OPINION| Due diligence needs to be more than a box-ticking exercise

The interdict granted by the Makhanda high court against Shell to carry out the three-dimensional seismic survey for oil and gas on the Wild Coast, from Morgan Bay to Port St Johns, is an example of how human rights due diligence can become a meaningless tick-box exercise. This is especially so in the current  international and national context where binding international and national human rights due diligence laws are absent. 

Hence, Judge Gerald Bloem concluded that Shell’s stakeholder analysis, an integral part of human rights due diligence processes, “was substantially flawed because it did not consider the subsistence and small-scale fishers along the coastline where the blasting would be carried out, though it plainly had a duty to do so”

In granting the interdict, the Makhanda high court ruled that the seismic survey and blasting had the potential to cause significant and lasting damage to marine life, the livelihoods of fishing communities and to potentially infringe on the customary and constitutional rights of surrounding communities.

Some of the applicants against the interdict and potentially affected groups are reported to be the fishing communities — the Dwesa Cwebe Communal Property Association and Sustaining the Wild Coast NPC — representatives of the Kei Mouth community and Port St Johns Fishing communities and a traditional healer, Mashona Dlamini. Additionally, there are subsistence farmers, holidaymakers and adventurers who are connected to the Wild Coast and who help ecologically sustain the area’s economy, presenting a low-carbon developmental alternative. 

If the programme succeeds and oil exploration and extraction begins, the possibility of an oil spill that can spread hundreds of kilometres should not be ruled out. With Shell Nigeria recently found liable by a Dutch court in January 2021 for damages in the form of compensation and environmental rehabilitation in the Niger Delta that threatened the food security and food rights of the local community, the Wild Coast could find itself with the same fate. 

Oil spills risk the contamination of water systems such as rivers that inadvertently compromise the health of surrounding communities, further compromising their human rights to access clean water. The human rights issues  at stake are glaring and Shell’s reputation precedes it. 

The United Nations Guiding Principles (UNGPs), which aim to influence the decision-making system of corporates and establish certain duties and obligations on states to protect human rights, are endorsed by Shell. At the global level, headquartered in London and The Hague, the company requires major projects and facilities to develop a social performance plan that defines actions for managing both negative and positive impacts on communities. 

As part of its social performance plan, it is important to identify and understand the social environment and stakeholders who may be vulnerable to human rights violations. In addition, the plan has to develop community feedback mechanism to engage with stakeholders about any queries or complaints that may arise with the aim of resolving them in a timely manner. According to the social performance plan, Shell also has requirements to, “avoid, minimise or mitigate potential impacts on traditional lifestyles and cultural heritage of indigenous people” including by avoiding involuntary resettlement. 

In applying Shell’s own approach to human rights due diligence, one can conclude that the process carried out was not meaningful, especially in the way that community engagement and feedback was managed. The process was fundamentally flawed in the way it informed, involved, consulted, collaborated and empowered potentially affected groups like the fishers. From the beginning, it did not promote public access or transparency to effectively engage the community about the impacts of the seismic survey on livelihoods, cultural identity and environmental impacts. 

In the Wild Coast, where resource extraction like mining has been vehemently opposed by surrounding communities such as in the Amadiba Crisis Committee’s battle against an Australian mining company, consultation, human rights due diligence and community feedback mechanisms for Shell’s potential operation should have been deemed important, especially if a context-specific approach was taken. A localised human rights due diligence is important within the framework of the United Nations Guiding Principles. 

For example, the notification procedure of the seismic survey, through an advertisement in a newspaper, was also not context specific. The advertisement was communicated only in English and Afrikaans where the dominant languages in the region are isiXhosa and isimPondo thus making the call for consultation inaccessible and less empowering too. 

Furthermore, Shell consulted traditional leaders and disregarded all other potentially affected groups like the fishing communities. This reinforces Bloem’s conclusion about the stakeholder mapping being substantially flawed. A stakeholder analysis is an integral part of due diligence that companies are undermining in the absence of binding legislation. 

Thus, the Shell case is an example of how the efficacy of the United Nations Guiding Principles in achieving its desired outcomes in practice has been limited especially as it relates to human rights due diligence. It leads one to conclude that despite the promulgation of company human rights policies and the endorsement of the United Nations Guiding Principles, voluntarism has limitations. 

This is mainly because as a requirement, human rights due diligence is rooted in transnational social norms and not in international legal norms — “supra-legal norms” co-existing with other legal norms. This is especially problematic in weak governance zones especially in the Global South where institutions tend to favour politicians, traditional leaders, military officials and cronies.

 As in the Shell case, consultation only occurred with traditional leaders.

Furthermore, in opposing the interdict, Shell argued that it obtained the necessary regulatory approval. Thus, the Shell case also highlights a governance gap. The minister of  mineral resources and energy had approved the Environmental Management Programme. Section 39 of the Mineral and Petroleum Resources Act excluded Shell from a National Environmental Management Act (Nema) application since it was granted before the 2008 Nema Amendment Act that introduced the environmental authorisation. 

The implications of Shell voluntarily electing to publish a global human rights policy and commit to human rights due diligence but to not meaningfully carry it out in seeking the seismic programme further highlights that, especially where governance gaps persist, gaps in the

 international regulatory human rights framework lead to non-compliance. 

As social norms, the United Nations Guiding Principles create regulatory incoherence and this has implications for a level playing field too. Royal Dutch Shell Plc shareholders have approved the relocation of the company’s headquarters to London to avoid the stricter human rights standards imposed by the Netherlands.

 This suggests that there is a necessity not just for company and national human rights due diligence legislation but for mandatory international human rights due diligence standards too in preventing governance gaps at all levels. 

There is a need to move beyond voluntarism in human rights due diligence frameworks and human rights regulatory frameworks as it relates to business generally and the United Nations Binding Treaty on Business and Human Rights can complement the United Nations Guiding Principles by introducing at the very least, mandatory human rights due diligence provisions. 

South Africa has been engaged at the Intergovernmental Working Group to elaborate an internationally binding instrument to regulate, in international law, the activities of transnational corporations and other business enterprises. And although the United Nations Guiding Principles, endorsed by South Africa and companies like Shell, seek to provide a global standard for preventing and addressing the risk of adverse human rights impacts linked to business activity, they are not grounded in an authoritative source

Moving beyond voluntarism, from soft to hard law, in which states should commit to passing legislation that provides pre-emptive measures and creates liability for businesses in the scope of rights agreed upon in a treaty should be the next step. And, due to the lack of compliance and meaningfulness in which business implements their human rights policies, business defensiveness in doing so should not hold water.

Streamlining a human rights regulatory framework is necessary to not only protect and access remedies for communities but it is also important for regulatory certainty and in creating a level playing field for business. The fourth revised draft will be negotiated at this year’s eighth open-ended intergovernmental working group at the Human Rights Council in Geneva and South Africa should remain committed to the process.

The views expressed are those of the author and do not reflect the official policy or position of the Mail & Guardian.

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Sikho Luthango
Sikho Luthango is a public policy analyst and a programme manager at the Rosa Luxemburg Stiftung.

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