2023 Renewable Energy & Human Rights Benchmark

Our key takeaway: The Business & Human Rights Resource Centre’s 2023 Renewable Energy & Human Rights Benchmark builds on an important statistic: “To reach net zero by 2050, the International Energy Agency estimates annual clean energy investment must increase seven-fold and amount to approximately US$4 trillion; and installed capacity of renewables-based electricity generation must triple by 2030 – with solar and wind capacity accounting for 85% of that increase.” The report suggests that increased investor appetite, spurred by government policy initiatives, can help accelerate renewable energy investment, but cautions that this cannot be achieved at the expense of human rights, especially those of Indigenous Peoples and other project-affected people. Companies in the solar and wind sectors and oil and gas companies entering the renewable energy market must take immediate, urgent action on four fronts to ensure a just energy transition: (1) Creating “shared prosperity” by sharing benefits of projects with project affected people, ensuring decent work and living wages for workers, bringing along workers left behind by the energy transition and conducting responsible, transparent corporate lobbying. (2) Upholding their corporate duty of care by adopting policies to respect human rights and protections for human rights and environmental defenders, conducting full value chain human rights due diligence, providing remedy for harms, and disclosing suppliers. (3) Negotiating fairly with local communities and ensuring FPIC for indigenous peoples, supporting channels for worker voice, and publicly reporting on payments and contracts with host country governments. (4) Planning and acting on the net-zero transition; oil and gas companies in particular should be adopting plans to cease fossil fuel production and halt exploration.

The Business & Human Rights Resource Centre (BHRRC) published Renewable Energy & Human Rights Benchmark: Key Findings from the Wind and Solar Sectors (November 2023):

• “Modest progress” since the 2021 renewable energy benchmark: The benchmark assesses 28 major companies in renewable energy against the UN Guiding Principles (UNGPs) and salient risks in the sector. Benchmarked companies include 19 wind and solar project developers, including fossil fuel companies moving into renewable energy, as well as the top 9 publicly listed wind turbine and solar panel manufacturers. In 2023, the benchmark found that 75% of the top wind and solar project developers have “strong human rights policies in place in line with the UNGPs. Two-thirds of project developers and nearly half of wind turbine and solar panel manufacturers have board-level oversight of human rights, demonstrating increased adoption of ‘tone at the top’ approaches to human rights in business conduct in the sector.” What’s more, all project developers have a grievance mechanism for workers, while two-thirds have a grievance mechanism for external stakeholders, local local communities. Eight companies have policies to respect the rights of human rights and environmental defenders—“a critical area” in the sector. Seven companies are increasing transparency by reporting taxes paid to host country governments, which “will need to be complemented by clear positions in support of contract transparency and disclosure of project-level financial flows, in line with existing standards for the extractive industry.” Finally, half of the companies have a public commitment to prohibit corruption.
  

• Shortcomings persist in specific topics: Despite progress in adopting overall human rights policies, companies display a notable lack of public policies and practices on respecting the rights of Indigenous Peoples and land rights, despite the fact that these rights are often at highest risk during renewable energy project development. Per the benchmark, “[a]ll but two companies – EDF Renewables and Ørsted – either do not mention Indigenous Peoples’ rights at all, or make commitments not anchored in the UN Declaration on the Rights of Indigenous Peoples.” Even companies which commit to respect land rights “do not provide evidence of how they identify legitimate tenure holders.” In addition, while “industry associations are taking steps to strengthen traceability standards” (related to potential forced labour from Xinjiang in China), there is a noticeable gap in transparency and communication about efforts to increase visibility in these supply chains; “[n]o company in the Benchmark currently publicly discloses its full supply chain, resulting in scores of 0% across the board for this indicator.” Furthermore, the discrepancy between policy and practice persists, with every company scoring low on their responses to serious human rights allegations related to their operations and value chain. And “[n]o companies scored any points on engaging with affected stakeholders to provide for or cooperate in remedy.” Solar panel manufacturers and oil and gas companies entering the renewables space are performing the worst. Solar companies have lower rates of human rights policy commitments and human rights due diligence practices compared to peers in wind. Oil and gas companies continue to lack “credible” plans and “limited” actions to address their overall contributions to climate change including a transition away from fossil fuel production.
  

• “Profound potential to build shared prosperity”: The benchmark finds that “the energy transition continues to offer profound potential to build shared prosperity, respect for human rights and social protection, and fair negotiations for communities and workers.” Companies can take actions under four broad categories to speed their transition to a just net-zero economy. (1) They can create “shared prosperity” by designing and implementing projects with built-in benefits sharing for Indigenous Peoples and others affected by projects; ensuring decent work and living wages for own and supply chain workers; adopting just transition plans for upskilling and retraining workers; and adopting “public, responsible” policies on lobbying and political engagement, including ensuring alignment of business associations with their own commitments. (2) They can ensure a “corporate duty of care” by adopting human rights policy commitments that apply along the full value chain and are overseen through company governance structures; conducting downstream and upstream human rights and environmental due diligence; ensuring “timely and effective” remedy for harms, including through the use of accessible grievance mechanisms for all stakeholders; and disclosing suppliers and sites “in case of severe human rights harm” while balancing disengagement from suppliers against considerations like “severity of risks, leverage, and crucial nature of business relationships.” (3) They can engage in “fair negotiations,” including holding meaningful consultation with project-affected communities and ensuring free, prior and informed consent for Indigenous Peoples starting at the earliest phases of project development; respecting the rights of workers to freedom of association and collective bargaining; adopting policies to respect the rights of human rights and environmental defenders; and clearly communicating commitments to zero tolerance for corruption, disclosing national tax contributions and making contracts public where possible. (4) Planning for a low-carbon transition, with oil and gas and electric utilities prioritising “just energy transition plans aligned with a 1.5°C scenario that include workers and affected communities” and oil and gas companies adopting credible plans to halt fossil fuel production, including exploration of new projects.