Vulnerable Livelihoods, Vulnerable Communities

Commentary, 01 December 2010

By Christine Jesseman, Emily Keeble

Informal sector livelihoods are often dangerous and unstable but are pursued by individuals because of the lack of alternative. | Photo: Julien Harneis

Can human rights help companies better understand the true impact of their activities on the displacement of informal sector work?

"I spend most of my life in complete darkness – save for the light of my torch – mining cassiterite (tin ore) in underground tunnels. Before I came to this place there was a war for many years, and when my family were displaced from our farming land I saw (artisanal) mining as the only way to make a living on my own" The Guardian i

Informal sector livelihoods play a critical role in preventing millions of people throughout the world from facing a life of extreme poverty and vulnerability. However, in some cases the loss of these livelihoods as a result of large-scale commercial activity is not being adequately compensated for under international best practice for corporate social risk management, leading to an exacerbation of this vulnerability.

International best practice ii as referred to here includes established standards and guidelines, for example the International Finance Corporation’s (IFC) Performance Standards, but also established corporate practice driven by competition.

Current best practice, and corporate interpretation and application of that best practice, around compensation is inclined to focus on the legality and financial value of economic activity rather than the equally important role of that activity in alleviating vulnerability and creating opportunities for development.

Should this and other examples of companies failing to either avoid or appropriately mitigate the impact that they have on vulnerability act as a motivator iii to encourage the overt incorporation of human rights impact avoidance and mitigation requirements into international best practice, particularly concerning compensation for informal sector livelihoods? And, would this assist companies in understanding and valuing the true impact that their activities can have on vulnerable communities?

In our view, utilising such an approach as a basis for departure in impact assessment would better enable companies to understand the imperative of not merely compensating for the loss of the economic activity, but also for ensuring that developmental benefits and human rights entitlements that informal sector jobs had previously been providing access to are in no way threatened by the end of the informal work and the arrival of large-scale business operations.

Informal sector livelihoods are often dangerous and unstable but are pursued by individuals because of the lack of alternative income generating activities. The context is often that of extreme socio–economic vulnerability, and in countries where governments are systematically failing to uphold international legal commitments to protect and fulfil fundamental socio-economic rights.

Informal sector livelihoods are seen as the best available means of escaping poverty and creating access to a range of fundamental rights iv, including rights to an adequate standard of living, the right to work and rights to health and education as well as the right to development v. However, displacement or loss of such livelihoods as a result of large-scale commercial activity can critically affect the broader development context vi. This is particularly true in conflict and post conflict areas characterised by competition for natural resources, weak governance structures, corruption and institutional capacity shortfalls vii.

Over the last decade, international best practice has been developed to encourage companies to compensate those affected by unavoidable economic displacement as a result of their activities. However, despite this there still remains a lack of clarity as to how far these strictures extend to informal sector livelihoods. The result is that compensation paid for the loss of these livelihoods does not reflect the true value of that activity or is simply non- existent.

A significant example can be seen in artisanal mining, a dominant informal sector livelihood for between 13 and 20 million people globally viii. Those working in this form of mining often fall outside the full protection of some elements of international best practice guidelines on economic displacement ix. This means that company activity which results in the loss of informal sector livelihoods may not necessarily be followed by compensation being provided by the company which is adequate to restore the development opportunities which that livelihood facilitated. The result is that the very socio-economic vulnerability which can often motivate people to engage in informal livelihoods is critically exacerbated by companies developing large operations, while at the same time risks of adverse social impacts facing the company are increased.

By adopting human rights impact methodologies as a point of departure in assessment and a consequent vulnerabilities lens, companies are in a better position to recognise and assess the extent to which local communities are vulnerable, the extent to which informal sector livelihoods are reducing that vulnerability, and the potential impact of not compensating for the loss of access to development opportunities and consequent reduction of vulnerability.

To truly be considered international best practice, standards for companies should include human rights impact avoidance and mitigation provisions to ensure companies are better able to identify and quantify both baseline vulnerabilities and the impact of commercial activity on that vulnerability in the broader developmental context of lived experiences.



i 'Congo’s tin slaves' - The Guardian, 15 July 2008.

ii Throughout this contribution “best practice” will be used in this context.

iii Particularly the IFC, which is currently reviewing its Environmental and Social Performance Standards.

iv See for example the Universal Declaration of Human Rights, the International Covenant on Economic, Social and Cultural Rights, the Convention on the Elimination of All Forms of Discrimination Against Women, the Convention on the Rights of Persons with Disabilities, the Convention on the Rights of the Child, as well as regional human rights instruments: www1.umn.edu/humanrts

v Declaration on the Right to Development, adopted by General Assembly resolution 41/128 on 4th December 1986.

vi As a different illustration of the principle, see the comments by Elders Ela Bhatt and Mary Robinson concerning the displacement of street vendors during the World Cup held in South Africa in 2010 and the proposal for the signing of a code of conduct between FIFA and local traders prior to the 2014 World Cup in Brazil

vii Guidance on Responsible Business in Conflict-Affected and High Risk Areas: A Resource for Companies and Investors

viii The scale of artisanal mining cannot be accurately determined but the World Bank housed Communities and Small-scale Mining Initiative estimates between 13 and 20 million people are engaged in the activity in 50 countries and a further 100 million are dependent on the sector for their livelihoods. Figures extracted from The World Gold Council.

ix FC Performance Standard 5 Guidance Note ref. G10 “In the event of potential adverse economic, social or environmental impacts by project activities other than land acquisition, the client’s Social and Environmental Assessment process under Performance Standard 1 should address how these impacts will be avoided, minimized mitigated or compensated. Examples include loss of access to state owned sub surface mineral rights by artisanal miners.... In these cases restrictions of access to natural resources do not occur from project-related land acquisition. While Performance Standard 5 will not apply to these situations, the client should nonetheless consider appropriate measures for the affected people under Performance Standard 1.

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