Human Rights Guidance Tool for the Financial Sector
Human Rights Issues by Sector

Case Studies

September 2014, Azerbaijan: The UN Council for Human Rights has called on the government to make the State Oil Company of Azerbaijan Republic accountable to parliament. SOCAR will supply gas to much of Europe, More...

May 2011, Peru: Indigenous peoples claim that oil and gas exploration in the area would destroy their way of life and introduce diseases to the isolated communities. The Peruvian government has identified significant oil reserves in the region, More...

Oil and Gas

This sector includes natural and petroleum gas, fuel oils, petrochemicals, lubricants, petroleum and other by-products. The emerging market for biofuels (derived from a wide variety of sources including sugar cane, vegetable oils and corn) is covered in Agriculture and Fisheries.

The core phases are:

  • Exploration (including seismic surveys and drilling)
  • Oil field development (including developing infrastructure - see Infrastructure for further information)
  • Production (including drilling, separation, compression and dehydration)
  • Refining (primary separation by distillation; secondary conversion or cracking). The production of different products depends on the composition of the crude oil, the technology of the refinery and market demand. (See also Chemicals and Pharmaceuticals)
  • Transportation (by pipeline above or below ground or on the sea-bed; by boat; by road) and storage
  • Retail and distribution

Key human rights related risks

  • Workplace conditions, particularly health and safety in the workplace
  • Threats to livelihoods due to monopolisation of resources (including land and other natural resources depended on by local populations) and relocation of communities away from traditional means of living
  • Large migrant populations, mainly male, can disrupt social cohesion and can lead to the spread of disease (eg HIV/Aids) to the existing population
  • Security contractors in areas of conflict may be connected to military/paramilitary groups
  • Misuse of revenues (corruption) by government officials may reduce local populations' access to services
  • Local infrastructure (including health and access to water) may be over-stretched
  • Loss of income following closure of installations

Examples of voluntary and trade initiatives

  • The Extractive Industries Transparency Initiative (EITI): supports openness, improved governance and accountable management of revenues from natural resources
  • The Voluntary Principles on Security and Human Rights : developed to guide companies in balancing the need for safety and security while respecting human rights
  • IPIECA is the global oil and gas industry association for environmental and social issues. It has produced a fact sheet and other resources on human rights.

There are links to these initiatives in Resources.


Core Operations

Health and Safety

Companies need to be aware of the risks to health and safety and take steps to avoid accidents and limit their consequences.

Main issues for the oil and gas sector:

  • Fatal and non-fatal incidents caused by lack of proper procedures, failure to follow procedures, inadequate risk assessment, poor risk management, faulty or inappropriate tools and equipment or mismanagement of an incident
  • Fatal and non-fatal incidents and injuries which could be prevented with relevant training, information and education of employees delivered in appropriate languages and protective clothing/equipment
  • Spread of communicable disease among workers due to lack of education, advice and/or poor living conditions
  • Employee exposure to protests from local people or pressure groups
  • Working excessively long hours under strenuous conditions may lead to accident or injury.

Migrant workers

There can be many migrant workers in the workforce due to a lack of local skills or a trained workforce.

Main issues for the oil and gas sector:

  • Migrant workers may be subject to degrading or life-threatening treatment or lack of equal opportunity for promotion, due to discrimination against workers from other cultures or races
  • There may also be discrimination with regard to working hours, pay, training, housing conditions and access to health care or education
  • Migrant and immigrant workers can have their travel documents held by the employer as a condition of work. This takes away their freedom of movement and is a form of bonded labour.

Security of operations

This covers activities undertaken by a company or their contractors to protect their assets and ensure the safety of their employees. Oil and gas facilities may be located in areas of current or recent conflict, which can lead to particular problems in relation to security.

Main issues for the oil and gas sector:

  • In conflict zones or failing states, there is potential for security contractors to be complicit in fuelling conflict by aiding illegal armed groups, including payment of protection money
  • Security forces may over-react to protests against a project. This can result in an escalation of violence, leading to the injury or death of union members and others exercising their right to protest
  • Security operations should consider the safety of workers beyond the boundaries of the project - when travelling to and from work or in housing facilities
  • Lack of effective security can lead to attacks, theft of dangerous equipment and an unsafe environment for workers
  • Lack of effective security creates health and safety risks for the general public (especially children/young people unaware of the dangers of machinery and equipment).

Controls and mitigants

  • Compliance with local/national law is the starting point
  • Even if local/national law, standards or enforcement are lower than internationally accepted good practice, a company should apply the same consistent and effective management practices globally (on workforce, community health and safety, supplier screening, site safety and security)
  • Health and safety plan communicated to all workers in their own language and supported by robust governance procedures
  • Emergency preparedness/accident response plan to ensure safety of workers in the event of a major incident and to limit the effects of the incident as far as possible
  • Policies and procedures on anti-discrimination and equal opportunities, including the protection and welfare of migrant workers
  • Policies and procedures on security, covering the employment and training of security workers; dealing with violent and non-violent protests; and use of local police force if arrests or detention are necessary
  • Companies should communicate their policies regarding ethical conduct and human rights to security providers, including the need for personnel to receive adequate and effective training
  • Security contractors should be competent and the number of staff deployed should be appropriate and proportional to the need
  • In cases where physical force is used by security, such incidents should be reported to the appropriate authorities and to the company. Where force is used, medical aid should be provided to all injured persons
  • A security contractor should respect the confidentiality of information obtained as a result of its position as a security provider.

Supply Chain

Companies face human rights issues and risks in their supply chain, as purchasers of goods and services from other companies/sub-contractors which may be associated with poor practice or controversy. As well as a very wide variety of equipment, many contractors/sub-contractors provide a range of services to this sector.

Workplace conditions

Workplace conditions in this sector apply particularly to contractors and sub-contractors who are used at various stages in oil and gas processes.

Main issues for the oil and gas sector:

  • Failure to ensure safety and security of transport and storage of hazardous materials at all stages in the production process
  • Ensuring that all workers are treated fairly with respect to working hours, pay, training, housing conditions and access to health care or education
  • Complex operations involving a number of sub-contractors may make it more difficult to ensure that health and safety standards are understood and rigorously implemented.

Livelihood and standard of living

This covers the rights to work, a fair wage and an adequate standard of living. These rights also support the realisation of other rights such as the right to health, housing, participation in the culture of the community, education and the right to a family life.

Main issue for the oil and gas sector:

  • Procurement activities can make a positive, neutral or negative contribution to the local economy and the economic rights of the local community. If local businesses (cleaning, construction or catering) are unable to operate to the scale required, non-local suppliers will be selected. This reduces the contribution that the oil and gas operations make to the local economy.

Controls and mitigants

  • Ethical and environmental supplier screening policy covering labour relations issues, sustainable/ethical sourcing of materials and transparency/bribery. Suppliers should be aware of potential hazards and have systems in place to protect workers and communities
  • Procurement policies and procedures in place which encourage the use of local suppliers and support the use of small and medium enterprises
  • Health and safety plan communicated to all workers (including contractors and sub-contractors) in their own language and supported by robust governance procedures. Effective health and safety procedures need to be built into contractual arrangements.

Communities

Livelihood and standard of living

This covers the rights to work, a fair wage and an adequate standard of living. These rights also support the realisation of other rights such as the right to health, housing, participation in the culture of the community, education and the right to a family life.

Main issues for the oil and gas sector:

  • Threat to life and livelihoods due to use of land and other resources previously depended on by local populations
  • Relocation of communities away from traditional means of living
  • Reduced standard of living due to environmental impacts (including dust, emissions, vibration, noise, vehicle movement and impact, pollution, use of hazardous substances and materials, water and soil contamination, destruction of habitats and other resources)
  • Health and safety issues include waste disposal, use of dangerous chemicals, transport movements
  • Lack of effective security creates health and safety risks for the community (especially children/young people unaware of the dangers of machinery, falling objects and so on)
  • The sector employs a high proportion of male workers. This can lead to mistreatment of women (including sex crimes and sexually transmitted diseases) and lack of equal opportunity
  • Infrastructure and basic services (health, education, water) may be overstretched so some local people are unable to access these services
  • Communities may consume contaminated water, causing health problems
  • F
  • Loss of income from operations can be a problem following closure.

Local and indigenous peoples' rights

This covers issues associated with activities that impact on ancestral land. This includes: cultural heritage; the use of natural local resources; and damage to sites which form the basis of the identity of local and indigenous groups.

Main issues for the oil and gas sector:

  • Governments may take responsibility for consulting with communities on relocation and ensuring that agreed compensation is paid. Companies involved with a project may be publicly associated with any government poor practice (or perceived poor practice) in this respect
  • Lack of free, prior and informed consent of local and indigenous populations and/or lack of process to explore this can lead to arbitrary destruction of identity and livelihood
  • Violent, repressive and life-threatening removal of local and indigenous groups from lands. This may be facilitated by host governments which do not recognise indigenous groups or their rights
  • Lack of, or unfair, compensation arrangements or delayed payments
  • Revenues may be channelled by host governments to support the national economy or development agenda, which may not benefit local and indigenous people
  • Damage to cultural, historical or religious sites which form the basis of the identity of local and indigenous groups
  • Non-conventional oil extraction, from tar sands and fracking, can lead to concerns about environmental impact and safety issues.

Impact of migrant population

This covers human rights such as the right to health, adequate standard of living, and non-discrimination that may be threatened due to large influxes of workers.

Main issues for the oil and gas sector:

  • Large, mainly male, migrant populations away from their families are a market for prostitution. This can lead to the spread of sexually transmitted diseases (including HIV/Aids) within the area and to families when workers return home
  • Basic health and hygiene standards of housing provided to workers can be poor, leading to illness and the risk of disease being passed on to the local population
  • There can be social conflict and a negative impact on social cohesion.

Controls and mitigants

  • A stakeholder engagement plan to ensure full and effective consultation with all stakeholders
  • A community awareness and education plan as part of health and safety measures
  • Rehabilitation of land disturbed or occupied by operations in accordance with appropriate post-operation land uses
  • Recognition of existing communities' rights, including policies and procedures on the conservation of cultural, historical or religious sites which form the basis of the identity of local and/or indigenous groups
  • Assessment to evaluate a project's positive and adverse effects on indigenous peoples and examine alternatives where adverse impacts may be significant
  • Emergency response plan to protect affected communities in the event of a major incident such as the release of hazardous materials. This should include the provision of emergency water and food supplies to local community if usual sources are contaminated
  • Clearly defined procedures on the use of indigenous peoples' knowledge and resources, including payment, benefit-sharing or other consideration
  • Policies and procedures on conservation and sustainable use of finite resources eg: water, energy, land, which take account of local community need for these resources now and in the future
  • Policies and procedures to ensure free, prior and informed consent of local and indigenous communities; ensuring that vulnerable groups are part of the consultation process and including a complaints mechanism for local communities
  • Policy and procedures on the relocation of communities, including measures around consultation, prompt and adequate compensation and continuation of livelihoods
  • Policies and procedures to ensure that migrant workers are protected and provided with adequate facilities, that local workers are used where possible to reduce the need for migrants and that facilities are provided which enable families to live together.

Society and Governments

Abuse of human rights by host governments

This covers human rights abuses carried out by or on behalf of the government. The oil and gas company may have a relationship with the government which controls the region where operations are carried out.

Main issues for the oil and gas sector:

Any benefits derived (directly or indirectly) from abuses perpetrated by the government, may result in the company being perceived as complicit in the abuse. Due to the large footprint of oil and gas operations and the importance to national economies of natural resources, there may be potential for:

  • Government use of forced or bonded labour to extract and realise national resources
  • The violent removal, severe repression or arrest of protestors and resisting indigenous groups by governments or their agents.

Revenue transparency and capital flight

There may be corrupt practices or economic disruption within a state.

Main issues for the oil and gas sector:

  • Failure by the state to provide basic services to local people
  • Increased cost of essential items such as food
  • Perception that companies are not paying tax due, if revenue is not seen to be benefitting local community

Controls and mitigants

  • Compliance with local/national law is the starting point
  • Even if local/national law, standards or enforcement are lower than internationally accepted good practice, a company should apply the same consistent and effective management practices globally
  • Ensuring that agreements with host governments reflect the rights of indigenous and local people
  • Transparency in reporting all payments made to host governments, locally and nationally.

See also the broader UNEP FI Environmental and Social Risk Briefing and Resources.

 

December 2014     United Nations Environment Programme Finance Initiative