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Arab Spring uprisings, African ‘land grabs’ and the economic downturn causing global increase in human rights violations, reveals Maplecroft ‘Risk Atlas’

07/12/2011

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An annual Human Rights Risk Atlas, analysing the extent of human rights abuses in 197countries, has revealed that human rights and labour standards risks for companies and investors are increasing on a global scale, with 48% of the world now posing ‘extreme’ or ‘high’ risks of corporate complicity in rights violations.

According to risk analysis and mapping company Maplecroft, author of the fifth annual Human Rights Risk Atlas (HRRA), citizens in 95 countries are now exposed to human rights violations by states. This represents a 6% increase in countries posing ‘extreme’ or ‘high’ risks, to business and investors since 2010.

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Maplecroft states that the global increase in human rights risk is attributed, in part, to three main factors. First the violent crackdown on protesters by security forces during the Arab Spring uprisings, which were sparked by anti-government sentiments relating to corruption, oppression of rights and rising food prices. Secondly, an emerging set of resource scarcity challenges for business, linked to large scale ‘land grabs’ in developing countries by foreign investors, aimed at increasing food, water and energy security at home, including biofuels production. In addition the global economic recession continued to challenge the rights of workers, with the results of the HRRA revealing a trend for the trafficking of migrant workers for forced labour i n countries such as Malaysia, Russia, South Africa and UAE.

The HRRA 2012 has been developed by Maplecroft to enable organisations to evaluate and monitor the risks and responsibilities of investing in countries and companies in terms of their human rights risk exposures in their global operations, investments or supply chains. It analyses 23 types of human rights violation within the categories of human security, labour rights, civil and political rights and access to remedy.

Human Rights Risk Index 2012

Legend
Extreme risk
High risk
Medium risk
Low risk
No Data

Rank	Country	Rating
1	Sudan	Extreme
2	DR Congo	Extreme
3	Somalia	Extreme
4	Afghanistan	Extreme
5	Myanmar	Extreme

Rank	Country	Rating
6	Pakistan	Extreme
7	North Korea	Extreme
8	Yemen	Extreme
9	Iraq	Extreme
10	China	Extreme

© Maplecroft, 2011

Arab Spring exposes risks of complicity with state security forces for the energy sector

While the Arab Spring protests aimed to boost the protection of human rights, they led to a surge of violations, due to high levels of violence by security forces against opposition groups and protesters.  In almost all MENA countries, the risk of human rights violations increased in the HRRA over the last year. In the ‘extreme risk’ category, Yemen 8th, Iraq 9th and Iran 10th saw slight increases in the rankings, while Libya 26th and Syria 13th rose 25 and 14 places respectively, indicating a significant rise in risk. The states of Egypt 35th and Bahrain 42nd both rated ‘high risk,’ climbed 11 and 60 places respectively and now sit just outside the highest risk category.

Complicity with the actions of the states in MENA countries pose significant risks to investors in the energy sector, which has extensive interests in the oil and gas rich region. A particular risk for companies is complicity with the actions of state and private security forces. Both are used in the protection of company operations and assets and associations with their actions in the repression of rights can result in significant reputational damage and legal risks. The excessive and lethal force used by state security in these countries, such as the ongoing killings of civilians in Syria and Egypt, as well as attacks on civil and political rights, highlights these risks vividly.

A further factor in the worsening situation in MENA countries is enhanced digital inclusion, where the rise of social media and digital photography has exponentially improved the reporting of human rights violations.

Companies must integrate ESG factors into investment analysis 

Maplecroft states that companies investing in emerging economies benefit from high growth rates and contribute significantly to development. However, due to long-term structural risks in these countries, such as their human rights environment, they are at increased social risk. Therefore, to maximise opportunity and minimise risk they need to assess potential negative human rights impacts, prevent them where possible and engage with partners to promote responsible investment.

“In the face of a deteriorating human rights situation, corporations can expect increased scrutiny from stakeholders and investors, making it imperative for them to assess, mitigate, manage and monitor these risks,” states Maplecroft CEO, Alyson Warhurst. “It is becoming critical for organisations to integrate environmental, social and governance factors, such as human rights impact assessment, into their decision making, or they leave themselves exposed to reputational damage, legal actions and costs to the business that in turn might lead to requirements to divest.”

Land grabs impact rights of the most vulnerable rural populations

The HRRA 2012 also finds that a rising trend for large scale land acquisitions, or ‘land grabs,’ by foreign investors, especially in Africa, is increasingly impacting the human rights of the most vulnerable populations. The right of local communities to water, food, adequate housing, the right to gain a living can all be adversely affected by such investments unless significant measures are taken to ensure their protection. Indigenous peoples are at particular risk, as their land rights are often not safeguarded.

States such as China, India, South Korea and the Gulf states are buying up land in developing countries to grow crops abroad, while private energy companies based in the UK, Germany and Sweden are securing land in sub-Saharan Africa for the production of biofuels. According to a May 2011 report in The Guardian, half of the 3.2m hectares of biofuel land identified in Africa is linked to 11 British companies, more than any other country.

Sub-Saharan African countries that have undertaken large scale land deals with foreign investors include DR Congo, Ethiopia, Mozambique, Mali, Sudan and Tanzania, all of which are classified as ‘extreme’ or ‘high risk’ in the HRRA. In Sudan, over the last year alone, companies from South Korea and UAE purchased 1.5 million hectares of agricultural land between them. It is also reported that some investors have been given unrestricted access to water in the country, a move that could negatively impact the livelihoods of local Sudanese.

Deals such as these illustrate the cross-cutting links between environmental, social and governance risks that create a range of ethical business dilemmas for investors in the agri-commodities sector, including human rights, deforestation and the loss of biodiversity.

“The debate around global food and water security in fragile and conflict-affected countries, in relation to human rights, has intensified,” continues Warhurst. “To avoid financial and reputational damage, investors in such projects should ensure they contain safeguards that also benefit the rural poor by generating employment in the sector, by developing rural infrastructure, as well as by contributing to poverty reduction.”

A WebEx on the HRRA 2012 will be held on 18th Jan 3pm GMT, 10am EST. Professor Alyson Warhurst, Founding CEO of Maplecroft and Honorary Professor at Warwick Business School will present the HRRA 2012 findings, analysis, methodology and outlook for business and investors in the growth economies. Register at info@maplecroft.com – please note that places are limited.

For more information visit the Human Rights Risk Atlas 2012, which includes 31 human rights risk indices and interactive maps, as well as analysis of the results.