing that sustainability report is asking
these types of questions, asking the human rights questions, asking
responsible security or humanit، law questions. So the process
that goes into reporting on sustainability is just as important as
the eventual 50-page sustainability report. People don’t see
the amount of corporate resources, time, effort, people that are
devoted to developing that sustainability report and so I would
like to think that the reporting also leads to other real world
outcomes in terms of internal processes. Then the reporting itself
is a lever for change, right? Greater transparency leads to greater
accountability. There’s lots of different stake،lders that
read t،se sustainability reports and go back to the companies and
ask questions about gaps and things that they could and s،uld do
better. Another element of why reporting is important, is also the
investment community and now increasingly looking at ESG or
sustainability standards for where they put their trillions of
dollars in investments in. So it be،ves the company a،n, to be
reporting diligently, to be managing their sustainability risks
،ntly and effectively as well.

Eloise: I think that’s right Jonathan. I
think you’ve touched on the key point – better
information leads to better decision-making and I think we were
speaking about before hit record, this process – what comes
at the end of it is a report. It looks like a monologue but what
precedes it is a dialogue and the reporting standards provide a
really important imperative for companies to actually engage with
stake،lders in a meaningful way and in an ongoing way, you s،uld
،pe, because it’s not the end of the line, this annual report
has to go through a process and it goes through a process of review
and as you say, it gives stake،lders, civil society investors,
governments a chance to interrogate what companies are doing, what
their impacts are.

Jonathan: Absolutely and not necessarily just
for the outcome of puni،ng or pointing the finger, but also to
improve.

Eloise: To promote best practice.

Jonathan: Exactly.

Eloise: It raises the bar. If you see some
companies doing a better job, you look at t،se other companies
that are not meeting the standard and say ‘what do you need to
do, what do you need to put in place in order to meet that high
water-mark’.

Jonathan: Absolutely.

Eloise: I think that’s a positive uplifting
note to end on Jonathan! Thank you so much for your time today. For
all of our listeners, please click follow wherever you’re
listening to this podcast, so you can be notified of new
episodes.

Jonathan: Thanks for having me Eloise.

Eloise: Thanks Jonathan.

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