“No news is bad news” (ABN AMRO, APG, ING, Robeco and Morningstar Sustainalytics)

Anna Triponel

April 14, 2023
Our key takeaway: “A risk assessment is only as good as the information that supports it.” This is a fundamental takeaway from a new report by investors on the challenges of getting information about human rights issues in their portfolios, in places where civic space is restricted. Civil society actors—human rights and environmental defenders (HREDs), NGOs, trade unions, journalists and activists—convey key information about affected rights holders in a given geography, information necessary for investors to conduct robust human rights due diligence. What’s more, civil society can also be a canary in the coal mine: where governments are cracking down on civil and political rights, allowing attacks on human rights defenders with impunity and repressing public dissent, you can be sure that other human rights abuses are rampant. The report offers several solutions that investors can take individually and collectively. For one, they should conduct their own human rights risk assessments with safeguards to mitigate potential risks to human rights defenders and civil society actors who might participate in such an assessment. They can also make stakeholder engagement a part of their stewardship principles when engaging with investee companies. Investors could collaborate to create ‘smart questions’ that can be posed to all investees, using leverage to engage with companies where there are high risks to people. They can also work together to support better access to consistent human rights information through ESG service providers, and use this information in their risk assessments. Investors could also come together in a regular working group to share information about red flags and risks and design strategies for collective action and leverage. A treasure trove of tips for investors - but also for just about any company working on meaningful human rights due diligence as well!

ABN AMRO, APG, ING, Robeco and Morningstar Sustainalytics, with advice from the Business & Human Rights Resource Centre and facilitated by Levin Sources, published No News Is Bad News (April 2023):

  • “Engagement with affected and potentially affected people and human rights defenders is key to understanding risks and addressing them effectively”: For the authors, “no news is bad news”—that is, when there are restrictions on civic space in a given operational context (whether due to governmental policy or business operations), investors face “an ‘information black box,’ leaving us with blind spots about potential or actual negative impacts on human rights connected to our business.” Civil society actors provide critical information about the status of human rights on the ground. The report suggests that, to dismantle this black box, individual institutions should carry out their own human rights risk assessments, working with security experts to mitigate risks to human rights and environmental defenders (HREDs). In addition, investors can communicate to investee companies that stakeholder engagement must be part of robust human rights due diligence. Financial actors can also use leverage and act collaboratively. For example, they can “pool resources to develop a common set of ‘smart’ questions (which each institution could adapt as necessary) that help uncover layers of insights from clients and investees about their stakeholder engagement processes and use their collective leverage in cases of concern. If financial sector organisations feel they have identified a high-risk context that requires a deeper risk assessment, they could potentially pool their resources to enable this.”
  • “Build a body of risk information that is more closely sourced from affected people and establishes the quality of the risk information”: Where civic space is restricted, investors lack sufficient information to understand the on-the-ground context and potential and actual risks to people—and to investments. Nor are ESG data providers necessarily equipped to capture this information, especially when NGOs lack formal status. Of course, many NGOs are unable to formalise where civic rights are restricted, exacerbating the challenge. One approach to work around this is to collaborate “with civil society organisations to understand each other’s respective methodologies and methodological needs. They could then collaboratively find ways to integrate risk information from civil society organisations into their risk assessment processes.” The report authors also recommend integrating information from organisations like the CIVICUS Monitor to assess the quality of information available in a country. “This can provide a useful indication of the level of risk and the quality or completeness of risk information, even before specific risks are assessed.”
  • “Develop a space to foster specialised human rights knowledge within financial sector organisations”: As a whole, the financial sector may lack the expertise necessary to untangle human rights issues. The report suggests that financial institutions “could increase their knowledge of human rights in various contexts by developing a working group that brings together financial institutions, ESG data providers, academics and civil society organisations to regularly discuss human rights concerns in various geographies with civic space restrictions.” Convening a regular working group could also facilitate sharing information about “red flags” so that financial institutions can learn from one another. The group could also engage directly with civil society and experts to gain a deeper understanding of these issues. This could be built onto existing efforts to protect civic spaces and HREDs, such as the Business Network on Civic Freedoms and Human Rights Defenders.

You may also be interested in

This week’s latest resources, articles and summaries.