January 22, 2021
Building a human rights due diligence approach for a development financier like Finnfund is a long and fascinating journey. It’s not only about building systems and developing processes but about building people and changing the thinking. It has also been a journey for me.
This blog is not about me, but given that I have been fortunate to play a central role in building Finnfund’s human rights management, I thought I could start with sharing the key event that in my belief was the start of my personal journey in the world of human rights.
In December 1984, the world was in shock: In India, an explosion at the Bhopal Union Carbide pesticide factory injured and killed thousands of people. That event is one of those that determined my future choices: environmental studies, industrial risk management, and finally, human rights. I was fifteen at that time.
Putting on the human rights lenses
Working with a human rights lens is sometimes also like giving new clothes to a dear old doll: human rights have been present before but one may have to look carefully and rethink one’s work to see them clearly.
Finnfund’s journey in the respect of human rights reflects the global development of human rights in business. Finnfund’s journey started slowly but surely in the early 1990s and accelerated in the mid-2000 with the adoption of the IFC Performance Standards on Social and Environmental Sustainability and the ILO Core Labour Standards as our environmental and social management framework.
In practice, that was a shift from a purely environmental approach to occupational health and safety, labour rights and to stronger focus on communities.
Our human rights journey really takes off
In 2015, we intensified our work to integrate human rights management into our investment process, starting with a series of specific human rights due diligence and impact assessment trainings and developing tools and approaches. To guide our work, in 2017 we hired a human rights consultancy to assess our progress and the gaps between our approach and the United Nations Guiding Principles on Business and Human Rights (UNGP).
Until then, we had thought what we were doing was already quite well aligned with what a human rights due diligence meant. However, that external ”audit” helped us in seeing the gaps and the ways how to close them.
In addition, we started to actively seek to learn from others: our fellow development financing institutions, consultants, NGOs, other Finnish companies, and our investees.
All this helped us to finalise our human rights statement in January 2019. In a way, this is when our human rights journey really took off.
Feedback makes us see our blind spots
Engagement is not always easy, but it is always worth it. One recent example of the benefits of engaging with others is the work of experts from Fairtrade Finland and Plan International Finland, as part of a project organised by FIBS, to assess our human rights report for 2019.
The feedback we received – positive remarks as wells as constructive critique on issues we have to develop– is extremely useful for us. Such feedback makes us see our blind spots and are both valuable and valued.
This is the strength of cooperation with our stakeholders and NGOs in particular. And the examples are not few: all the exchanges and feedback when we were preparing our human rights statement; several discussions on labour rights with SASK; time spent together and discussions at the annual UN Forum on Business and Human Rights; reflections at the Business and Human Rights focus group organised by FIBS; meetings of the multi-stakeholder international community of practice on human right impact assessments organised by the Danish Institute of Human Rights – and many more.
We have never been shy sharing draft versions of our different tools with other development financing institutions to get their feedback. Some of our sister organisations have developed better tools based on our drafts and shared them back. This process of co-creation and continuous development benefits us all.
What’s in it for me?
On our journey, we have come to realise that we already did a lot in terms of human rights due diligence but we did not call it human rights due diligence at that time.
The IFC performance standards and the ILO core labour standards, the two frameworks of our environmental and social management, cover several, selected human rights impacts for some groups of stakeholders, and while this is not fully in line with the UNGP, working with those standards meant that we were familiar with labour rights, rights of indigenous people and minorities, right to a fair standard of living, right to access to water, right to land, right to health and life, rights to religion and culture, freedom of association, right to security, and many more. But we did not call them human rights.
Concepts are important here. In the world of finance, the term due diligence is used for the assessments done before an investment decision, while in the UNGP it refers to a continuous process, hence it is not limited to a pre-decision phase. It corresponds to what we (in the world of finance) would call a management system.
Once you understand that, all the pieces of the jigsaw come to their place more easily. But it can take time to move from theoretical presentations on human rights conventions and principles (and using a specific jargon) into the practical reality of local contexts, companies, projects and people. In other words, to understand “what’s in it for me”.
We are not quite there – yet!
For years, we have included binding environmental and social compliance requirements in our investment agreements, we have used environmental and social action plans as tools to prevent, mitigate and correct adverse environmental and social impacts of our investees’ projects/activities. We have discussed environmental and social impacts and the need to have grievance mechanisms, we have monitored compliance and performance of our investees, we have audited… And so forth.
Now we realise that these can be seen as elements of leverage and remedy. That does not mean we have all the leverage and remedy tools and procedures we need, but we have a foundation to build on.
And we also understand that we are not quite there yet. Yes, our present environmental and social management system is a good start but it is not sufficient. Yes, we have already developed additional tools, but we need more.
We have to go beyond, we have to engage more, convince our clients to engage more, get rid of our fear of criticism and conflicts or of creating expectations we would not be able to fulfil.
Sometimes this all feels overwhelming. Then it is good to take a deep breath, get back to the feedback received from our stakeholders, and step by step, move forward. As with all aspects of sustainability, developing a human rights due diligence approach is both a wonderful and never-ending journey.
Put people at the centre
We started 2020 with enthusiasm and an ambitious plan to finalise the missing elements of our human rights due diligence framework. Then the world changed, and we found ourselves looking at the COVID-19 pandemic and thinking about the workers of our investee companies. Worrying about people: protection, jobs, families, right to work, right to health, right to life, non-discrimination, changing legislations, ostracism, mental well-being. And what to do from Helsinki? How to help? What a feeling of urgency and powerlessness!
We have been discussing and asking questions, sharing guidelines and guidance, reminding of good practices to manage retrenchments, adding requirements to investment agreements, restructuring financing, giving more time to implement environmental and social actions plans due to changes in priorities, monitoring, discussing with other development financiers and NGOs, and finding new ways to work…
2020 was a challenging year. However, there is one good thing to take with to the new year: in many ways, the pandemic has put the people at the centre. Let’s keep it that way.
Senior Environmental and Social Advisor