Challenging the resource curse

16th April 2014

Gazing down from a helicopter at the dense foliage of an Indonesian jungle, Christine Bader’s heart sank. It was 2000, and she was looking at a site on which BP, her employer, was to build a natural gas plant. Rainforests are not the only casualties of extractive and energy industry operations – so are the communities around them. But while the industry has made progress on managing its impact, companies still struggle to navigate the complex issues they encounter when setting up shop.

In her new book The Evolution of a Corporate Idealist, Bader describes BP’s efforts to minimise harm to the community while relocating the Indonesian villagers who had lost their land in in West Papua to make way for the Tangguh liquefied natural gas facility.

The work of Bader and her colleagues involved everything from relocating sacred rocks to having workers paid back home rather than onsite (the influx of cash can prompt the arrival of brothels and gambling houses).

Often operating in conflict zones, another challenge for companies is how to manage their relationships with private security forces or local military while avoiding accusations of complicity in human rights abuses, something that in the past has tarnished the reputation of companies such as Shell and BP.

Today, guidance is available in the Voluntary Principles on Security and Human Rights. Established in 2000, the principles help companies maintain safety and security around operations while respecting human rights and fundamental freedoms.

“The argument is over as to whether extractives companies share human rights responsibilities with governments,” says Bennett Freeman, head of sustainability research and policy at Calvert Investments, who led the development of the principles.

“Does that mean companies are all strongly and equally committed? No,” he says. “But they have to engage with stakeholders and at least have basic policy frameworks.”

But while the ethical management of security is one thing, extractives companies also need to deal with everything from government corruption and local turf wars to terrorism and rebel movements.

“Many of the outcomes in these situations are not in the company’s control,” says Bader. “So many factors determine the health and prosperity of society that even a big company plays a tiny role.”

Moreover, when they do take action to mitigate the negative impact of their presence, defining the limits of responsibility is tough. Companies can build roads, hospitals and schools for the communities surrounding their operations, but villages further away may feel left out and react with violence.

Companies have learned lessons over the years about what works and what doesn’t. Most stress the importance to partnerships with NGOs and governments. But they also need to do a good job of listening to the people they’re trying to help rather than assuming they know what’s best for a community.

This is an approach taken by Banro Corporation, a Canadian gold mining company, in the Democratic Republic of the Congo. “In every community, we put together committees of leading citizens to advise us on what to do,” explains Martin Jones, chairman of the corporate foundation the company established as a means of making community investments.

In their community investments, companies also need to move from single initiatives to strategies that relate to broader national agendas, argues Lite Nartey, assistant professor of international business at University of South Carolina’s Moore School of Business.

“Right now, there are islands of excellence everywhere,” says Nartey, who has been researching how multinational firms in the extractive and other industries interact with NGOs, governments and others. “But the infrastructure falls apart because there’s no support – so you have a superb hospital with no connection to the national grid.”

A more holistic approach involving collaboration with government also ensures the long-term sustainability of community investments. “Linking it to broader developments is really important,” says Nartey. “You can do something well for five to 10 years, but what happens after is the big question.”

Of course when it comes to curbing human rights abuses, it’s hard to measure the extent to which corporate policy changes and the presence of the Voluntary Principles have contributed to a fall in incidents. And Freeman argues that the principles need to move towards greater accountability and transparency.

Companies’ efforts to foster the wellbeing of local communities appear to have made a difference – at least in some places. “Take the BP Tangguh project,” says Freeman, who co-authored a comprehensive human rights impact assessment for the project, the first of its kind. “I’ve not heard of a single significant incident there in a dozen years.”

Nartey sees the biggest challenge as the weak performance of governments, leaving companies to fill the gap. “Governments are lazy,” she says. “And right now governments are very happy letting the firms do their work.”


Here, I invite my interviewees to name a favourite charity and – in the spirit of Mixing It Up – a favourite cocktail.

Christine Bader @christinebader

Charities: The OpEd Project, the Business & Human Rights Resource Centre and CityYear

Cocktail: Manhattan

Bennett Freeman

Charity: Global Witness

Cocktail: Pimm’s Cup

Martin Jones

Charity: Plan International

Lite Nartey

Charity: Reporters Without Borders