A rise in human rights violations from government crackdowns on public protest and political dissent is significantly increasing risks to business in ten of the world’s fastest growing economies, according to Maplecroft’s newly released Human Rights Risk Atlas 2013 (HRRA).

The Atlas reveals growing socio-economic and political instability in the growth economies due to increasing levels of public dissent against governments and business interests. As a result, the reactions of repressive governments and their security forces is contributing to a worsening global human rights situation, which is leaving foreign investors exposed to high levels of operational, financial, legal and reputational risks.

Egypt (ranked 24 in the Atlas) and Indonesia (32) are classified as ‘extreme risk’ for the first time in the six years the HRRA has been produced. They now join the growth economies of Pakistan (5), Nigeria (12), China (16), Bangladesh (18), India (19), Russia (23), Mexico (25), and the Philippines (26) among the countries with the world’s worst human rights records.

“Multinational corporations are particularly vulnerable to allegations of complicity in human rights abuses, due to their complex supply chains,” explains Maplecroft CEO, Alyson Warhurst. “Business investment is deeply rooted in emerging economies and many of these countries are affected by social tensions. A decline in the human rights risk landscape is not only an unacceptable situation; it is also a forecaster of political risk and business disruption.”

Maplecroft’s annual HHRA identifies human rights violations; political instability; business risks, such as supply chain disruption and potential reputational damage through the analysis of 24 human rights violation categories across 197 countries, as well as identifying opportunities by highlighting where human rights are improving.

This piece of research illustrates a significant increase in human rights violations over the last six years, with the ‘extreme risk’ category increasing by 60% to 32 countries. Maplecroft believes this increase is attributed to three core reasons:

1.Continued crackdown on protesters and political dissent by increasingly violent security forces acting with impunity

2.Rising socio-economic tensions due to uneven distribution of wealth around the development of extractive projects and agro-commodities production

3.Increased digital inclusion that has galvanised protest movements and accelerated the spread of public discontent

Understanding what is happening in terms of human rights is fast becoming of critical importance to mitigating business risk and harnessing opportunity in growth markets. Many manufacturing and retail companies switched procurement to these markets to take advantage of favourable labour conditions but the risk of supply chain disruption is heightened by wages that do not rise with cost of living increases. For those industries requiring infrastructure investments, such as energy and transportation, there is also an increased risk. Specifically, reliance on security forces to protect assets or make land seizures through extreme or repressive tactics could result in risks of complicity and legal implications in the future.

The risk of complicity in human rights violations by security forces is especially high in fragile, resource rich countries such as DR Congo (2), Myanmar (6), Iraq (7), Nigeria (12) and Indonesia (32).

The increased use of digital technologies and social networking platforms has exposed human rights violations resulting in the mobilisation of protest movements. Countries with repressive leadership have seen a surge in protests, increasing risks to business and potentially undermining their social licence to operate. Related to this, in efforts to manage the risks, China (16), Russia (23) and Viet Nam (43) have all implemented widespread internet censorship and imposed severe restrictions on freedom of speech.

Strict due diligence to avoid complicity in human rights violations is crucial in these circumstances.

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