Company and supply chain labour rights in the oil and gas

Company and supply chain labourrights in the oil and gas industry IPIECA awareness briefing

Socialresponsibility

Advancing environmentaland social performanceacross oil and gas

www.ipieca.org

LABOUR RIGHTS SERIES

An introduction

© IPIECA 2019 All rights reserved.

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This publication has been developed to support the implementation of IPIECA’s mission and vision. Whileevery effort has been made to ensure the accuracy of the information, it is intended to provide generalguidance only. It is not designed to provide legal or other advice, nor should it be relied upon as asubstitute for appropriate technical expertise or professional advice. All attempts have been made toensure that the information is correct at the date of publication. This publication does not constitute amandatory commitment which members of IPIECA are obliged to adopt. The views and conclusionsexpressed herein do not necessarily reflect the views of all IPIECA members or the individuals, companiesand institutions that contributed to this publication.

While reasonable precautions have been taken to ensure that the information contained in thispublication is accurate and timely, this publication is distributed without warranty of any kind, express orimplied. IPIECA neither endorses nor accepts responsibility for the content or availability of any websitereferred to, or linked to, in this publication. The responsibility for the interpretation and use of thispublication lies with the user and in no event will IPIECA or any of its members past, present or futureregardless of their negligence, assume liability for any foreseeable or unforeseeable use made thereof,which liability is hereby excluded. Consequently, such use is at the recipient’s own risk on the basis thatany use by the recipient constitutes agreement to the terms of this disclaimer. This disclaimer should beconstrued in accordance with English law.

1 — Company and supply chain labour rights in the oil and gas industry

IPIECA has been raising awareness of, and working on,human rights issues across the industry for more than adecade. As a consensus-based membership organization,IPIECA is uniquely placed to facilitate peer learning,provide guidance on the implementation of business andhuman rights frameworks, and facilitate thedevelopment, sharing and promotion of good practicesfor the industry.

IPIECA supports the United Nations Guiding Principles onBusiness and Human Rights (UNGPs), which provideclarity on the duty of all states to protect human rights,and on the business responsibility to respect them; theUNGPs provide a common language on human rights,along with a set of high-level principles for managinghuman rights impacts and risks. The responsibility torespect human rights stipulates that business enterprisesavoid causing, or contributing to, adverse human rightsimpacts through their own activities, and address suchimpacts when they occur. The UNGPs also expectbusiness enterprises to seek to prevent or mitigateadverse human rights impacts that are directly linked totheir operations, products or services through their

business relationships, even if they have not contributedto those impacts. This means that companies shouldwork with their business partners, including suppliers, toset expectations and use leverage to seek improvedhuman rights performance.

Following the endorsement of the UNGPs by the UNHuman Rights Council in 2011, IPIECA launched theBusiness and Human Rights Project, which builds on thecollective experiences and knowledge of its members.The initial phase of the project resulted in thepublication of a set of practical guidance documents ondue diligence and community grievance mechanisms,that has been widely used throughout the industry.

To further demonstrate strong and continued industrysupport for the UNGPs, IPIECA has focused the nextphase of the Business and Human Rights Project towardsaddressing the potential human rights impacts andissues that may occur through business relationships,particularly in the industry supply chain. This new phaseof work is known as the Company and Supply ChainLabour Rights Project.

IPIECA awareness briefing

Introduction

Human rights duediligence processA practical guide to implementationfor oil and gas companies

SocialResponsibility2012

www.ipieca.org

www.ipieca.org www.humanrights.dk

Socialresponsibility2013

Integrating human rights intoenvironmental, social and healthimpact assessments A practical guide for the oil and gas industry

SocialResponsibility2015

A manual for implementing operational-levelgrievance mechanisms and designingcorporate frameworks

Community grievancemechanisms in the oil and gas industry

Outputs of the firstphase of IPIECA’sBusiness and HumanRights Project.


IPIECA, together with engineering, procurement andconstruction (EPC) contractors and field servicecompanies, held a series of workshops exploring humanrights issues in the industry supply chain. Theseworkshops identified the need to build awareness andimprove industry performance in the area of companyand supply chain labour rights, and determined that themost significant risk activity for the industry is theconstruction of large projects in sensitive geographieswith vulnerable workers.

Company and supply chain labour rights issues arecomplex and multifaceted, covering, for example, forcedlabour and human trafficking, freedom of movement,worker grievance mechanisms, supplier andsubcontractor management, working hours and pay,health and safety and welfare principles, etc.

There is strong interest from external stakeholders suchas governments, non-governmental organizations(NGOs), the media and investors, in knowing more aboutwhat companies are doing in this area, as well as anevolving regulatory context, both from ‘home countries’(such as the UK Modern Slavery Act) and through ‘hostcountry’ labour law reforms. However, in contrast toother sectors, there is limited availability of oil and gasindustry-specific guidance and tools for practitioners whoare responsible for managing these issues.

The next phase of the Business and Human Rights Projectis therefore focused on the contracted workforce that theindustry relies on to develop and conduct large-scaleoperations. This is an area of common saliency across theoil and gas industry, and one in which IPIECA memberscan benefit from peer learning and the sharing of goodpractices, including from other industry and civil society-led initiatives. This second phase of work has been namedthe Company and Supply Chain Labour Rights Project.


The next phase of IPIECA’s Businessand Human Rights Project


Oil and gas companies are deeply concerned about thehealth, safety, and well-being of their workforce and ofworkers in their supply chain. As well as being committedto avoiding harm to people, companies recognize thatbetter welfare correlates with better business results, andthat this can be achieved through greater respect for therights of workers in the supply chain.

Operators can be affected by protests and other forms ofwork stoppages stemming from labour issues in theirsupply chain to the same degree that they may beaffected by issues that arise in their own operations.Allegations of forced labour made against a supplier orcontractor, or other adverse labour rights impacts, maycause the company to permanently or temporarily shutdown, with the potential for serious business continuityconsequences. A reputation for operating responsibly iskey to maintaining actual and social licences to operate,by furthering relationships both within the community inwhich the company is operating and with the host-country government, and may assist in winning newbusiness opportunities.

Whether seeking to increase their customer base, or gainaccess to resources around the world, companies benefitfrom being honest brokers that are concerned with thewelfare of workers involved in all aspects of theiroperations.

Some IPIECA members are already engaging with theircontractors to assess and mitigate labour rights risksthrough the use of appropriate systems and tools whichcomply with legislation such as the UK Modern SlaveryAct. However, not all companies have yet reached thesame level of maturity. Hence, IPIECA members agreedto gather and consolidate their collective knowledge andexperience in this area and to share it among their peers.

As IPIECA members have collaborated to develop tools toaddress labour rights issues in the industry supply chain,responsible labour practices can evolve into aprecompetitive aspect of how oil and gas contractorsoperate, similar to health, safety, security andenvironment (HSSE) standards.


Why focus on company and supplychain labour rights?


The risks and challenges in relation to poor employmentpractices and labour rights issues in the oil and gasindustry are many and varied, and numerous factors cancontribute to worker vulnerability. These factors mayinclude:

l the particularities of where the worker is located, forexample in remote/isolated locations or countrieswith weak governance;

l the particular characteristics of a worker, for examplefemale, migrant, low-skilled or illiterate workers;

l the type of job the worker performs, for examplemanual and low-skilled work, carrying out hazardousactivities, etc.; and

l how a project is structured and engages its labour, forexample a project may involve multiple levels ofsubcontracting, there may be a lack of visibility intocontractors’ and subcontractors’ practices and level ofcapacity, or a project may be reliant on informalrecruitment practices, etc.

Companies need to undertake extensive due diligencebefore entering a country, and fit-for-purpose processeshave to be established to promote respect for humanrights. In early project phases, before contractors havebeen selected, it can be extremely challenging forcompanies to fully anticipate all risk factors, such as thecharacteristics of all future workers, or cultural barriersthat may pose a unique threat to labour rights in thesupply chain.

Furthermore, the maturity level of a company and itssupply chain operations may pose a significant challenge.Recently established companies, or small and medium-sized enterprises (SMEs), are likely to have fewerresources and lower capacity overall to manage the riskof labour rights issues, compared with companies thathave an established presence in the area and strongrelationships with their suppliers. Companies often needto work with SMEs and less-mature companies to meetlocal content requirements, and therefore need toensure that they have processes in place which ensurethat these organizations are meeting their expectationsin terms of respecting human rights.


Challenges


IPIECA’s Business and Human Rights Project hasgenerated dialogue and collaboration on labour rights inthe supply chain between IPIECA members, whichinclude field service companies and EPC contractors. Asthe work develops, the goal is to expand collaboration tooil and gas contractors outside of IPIECA’s membership.

The initial focus of the project has been on theconstruction of large projects in sensitive geographieswith vulnerable workforces, focusing on respect for therights of the site-based workforce employed bycontractors and their subcontractors. The key goals are to:

l enable members to more effectively identify, preventand mitigate labour rights risks and impacts withinprojects, operations and supply chains;

l inform stakeholders of the industry’s collectivecommitment and efforts to respect labour rights; and

l support IPIECA members in anticipating emergingtrends and challenges.

In support of these goals, IPIECA has developed thepractical guidance and tools listed below, for which thisawareness briefing provides an introduction:

l Responsible recruitment and employment:a guidance document covering considerations onresponsible recruitment and employment in the oiland gas industry. The document outlines key labourrights issues to be addressed during a project lifecycle, and identifies risks, emerging good practice andconsiderations for effective management.

l Labour rights assessment:guidance on the design and implementation of anon-site labour rights assessment, outlining approachesfor conducting an on-site audit and assessment ofcontractors following contract commencement. Thedocument also provides examples from oil and gascompanies and other industries.

l Worker grievance mechanisms:guidance on developing and implementing effectiveworker grievance mechanisms across oil and gasworkplaces and project sites. The document providesexamples of good practices from IPIECA membersand other industries, that have enabled workers tospeak up and have their concerns acknowledged andaddressed.

l Key steps for carrying out an on-site labour rightsassessment: a quick reference tool based on thecomprehensive Labour rights assessment guidancedocument and Labour rights assessment toolkit.

l Labour rights assessment toolkit:a detailed set of tools for comprehensive on-sitelabour rights assessments (Microsoft™ Excel®

spreadsheet format).

The complete set of guidance documents and tools canbe downloaded from the IPIECA website at:http://www.ipieca.org/resources/good-practice/company-and-supply-chain-labour-rights-guidance/


Project overview

Responsible recruitment and employment Guidance document for the oil and gas industry



www.ipieca.org


Guidance 1

Key steps for carrying out an on-site labour rights assessment Quick reference tool for the oil and gas industry



www.ipieca.org


Guidance 2 tool

Labour rights assessment Guidance document for the oil and gas industry



www.ipieca.org


Guidance 2

Worker grievance mechanisms Guidance document for the oil and gas industry



www.ipieca.org


Guidance 3

Above: IPIECA’s practical guidance documents and toolsfor managing labour rights, developed as part of theCompany and Supply Chain Labour Rights Project.

http://www.ipieca.org/resources/good-practice/company-and-supply-chain-labour-rights-guidance/

IPIECA

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© IPIECA 2019 All rights reserved.

IPIECA is the global oil and gas industry association for advancing environmental and social performance. Itdevelops, shares and promotes good practice and knowledge through industry collaboration. IPIECA convenesa large portion of the global oil and gas industry across the value chain and is the industry’s principal channelof communication with the United Nations.

Through its member-led groups and executive leadership, IPIECA brings together the collective expertise of oiland gas companies and associations. Its unique position within the industry enables its members to contributeeffectively to the sustainable development agenda.

MEMBERS

AIP

AMEXHI

Anadarko

API

APPEA

ARA

ARPEL

Baker Hughes

Bechtel

BHP

BP

Canadian FuelsAssociation

CAPP

Cheniere

Chevron

CNOOC

CNOOC Nexen

ConocoPhillips

Concawe

Encana

Eni

Equinor

ExxonMobil

Fuels Europe

Halliburton

Hess

Husky Energy

IBP

INPEX

IOGP

JPEC

Kosmos

Libya NOC

Marathon Oil

Noble Energy

Norsk olje & gass

Oil & Gas UK

Oil Search

Olie Gas Danmark

OMV

Occidental

PAJ

PDO

Pemex

Pepanz

Petrobras

Petronas

Petrotrin

PTTEP

Qatar Petroleum

Repsol

Sapia

Saudi Aramco

Schlumberger

Shell

SNH

Total

Tullow Oil

UKPIA

VNPI

Wintershall

WLPGA

Woodside

WPC

Documents

Company and supply chain labour rights in the oil and gas