As we scale up investment in renewable energy, it is time for companies to adopt strong human rights practices. Eniko Horvath and Marti Flacks, from the Business & Human Rights Resource Centre describe the important role of benchmarking in helping achieve a fast and fair transition to an economy that is compatible with both planetary boundaries and social justice.
Climate breakdown demands immediate action to radically reduce emissions. Expanding use of renewable energy sources, such as solar and wind power, is vital for the transition and to help provide access to sustainable energy for all.
But such an abrupt expansion can present enormous dangers to both the communities around renewable energy projects and the communities and workers in their supply chains. The Business & Human Rights Resource Centre is increasingly tracking reports of human rights abuses related to renewable energy projects and their supply chains. We have recorded 152 such allegations since 2010, with 1/3 of these taking place in the last two years. In Oaxaca, Mexico, for example, the lack of respect for indigenous peoples’ rights by wind farm developers mean many community members now see renewable energy projects as a threat to their land and nation on a scale like the extractive oil and gas industry.
These abuses risk not only harming the communities that should be benefiting from these projects, but may also slow down the global transition to renewable energy as community backlash can result in project delays or cancellations. But companies can be pressed and encouraged to improve their human rights performance.
How we’ll encourage a race to the top
We will be piloting the benchmark of the biggest wind and solar energy producers in the sector. By highlighting good practice and exposing abuses, benchmarking simultaneously creates a race to the top and reputational risk for companies. It also encourages investors and end-use companies not to invest in or use energy from laggards, as well as governments not to grant them licenses. The benchmarking approach we use draws on the model and methodology developed by the Corporate Human Rights Benchmark and KnowTheChain. Both demonstrate the power of tapping into the competitive and brand-conscious spirit of companies, while integrating benchmarking into investors’ toolkits to drive improved human rights practices.
We use three building blocks to drive change through benchmarking:
1. Encourage a race to the top
The renewable energy sector is seen by investors, governments, and end-users as a force for good. It’s importance in achieving both climate and energy access goals makes it even more important for them to respect human rights, create co-benefits for communities and workers, and avoid project delays and legal procedures. So by ranking the biggest wind and solar companies against their peers, we can create positive competition and a race to the top that catalyzes voluntary action and provides vital information for investors, end users and governments
2. Empower affected communities
Our benchmark will measure companies against the human rights risks that most concern indigenous peoples, workers, and other communities affected by renewable energy projects and operations. Their input into the design and execution of the benchmark is essential. With their insights, the benchmark (in combination BHRRC requests for companies and investors to respond directly to allegations) provides vital information that can empower affected communities and civil society working to hold companies to account.
3. Build alliances
As well as working with communities we also work with other allies. The responsible investment community has been key in putting the issue on investors’ agenda. For example advising us on an investor briefing on renewable energy and human rights. We are also supported by allies in human rights, climate change, and environmental NGOs. They help guide our messaging to ensure it strikes the right balance between supporting the urgent transition to a low-carbon economy, and insisting that this transition occurs in a way that upholds human rights.
We are collaborating with Amnesty International, Greenpeace and others on an upcoming People’s Summit on human rights and climate change to deepen the conversation. We are also fortunate to have the support and insights of renewable energy experts, who can identify levers within the industry. We published an atlas mapping the renewable energy sector to the SDGs with the help of some of these experts, and others are supporting the benchmark methodology and strategy development.
The challenges we’ll face in doing it
This work is not without challenges and risks. There are three immediate concerns we seek to tackle:
1. Benchmark performance not just policy
One of the biggest challenges is to develop risk indicators that go beyond measuring company policies (which can be a PR operation) to reflect human rights performance on the ground. This is not easy and is the next frontier in the corporate benchmarking world. We are in regular conversation with local partners to identify ways to accurately assess and reflect company performance.
2. Move laggards as well as leaders
So far, our benchmarks have shown they can generate a race to the top amongst leading companies, which advance better practice models. This is also true for ‘catch-up’ companies who aspire to lead. But we have less evidence that laggard companies are catalyzed into action by rankings. The jury is still out as to how effective we are in shifting their performance.
3. Motivate governments and international financial institutions to act
We know that to achieve transformational change in business and human rights in any sector, we need governments to step up and provide the regulations and incentives, like public procurement rules, that create powerful legal risks and market signals to shift corporate behavior. Examples of better practice can be used to advocate for governments to raise the minimum standard of corporate behavior, and outlaw abusive companies.
Our benchmarking work, with communities and allies, is a fundamental first step to create the necessary evidence to ensure that the transition to a low-carbon economy that is not only fast, but also fair.
This blog is part of our Influencing Series, discussions about strategies and models behind influencing.