Human Rights Are a Business Issue

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Other key countries and commodities include: Angola (oil), Chad (oil), Equatorial Guinea (oil, titanium, iron ore, uranium, gold), Gabon (oil, iron ore), Mozambique (titanium, aluminium), Sierra Leone (diamonds), and Zambia (copper).

The human rights risks associated with working in these countries are substantial. According to Maplecroft, operating in all of these countries poses a business complicity risk that is either "high" or "extreme." Chad, the DRC, Equatorial Guinea, and Sudan were found to pose "extreme" risk to business. The DRC fares worst worldwide in both the HRRI and the complicity risk index.

Private security and human rights: Another Maplecroft index lets companies see at a glance where they are likely to require an extra degree of carefully trained and monitored private security in order to protect their assets. It also shows businesses where they are at greatest risk of complicity in human rights violations due to a private security company committing a violation while in their employ. The indices show that violations are more likely to occur in countries with valuable natural resources, where human security is poor.

Countries with severe internal conflict carry the highest risks for companies hiring private security forces. These include the Democratic Republic of Congo, Sudan, Iraq, Somalia, Sri Lanka, and Colombia, where local private security or irregular forces protecting assets have committed human rights violations, including extrajudicial killings.

The private security industry is insufficiently regulated and in many cases poorly trained and monitored, so there is an obvious advantage for companies in ensuring they hire legal and responsible security providers. Charges that private security companies commit human rights violations with impunity are commonly recorded for Afghanistan and Angola, where there has not yet been a case brought for extrajudicial killing.

The helpful thing about these indices is that they focus business efforts at remediation on the key risks. For example, Indonesia scores 1.2 (extreme risk) for labor rights and protection because the worst forms of child labor are tolerated and compulsory labor for some migrant workers still exists. In China, on the other hand, child labor is rated only "medium risk," but forced and involuntary labor scores "high."

The bottom line for businesses investing in unfamiliar markets is they must be aware of what they're getting into—and understand exactly which country-specific risks will likely require remediation and which require monitoring. That should be of concern from the corner office on down, because reputation, market capitalization, and even litigation may be at stake. Risk managed responsibly leads to reputation advantage.

At the same time, foreign investment is essential for the development of emerging economies. If business is better able to manage and monitor risks and reputation, it is to the mutual benefit of all.

With Carolin Seeger, Maplecroft

Alyson Warhurst is chair of Strategy and International Development at Britain's Warwick Business School, a fellow of the World Economic Forum, and a founding director of social enterprise and advisory firm Maplecroft. She has advised De Beers and international humanitarian and human rights organizations, among others, on corporate social responsibility.