Introduction
The acronym “ESG” stands for Environment, Social and Governance. At first glance, it may not appear to include human rights. However, human rights tend to find its way into the very essence of the ESG framework, particularly in its data compilation, implementation, and reporting.
The fundamental document for human rights is the United Nations Declaration of Human Rights that was adopted on 10 December 1948 in the wake of the Second World War – a date that is now commemorated as World Human Rights Day.
The overlap between ESG and human rights becomes clear when considering the environmental and social issues aspects of ESG. In the international context, relevant documents include the International Covenant on Economic, Social and Cultural Rights as well as the Paris Agreement1, an international binding agreement dealing with climate change.
This covenant includes rights relating to work, as set out in Article 6 which states that:
“Article 6
1. The States Parties to the present Covenant recognize the right to work, which includes the right of everyone to the opportunity to gain his living by work which he freely chooses or accepts, and will take appropriate steps to safeguard this right.”
The covenant also addresses workplace safety, health, and education, all of which find their way onto. These issues often appear in ESG reports, whether due to legal compliance of through private sector community contributions, such as supporting schools or providing medical treatment.
In terms of disclosure, the usual approach is to address labour issues under the Human Rights perspective. As an example, the Simplified ESG Disclosure Guidance (“SEDG”) when reporting on human rights focuses essentially on child labour and forced labour.
Source: Simplified ESG Disclosure Guide issued by Capital Markets Malaysia and the Securities Commission
Human Rights in GRI Standards and Environmental Reporting
The intersection of human rights with other ESG aspects is further underscored by how GRI standards apply. Generally, these standards state:
“GRI standards enable an organisation to report information about its most significant impacts on the economy, environment and people including impacts on their human rights …”2
This means that even disclosures focused on environmental issues – such as floods or impacts on water resources – inherently affect not just employees but entire communities. These community impacts touch on human rights and should be reported. When reporting is required, there is also obligation to address remediation. This is especially relevant for extractive industries that operate on lands rich in minerals and oil, often belonging to indigenous communities.
Similarly, the severe impact of oil spills on fishing and coastal communities highlights the need for ESG human rights assessments to extend beyond employment standards3. ESG reporting should account for how company activities impact various community segments, reflecting broader social and environmental consequences.
International Labour Organisation and Indigenous Rights
The International Labour Organisation (“ILO”) has long recognised these links through its Indigenous and Tribal Peoples Convention, 1989 (No. 169) (ILO Convention No 169), adopted on 27 June 1989. This Convention underscores the obligation to respect the cultural and spiritual importance of lands for indigenous peoples. It highlights the collective aspect of this relationship and the need to protect it. The ILO specifically addresses the special features of this relationship between the land and indigenous people in Article 14, which states:–
“Article 14
1. The rights of ownership and possession of the peoples concerned over the lands which they traditionally occupy shall be recognised. In addition, measures shall be taken in appropriate cases to safeguard the right of the peoples concerned to use lands not exclusively occupied by them, but to which they have traditionally had access for their subsistence and traditional activities. Particular attention shall be paid to the situation of nomadic peoples and shifting cultivators in this respect.”
Other provisions of the ILO Convention No. 169 cover matters such as recruitment and conditions of employment, including health hazards through exposure to pesticides or other toxic substances, as well as prevention of coercive recruitment systems, including bonded labour and other forms of debt servitude.
Cultural Rights and Indigenous Land Use
Article 15 of the ILO Convention No 169 explicitly recognises:
“the rights of the peoples concerned to the natural resources pertaining to their lands … (which) include the right of these peoples to participate in the use, management and conservation of these resources.”
Relocation of indigenous communities is tightly regulated. Most importantly, the right to return to their traditional lands once the grounds for relocation cease to exist, is expressly recognised4. This is particularly important when considering the actual condition of the land after activities like mining.
Land Rehabilitation and Reporting Obligations
This underscores the importance of land rehabilitation as part of the human rights of indigenous and affected communities. Rehabilitation typically involves restoring a site (previously used for activities like mining) to its original state. Although full restoration is often impossible, this highlights the gap between the recognition of human rights in international instruments and the limited protection available in practice. Despite these challenges, countries and companies have an obligation to report remedial actions – such as cleaning contaminated areas to safe levels – to enable communities to return to their lands. While it may not be expressly provided in national laws, ESG reporting requirements demand that these questions be ask, answered, and acted upon.
Traditional Activities and Social Rights
Article 23 of the ILO Convention No 169 highlights the importance of traditional activities of indigenous people, such as handicrafts, hunting, fishing, trapping and gathering:
“… as important factors in the maintenance of their cultures and in their economic self-reliance and development. Governments shall, with the participation of these peoples and whenever appropriate, ensure that these activities are strengthened and promoted”.
While the convention addresses governments, it should be noted that in a world where ESG is of increasing importance, businesses also share responsibility in these areas, regardless of whether national laws are up to date.
Conclusion: Expanding the Human Rights Lens
This is especially relevant in light of the United Nations Declaration on the Rights of Indigenous Peoples, adopted in 2007, and the United Nations Guiding Principles on Business and Human Rights (“UNGPHR”), adopted in 2011. The UNGPHR clearly states that these guiding principles should be implemented in a non-discriminatory manner:
“… with particular attention to the rights and needs of, as well as the challenges faced by, individuals from groups or populations that may be at heightened risk of becoming vulnerable or marginalized, and with due regard to the different risks that may be faced by women and men.”5
While it is arguable that these instruments are merely declaratory in nature, it is no longer acceptable for those involved in human rights or ESG implementation to claim ignorance or indifference to companies’ human rights obligations. These obligations go beyond labour issues to include cultural and social rights and environmental responsibilities, reflecting the far-reaching impacts of business activities on human rights.
For further information, please contact:
Pushpa SK Nair , Azmi & Associates
pushpanair@azmilaw.com
- Malaysia has not signed or ratified or acceded to this Covenant but is bound by the Paris Agreement.
- See GRI 2: General Disclosures – Global Reporting Initiative at <https://www.globalreporting.org/>
- Compensation for the effects of oil spills is covered by International Conventions, national laws and by insurance coverage for vessels. The majority of vessels operating in international trade are insured for third party liabilities by a Protection and Indemnity (P&I) Club. For oil pollution incidents, the P&I Clubs and other insurers may pay for losses up to the amount set by the applicable convention or national legislation. See <https://www.itopf.org/knowledge-resources/documents-guides/liability-and-compensation-for-ship-source-oil-pollution-in-the-marine-environment-an-overview-2021/>
- ILO Convention No 169, Article 16.
- General Principles UNGPHR.
