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Investors can help prevent companies from using frivolous lawsuits to silence human rights and environmental defenders

Companies are increasingly using so-called ‘Strategic Lawsuits Against Public Participation’ (SLAPPs)

To create long-term returns – and meet their responsibilities under the UN Guiding Principles on Business and Human Rights and the OECD Guidelines on Multinational Enterprises – more and more investors are factoring environmental, social, and governance (ESG) issues into investment decisions. This helps to ensure their portfolio companies respect human rights.
To this end, local communities and human rights and environmental defenders, who are closest to businesses’ impact on people and their environment, are of immense value as sources of information to investors. These defenders can highlight damaging business practices, increasing public awareness of risks and harms, and provide crucial information for companies, authorities, and investors. But the space for them to do this work safely and without intimidation is under growing threat.
Companies are increasingly abusing legal tools to silence human rights defenders (HRDs) who alert companies and investors to destructive business practices. These lawsuits are commonly referred to as Strategic Lawsuits Against Public Participation, or SLAPPs. Our latest research shows that between 2015 and 2018, at least 24 SLAPPs were brought against 71 defenders by just 12 major oil, gas and mining companies and one industry association, seeking a total of US$ 904 million in damages.
SLAPPs are designed to weaken the defender, not necessarily to win the case. One example would be the lawsuits brought by Energy Transfer Partners after the Dakota Access Pipeline protests in 2017, which were all dismissed by the court in February 2019. This stifles criticism by HRDs, limits them from doing their work, and ultimately harms businesses and investors, as both benefit from defenders alerting them to environmental, social and financial risks.
A number of governments have enacted or are considering anti-SLAPP legislation so that invalid and abusive suits can be subject to early termination. However, investors can also play a key role in identifying, preventing and stopping SLAPPs.
How can investors identify SLAPPs? A good indication of a SLAPP is if the remedies sought are unusually aggressive or disproportionate to the conduct targeted by the lawsuit, (e.g. a prison sentence for a Facebook post, or a large amount of money requested to compensate “reputational damage”). Another tell-tale sign is the fact that the company bringing the lawsuit is willing to use procedural manoeuvres that appear intended to drag out the case or drive up costs, such as pursuing appeals with little prospect of success.
In the period we analysed, defenders facing lawsuits were tied into legal proceedings for anywhere from one month to four years, draining their time and resources.In some cases the companies targeted defenders with multiple SLAPPs, even suing individual defenders along with their organization, further chilling advocacy.

Companies often exploit their economic advantage and seek high monetary damages. In defamation lawsuits filed by Mineral Commodities and its subsidiary Mineral Sands Resources in South Africa, against two CER lawyers and four other defenders, the total requested damages were USD 662,000, a sum 2,890 times the monthly salary of a minimum wage worker in that country. The fact that most of the lawsuits we looked at were dropped or dismissed is suggestive of them being frivolous.

SLAPPs are expensive, time-consuming and increase legal, reputational and operational risks for companies. For instance, the cost of the Dakota Access Pipeline (DAPL) nearly doubled because of the social pressure against DAPL and Energy Transfer Partners’ response to it – which included a number of SLAPPs brought against leading defenders. These are material concerns for investors.
Investors can clearly communicate to portfolio companies that they expect them to not file lawsuits aimed at silencing critics. They should also constantly monitor the use of any lawsuits which are brought. When investors learn of a lawsuit matching the characteristics of a SLAPP, they should discuss it with the company with the aim of persuading them to drop it and provide an appropriate remedy, in consultation with a human rights defender.
Investors can also use their leverage prior to and during investment to ensure portfolio companies do not engage in this practice. They can do this as part of their due diligence by avoiding investment in companies with a history of SLAPPs. They should also raise the issue as part of their engagement with governments, emphasising the value of anti-SLAPP legislation, when they are supported by local civil society on the matter.
We have developed a list of key questions that we suggest investors ask portfolio companies. Among them are: If a lawsuit is filed against a defender or civil society group, is it the last resort? What are the steps taken prior to resorting to a lawsuit? If a lawsuit is filed, is there senior level oversight? By asking these questions, as part of the broader anti-SLAPP efforts outlined above, investors can protect against a range of risks, and protect HRDs who are a crucial check on corporate abuse.

Ana Zbona and Elodie Aba are, respectively, Civic Freedoms and Human Rights Defenders Project Manager and Senior Legal Researcher at the Business and Human Rights Resource Centre.