Human Rights Guidance Tool for the Financial Sector
Human Rights Issues by Sector

Case Studies

February 2014, USA: Millions of gallons of coal ash sludge from a closed power plant spilled into a river in North Carolina. The river provides drinking water to communities in North Carolina and Virginia. More...

May 2011, China: The government has promised to improve disaster prevention mechanisms around the Three Gorges Dam project, as severe drought in central and southern China threatens millions of people. More...

Power generation

Power Generation includes:

  • Power stations and the use of fossil fuels
  • Nuclear power
  • Renewable energy sources, such as hydroelectric power, wind farms, geothermal energy, photovoltaics
  • Energy generation from biomass and waste

This briefing covers project feasibility, operations and decommissioning of facilities. See Utilities and Waste Management for electricity transmission and distribution. For the construction of facilities for this industry see Infrastructure. For issues relating to biomass see Agriculture.


Key human rights related risks

  • The impact on the workforce, particularly health and safety issues
  • Fuel sourcing, particularly coal (the sector is the largest purchaser of coal worldwide) and increasingly bio-fuels (both their production and disposal)
  • Community impact, including the health and safety of communities and the environmental impact on them
  • Use of security contractors
  • The threat of terrorism and sabotage, which has implications for security and also a potentially significant impact on workforces and local communities.

Examples of voluntary and trade initiatives

  • The Voluntary Principles on Security and Human Rights: signatories include a number of power generating companies; the Principles guide companies in balancing the need for safety and security while respecting human rights
  • Forest Peoples Programme: This NGO supports indigenous people to protect their ways of life and traditional knowledge from developments (including hydroelectric schemes and gas pipelines) that may force them out of their homes.

There are links to these initiatives in Resources.


Core Operations

Health and Safety

Companies need to be aware of the risks to health and safety and take appropriate steps to avoid accidents and limit their consequences.

Main issues for the power generation sector:

  • Fatal and non-fatal incidents caused by lack of proper procedures, failure to follow procedures, inadequate risk assessment, poor risk management, faulty or inappropriate tools and equipment
  • Fatal and non-fatal incidents and injuries which could be prevented with relevant training, information and education of employees delivered in appropriate languages and protective clothing/equipment
  • Long term health issues arising from exposure to radiation
  • Spread of communicable disease among workers due to lack of education, advice and/or poor living conditions
  • Employee exposure to protests from local people or pressure groups opposing the development
  • Working excessively long hours under strenuous conditions may lead to accident or injury.

Migrant workers

Migrant workers can constitute a large component of the workforce due to lack of local labour skills and resource.

Main issues for the power generation sector:

  • Migrant workers may be subject to degrading or life-threatening treatment or lack of equal opportunity for promotion, due to discrimination against workers from other cultures or races
  • There may also be discrimination with regard to working hours, pay, training, housing conditions and access to health care or education
  • Migrant and immigrant workers can have their travel documents held by the employer as a condition of work. This takes away their freedom of movement and is a form of bonded labour.

Security of operations

This covers the activities undertaken by a company or their contractors to protect their assets and ensure the safety of their employees. Power stations may be the focus of protests by environmental and community groups.

Main issues for the power generation sector:

  • In conflict zones or failing states, there is potential for security contractors to be complicit in fuelling conflict by aiding illegal armed groups, including payment of protection money
  • Security forces may over-react to protests against a project. This can result in an escalation of violence, leading to the injury or death of union members and others exercising their right to protest
  • Security operations should consider the safety of workers beyond the boundaries of the project - when travelling to and from work or in housing facilities
  • Lack of effective security can lead to attacks, theft of dangerous equipment and an unsafe environment for workers.

Controls and mitigants

  • Compliance with local/national law is the starting point
  • Even if local/national law, standards or enforcement are lower than internationally accepted good practice, a company should apply the same consistent and effective management practices globally (on workforce, community health and safety, supplier screening, site safety and security)
  • Health and safety plan communicated to all workers in their own language and supported by robust governance procedures
  • Regular health checks available to workers
  • Emergency preparedness/accident response plan to ensure safety of workers in the event of explosion or other serious incident and to limit the effects of the incident as far as possible
  • Procedures in place to ensure regular maintenance of power station components (piping, containers, meters, electronics etc.) and on-site equipment
  • Policies and procedures on collective bargaining and recognition of trade unions
  • Policies and procedures on anti-discrimination and equal opportunities, including the protection and welfare of migrant workers
  • Policies and procedures around security, covering the employment and training of security workers; dealing with violent and non-violent protests; and use of local police force if arrests or detention are necessary
  • Companies should communicate their policies regarding ethical conduct and human rights to security providers, including the need for personnel to receive adequate and effective training
  • Security contractors should be competent and the number of staff deployed should be appropriate and proportional to the need
  • In cases where physical force is used by security, such incidents should be reported to the appropriate authorities and to the company. Where force is used, medical aid should be provided to all injured persons
  • A security contractor should respect the confidentiality of information obtained as a result of its position as security provider

Supply Chain

Companies face human rights issues and risks in their supply chain, as purchasers of goods and services from other companies/sub-contractors which may be associated with poor practice or controversy. See Infrastructure for issues relating to the construction of facilities.

Fuel Sourcing

Purchasing of coal, nuclear materials and biomass all have risks associated with them.

Main issues for the power generation sector:

  • The sector is the main purchaser of coal world-wide. See Mining and Metals for more information
  • The sector purchases and burns increasing amounts of biomass and waste as a fuel source. See Agriculture and Fisheries for more information
  • Risks arising from the purchase of components, chemicals and equipment for nuclear power stations include
    • supplier participation in black-market or illegal trading
    • insecure transportation leading to concerns about terrorism and public safety.

Other Key Products and services

As well as purchasing supplies, the power generation sector uses contractors and sub-contractors at various stages.

Main issues for the power generation sector:

  • The sector is a key customer for suppliers of cabling, piping, meters, personal protective equipment and uniforms. These may be made or assembled in factories which have issues such as child labour, unfair pay, health and safety, and forced over-time. See General Manufacturing.
  • Ensuring that sub-contracted workers are recruited legally and are treated fairly with respect to working hours, pay, training, housing conditions and access to health care or education
  • Complex operations involving a number of sub-contractors may make it more difficult to ensure that health and safety standards are understood and rigorously implemented.

Controls and mitigants

  • Ethical and environmental supplier screening policy covering labour relations issues, sustainable/ethical sourcing of materials and transparency/bribery. Suppliers should be aware of potential hazards and have systems in place to protect workers and communities
  • Health and safety plan communicated to all workers (including contractors and sub-contractors) in their own language and supported by robust governance procedures. Effective health and safety procedures need to be built into contractual arrangements.

Communities

Community Health and Safety

Power stations, whether coal-fired, nuclear, biomass, or renewable energy plants can be a source of potential environmental and health and safety risks which affect workers and local communities.

Main issues for the power generation sector:

  • Risk (especially for children) of accident and death when insufficient security arrangements and warnings are provided around facilities and assets
  • Decommissioning of nuclear power stations presents (though currently not fully understood) environmental and human rights risks particularly in terms of storage of waste
  • Long term health risks associated with exposure to nuclear radiation
  • Emissions can adversely affect the local air quality. This can lead to asthma and other respiratory diseases
  • Contamination of local water supply can lead to disease and illness
  • Electro-magnetic and electric radiation may be a risk to communities living under or close to power lines connected to power stations (medical opinion on this risk is divided)
  • The impact of natural disasters and severe weather events on facilities (especially nuclear power stations) can put the health and safety of local communities at risk.

Property rights and land acquisition

Communities may need to be relocated if their current location is to be re-developed for a power generation plant. Their needs may include residential land, land for agriculture, fisheries and traditional employment and land used for community activities.

Main issues for the power generation sector:

  • Governments may take responsibility for consulting with communities on relocation and ensuring that agreed compensation is paid. Companies involved with a project may be publicly associated with any government poor practice (or perceived poor practice) in this respect
  • Lack of free, prior and informed consent of local and indigenous populations and/or lack of process to explore this can lead to arbitrary destruction of identity and livelihood
  • Forced removal of indigenous groups from lands. This may be carried out by host governments which do not recognise indigenous groups or their rights
  • Lack of, or unfair, compensation, or lack of adequate and appropriate alternative provision
  • Damage to or loss of cultural/historical sites which form the basis of indigenous groups and/or national identity
  • Communities may also be split or separated from neighbouring communities by the development
  • Economic depression after facility closure, particularly in remote areas, due to lack of alternative sources of employment.

Access to resources

Energy production accounts for 15% of the world's water usage. It also uses a lot of other resources.

Main issues for the power generation sector:

  • Demand for energy is growing strongly in China, India and the middle East, leading to potential conflicts over resource use
  • Non-conventional power generation can be a particularly heavy user of water which may reduce water available for local agriculture and small scale industry
  • There may also be conflicts about the use of other resources, including land
  • Non-conventional power generation, including from tar sands, fracking and biomass can lead to public protest over environmental and safety issues.

Controls and mitigants

  • A stakeholder engagement plan to ensure full and effective consultation with all stakeholders
  • A community awareness and education plan as part of health and safety measures
  • Rehabilitation of land disturbed or occupied by operations in accordance with appropriate post-operation land uses
  • Recognition of existing communities' rights, including policies and procedures on the conservation of cultural, historical or religious sites which form the basis of the identity of local and/or indigenous groups
  • Assessment to evaluate a project's positive and adverse effects on indigenous peoples and examine alternatives where adverse impacts may be significant
  • Emergency response plan to protect affected communities in the event of a major incident such as the release of hazardous materials. This should include the provision of emergency water and food supplies to local community if usual sources are contaminated
  • Clearly defined procedures on the use of indigenous peoples' knowledge and resources, including payment, benefit-sharing or other consideration
  • Policies and procedures on conservation and sustainable use of finite resources eg: water, energy, land, which take account of local community need for these resources now and in the future
  • Policies and procedures to ensure free, prior and informed consent of local and indigenous communities; ensuring that vulnerable groups are part of the consultation process and including a complaints mechanism for local communities
  • Policy and procedures on the relocation of communities, including measures around consultation, prompt and adequate compensation and continuation of livelihoods
  • Economic development plan for full-life cycle of facility including after closure.

Society and Governments

Vandalism, terrorism and sabotage

Power stations may be targets for vandalism, terrorism or sabotage during either their construction or operational phases.

Main issues for the power generation sector:

  • Restrictions on local people's movement or access to facilities, as part of the overall security provision for site
  • Discrimination against some sectors of society due to government views on their likely involvement in terrorism or sabotage
  • Catastrophic damage to the local community, including large scale injury, deaths and damage to community infrastructure and livelihoods in the event of an attack, especially in relation to nuclear facilities
  • Regional or national loss of life and livelihood due to break in supply of energy. Examples include loss of income due to business closure and shut-down of basic services such as hospitals and schools.

Corruption and bribery

The sector is often highly regulated and part/fully-owned by the state. This close relationship with states can provide opportunities for bribery and corruption.

Main issues for the power generation sector:

  • Price are often set and controlled by a regulator which may limit price sensitivity to the market and transparency about charges. There is potential for over-charging in what may be a monopoly market, making power very expensive for local communities and businesses
  • Major developments of infrastructure for projects is potentially subject to corruption and bribery during the planning process, so projects of local benefit may lose out
  • Regulation may mean that generators are very close to government officials, leading to concerns about transparency of taxation, licensing and other payment
  • In corrupt regimes, taxes and revenues may be reduced or diverted away from the realisation of fundamental rights of local people, such as education and health.

Controls and mitigants

  • Compliance with local/national law is the starting point
  • Even if local/national law, standards or enforcement are lower than internationally accepted good practice, a company should apply the same consistent and effective management practices globally (on community health and safety, site safety and security)
  • Clear emergency plans in place to deal with the company's role in reacting to and managing large scale incidents
  • Transparency about payments to governments, including licence payments, taxation and other payments
  • Anti-corruption policies which are communicated to all employees, agents and intermediaries.

See also the broader UNEP FI Environmental and Social Risk Briefing and Resources.

 

December 2014     United Nations Environment Programme Finance Initiative