The climate crisis threatens widespread disruptions to business operations and supply chains, and the people and communities that business rely on. Alongside the growing urgency to reduce carbon emissions and tackle climate change, human rights is fast becoming a priority for businesses who are facing more scrutiny and demands from regulators, investors, and civil society.
Despite the increasing convergence between climate change and human rights, all too often plans to address planet and people, or environmental and social sustainability are considered in isolation.
To explore this important intersection, and what it means for businesses and investors, Sancroft convened an expert discussion for business leaders with Elise Groulx Diggs, one of the world’s top lawyers in the field of Business and Human Rights, and Phil Bloomer, Executive Director of Business & Human Rights Resource Centre. The discussion, which was chaired by Sancroft Chairman Lord Deben, was wide-ranging and covered why human rights is not just a moral or legal issue, but business-critical and the benefits of taking a proactive approach to protecting people and planet.
- To be fast, the transition needs to be fair – The importance of securing social buy-in
Extraordinary efforts are required if the world is to combat climate change and transition to a low carbon economy in the next 30 years. This transformation will have significant implications for certain sectors, communities, and countries.
A just transition involves engaging stakeholders directly affected by this shift and ensures that climate action not only respects human rights, but that stakeholders support the process and transition projects are not blocked or delayed. The Norwegian Supreme Court reminded us of this in October 2021 when it denied the concession for a wind turbine park on the basis that the windmills prevented indigenous Sami people from herding reindeer thereby violating their cultural rights. This highlights the cost of not doing genuine stakeholder engagement as set out in internationally agreed standards including the Equator banking principles.
Conversely, new models that organisations are adopting to secure social license to operate, and harness local knowledge include co-benefit, ownership and management for communities. Listening to affected communities can also help businesses manage supply chain risks; environmental defenders can function as the canary in the coalmine that can help businesses understand and mitigate risks before they escalate.
- ‘Its not enough to be green’ – Climate solutions that deny people’s human rights are not sustainable
Increasingly, businesses are learning that they will not just be judged on how ‘green’ their products are, but also how they make them, and whether they respect human rights. This is clearly set out in new regulations; to qualify as sustainable under the new EU Taxonomy regulations economic activities must meet environmental thresholds, whilst also aligning with internationally recognised minimum social and governance standards. As the Business and Human Rights Resource Centre research reveals, many renewable companies, while pioneering much needed climate solutions, do so at the expense of workers and local communities. There is a very real risk that the accelerating demand for ‘transition minerals’ on which clean energy technologies depend, will fuel a wave of human rights abuses. Violations associated with the extraction of these natural resources, such as cobalt, copper, lithium are already well documented: from hazardous working conditions, to child labour, land grabs, abuse of indigenous rights, water scarcity, pollution and conflict. These violations undermine the speed and scale of investment required to achieve the objectives of the Paris Agreement. They also demonstrate that we need to build up different business models to achieve a just transition, creating a consensus with stakeholders.
- Navigating norms, not ticking boxes – From nudge politics to civil liability
Today, organisations need to navigate a fast-evolving global universe of human rights regulations and soft law guidelines and norms. In recent years there has been a clear shift from voluntary ‘nudge’ approaches to mandatory requirements which impose legal obligations and civil liability on business and financial institutions. This is the case with the incoming EU directive on Corporate Sustainability Due Diligence which lays down rules for companies to respect human rights and environment in global value chains.
However, a recent surge in climate change litigation makes it increasingly clear that it is no longer enough to follow the black letter of the law without regard for internationally agreed norms of business conduct and behaviour.
Landmark court judgements in the UK, Netherlands, France, and Norway have established legal obligations for countries and businesses based on interpretations of ‘soft law’ guidance such as the UN Guiding Principles on Business and Human Rights and OECD guidelines which were traditionally considered non-binding. These rulings are based on the principle that the protection of the rights of people requires the protection of the planet, and second, that that the protection of the planet must be ensured in ways that respect the rights of people. They have set important precedents and demonstrate that approaches that tick the box, but miss the point, no longer offer strong enough protection against legal, reputational and financial risks.
The fall out from Rio Tinto’s destruction of Aboriginal caves in Australia highlights the consequences of a narrow interpretation of legal obligations leading to blocked mining project, hostility of major Australian pension funds and risk of the loss of “social license” for other Australian mining projects – resulting in the resignation of the CEO and several executives.
The Galaxy of Human Rights Norms is a tool created by Sancroft’s human rights adviser Elise Groulx Diggs, to help organisations navigate this new and fast-evolving global universe of human rights and climate global guidelines, national legislation and soft law guidelines and norms. This can help corporations and investors build social consensus in climate debates that are becoming heated.
- Human rights should be put at the centre of ‘ESG’
Internationally agreed standards of human rights provide a valuable key for understanding and managing Environmental, Social and Governance issues. It is increasingly being recognised that these inter-related issues cannot be addressed in silos; good governance means taking all these issues into account and responsible, and of course strong leadership is paramount to achieve good results.
- We need to transition from business as usual
We know the world needs to change. As our chairman often remarks, climate change is a symptom of the wider problem: linear business models that expect others to pay their social and environmental costs. We need to fundamentally change business as usual and embrace new business models if we are to tackle mounting and interconnected social and environmental crises: from climate, to biodiversity to rising inequality and human rights abuse.
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 understand how expectations are changing in the market and how to effectively manage their human rights risks. To find out how we can help you, please contact firstname.lastname@example.org or email@example.com