Human rights in Finnfund operations
In its work Finnfund respects human rights as enshrined in internationally recognised human rights standards1). The human rights perspective is embedded in Finnfund’s Environmental and Social Policy, and it also endorses the Principles for Responsible Finance of the European Development Finance Institutions (EDFI), of which it is a member. In human rights questions Finnfund’s Environmental and Social Policy tracks the UN Global Compact, the UN Guiding Principles on Business and Human Rights2) and the ILO’s fundamental principles. Projects financed by Finnfund comply with the environmental and social Performance Standards of the IFC (International Finance Corporation)3), part of the World Bank Group. These performance standards incorporate international human rights principles.
The IFC and the EDFI group track international guidelines in keeping their standards and tools for human rights compliance under continuous review. The IFC’s Performance Standards were last revised in 2012 to reflect UN Guiding Principles on Business and Human Rights. In the same way Finnfund steadily develops its own procedures and tools.
Finnfund’s approach is in line with the Human Rights Based Approach4) in development cooperation of Finland’s Ministry for Foreign Affairs. Its procedures and tools are vetted by the Ministry, which is responsible for the ownership steering of Finnfund.
Procedures and tools
An examination of human rights aspects is part of Finnfund’s financing process. A human rights assessment is carried out for each project alongside the environmental and social assessment. Assessments follow IFC and EDFI procedures.
Human rights principles, tools and procedures are embedded in Finnfund’s financing process:
- Finnfund produces or commissions a due diligence report at the project preparation stage. This report analyses project and customer operations and compares them to the relevant international standards, with the aim of identifying, mitigating, remedying and pre-empting possible defects.
- Finnfund’s specialists examine the human rights situation in the target country using public information sources and reviews. The assessments apply detailed questions and checklists (such as the “Human Rights Compliance Assessment Quick Check” of the Danish Institute for Human Rights). These are used to certify that the project respects applicable human rights regarding labour law and conditions, land ownership and use, exploitation of resources, community health and safety, food safety, population movement, protection of cultural heritages, the status of native peoples and other vulnerable groups, hearings and consultation for stakeholders, and so on.
- When making an investment decision the Finnfund board has at its disposal all information relevant to the possible human rights impact of the project. Its draft decision can also contain a list of measures to remedy possible deficiencies.
- Finnfund does not finance enterprises and projects with human rights violations that cannot be prevented or corrected.
- Human rights requirements and remedial measures are documented in Finnfund financing contracts.
- Compliance with contract conditions and the operations of the company/project are monitored for as long as the project is in Finnfund’s financing portfolio. Human rights questions are an integral part of this work. The monitoring tools are reports supplied by the company, regular visits and collaboration with other financial institutions involved, and stakeholders.
- If defects in respect for human rights are observed, Finnfund seeks solutions in cooperation with the customer. The process can also lead to termination of finance.
- Finnfund publishes information on its individual investments in line with general practice in the field of finance, and what has been agreed with the customer company. Finnfund encourages its customers to openly share information on their operations.
Finnfund human rights skills
Finnfund’s environmental and social specialists and development impact advisers play a key role in assessing and monitoring each project’s observance of human rights. Where necessary, Finnfund engages outside experts.
When ensuring the environmental and social responsibility of operations, Finnfund underlines human rights. The company has three full-time experts on environmental and social responsibility and one development impact adviser, all of whom are well versed in identifying and handling human rights questions. These specialists are separated from investment planning so that human rights questions, and environmental and social responsibility in general, are tackled impartially and consistently.
Finnfund applies continuous training, in Finland and abroad, to maintain and develop the skills of its specialists in environmental and social responsibility and in development impacts. Training in human rights is organized for all employees as well as for customers.
Finnfund cooperates with European and multinational development finance institutions (EDFIs and IFIs) as well as other financiers (banks). Finnfund’s specialists participate in the international dialogue with financial institutions on advancing human rights work. We closely track developments in the field in order to support the continuous development of our own processes.
1) International Bill of Human Rights ja ILO Declaration on Fundamental Principles and Rights at Work
2) Guiding Principles on Business and Human Rights
3) Performance Standards, PS
4) Human Rights Based Approach, HRBA
Useful human rights links
Finland’s international human rights policy (Foreign Ministry web site)