Climate change and human rights: Why businesses need an integrated approach to people and planet to ensure resilience

Climate change and human rights: Why businesses need an integrated approach to people and planet to ensure resilience
29th July 2022 Rachel Weller
In Blog

The recent extreme weather across the globe is a powerful reminder that climate change will have profound implications for people and societies, in particular the most vulnerable, and that these effects are already being felt today. To ensure resilience and social license to operate, businesses and investors will need to better understand the implications of climate change on people and communities in their operations and value chains and put in place measures to prevent and mitigate these adverse impacts now.

The climate crisis poses grave threats to human rights around the world – and widespread disruptions to business operations and supply chains.

In agriculture for instance, the physical effects of climate change including heat stress, drought and typhons are already impacting farmers yields – threatening the health and livelihoods of farmers. Without effective interventions, 500 smallholder farmers around the world risk falling below the poverty line, also threatening the security of supply of key commodities. Climate change and environmental degradation is also a driver of climate-induced migration which increases the risk of human trafficking, forced- and child labour; potentially millions more people look set to fall into modern slavery as a result. Extreme weather is also impacting the ability for employers to provide safe and healthy working environments, with consequences for labour productivity. The ILO estimates that by 2030, more than 2% of working hours worldwide will be lost each year because it will either be too hot to work or workers will have to work slower.

Climate solutions also pose risks for people and communities which need to be managed

While renewable energy infrastructure and technologies are undoubtedly critical to reduce emissions and our dangerous reliance on fossil fuels, they are also a driver of serious human rights violations. The Business & Human Rights Resource Centre has identified nearly 200 allegations of human rights abuses related to renewable energy projects, including wind, solar, bioenergy, geothermal, and hydropower since 2010. Abuse allegations include: killings, threats, and intimidation; land grabs; dangerous working conditions and poverty wages; and harm to indigenous peoples’ lives and livelihoods. Many clean energy technologies rely on minerals such as cobalt, lithium and nickel which are sourced from countries such as the Democratic Republic of the Congo, often mined under dangerous conditions, including by children as young as seven. 75% of polysilicon, a key raw material for solar panels, comes from China including 45% from the Uyghur region where state-sponsored forced labour is well documented. With global efforts underway to address this, such as the US import bans on solar panel materials associated with forced labour, this becomes not just an issue of human rights but one of continuity of supply for businesses and investors.

The shift to a low carbon economy will also have significant transitional implications for key sectors, communities and entire countries, in particular for those in emission-intensive industries. These risks need to be managed to avoid not only ‘stranded assets’, but ‘stranded workers and communities’ which could entrench inequalities and fuel economic stagnation and political instability, and result in businesses loss of social license to operate.

As the effects of climate change and decarbonisation efforts accelerate, so to do the drivers to address human rights and the social implications of the climate crisis

A new wave of regulation designed to create a just and sustainable economy encourages businesses to consider and prevent risks to people and planet. Under the EU’s proposed corporate sustainability due diligence directive businesses will be required to identify, prevent, or mitigate adverse impacts of their activities on human rights, such as child labour and exploitation of workers, and on the environment. Expanding sustainability reporting requirements will also require business to disclose in greater specificity how they impact the planet and rightsholders, including employees, value chain workers, consumers/end-users and communities.

The concept of a Just Transition was included in the 2015 Paris Agreement on climate change – recognizing the need for the transition to net zero to be fair and to address transitional challenges for workers, communities and countries.  This framework, which centres on social dialogue and re-skilling, is being adopted by investors. For example, the Just Transition Finance Challenge, a £3.6 trillion investor coalition, is developing a Just Transition label for investment products that deliver on climate and environmental action, socio-economic equity and distribution, and community voice. Climate Action 100+, an investor-led initiative to ensure the world’s largest corporate greenhouse gas emitters take necessary action on climate change, this year integrated a Just Transition indicator into its Benchmark disclosure framework.

There are also increasing efforts to hold companies accountable for alleged human rights harms arising from climate change, with human rights law and standards increasingly being invoked in court. This includes a growing trend of human rights-based climate change litigation as well as  just transition litigation, which challenges the way in which climate action is carried out on human rights grounds, including the rights of indigenous peoples for example through the construction of renewable energy projects.

How should businesses respond?

To ensure resilience, businesses will need to better understand the social consequences of climate change on their operations and value chains – and the potential impact of their climate mitigation and adaption strategies on people and put in place measures to prevent and mitigate these adverse impacts now. Special attention should be paid to the most vulnerable in society who are likely to be disproportionately impacted and least able to adapt without interventions. It will be important to take an integrated approach, by breaking down siloes, encouraging synergies between environmental and social teams and identifying areas of shared opportunity and risk. Steps your business could take now include:

  • Conduct a human rights saliency assessment – assess where there is greatest potential to cause, contribute or be connected to human rights abuses, taking into account longer-term climate-related issues.
  • Integrate climate impacts and environment into on-going due diligence processes- using the lens of risk to people, not just to business, and create plans to mitigate these risks.
  • Assess climate strategies and their potential to adversely impact people and take action to prevent these risks, including through engaging with impacted rightsholders.
  • Understand exposure and greatest impacts – assess how climate change is impacting the business, and the commodities it relies on, and the implications for human rights.
  • Support climate adaption and resilience – build climate resilience into operations and supply chains and local communities, including through working with suppliers, other businesses, industry initiatives, NGOS and governments.
  • Upskill teams on the importance of integrating a human rights-based approach, including at board level.
  • Disclose how human rights considerations are integrated into existing strategies and the management of climate-related risks, impacts and opportunities

Disruption from climate change is inevitable, the impact on businesses should not be under-estimated. The covid crisis and war in Ukraine, and its global impact on manufacturing, food and energy supply chains is a reminder of how fragile our just-in time supply chains are. The difference with the climate crisis is that we know it is going to happen. By taking action now, and integrating a human rights lens, businesses can help future-proof their businesses and ensure a more orderly transition that respects the rights and needs of people, creating a more just and resilient world in which all can thrive.

At Sancroft we champion a holistic approach to sustainability that takes into account social, environmental and economic considerations. We have decades of experience helping organisations to effectively manage human rights risks in their direct operations and wider value chains. Recently this has included: assessing where human rights risks are greatest – from the Group level, down to in-depth reviews of local high risk labour markets in product supply chains; developing risk assessment and due diligence frameworks as well as designing engaging and interactive training to support commercial integration of human rights/due diligence in organisations, including at board-level. To find out how we can help you, please contact Rachel.weller@Sancroft.com