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22 May 2017

Renewable energy impacts on communities: Managing investors' risks & responsibilities

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This briefing sets out how investors can manage their human rights risks and responsibilities related to their investments in renewable energy. It provides insights on the following questions:

  • What adverse impacts can renewable energy projects have on communities?  The briefing offers case studies from around the world on displacement, harms to indigenous peoples’ rights, threats and killings linked to wind, hydropower and solar projects.
  • Why does this matter for investors?  The briefing describes international responsibilities of investors and sets out concrete risks including costly delays, increase in operating and capital expenditure, reduced monetization, reputational damage, etc.
  • What steps can investors take to manage these risks and responsibilities?  The briefing outlines specific steps investors can take to manage these risks prior to and during investment.

Full briefing | Executive summary | Press release

Specific actions investors can take include:

  • Prior to investment: Ensure human rights due diligence is undertaken as per UN Guiding Principles on Business and Human Rights (UNGPs) as a condition for investing and structure investments so as to maximize the ability to influence respect of human rights.
  • During investment: Monitor human rights performance of investments and engage with companies to encourage respecting communities’ rights as per the UNGPs. If the company is not receptive, increase pressure e.g. through collaboration with peers or divest.
  • Both prior to and during investment: Engage with companies or asset managers with specific questions on human rights and take steps to verify information; engage with governments, civil society, trade unions, communities, and others to encourage community-led best practices and renewable energy that respects human rights.

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What investors are saying about the briefing:

Anne Simpson, Sustainability Investment Director, California Public Employees' Retirement System (CalPERS):

“As long-term investors, we believe that the analysis of human rights in the renewable energy context set forth in this briefing is fundamental. We need to foster more community engagement to ensure that the transition to renewable energy truly benefits communities and does not create undue risk for investors. This view of investment as management of financial, human and environmental capital underpins CalPERS’ beliefs."

APG Asset Management:

"Responsible investing means considering the full range of ESG risks for each investment we make. While investments in renewable energy have obvious environmental benefits, this briefing underlines the importance of taking a careful look at the potential impact on individual human rights and the rights of local communities. Investors need more dedicated research to guide us on addressing the human rights aspects of renewable energy projects.” 

Boston Common Asset Management:

“Investors have a critical role to play in ensuring that renewable energy projects aiming to tackle climate change respect human rights. This briefing presents a clear argument that this is not only good for investors but also benefits and protects Indigenous Peoples."