Introduction

When we launched a three-year project in 2004 to
develop and test a human rights impact assessment
methodology for investment, we knew that the task
ahead would not be simple. We had been examining the
links between human rights and economic globalization
for many years and concerns related to foreign investment
were impossible to avoid. We were receiving an
ever-increasing number of appeals from communities
around the world who often held dramatically different
opinions about the benefits of foreign investment than
did their governments or the corporations involved.

While we acknowledge that investment itself is neither
inherently good nor bad for human rights, these stories
illustrated that if foreign direct investment projects are to
contribute towards sustainable and equitable development,
their human rights impacts will have to be both
acknowledged and addressed. This requires a process
through which the impacts of specific investment projects
can be understood in human rights terms.

At its first meeting in November 2004, the project’s
international advisory committee grappled with the
challenges presented by such an ambitious idea. They
understood that governments, businesses and the
affected communities each have distinct roles and
responsibilities with regard to the protection of human
rights, albeit with very different levels of influence.
They agreed also that basic human rights principles
emphasize attention to the most vulnerable and that
a process aimed at community empowerment would
therefore be the most appropriate.

As a result of these deliberations, Rights & Democracy
and the project’s international advisory committee,
decided to develop a draft methodology and research
guide aimed at empowering communities to conduct
human rights impact assessments of foreign investment
projects. The model they developed was subsequently
tested in five case studies, the results of which are
presented here in two parts: our reflection on the
experience (part one); the case study reports (part two).
The case study reports are the result of a year-long
process that involved members of the affected communities,
local researchers and our international advisory
committee. It is unfortunate that the richness of that
experience cannot be fully represented in these few
pages. However, the information provided is faithful to
the experience and to the data generated by using the
draft methodology, although some editing of the final
reports has been done by Rights & Democracy for the
purposes of consistency.

You will find additional background information about
this initiative on the Rights & Democracy website at
www.dd-rd.ca, including the original versions of the draft
methodology and the research guide. A revised methodology
and research guide, based on lessons learned from
this process, will be provided in a forthcoming publication.

The Challenge: Addressing
the investment and human
rights nexus

In recent years, corporate involvement in human rights
violations has become a high-profile issue. In some
cases, corporations have been held directly responsible
for specific violations of human rights, such as abusive
labour practices or forced evictions. In other cases,
corporations have been viewed as complicit in human
rights violations perpetrated by the state, for example
by using government security forces to suppress
opposition. What is common in most cases is that the
people whose lives may be fundamentally transformed
by the corporate activity are ill-equipped to negotiate
with the companies, to participate in government
decision-making or even to understand the international
processes that facilitate project bidding and financing.
To address this challenge, we determined that a
community-led human rights impact assessment would
be an important tool. What was needed was an assessment
model that would allow those most affected by
the investment to identify its specific human rights
impacts and to seek appropriate remedies.

Duty-bearers in the boardroom?

One of the primary challenges of applying a human
rights framework to investment is that the very nature
of corporate obligations remains undefined. It is
certainly true that states bear the primary responsibility
for protecting and promoting human rights. Nevertheless,
the integration of economies and the free flow of capital
project overview
across borders has made it much more
difficult for them to do so. The pressing
need for foreign exchange and technology
transfer often leads to the reluctance of
states to enact or enforce regulations they
believe might deter foreign investment. Even
in a company’s home state, the government
commonly acts in the interests of its private
sector and gives insufficient attention to
the human rights impacts or potential
impacts of corporate activities overseas.

Human rights advocates acknowledge
that the state, the market and civil society are
complex, interacting entities. In today’s
world, focusing on the state as the only
human rights duty-bearer does not reflect
the increased influence of the market and its
primary actors, corporations. However, the human rights
responsibilities of companies are not the same as the obligations
of states. Our view is that businesses must comply
with national and international law, including human
rights law, and that this is best understood as a requirement
to respect human rights, not to benefit from
violations of human rights, and not to be complicit in
human rights abuses.1 In fact, the Universal Declaration
of Human Rights states in its opening preamble that
“every organ of society” must respect human rights and
secure their observance.

In recent years, there have been a number of
initiatives designed to more clearly articulate the
responsibilities of the private sector in relation to human
rights. For example, the UN Global Compact, the
Kimberly Process, the Voluntary Principles on Security and
Human Rights and the OECD Guidelines for Multinational
Enterprises have all attempted to regulate and influence
corporate activity to some degree. In 2003, the UN
Sub-commission on the Protection and Promotion
of Human Rights adopted the UN Norms on the
Responsibilities for Business and Other Transnational
Corporations with Regard to Human Rights (the Norms),
although there was no corresponding consensus among
states to adopt them at the Commission on Human
Rights itself (now the Human Rights Council). Instead,
in 2005 UN Secretary-General Kofi Annan appointed
John Ruggie as his Special Representative on Business
and Human Rights.3 Part of his mandate is described as
the development of “materials and methodologies for
undertaking human rights impact assessments of the
activities of transnational corporations and other
business enterprises”.

There are other initiatives led by civil society organizations.
The Danish Institute for Human Rights has
developed a human rights compliance assessment
model for use by business. The International Business
Leaders Forum, in partnership with the International
Finance Corporation, has developed its own methodology.
These projects are designed to assist businesses
to better understand human rights and to better
respond to the range of human rights challenges
encountered when operating overseas.

In Canada, the federal government has overseen
a process that brought representatives of civil society,
government and the private sector together to address
corporate responsibility in the extractive sector. The
process evolved from a June 2005 report issued by the
House of Commons Standing Committee on Foreign
Affairs and International Trade. It concluded that public
support for corporations, including project financing
and embassy services, should be conditional on the
respect of human rights. In its response to the report,
the Government of Canada announced that it would
convene a series of roundtables across the country
focused specifically on the extractive sector. Each
roundtable included consultations with the public as
well as closed-door sessions with experts on a number
of related themes. A multi-stakeholder advisory group
with representatives from industry, civil society and
academia worked with a government steering committee
to oversee implementation of the roundtable
process. Following completion of the roundtables,
the advisory group prepared a report with a series
of recommendations for the Government of Canada.
The report was issued in March, 2007.

Shifting the Power Dynamic

All these initiatives have succeeded in reminding states
of their human rights responsibilities in relation to
foreign investment. They have also made valuable
contributions to the debate about the precise nature
of corporate obligations with respect to human rights.
Yet there has been scant attention paid to the active
involvement of the rights holders themselves in these
processes. The individuals and communities who are
directly affected by specific investment projects have
been largely excluded from international debates about
corporate accountability.
There are many reasons for this. Communities often
have little leverage over the states that govern them
and even less over foreign investors and their home
governments. They are also disadvantaged by a lack
of information and insufficient access to financial
resources. There may be additional security concerns
and threats to their personal safety. Yet this entire
debate purports to be about the impact of foreign
investment as experienced by these very communities.
It has been argued that environmental and social
impact assessments provide an adequate response to
this challenge. In fact, such assessments are now widely
used for large-scale investment projects, including those
supported by the World Bank. Environmental and social
impact assessments, however, do not adequately
confront the challenge of unequal power among
stakeholders. The value of reconceiving impact assessments
within a human rights framework lies in clarifying
the roles of duty-bearer (the state) and rights-holder
(those living under the state’s jurisdiction).
This idea is illustrated by looking at the standards
upon which assessments are based. In a social impact
assessment, for example, the baseline data is the current
situation and all else is measured from that starting point.
Repeated assessments throughout the project cycle
identify impacts. A human rights impact assessment,
on the other hand, emphasizes standards established
by international law and reflected in domestic legislation
and policies. While it is also important to measure
progressive improvement from a human rights perspective,
the main objective of a human rights impact
assessment is to measure the gap between the legal
norm and the experience.
To assist us in understanding exactly how this
approach is applied, it is useful to look at some of the
primary principles that govern human rights.
• Participation: A human rights framework requires
the meaningful participation of the rights holders,
be they individuals or communities. This reflects the
right to take part in public affairs directly or through
chosen representatives.6 A human rights impact
assessment therefore requires the active involvement
of people living in affected communities. This in turn
requires enjoyment of the human rights to information,
freedom of expression and opinion, security of
the person, and the right to privacy.
• Accountability: A human rights framework emphasizes
the accountability of duty-bearers, including
government and corporate actors. This reflects the
right of individuals and communities to an effective
remedy when the state has failed to respect and
ensure their rights.7 A human rights impact assessment
therefore requires attention to judicial
processes or legislative and administrative procedures
that will offer recourse to the victims of human
rights violations.
• Transparency: A human rights framework assumes
transparency in both process and content. This reflects
the human right to seek and receive information.8 A
human rights impact assessment therefore requires full
disclosure of information unless restrictions are provided
by law, including for the protection of national security.
• Non-discrimination: A human rights framework
gives special attention to policies and practices that
result in discriminatory outcomes. This reflects the
right to equality before the law and to equal protection
before the law.9 A human rights impact
assessment therefore demands identification of the
project overview 17
most vulnerable groups in a given situation and the
incorporation of specific steps aimed at their protection
and empowerment. Such steps might include designing
an impact assessment tool specifically for use by
affected communities.
• Indivisibility: A human rights framework adopts the
view that all human rights – social, economic, cultural,
civil and political – are interrelated and interdependent.
This principle is derived from the preambles of both the
International Covenant on Civil and Political Rights and
the International Covenant on Economic, Social and
Cultural Rights. A human rights impact assessment
therefore looks not only at living standard indicators,
for example, but gives equal attention to the ability
of affected groups to safely participate in the project
process or to express dissent related to the project.
The relevance of human rights principles is sometimes
unclear to the communities, the states and the companies
involved in the project assessment. A fisher who
can no longer eat the fish he catches because the water
has been polluted might immediately understand the
environmental impact but may not know that access
to safe and nutritious food is actually a human right to
which he is entitled. Similarly, a mining company might
think that building a health clinic for the community is
an act it can cite as an example of goodwill, but may
not realize that the attainment of the highest standard
of health is a human right required by and protected
in international law. In order to encourage better
understanding of human rights it is necessary to integrate
education and capacity building as central components
of the human rights impact assessment process.
The Response: Fitting the
approach to the challenge
It is generally understood that a human rights impact
assessment could be applied to policies, processes or
projects. We have chosen to focus on the impact of
investment at the level of the project. This choice
reflects our predisposition to work with affected communities
where human rights violations are experienced
first-hand. Clearly however, an assessment conducted at
the project level focuses largely on the symptom rather
than the cause, and some examination of the other
levels (such as trade and investment policies or national
development plans aimed at fulfillment of social
objectives) would be valuable.
In making the choice to focus on a community-led
process at the project level, we understood that our
emphasis would be on established projects (ex-post) rather
than projects still in the planning stage (ex-ante). Although
the International Association for Impact Assessment defines
assessment as a “process of identifying the future consequences
of a current or proposed action”,10 our decision
from the outset was to emphasize actual impacts of
current investment projects as experienced by affected
communities. Furthermore, conducting an ex-ante study
at the community level is particularly difficult because
communities rarely have adequate information about
projects that are in the planning or bidding phases.
A unique dimension of ex-post impact assessments
is that in addition to identifying both negative and
positive impacts, they may also reveal specific violations
that have occurred as a direct result of the investment.
However, adequate documentation of violations would
require additional steps and expertise within the
research process as well as a commitment on the part of
the accompanying organization to support community
efforts for remedial action, including perhaps court
actions, civil suits or even UN complaint procedures.
One might argue that it is in the corporate interest to
ensure the free, prior and informed consent of communities
in the planning stages of any investment project
in order to avoid responsibility for violations down the
road. At the moment, however, this is not the case.
Having made these strategic decisions for the
project, Rights & Democracy and its international
advisory committee launched three concurrent
processes with the idea that each pillar would inform
the other. The three processes were:
• Design a methodology specifically for
community-led human rights impact assessments;
• Create a research guide for use during community
training and investigation (also referred to as the
indicators);
• Select five case studies to test and revise the
methodology and the guide.
Human Rights Impact Assessments for Foreign Investment Project18 s
The methodology
Much has been written about the value of participatory
evaluation processes.11 Essentially, a participatory process
emphasizes the active involvement of the affected person
or group in the evaluation or assessment being conducted.
Active involvement means not only provision of information
to researchers, but actual ownership of the research
process itself. In this sense, the accompanying organization
serves only to facilitate communication between
various stakeholders and to provide technical assistance
to researchers, depending on the situation and the need.
Such an approach empowers affected communities to
actively engage the assessment process, to take hold of
situations affecting their well-being, and to actively
assert their human rights when they determine that
violations have taken place. They are no longer forced
into a position of waiting for someone else to bestow
their human rights upon them.
Participatory processes involve a number of departures
from more conventional methods of project
assessment. The level of objectivity, for example, might
be quite different and there will be less emphasis on
quantitative indicators. The process will also require
fitting the method to the situation and not the other
way around. For the affected community, however, the
outcomes of a process like this are often more relevant to
their actual situation. Other stakeholders benefit from the
richness of data collected from an investigative process
that draws upon an element of trust between the
researcher and the person or group being interviewed.
In putting forward a methodology that would assist
the case study researchers through a participatory
impact assessment process, we attempted to address
all the various challenges summarized in the previous
pages, while incorporating the basic human rights
principles as described. We also sought to ensure that
procedures were accessible and easily implemented by
communities with a minimum of financial and other
resources. The resulting roadmap, the Ten-Step
Methodology, can be summarized in four general
categories: preparation of the case study; application of