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February 14, 2022

“Among the best-performing organisations”– external review of Finnfund’s Human Rights Statement and its implementation is ready

“The review provides us a valuable analysis, recommendations, and second opinion both by experienced consultants and our stakeholders. It does not only provide us information on where we are currently standing at in terms of our path to implement our human rights approach but also gives us recommendations to move forward and further improve our tools and processes,” says Kaisa Alavuotunki, Director, Impact and Sustainability.

Since the beginning of 2019, a specific Human Right Statement has guided Finnfund’s human rights work. The statement is based on the key principle that human rights are the cornerstone of Finnfund’s work as a development financier and impact investor.

Two years after its adoption, it was time to review the statement and its implementation. The review was also requested by the Finnish Ministry for Foreign Affairs in their 2021 Steering Memorandum, stressing the importance of ensuring that Finnfund has sufficient implementation resources, tools and expertise and includes comprehensive human rights reporting within the annual sustainability reporting.

Benchmarking and gap analysis

The review, finalised at the end of 2021, was conducted by Pillar Two, a Australian-based business and human rights advisory firm that specialises in supporting business and other organisations to respect human rights using a principled, integrated and practical approach. Pillar Two is led by Vanessa Zimmerman who was a member of the core drafting team of the UN Guiding Principles on Business and Human Rights.

The review consisted of two parts:

First, a benchmarking exercise, in which Finnfund’s human rights risk and impact management policies and processes were compared to those of three development finance institutions and two private banks, based on publicly available documents.

Second, a gap analysis based on internal documents and interviews with seven internal stakeholders and six external stakeholder organisations. The gap analysis report describes the human rights capacity, policies, processes and reporting Finnfund has already built and implemented, identifies gaps with relevant international business and human rights standards, and provides recommendations to address the identified gaps.

The benchmarking and the gap analysis were both conducted against criteria derived primarily from the UN Guiding Principles on Business and Human Rights (UNGPs) and the Human Rights Based Approach in Finland’s Development Cooperation (HRBA). Where relevant, the OECD Guidelines for Multinational Enterprises, the Equator Principles, and the IFC Performance Standards were also considered.

Active approach

The aim of the benchmarking was to explore how well Finnfund performs against organisations that engage in similar financing activities, and therefore face similar human rights risks and challenges. Benchmarked organisations were selected based on relatability to Finnfund’s activities and purpose and how much information they had publicly available.

In general, Finnfund performed well. Pillar Two states, for instance, that “in terms of public commitment and human rights policy, the different organisations generally performed well, but Finnfund was among the best-performing organisations”.

“It was a pleasure to work with Finnfund on reviewing their human rights processes. The team members are very dedicated to evolving Finnfund’s approach to human rights, and eager to engage with feedback. We heard from external stakeholders that Finnfund has come a long way in the past decade, and it is great to see that they are committed to continuous learning and improvement,” says Vanessa Zimmerman, CEO of Pillar Two.

Finnfund’s human rights due diligence process is also considered to be well-aligned with the UNGPs: Human Rights Due Diligence findings are integrated in environmental and social action plans and in the investment agreements, and Finnfund is monitoring and tracking human rights impacts throughout the life of the investment.

In terms of governance and human rights training, Finnfund also performed better than most other benchmarked organisations. In particular, the review highlights that Finnfund has taken an active approach to staff training on human rights awareness and skills.

“We are proud to be performing well in this high level benchmark, on many of the indicators, as these organisations can be considered front runners in this field, and at the same time, we recognise that there is room for improvements,” says Sylvie Fraboulet-Jussila, Senior Environmental and Social Adviser.

“When engaging in the exercise we expected that there would be gaps and we knew where these could be. We needed external experts to help us point the gaps out, put words on our blind spots and share their insightful expertise and views on improvement actions,“ she continues.

“Strong alignment with the UNGPs”

According to the review, Finnfund’s Human Rights Statement 2019 shows strong alignment with the UNGPs by making a clear commitment to respect human rights in the context of its investment activities, referencing key international standards, and describing all key elements of human rights due diligence.

One clear area of improvement is related to salient human rights risk assessment at portfolio level: Only one third of benchmarked organisations had conducted a salient human rights risk assessment, and Finnfund was not among them.

“While Finnfund assesses the potential (or actual) human rights impacts at the level of individual investments, we are yet to perform a salient human rights assessment at portfolio or even sector level and formally identify the most salient human rights risks and impacts. Not that we do not have an idea of what these could be, but we have not yet conducted a thorough assessment,” Fraboulet-Jussila comments.

Alignment with UNGPs – benchmarking by Pillar Two.

Cooperation and continuous development

Discussions and consultations with stakeholders formed an integral part of the assessment. PillarTwo had several one-on-one discussions with Finnish and international stakeholders, such as representatives of civil society and other human rights experts, as well with Finnfund’s own staff from different functions.

According to the report, external stakeholders commented that Finnfund has made an impressive transition in its human rights practices over the past decade, and particularly the last few years. In addition, stakeholders indicated that Finnfund is seen as an emerging leader in the field, and in the business and human rights space in Finland generally.

However, that opinion came with a clear caveat that Finnfund must continue working to address remaining gaps. Many of the external stakeholders also expressed their interest in working more with Finnfund, both with offers to provide input on new tools and processes, as well as seeking to learn from Finnfund’s work to implement the UNGPs.

Stakeholders also identified Finnfund’s external complaints and whistleblowing mechanism as well as greater transparency on funding sources and investment decisions as areas where further work is needed to ensure that Finnfund can maintain its increasingly positive reputation.

“The benchmarking and gap analysis with all its valuable recommendations opens a new page in improving Finnfund’s human right approach. We will prioritise and include the recommended actions in our plans and have already started to implement some of them,” Fraboulet-Jussila says.

“I would particularly like to thank all our external and internal stakeholders that have been involved in this work. Your feedback and suggestions are extremely valuable for us, and we are looking forward to continuing cooperation and exchanging views also in the future,” Alavuotunki adds.

A summary of the review is available here Finnfund human rights review – summary by Pillar Two (pdf)

Read more
Human rights – Finnfund
Human rights management system – our work in practice – Finnfund
Finnfund reviews the implementation of its Human Rights Statement – Finnfund
Blog: The fascinating (and long) journey of our human rights approach – Finnfund
Blogi: Vipuvoimaa ihmisoikeuksiin – Finnfund

Further information
Sylvie Fraboulet-Jussila, Senior Environmental and Social Adviser,, tel. +358 40 587 6467
Päivi Michael, Environmental and Social Adviser,, tel. +358 40 563 5414
Kaisa Alavuotunki, Director, Impact and Sustainability,, tel. +358 41 522 3693

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