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Abstract
This commentary aims to frame human rights due diligence as a key instrument in risk management of a mining company with a focus on Chile. To this end, we analyse the challenges faced by the industry in a scenario of clean energy development that involves a high demand for minerals such as copper and lithium. It is concluded that human rights due diligence is a requirement for exporting products to certain markets, serves to improve the reputation of companies, and can be an important instrument for risk-management decisions in the mining industry.
Disclosure statement
No potential conflict of interest was reported by the author(s).
Notes
1 International Energy Agency (IEA), The Role of Critical Minerals in Clean Energy Transitions (2021) 5 <www.iea.org/reports/the-role-of-critical-minerals-in-clean-energy-transitions> accessed 12 October 2023.
2 According to figures provided by the National Geology and Mining Service, Anuario de la Minería de Chile 2022 (2022) 9 and 13 <www.sernageomin.cl/pdf/Anuario_2022_310523.pdf> accessed 12 October 2023; and the International Trade Administration (hereinafter, ‘ITA’) <www.trade.gov/country-commercial-guides/chile-mining> accessed 12 October 2023.
3 Organisation for Economic Co-operation and Development, Responsible Business Conduct Country Fact Sheet – Chile (2020) 15 <https://mneguidelines.oecd.org/RBC-LAC-country-fact-sheet-Chile.pdf> accessed 12 October 2023.
4 The Salar de Atacama, in northern Chile, has the highest concentration of brine and has about 30 per cent of the world’s known lithium resources. See Datu Buyung Agusdinata and others, ‘Socio-Environmental Impacts of Lithium Mineral Extraction: Towards a Research Agenda’ (2016) 13 Environmental Research Letter 1, 3 and 9 <https://doi.org/10.1088/1748-9326/aae9b1>. Indigenous claims for territory and water are complex issues. See Felix Malte Dorn and Hans Gundermann, ‘Mining Companies, Indigenous Communities, and the State: The Political Ecology of Lithium in Chile (Salar de Atacama) and Argentina (Salar de Olaroz-Cauchari)’ (2022) 29(1) Journal of Political Ecology 341, at 349 <http://dx.doi.org/10.2458/jpe.5014>.
5 The Paris Agreement is based on the United Nations Framework Convention on Climate Change and was signed by Chile on 20 September 2016.
6 IEA (n 1) 5. Lithium extraction is key to the energy transition. See Florencia Heredia, Agostina L Martinez and Valentina Surraco Urtubey, ‘The Importance of Lithium for Achieving a Low-Carbon Future: Overview of the Lithium Extraction in the “Lithium Triangle”’ (2020) 38(3) Journal of Energy & Natural Resources Law 213, at 216–17 <https://doi.org/10.1080/02646811.2020.1784565>.
7 The Indigenous and Tribal Peoples Convention (hereinafter, ‘ILO Convention 169’) was ratified by Chile on 15 September 2008.
8 John Gerard Ruggie, Caroline Rees and Rachel Davis, ‘Ten Years After: From UN Guiding Principles to Multi-Fiduciary Obligations’ (2021) 6(2) Business and Human Rights Journal 193 <https://doi.org/10.1017/bhj.2021.8>; Markus Krajewski, Kristel Tonstad and Franziska Wohltmann ‘Mandatory Human Rights Due Diligence in Germany and Norway: Stepping, or Striding, in the Same Direction?’ (2021) 6(3) Business and Human Rights Journal 550–53 <https://doi.org/10.1017/bhj.2021.43>.
9 Although the European Union has not enacted legislation that obliges European companies to implement a due diligence process in general terms, some laws exist regarding due diligence obligations regarding some commodities. On the one hand, the first due diligence law was passed in Europe through European Regulation No. 995/2010 in relation to tropical timber. This regulation aims to guarantee that timber and related goods can only enter Europe whether they have been harvested in accordance with the domestic law of the producing state. On the other hand, the European Conflict Minerals Regulation No. 2017/821 seeks to oversee the supply chain of the ‘conflict minerals’ tin, tantalum, tungsten and gold from conflicted zones. See Frank Hoffmeister, ‘The European Regulatory Approach on Supply Chain Responsibility’ (2022) 25(2) Zeitschrift für Europarechtliche Studien 223, at 234–35 and 236–37 <https://doi.org/10.5771/1435-439X-2022-2-221>.
10 Subhan Ullah and others, ‘Multinational Corporations and Human Rights Violations in Emerging Economies: Does Commitment to Social and Environmental Responsibility Matter?’ (2021) 280 Journal of Environmental Management 1, at 11 <https://doi.org/10.1016/j.jenvman.2020.111689>.
11 Charlotte Villiers, 'A Game of Cat and Mouse: Human Rights Protection and the Problem of Corporate Law and Power' (2023) 36(2) Leiden Journal of International Law 415, at 416–20 <https://doi.org/10.1017/S0922156522000632>.
12 Claire Methven O'Brien and Jolyon Ford, 'Business and Human Rights: From Domestic Institutionalisation to Transnational Governance and Back Again' (2019) 37(3) Nordic Journal of Human Rights 216, at 218–19 <https://doi.org/10.1080/18918131.2019.1697098>.
13 Along with state power, it is interesting to consider the case of state-owned enterprises. In this regard, at least in Chile, it has been discussed whether the state can be directly responsible for its activities when they constitute human rights violations in the light of the rules of international law. See the investigation carried out by Judith Schönsteiner, Vicente Martínez and Carlos Miranda, ‘Atribuibilidad al Estado de Chile de actos y omisiones de sus empresas públicas del sector extractivo a la luz de la jurisprudencia de tribunales regionales de derechos humanos’ (2020) 47(3) Revista Chilena de Derecho, 757–84 <https://doi.org/10.7764/R.473.7>. They conclude that, considering the regulatory framework of public companies in Chile, their actions are directly attributable to the State of Chile, following a test derived from the project and the interpretations of arbitral tribunals, the Inter-American Human Rights System and the European Court of Human Rights.
14 Jessica M Smith, 'Climate Change Justice and Corporate Responsibility' (2016) 34(1) Journal of Energy & Natural Resources Law 70, at 70 <http://dx.doi.org/10.1080/02646811.2016.1120074>.
15 An example of the negative impacts on human rights in countries with developing economies is the current trend towards foreign direct liability claims. These lawsuits are filed in the courts of the companies’ home countries to hold them accountable for damages caused to people and the environment because of their activities in the host country. See Liesbeth Enneking, ‘International Relevance of the Dutch Shell Nigeria Case’ (2014) 10(1) Utrecht Law Review 44, at 47 <https://doi.org/10.18352/ulr.256>.
16 The results are plain to see. According to figures from the Economic Commission for Latin America and the Caribbean, in 2021, Chile ranked third in the region in terms of foreign direct investment, surpassed only by Mexico and Brazil. See <http://repositorio.cepal.org/handle/11362/48520> accessed 14 May 2023.
17 In the case of international treaties signed by Chile, it is important to consider Chapter 20 of the Comprehensive and Progressive Agreement for Trans-Pacific Partnership (hereinafter, ‘CPTPP’). Article 20.3(1) states that the parties ‘recognize the sovereign right of each Party to establish its own levels of domestic environmental protection’. Moreover, Article 20.4 extends this recognition to the multilateral environmental agreements, in the sense that each party must implement its content. See Oliver Hailes, ‘Lithium in International Law: Trade, Investment, and the Pursuit of Supply Chain Justice’ 25(1) Journal of International Economic Law 148, at 167 <https://doi.org/10.1093/jiel/jgac002> There are similar provisions in Article 14 of the investment treaty between Chile and Uruguay and Article 15 of the investment treaty between Chile and Hong Kong.
18 Doris Fuchs and Benedikt Lennartz, 'Business Interest in Human Rights Regulation: Shaping Actors' Duties and Rights' (2022) Critical Review of International Social and Political Philosophy 1, at 3–7 <https://doi.org/10.1080/13698230.2022.2113226>.
19 Vlado Vivoda and Deanna Kemp, 'How Do National Mining Industry Associations Compare on Sustainable Development?' (2019) 6(1) The Extractive Industries and Society 22, at 27 <https://doi.org/10.1016/j.exis.2018.06.002>.
20 Sarah Lauwo and Olatunde Julius Otusanya, 'Corporate Accountability and Human Rights Disclosures: A Case Study of Barrick Gold Mine in Tanzania' (2014) 38(2) Accounting Forum 91, at 103–04 <https://doi.org/10.1016/j.accfor.2013.06.002>; Nathan Andrews and Marcellinus Essah, 'The Sustainable Development Conundrum in Gold Mining: Exploring "Open, Prior and Independent Deliberate Discussion" as a Community-Centered Framework' (2020) 68(101798) Resources Policy 1, at 1–2 and 5 <https://doi.org/10.1016/j.resourpol.2020.101798>.
21 Sustainable development can be framed within the Sustainable Development Goals established by the United Nations and adopted by Chile in 2015. The regulatory framework for forming the National Council for the Implementation of the 2030 Agenda for Sustainable Development was last updated by the Supreme Decree No. 67 of the Ministry of Foreign Affairs.
22 Howard Mann, ‘The New Frontier: Economic Rights of Foreign Investors versus Government Policy Space for Economic Development’ in Chin Leng Lim (ed), Alternative Visions of the International Law on Foreign Investment: Essays in Honour of Muthucumaraswamy Sornarajah (Cambridge University Press 2016) 292 and 322.
23 Elmira Tajvidi Asr and others, 'A Review of Studies on Sustainable Development in Mining Life Cycle' (2019) 229 Journal of Cleaner Production 215 <https://doi.org/10.1016/j.jclepro.2019.05.029>.
24 Ibid.
25 Olivier De Schutter, Transnational Corporations and Human Rights (Hart Publishing 2006) 1–17.
26 Malcolm Shaw, International Law (6th edn, Cambridge University Press 2008) 117.
27 María Benavides, ‘El soft law en el contexto de las fuentes del derecho internacional: Aportes para la discusión’ (2021) 94 Revista de Derecho Público 1, at 4–5 <https://doi.org/10.5354/0719-5249.2021.64239>.
28 Andreas Rasche and Sandra Waddock, 'The UN Guiding Principles on Business and Human Rights: Implications for Corporate Social Responsibility Research' (2011) 6(2) Business and Human Rights Journal 227, at 228 <https://doi.org/10.1017/bhj.2021.2>.
29 Elif Askin, ‘The Human Rights Responsibilities of Corporations in Global Supply Chain’ (2022) 25(2) Zeitschrift für Europarechtliche Studien 324 <https://doi.org/10.5771/1435-439X-2022-2-319>.
30 Surya Deva, ‘The UN Guiding Principles’ Orbit and Other Regulatory Regimes in the Business and Human Rights Universe: Managing the Interface’ (2021) 6(2) Business and Human Rights Journal 339 <https://doi.org/10.1017/bhj.2021.23>.
31 Ibid 336–37.
32 Anne Peters and others, ‘Business and Human Rights: Towards a “Smart Mix” of Regulation and Enforcement’, (2023) 83 Zeitschrift für ausländisches öffentliches Recht und Völkerrecht 421 <https://doi.org/10.17104/0044-2348-2023-3-415>.
33 Peter Muchlinski, ‘The Impact of the UN Guiding Principles on Business Attitudes to Observing Human Rights’ (2021) 6(2) Business and Human Rights Journal 219–20 <https://doi.org/10.1017/bhj.2021.14>.
34 Humberto Cantú, ‘La OCDE y los derechos humanos: el caso de las Directrices para Empresas Multinacionales y los Puntos de Contacto Nacional’, (2015) 15(1) Anuario Mexicano de Derecho Internacional 628–29 <http://dx.doi.org/10.1016/j.amdi.2014.09.011>.
35 Marian G Ingrams, ‘The 2023 Update of the OECD Guidelines Sets Stronger Standards for Companies but Weak Expectations for Governments – High and Lowlights from the New Text’ (2023) First View, Business and Human Rights Journal 2 <https://doi.org/10.1017/bhj.2023.40>.
36 Ibid 3.
37 Cantú (n 34) 652.
38 Ibid 653.
39 Muchlinski (n 33) 213–14.
40 This policy statement allows the community to know what the company's human rights commitments are and to complain in the case that the company does not comply with them in relation to any of its products and services. Daniela Ortega, Alejandra Parra, and Judith Schönsteiner, Derechos humanos y empresas. Acceso a remedios (DER 2022), 56.
41 David Bilchitz, Fundamental Rights and the Legal Obligations of Business (Cambridge University Press 2022) 195–97; Jonathan Bonnitcha and Robert McCorquodale, ‘The Concept of “Due Diligence” in the UN Guiding Principles on Business and Human Rights’ (2017) 28(3) The European Journal of International Law 899, at 901–06 <https://doi.org/10.1093/ejil/chx042>; John Gerard Ruggie and John F Sherman, ‘The Concept of “Due Diligence” in the UN Guiding Principles on Business and Human Rights: A Reply to Jonathan Bonnitcha and Robert McCorquodale’ (2017) 28(3) The European Journal of International Law 921, at 926–28 <https://doi.org/10.1093/ejil/chx047>.
42 Robert McCorquodale and Justine Nolan, ‘The Effectiveness of Human Rights Due Diligence for Preventing Business Human Rights Abuses’ (2021) 68 Netherlands International Review 455, at 469–71 <https://doi.org/10.1007/s40802-021-00201-x>; Rachel Chambers and Anil Yilmaz Vastardis, ‘Human Rights Disclosure and Due Diligence Laws: The Role of Regulatory Oversight in Ensuring Corporate Accountability’ (2021) 21(2) Chicago Journal of International Law 323, at 362–63 <https://chicagounbound.uchicago.edu/cjil/vol21/iss2/4>.
43 Muchlinski (n 33) 219–20.
44 Álvaro Paúl, ‘Nueva Constitución y Derecho Internacional’ (2021) 48(1) Revista Chilena de Derecho V, at XIX.
45 In this regard the case of Poland is illustrative. See Marcin Kilanowski, 'Evaluating the Polish NAPs: Lessons for the Future Implementation of the UN Guiding Principles on Business and Human Rights' (2023) Business and Human Rights Journal 1, at 2–4 <https://doi.org/10.1017/bhj.2023.4>.
46 Virginia Mantouvalou, ‘The UK Modern Slavery Act 2015 Three Years On’ (2018) 81(6) Modern Law Review 1017, at 1019–22 <http://dx.doi.org/10.1111/1468-2230.12377>.
47 Some scholars criticise the Modern Slavery Acts model, since its regime only requires reporting, rather than carrying out a human rights due diligence process in the company. See Jolyon Ford and Justine Nolan, 'Regulating Transparency on Human Rights and Modern Slavery in Corporate Supply Chains: The Discrepancy between Human Rights Due Diligence and the Social Audit' (2020) 26(1) Australian Journal of Human Rights 27, at 31–32 <https://doi.org/10.1080/1323238X.2020.1761633>.
48 The law is expected to apply to more than 8,800 companies. See Krajewski, Tonstad and Wohltmann (n 8) 550, 553.
49 It is possible to argue that the LkSG seeks corporate sustainability, since it contains obligations aimed at the economic, social and environmental aspects of a company. See Anne-Christin Mittwoch and Fernanda Luisa Bremenkamp, ‘The German Supply Chain Act – A Sustainable Regulatory Framework for Internationally Active Market Players?’ (2022) Heft 182 Beiträge zum Transnationalen Wirtschaftsrecht 1, at 10 <http://dx.doi.org/10.25673/92079>.
50 Robert Grabosch, Das neue Lieferkettensorgfaltspflichtengesetz (NomosPraxis 2021) 17–18.
51 According to figures provided by the National Geology and Mining Service (n 2) and the ITA (n 2).
52 Samuel Lira, Curso de Derecho de Minería (7th edn, Editorial Jurídica de Chile 2016) 81.
53 Participation is key in the environmental impact assessment of projects in Chile. It serves as a mechanism for the prevention and resolution of conflict and as a form of cooperation between citizens and the administration. See Camilo Mirosevic, ‘La participación ciudadana en el procedimiento de evaluación de impacto ambiental y las reformas introducidas por la Ley N° 20.417’ (2011) 36(1) Revista de Derecho (Valparaíso) 281, at 285–86 <http://dx.doi.org/10.4067/S0718-68512011000100008> Public participation must meet certain standards, and citizen comments must be considered in the environmental impact assessment. Pilar Moraga, ‘La definición de nuevos estándares en materia de participación ciudadana en el sistema de evaluación de impacto ambiental chileno’ (2017) 38 Revista Derecho del Estado 177, at 194 <https://doi.org/10.18601/01229893.n38.07>.
54 Some scholars point out that states use NAPs in a way that they can mix domestic needs with the concerns of the international community. See O’Brien and Ford (n 12) 220–23.
55 NAP (2017) 26–28, 65 and 90 <https://minrel.gob.cl/minrel_old/site/artic/20171109/asocfile/20171109170236/plan_de_accion_nacional_de_ddhh_y_empresas.pdf> accessed 12 October 2023.
56 NAP (2022) 25 <https://ddhh.minjusticia.gob.cl/media/2022/03/2%C2%BAPAN_2022-2025-2.pdf> accessed 12 October 2023.
57 The rule applies to certain companies registered in the Registro de Valores (I.3)..
58 Jorge Bermúdez, Fundamentos de Derecho Ambiental (2nd edn, Ediciones Universitarias de Valparaíso 2016) 93.
59 Ibid 97.
60 Cristóbal Carmona Caldera, ‘Evaluación ambiental, consulta indígena y el “desplazamiento” de los derechos de los pueblos indígenas’ (2020) 248 Revista de Derecho Universidad de Concepción 199, at 204–05 <https://doi.org/10.29393/RD248-17EACC10017>.
61 Ortega, Parra and Schönsteiner (n 40) 116–29 and 137–43.
62 Judith Schönsteiner, ‘Brechas de cumplimiento: el Estado, empresas y derechos humanos’, in Tomás Vial (ed) Informe Anual sobre Derechos Humanos en Chile 2016 (Santiago, UDP 2016) 135.
63 Ibid 134.
64 Ibid 136.
65 Hevina Dashwood, ‘Sustainable Development and Industry Self-Regulation: Developments in the Global Mining Sector’ (2013) 53(4) Business & Society 551, at 554 and 558 <https://doi.org/10.1177/0007650313475997>.
66 Ibid 554; ICMM, ‘Who We Are’ <www.icmm.com/en-gb/our-story/who-we-are> accessed 12 October 2023.
67 Dashwood (n 65) 557.
68 S Prakash Sethi and Olga Emelianova, ‘International Council on Mining and Metals Sustainable Development Framework (ICMM)’ in S Prakash Sethi (ed) Globalization and Self-Regulation (Palgrave MacMillan 2011), 164, 174, 175, 177.
69 Alberto Fonseca, ‘How Credible Are Mining Corporations’ Sustainability Reports? A Critical Analysis of External Assurance under the Requirements of the International Council on Mining and Metals’ (2010) 17(6) Corporate Social Responsibility and Environmental Management 364 <https://doi.org/10.1002/csr.230>; Glen Corder, ‘Mining and Sustainable Development’ in T O’Callaghan and G Graetz (eds) Mining in the Asia-Pacific (Cham Springer 2017) 261 <https://doi.org/10.1007/978-3-319-61395-6_15>.
70 Prakash Sethi and Emelianova (n 68) 177; Bilchitz (n 41) 425.
71 Prakash Sethi and Emelianova (n 68) 172.
72 ICMM ‘Mining Principles’ 2, 7, 8 <www.icmm.com/website/publications/pdfs/mining-principles/mining-principles.pdf?cb=10319> accessed 12 October 2023.
73 The following master's thesis concludes that mining activity can be a catalyst for sustainable economic development in a region. See Sophia Gabriella Hallqvist, ‘Mining under the Sustainable Development Framework. A Case Study of Gold Fields Impact on Local Economic Development’ (Lund University 2019) <https://lup.lub.lu.se/luur/download?func=downloadFile&recordOId=8976627&fileOId=8976628> accessed 12 October 2023.
74 Some scholars argue that there is no political commitment from the authorities to regulate the issue of business and human rights in Chile. See Schönsteiner (n 62) 135.
75 According to figures provided by the Quarterly Trade Report, 4th Quarter 2021 of the SUBREI, 10–12 <www.subrei.gob.cl/docs/default-source/estudios-y-documentos/reporte-trimestral/comercio-exterior-de-chile-t4-2021.pdf?sfvrsn=758484c2_1> accessed 12 October 2023.
76 According to figures available in the Macroeconomic Indicators for Germany and Chile, updated to May 2023 of the SUBREI <www.subrei.gob.cl/docs/default-source/estudios-y-documentos/fichas/alemania-anual.pdf?sfvrsn=2fac4d79_9> accessed 12 October 2023.
77 Lise Smit and others, ‘Human Rights Due Diligence in Global Supply Chains: Evidence of Corporate Practices to Inform a Legal Standard’ (2020) 25(6) The International Journal of Human Rights 1, at 5–8, 21, 23–24 <https://doi.org/10.1080/13642987.2020.1799196>.
78 Dashwood (n 65) 557.
79 Ibid.
80 Ibid; Bilchitz (n 41) 424–27.
81 Magdalena Bexell, ‘Ranking for Human Rights? The Formative Power of Indicators for Business Responsibility’ (2022) 21(5) Journal of Human Rights 604, at 606–12, 615–16 <https://doi.org/10.1080/14754835.2022.2104118>.
82 Lira (n 52) 81.
83 Bermúdez (n 58) 93.
84 Ibid 97.
85 In the case of Peru, scholars have suggested that the UNGPs may be an answer to community problems. John Sherman, ‘Why Human Rights Due Diligence Is Essential for Mining Companies in Peru’ in Carmen Velazco Ramos (ed) Los Principios Rectores de las Naciones Unidas en el Perú (Palestra, Universidad ESAN and Tirant Lo Blanch 2021) 55–80.
86 Ian Higham, ‘UN Guiding Principles on Business and Human Rights’ in Odd Einar Olsen and others (eds) Standardization and Risk Governance. A Multi-Disciplinary Approach (Routledge 2020) 219–20.
87 Bonnitcha and McCorquodale (n 41) 901–06.