Archived: BP Executives' Human-Rights Miscalculation: Have They Bet the Company

“A fisher[man] 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.” (Human Rights Impact Assessments for Foreign Investment Projects, International Centre for Human Rights and Democratic Development, 2007, p. 17).

Before the recent disaster at BP’s Deepwater Horizon drilling platform, one could assume that no BP executive imagined that our “fisherman” with the inedible catch might be an American, let alone a Gulf Coast resident. To the extent that BP’s leaders contemplated any environmental mishap in the Gulf, it’s likely that they didn’t think they were flirting with human-rights violations. It is fair to ask, “Why not”

The suffering of the Gulf population results from human-rights violations. Since the dawn of the human-rights idea 60 years ago, international norms have established as fundamental human rights the opportunity for an adequate standard of living, to gainful employment, and to health. Our entitlement to a clean environment is a human right that is 30 years old and well established.

BP’s leadership is not unaware of these rights. They have performed many human-rights impact assessments (HRIAs) in other parts of the world, typically in countries that are economically underdeveloped. BP has a human-rights guide on its website supporting, but not mandating, operational managers to respect those rights. Its personnel have analyzed human-rights concerns affected by its business interests in Colombia, Georgia, Turkey and Azerbaijan. BP’s HRIA of its Tangguh LNG project in West Papua is referenced in UN reports as an early example of the HRIA genre.

Miscalculation or Malevolence

How, then, did BP executives fail to grasp the human-rights implications of drilling activities in the Gulf Furthermore, had they evaluated the human-rights implications of their conduct, might there have been a different outcome It will require lengthy investigations by the executive branch of government, Congress, industry groups, private litigants and BP itself to reach definitive conclusions.

In the meantime, the possible explanations include two diametrically opposite theories. The first is that BP executives deliberately risked disaster for profit. The second is that BP inadvertently failed to perform a thorough risk assessment.

The theory that BP executives deliberately assumed unreasonable risks in order to cut costs and save time has already been advanced in several quarters, including in a preliminary report of the House Commerce Committee by its chairman, Henry Waxman. The charge has been echoed by the populist voice of Kindra Arnesen, a fisherman’s wife from Louisiana, whose criticism inspired BP to bring her inside its councils and to observe its deliberations. She has publicly alleged that BP talkedduring its cleanup and emergency-response phaseof cutting clean-up costs and of assembling clean-up workers temporarily for “balloon and pony” shows when the media or high-ranking political officials visited key sites. (Arnesen’s widely noted and dramatic speech to the Gulf Emergency Summit can be found here).

If this theory is accurate, BP will face huge regulatory fines and dramatic civil-law verdicts, and the company and its executives may endure grand-jury investigations, indictments and trial. However, such a scenario offers earnest executives elsewhere few lessons they didn’t imbibe with their mother’s milk.

The more benign theory is that BP executives failed to do a comprehensive risk analysis and were encouraged in this behavior by executive branch attitudes, including those of regulators at the Mineral Management Services (MMS). MMS made the now-controversial decision to exempt BP from the requirements of performing a detailed environmental-impact assessment in connection with the Deepwater Horizon lease. (A related storm continues to rage over scores of comments from leaders of both major parties claiming that leaks from oil rigs are not a problem, even during hurricanes as violent as Katrina.)

Even if BP executives convince observers that they were lulled into flawed risk analysis by governmental and industry consensus that the chance of a catastrophic Gulf spill was low, there is still no answer to the question of why a human-rights impact assessment was not performed and made public before exploratory drilling began.

In part, it appears that BP’s executives shared the view of many in the western business world that human-rights issues are relevant to ventures in “third world,” “frontier” or underdeveloped countries. This view is perhaps encouraged by horrific human-rights abuses in places like Nigeria’s Niger Delta, where an entire region has been environmentally, socially and developmentally savaged by oil exploration and drilling. Indeed, the contrast between the worldwide response to the Gulf disaster and the muted commentary on the Niger Delta has led some critics of the corporate and governmental misconduct in Nigeria to decry the double standard.

A factor underlying the focus on human-rights issues elsewhere is the assumption that western democracies have more benign governments and more active civil-society elements and therefore that human rights are domestically protected. Surely the duty of the government to protect its citizens, a fundamental principle of democracy, will be heavily debated. That said, the Deepwater Horizon experience suggests that Americans in general and Gulf residents in particular should have their human rights respected by executives of foreign companies doing business there.

If Arnesen is correct that recovery from this emergency is being hindered by an unholy collaboration of “EPA, OSHA, NOHA, the federal government and BP” to cut costs at the expense of human lives, the loss of major industry sectors and the long-term corruption of the environment, then human-rights protections must be a required element of corporate due diligence. Even a less conspiratorial view than Arnesen’s compels the conclusion that HRIAs should be the essential component of foreign business activities in the United States.

Environmental Assessment vs. Human-Rights Impact Assessment

BP and other major oil companies did limited environmental assessments prior to launching deep-water drilling operations, assessments that have been called deeply flawed: “All the companies operating in [the Gulf] had, like BP, been risking a blowout that they had no technical means of dealing with, should it occur” (“The Economist,” June 1519, 2010, p. 66).

The limited environmental assessment failed to identify the consequences of a disaster. An internal process that resulted in an HRIA would have identified risks and put in place real assets and processes to deal with those risks. The primary differentiator between the two assessments is that an HRIA incorporates interaction with “rights holders,” the residents and workers of the Gulf coast, through a collaborative assessment of human rights that may be impacted during a project or while a company is doing business. For BP’s scenario-building process around human-rights impacts, those rights should necessarily have been environmental and workplace safety, the right to clean water, and a living wage, just to name some. Because an HRIA is a public document based on public discourse, it gives equal footing to business and public interests.

An HRIA necessarily makes explicit tensions between parties like BP and inhabitants, but the process allows coexistence based on the evaluation of worst-case scenarios (e.g., What if the rig explodes) and the rank ordering of rights combined with substantive remediation plans and processes. An HRIA would have erased the widening gap between BP’s business interests and the destruction of industries, livelihoods and the environment. Finally, an HRIA would have been some protection in shielding investor speculation that the risks were known and callously not managed, to the great loss of the investment community.

Why should executives consider HRIAs an obligatory piece of corporate due diligence John Ruggie, the Special Representative of the Secretary-General (U.N.) on the issue of human rights and transnational corporations, frames the issue succinctly: “[I have] maintained that the widening gaps between the scope and impact of economic forces and actors, and the capacity of societies to manage their adverse consequences, were unsustainable. These governance gaps provide the permissive environment for wrongful acts by companies of all kinds without adequate sanctioning or reparation.”

What should the informed executive take away from the BP spill Clearly, the massive debacle that BP now faces on all flanks could have been avoided or minimized by institutionalizing HRIAs enterprise-wide in the due-diligence process, including projects in economically developed hosts. To be sure, it would have shone light on disaster preparedness. The costs of an HRIA in contrast to BP’s massive expenses from the harm it has done simply pale by comparison. In the process of avoiding comparatively small costs, or perhaps just through miscalculation, BP has made itself inimical to all stakeholdersinvestors, customers, employees, inhabitants, government and regulators. Have BP executives disregarded their responsibility to their company and the people surrounding it on the assumption that balloons and ponies might compensate

Raymond Brown is the chair of the White Collar Defense and Corporate Compliance Practice Group at Greenbaum, Rowe, Smith & Davis. He has practiced international criminal law (ICL), taught, written and lectured on ICL, and served as an international legal journalist. Brown is a member of list counsel at the International Criminal Court and is legal representative for victims in the case of OTP v Bashir and in the Darfur situation. He is a delegate from the International Criminal Bar to the Rome Treaty Review Conference in Kampala, Uganda.

Brown was a speaker at DiversityInc’s March 2010 event in Washington, D.C. Click here to watch a video of his presentation.

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