A/HRC/4/74 page 3 Impact assessment, simply defined, is the process of identifying the future consequences of a current or proposed action. International Association for Impact Assessment I. FRAMING THE ISSUE: HUMAN RIGHTS IMPACT ASSESSMENTS RESOLVING KEY METHODOLOGICAL QUESTIONS 1. The societal impacts of business activity are complex. Such impacts can be positive and negative, direct and indirect, singular and cumulative, highly specific to local circumstances, and have multiple interrelated factors. 2. It is important to understand how business activity impacts human rights, so that those who are most directly involved and affected - including local communities, Governments, and employees - can intervene to enhance positive effects, avoid or mitigate negative impacts and risks, and contribute to the fulfilment of human rights. Such interventions are most effective and least costly when implemented in anticipation of rather than in reaction to changes brought on by business activity.1 3. This philosophy is well-developed in the area of environmental and social impact assessments (ESIAs), which are now considered routine for projects with a significant physical footprint and are often required by national law or financing institutions, particularly in the extractive industries. 4. ESIAs examine the business activity and its direct impacts. This often raises issues of human rights, for example the right to an adequate standard of living. 5. However, the ESIA approach of studying the direct impacts of a business can miss human rights violations that are embedded in a society, such as where freedom of association is discouraged or explicitly denied, or where the right to privacy is not respected (for example in the case of customers or employees). These issues will shape how the company operates locally, and place the business squarely in the middle of significant conflicts between international standards and local practice - where the company could be either seen as committing or being complicit in human rights violations, or in conflict with local staff or government officials. 6. In light of this realization and the growing salience of business and human rights issues generally, a number of organizations are experimenting with human rights impact assessments (HRIAs) for private sector projects. 7. Paragraph 1 (d) of the mandate asks the Special Representative of the Secretary-General to develop materials and methodologies for undertaking human rights impact assessments. The Special Representative in his interim report stated that this task is beyond the resource and time constraints of the mandate but committed to monitoring ongoing efforts. 1 The term “impact assessment” is also often used to describe activity ranging from ex post evaluations to compliance checks. This paper takes the term to mean ex ante activity, although ongoing assessments of various kinds should be a part of good business practice.