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  1. Policy
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9 February 2022

Why wind and solar companies need to address human rights

Allegations of human rights abuses ranging from land grabs to violations of workers’ rights risk slowing the energy transition. Renewable energy supply chains need a human rights policy.

By Jocelyn Timperley

In 2016, a $144m wind park in Kenya was cancelled following several years of hold-ups. The Kinangop project had become embroiled in disputes with residents over compensation for land and opposition from farmers. Kinangop said protests by locals had made it difficult for workers to build the wind farm.

“It went through legal processes for three to four years and almost bankrupted the company,” says Jessie Cato, natural resources and human rights programme manager at the Business and Human Rights Resource Centre (BHRRC). “It got shut down because of a lack of due diligence and a lack of community consent.”

Rolling out clean energy is clearly a critical part of global mitigation efforts, but there are rising concerns that some of these projects are failing to properly incorporate human rights. This could in turn put these businesses, and even the whole energy transition, at risk.

Wind turbines at the Lake Turkana Wind Power project in Marsabit County, approximately 545km north of Nairobi, Kenya. (Photo by Simon Maina/AFP via Getty Images)

“We don’t have a choice but to decarbonise the planet; the climate crisis is the biggest threat to human rights that we currently face,” says Cato. “So we need the industry to keep growing. What we don’t want is the industry to grow in a way that replicates abusive sectors.”

An influx of allegations

Kinangop is not the only renewable energy project to have seen hold-ups due to disputes with local communities. Kenya’s High Court recently ruled that another wind power project in Lake Turkana acquired community land unprocedurally, giving one year for the process to be regularised, after which the title deeds will revert to the community.

Mexico is also witnessing conflict. In 2020, locals and human rights groups filed a lawsuit demanding the suspension of EDF’s Gunaa Sicarú wind park project planned on the territory of indigenous community Unión Hidalgo, although a French civil court recently dismissed the request, partially on procedural grounds. The huge Eolica del Sur project on Mexico’s Pacific Coast has also seen widespread protests, and Colombia’s Guajira I wind farm faces similar problems.

Criticisms have also been made of solar plants, such as Engie’s Nueva Xcala Solar Park and Jinkosolar’s Yucatán Solar Park, both in Mexico. Israel’s solar energy industry has been accused of contributing to Palestinian displacement. “I would say wind and solar are equal in terms of impacts,” says Cato.

Anita Dorett, program director for the Investor Alliance for Human Rights, says the renewable energy sector is facing the same issues fossil fuel companies faced in terms of land grabbing and ensuring they had free, prior and informed consent of communities. “Whether you are drilling a hole in the ground to extract oil, or putting up a giant wind [turbine], it is still land, and you have to acquire that land. You can’t take decisions to move to the renewable energy space without understanding who you are going to impact.”

Nicholas Diamond, director at governance consultancy C&M International and counsel at law firm Crowell & Moring, says an important lesson learned from fossil fuel companies is the need to closely scrutinise the full spectrum of business relationships, from supply chain partners to sellers and customers.

“While the energy transition may be relatively new, the same long-standing principle applies – the better you know your business operations, the better positioned you will be to implement due diligence processes to surface and remedy issues,” he says.

The BHRRC has collated more than 200 human rights allegations linked to renewable energy projects in the past 11 years, with 44% of these linked to wind or solar power. Most of the remaining allegations were connected with hydro power, the world’s largest source of renewable energy.

[We] started looking at renewable energy allegations because we started getting an influx of them, essentially,” says Cato. “As the sector has grown, we get more communities and front-line groups approaching us for assistance with approaching companies.”

Cases include land and water grabs, violation of the rights of indigenous peoples and denial of workers' rights, says Cato. “It is a broad spectrum, but primarily around issues related to land rights and indigenous rights.”

Diamond warns that failing to build the right partnerships on some of these human rights obligations and norms in the renewable sector could “bleed over and slow down progress that we are trying to make around climate change”.

Supply chain challenges

These lessons do not just apply to the mounting of solar panels and wind turbines. As focus on ethical sourcing increases, renewable energy suppliers are likely to find their entire supply chain under increasing scrutiny from the consumer-facing brands buying their energy.

Pressure for change can also come from the bottom up. Tesla last year found itself being urged by indigenous communities not to source nickel from Russian company Nornickel, due to its impacts on the environment and livelihoods. Meanwhile, a report last year from Sheffield Hallam University in Yorkshire documented the links between the production of solar-grade polysilicon in the Xinjiang Uyghur Region of China and forced labour. The finding “reveals the ways forced labour in the Uyghur Region can pervade an entire supply chain and reach deep into international markets”, the paper says.

These situations can put companies in a difficult position, stuck between protecting their supply chains and the reputational and even legal risks of failing to stand against human rights abuses. Intel provides a recent example: in January, it reportedly edited a letter to suppliers published on its website, removing a previous statement telling its suppliers not to source products or labour from Xinjiang after a backlash from China.

The US-based Solar Energy Industries Association has called the reports of human rights abuses in Xinjiang “reprehensible”, called on solar companies to leave the region and created a traceability protocol to ensure there is no forced labour in their supply chains.

Renewable supply chains tend to be more complicated than for energy companies at large, says Diamond, making it more difficult to ensure suppliers share the same vision for human rights. “That is also exacerbated by the fact that many companies are getting into the renewables space for the first time,” he says. “You are having to identify new supply chain partners and build new relationships with those partners.”

Companies with net-zero goals that plan to use offsets may also need to start ensuring those offsets respect human rights. “Offset projects themselves can cause human rights violations […] including the rights of indigenous peoples on whose land the projects often take place,” says Erika Lennon, senior attorney at the Center for International Environmental Law.

Getting it right

So, what can companies do to ensure they are protecting human rights? “I think doing basic human rights due diligence is a really good start,” says Cato. “I don't think a lot of [renewables] companies really understand how their business model can impact communities. Because they see it as good, they don't necessarily understand why a community wouldn't also see it as good.”

Simply having a human rights policy is a good first step, says Dorett. This should aspire to the highest standards of international human rights laws, rather than only complying with local laws, she adds.

However, the policy is also only as good as its implementation into a company's culture and operations, she adds. Last year’s just transition assessment from the World Benchmarking Alliance highlighted a gap between corporate commitments to respect human rights and the actual processes companies have in place to ensure this in practice. A quarter of the 180 oil and gas, electric utility and car companies assessed scored zero on all human rights indicators.

It is often only when a dam collapses, or a fire happens in Rana Plaza in Bangladesh, that people sit up, says Dorett. “The idea is that you don't want to wait for that crisis to happen, you want to be aware of it," she explains. "That is part of any company's risk management structure: they need to address it on a day-to-day basis.”

According to the World Benchmarking Alliance report, Iberdrola is a good example of a company getting it right. Iberdrola’s policies include pre-construction environmental impact assessments. In countries with indigenous communities, a social impact study always includes analysis of the potential impacts on human rights. For several solar and wind projects in Mexico, Iberdrola both conducted these evaluations and contributed social welfare to communities located near the projects. It also implemented several just transition plans in the areas to avoid job losses due to the closure of two coal plants.

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Scottish energy company SSE, meanwhile, appoints liaison officers for all its major projects. These are responsible for “going above and beyond statutory requirements” for consultation and engagement for new projects, notes the report, as well as establishing community liaison groups that are maintained throughout a project's lifetime.

Ensuring local communities get access to the energy generated by renewables near to them is also a good start. The non-profit Indigenous Clean Energy programme in Canada, for example, prioritises support for the electrification of local rural communities that often rely on diesel generators.

By offering concrete examples of what it looks like when human rights risks play out in the renewables space, the BHRRC’s work is useful to companies starting out in this area, says Diamond. “It is important to be thinking about which of those risks you can help mitigate by putting in place the right policies from the very start,” he says. For example, even if you have implemented due diligence in your own operations, do your suppliers have appropriate processes in place? “You really don't want to have to play catch-up on those things.”

Investors wake up

Last year the BHRRC published a benchmark report of 15 of the largest publicly traded wind and solar producers, including two investors with large renewable energy holdings, Blackrock and Brookfield. This found that companies with better scores tended to be those with significant global reach. However, all 15 companies tended to score poorly on specific indicators used to examine the salient risks of the renewables sector, such as land rights, indigenous rights, gender equality and anti-corruption.

The BHRRC deliberately highlights investors as key actors by including BlackRock and Brookfield among the 15 companies they rank. “We also wanted to look at the big investors and cover who owns the production of [renewables],” says Cato. “We think these kinds of players have a lot more power to influence the sector than what they maybe want to take responsibility for.”

Dorett says interest from investors in human rights has risen during Covid-19 as gaps and the weaknesses in the social contract – think workers’ rights and the impact on people – were brought into focus. “Investors are far more discerning now, and looking at the way companies perform,” she says.

”Maybe [previously] there was this idea of 'Oh, I am moving away from fossil fuels, so I am moving away from certain behaviours I don’t agree with’, not necessarily realising that some of those behaviours [might] continue. [Now] investors are saying no, that is not what we want, we want you to ensure you are looking at non-financial risks across all aspects.”

Responsible investors want to know whether a renewable energy company has a human rights policy, says Dorett. They also want to know whether its business decisions take into account human rights impacts from its operations, its choice of suppliers and even its choice of customers. Another important indicator is how a company treats its workers, she adds.

All these decisions have big stakes, not only for the companies themselves but for the wider transition to a net-zero world.

“It is a new sector, things aren't set in concrete,” says Cato. “This is the time for them to say, who are we? What are we doing in the world? How can we be better operators? I think you are seeing some companies doing that. We just need more to get on board.”

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