Glossary

Actual Human Rights Impact – An “actual human rights impact” is an adverse impact that has already occurred or is occurring.

Accessibility (in consultations / grievance mechanisms) – Accessibility in the context of grievance mechanism and consultations, is when details and knowledge required to participate is known to stakeholder groups and adequate assistance is provided to remove barriers to access, particularly for vulnerable or marginalised groups.

Adverse Human Rights Impact – An “adverse human rights impact” occurs when an action removes or reduces the ability of an individual to enjoy his or her human rights

Anonymity – In relation to grievance mechanisms, this refers to the ability to receive a complaint without the complainant revealing their identity. Alternatively, the complaint will be managed whilst removing identifying details and preserving the anonymity of the complainant. This supports non-retaliation in some cases and can remove real or perceived barriers for vulnerable people.

Business Relationships – Business relationships refer to those relationships a business enterprise has with business partners, entities in its value chain and any other non-State or State entity directly linked to its business operations, products or services. They include indirect business relationships in its value chain, beyond the first tier, and minority as well as majority shareholding positions in joint ventures.

Child labour – According to the ILO, Child Labour refers to work that deprives children (any person under 18) of their childhood, their potential and their dignity, and that is harmful to their physical and/or mental development. It refers to work that is mentally, physically, socially or morally dangerous and harmful to children; and/or interferes with their schooling by:

• depriving them of the opportunity to attend school
• obliging them to leave school prematurely
• requiring them to attempt to combine school attendance with
• excessively long and heavy work.

Whether or not particular forms of “work” can be called “child labour” depends on the child’s age, the type and hours of work performed, the conditions under which it is performed and the objectives pursued by individual countries. In its most extreme forms, child labour involves children being enslaved, separated from their families, exposed to serious hazards and illnesses and/or left to fend for themselves on the streets of large cities – often at a very early age.

Civil Society Organisation (CSO) – Civil Society is a broad term used to describe a section of society and communities that is distinct from government and from business. It includes a broad range of actors such as human rights defenders, human rights NGOs, bar associations, student clubs, trade unions, university institutes, bloggers, environmental rights activists, or charities working with discriminated groups.

Confidentiality – Confidentiality outlines and limits how information may be transmitted, to whom, and for what purpose. Confidentiality means not disclosing any information without the informed consent of the person concerned. In relation to grievance mechanisms, confidentiality is an important principle that must be implemented and communicated.

Conflict (Armed conflict) – A dispute involving the use of armed force between two or more parties. These do not need to be state parties. International humanitarian law distinguishes between international and non-international armed conflicts. Conflict includes cases of occupation of one State over the territory of another, even when not met with armed resistance. For conflict within countries, violence will be protracted and meet a minimum level of intensity to be considered armed conflict.

Contracted workers (Contractor, third party workers/ contractors) – Contracted workers are people performing work for a person or legal entity (the user enterprise) under conditions of dependency or subordination to the enterprise. The conditions of the work they do is similar to those that characterize an employment relationship under national law and practice, but the worker is not the employee of the user enterprise. Contracted workers often work for a fixed period of time and have fewer rights than employees.

Community liaison – Community liaison is the process of managing the communication and exchange of information between local operations, institutions or businesses and community citizens and local external stakeholders. Community liaison officers are staff that act as a contact point to coordinate with the community, talk about community concerns, receive, record or escalate issues and grievances, directing affected people to support or disseminating organisational information.

Decent work – The International Labour Organization (ILO) defines decent work as “productive work for women and men in conditions of freedom, equity, security and human dignity”. In general, work is considered as decent when: it delivers a fair income, security in the workplace and social protection, better prospects for personal development and social integration, freedom for people to express their concerns, organize and participate in the decisions that affect their lives and equality of opportunity and treatment for all women and men.

Due Diligence –Due diligence has been defined as “such a measure of prudence, activity, or assiduity, as is properly to be expected from, and ordinarily exercised by, a reasonable and prudent [person] under the particular circumstances; not measured by any absolute standard, but depending on the relative facts of the special case” (Black’s Law Dictionary, 6th ed.) In the context of the Guiding Principles on Business and Human Rights, human rights due diligence comprises an ongoing management process that a reasonable and prudent enterprise needs to undertake, in the light of its circumstances (including sector, operating context, size and similar factors) to meet its responsibility to respect human rights.

Environmental and social (E&S) due diligence – E&S due diligence typically describes a process which FIs apply to client / project assessment on a transaction-by-transaction basis and which integrates E&S considerations at key stages of the financing cycle. This process typically complements other transaction due diligence processes, including commercial, business integrity, and legal due diligence. E&S due diligence is just one aspect of an FI’s lending and investment operations which, if aligned with the UNGPs, can support human rights due diligence (see ‘Human rights due diligence’).

ESG – ESG abbreviates environmental, social and governance information. Sustainable finance integrates environmental, social and governance (ESG) information into the decision-making processes of companies and financial institutions. It is an important tool for managing climate and other sustainability risks and meeting society’s growing expectations for a more sustainable economy.

Forced labour –The term forced or compulsory labour shall mean all work or service which is exacted from any person under the menace of any penalty and for which the said person has not offered himself voluntarily. There are some conditional exceptions such as military service, also governed by the convention. Forced labour is an umbrella term that covers many different forms of unfree labour, including modern slavery and debt bondage.

Foreseeability – The extent to which an enterprise could or should have known about the adverse impact or potential for adverse impact. This factors into the determination of an enterprises contribution/ linkage to an impact as well as the required due diligence and remedy.

Fragile and Conflict Affected Situations (FCAS) –  Conflict-affected contexts tend to be fragile and in turn fragility increases the risks of conflict or crisis. Conflict-affected areas are identified by the presence of armed conflict, widespread violence or other risks of harm to people e.g. insurgencies, political repression, civil wars. Armed conflict may take a variety of forms. Fragile and conflict-affected situations create challenges for people who live in or near these contexts, including unemployment, failing infrastructure, economic uncertainty, extreme poverty and violence, often simultaneously.

Free Prior and Informed Consent (FPIC): FPIC is a specific right that pertains to Indigenous Peoples and is recognized in the United Nations Declaration on the Rights of Indigenous Peoples (UNDRIP). It allows them to give, withdraw or withhold consent to a project that may affect them or their territories. Furthermore, FPIC enables them to negotiate the conditions under which the project will be designed, implemented, monitored and evaluated. The standard, Free, Prior and Informed Consent (FPIC), is embedded within the universal right to self-determination.

• ‘Free’ implies that there is no coercion, intimidation or manipulation.
• ‘Prior’ implies that consent is to be sought sufficiently in advance of any authorization or commencement of activities and respect is shown to time requirements of indigenous consultation/ consensus processes.
• ‘Informed’ implies that information is provided that covers a range of relevant aspects of any proposed project or activity; such as the purpose of the project as well as its duration; locality and areas affected; a preliminary assessment of the likely economic, social, cultural and environmental impact

Freedom of association (and/ or collective bargaining) – The right to freedom of association involves the right of individuals to interact and organize among themselves to collectively express, promote, pursue and defend common interests. This includes the right to form trade unions. ILO Convention No. 98 concerning the Right to Organize and Collective Bargaining sets out that collective bargaining is a key means through which employers and their organizations and trade unions can establish fair wages and working conditions. A collective bargaining agreement is a labor contract between a union representing employees and the employer.

Grievance – A grievance is an allegation, issue, or problem that a person or group of people report to the an institution or organisation that concerns their treatment or experience (actual or perceived). Similar terms include ‘complaint’, ‘concern’, or ‘feedback’.

Grievance Mechanism – A grievance mechanism is a formalised process through which an institution or organisation deals with a grievance or complaint. It includes the procedures and systems for receiving complaints of any sort and facilitating their resolution. Resolution may include steps to enable complainants to seek remedy.

Health and safety (occupational, environment and social) – Occupational safety and health (OSH) is generally defined as the science of the anticipation, recognition, evaluation and control of hazards arising in or from the workplace that could impair the health and well-being of workers, taking into account the possible impact on the surrounding communities and the general environment.

Human Rights Defenders (HRDs)  – Human rights defenders are all persons, who individually or in association with others, act to promote or protect human rights peacefully. They can be a group vulnerable to human rights risks.

Human Rights Due Diligence – Human rights due diligence (HRDD) allows financial institutions to identify, prevent, and mitigate potential and actual adverse human rights impacts. As stated by the UN Working Group on Business and Human Rights, HRDD “involves a bundle of interrelated processes” that can be included within broader enterprise risk management systems, provided that this integration results in a focus on human rights impacts on people (i.e. beyond material risks to the company itself) and is aligned with the UNGPs.

Human Rights Impact Assessment – In the business context, HRIA can be defined as a process for identifying, understanding, assessing and addressing the adverse effects of a business project or business activities on the human rights enjoyment of impacted rightsholders such as workers and community members.

Indigenous People – Considering the diversity of indigenous peoples, an official definition of “indigenous” has not been adopted by any UN-system body. Instead the system has developed a modern understanding of this term based on the following:

• Self- identification as indigenous peoples at the individual level and accepted by the community as their member.
• Historical continuity with pre-colonial and/or pre-settler societies
• Strong link to territories and surrounding natural resources
• Distinct social, economic or political systems
• Distinct language, culture and beliefs
• Form non-dominant groups of society
• Resolve to maintain and reproduce their ancestral environments and systems as distinctive peoples and communities

National governments may have a list of recognised indigenous peoples. Some indigenous peoples may not be recognised by national governments but will meet the characteristics above.

Irremediable Character – “Irremediability”, the third relevant factor, in Human Rights due diligence refers to any limits on the ability to restore those affected to a situation at least the same as, or equivalent to, their situation before the adverse impact.

Just Transition – A just transition is the approach and process to ensure that environmentally sustainable economies are promoted in a way that is as fair and inclusive as possible to everyone concerned, creating decent work opportunities and leaving no one behind. It aims to ensure that the transition to net-zero emissions and climate resilience is orderly, inclusive and just.

Leverage – Leverage is an advantage that gives power to influence. In the context of the UNGPs, it refers to the ability of a business enterprise to effect change in the wrongful practices of another party that is causing or contributing to an adverse human rights impact.

Materiality – Materiality is a criterion for inclusion of specific information in corporate reports. The concept of materiality has been applied to voluntary sustainability reporting standards, albeit with different meanings ranging from the significance of impacts on people and planet to the significance of implications for the financial success of a company. “Double materiality,” introduced for the first time in the European Sustainability Reporting Standards (ESRS), brings these two approaches together and makes clear that it includes both impacts on people and the environment resulting from a company’s activities and business relationships (impact materiality); and sustainability-related risks or opportunities that influence the company’s “development, financial position, financial performance, cash flows, access to finance or cost of capital” (financial materiality). Impact materiality and financial materiality are considered “interrelated” by the ESRS.

Mitigation – The mitigation of adverse human rights impact refers to actions taken to reduce its extent, with any residual impact then requiring remediation. The mitigation of human rights risks refers to actions taken to reduce the likelihood of a certain adverse impact occurring

Modern slavery – see ‘Forced Labour’

Non-discrimination – The principles of equality and non-discrimination are part of the foundations of the rule of law and human rights. Discrimination against people on the ground of protected characteristics is a key principle of human rights law. Protected Characteristics include sex, race, colour, ethnic or social origin, genetic features, language, religion or belief, political or any other opinion, membership of a national minority, property, birth, disability, age or sexual orientation

Portfolio level (re. screening or due diligence) – A portfolio for a financial institution is a collection of investments (individually a type of transaction) that the institution owns. This can include stocks, bonds, real estate, and other financial assets. An action at portfolio level (for example due diligence or a risk screening) will look at multiple investments, business relationships and transactions, considering the composition of the portfolio, trends within it and the operating context. Where FI’s have a large volume of business relationships, the UNGPs consider it reasonable to initially identify general areas where the risk of adverse human rights impacts is most significant.

Potential Human Rights Impacts – A “potential human rights impact” is an adverse impact that may occur but has not yet done so.

Remedy – Remedy describes the process and the outcome that seek to restore that dignity. The focus on process means that remedy should be stakeholder-driven; the focus on outcomes seeks to counteract, or make good, the negative impact. Remedy can take many forms, including:

• Apology
•  Restitution
•  Rehabilitation
•  Compensation
• Sanction
• Guarantees of non-repetition

Representatives and proxies – Legitimate representatives of rights holders are actors selected by or acceptable to a group of rights holders, accurately representing their views, needs and interests in good faith. This might include actors who are (legally or communally) nominated by or accountable to the stakeholder group. Credible proxies are those that have relevant in-depth experience of working with or previously consulting a particular rights holder group and as such may offer an approximation of their likely views. This could include NGOs, academics, or representatives of multi-stakeholder initiatives.

Resettlement – Resettlement refers to the relocation of people following physical or economic displacement by events such as conflict, natural disaster, persecution or land acquisition. Resettlement can re-establish affected people’s right to property and an adequate standard of living, amongst other human rights. Involuntary resettlement is the displacement or relocation of people or communities without their consent and without due process. Involuntary resettlement can include the use of force, lack of compensation and lack of resettlement planning.

Responsible exit – Responsible exit is a principle guiding how businesses end their business relationships or exit challenging country contexts in a manner that involves preparation and exit to avoid or mitigate harm to people or the environment. It also requires consideration of possible adverse impacts that might arise from the act of exiting as part of decision on whether or not to exit, and the timing of exit.

Retaliation (also Reprisal) – There is not a singular agreed definition of retaliation and instead institutions define this with some variation. However, Retaliation refers to any action that adversely affects the rights, safety, employment or wellbeing of an individual, where such action has been taken, recommended or threatened for the purpose of punishing, intimidating or injuring an individual, a group, or representatives, because they engaged in criticism or permitted free speech (inc Whistleblowing), activism, or information sharing. Often this is done with the intent of preventing individuals or groups from continuing to speak out/ express their views.

Rightsholder – Stakeholders as a term can include rightsholders. Rightsholders are groups, internal or external to the FI, whose human rights are potentially or actually impacted by the FIs operational or financial activities.

Saliency/ Salient – Salient issues are those human rights at risk of the most severe negative impact (potential or actual) through the company’s activities and business relationships. on rightsholders such as workers, customers, or the broader community. This will typically vary according to its sector and operating context. The Guiding Principles make clear that an enterprise should not focus exclusively on the most salient human rights issues and ignore others that might arise. But the most salient rights will logically be the ones on which it concentrates its primary efforts (OHCHR).

Severity – Severity is determined in reference to the scale, scope and irremediable character of impacts. This means that its gravity and the number of individuals that are or will be affected are relevant. “Irremediability”, the third relevant factor, in Human Rights due diligence refers to any limits on the ability to restore those affected to a situation at least the same as, or equivalent to, their situation before the adverse impact.

Strategic Lawsuits Against Participation (SLAPPs) – SLAPPs refer to lawsuits or threats of legal action which use abusive litigation tactics with the aim or effect of suppressing public participation and critical reporting on public interest matters. Such lawsuits are increasingly used in all parts of the world, irrespective of legal traditions and judicial system, either by State or non-State actors. Business actors initiate a significant portion of SLAPPs.

Supply Chain – A supply chain encompasses the flow of goods and services from the initial supplier to the production of a product for use or sale. This is typically referring to goods, materials and labour supply, often referred to as ‘upstream’ inputs. The supply chain includes all activities (production and distribution) that transform raw materials into finished products for sale. See also the definition of Value Chain. Supply chain includes a smaller scope of activities and relationships than value chain.

Stakeholder (affected stakeholder/ affected community) – A stakeholder refers to any individual who may affect or be affected by an organisation’s activities. An affected stakeholder refers here specifically to an individual whose human rights have been affected by an enterprise’s operations, products or services. Affected stakeholders might include internal stakeholders (e.g., employees and contract workers), as well as external stakeholders (e.g., supply chain workers, communities, consumers and end users of products).

Transactional level (re. screening or due diligence) – A transaction for a financial institution is an exchange of money in any form. This can include purchase or sale of stocks, loans, accepting deposits or transferring funds. An activity (such as due diligence or risk screening at this level) will look at a single transaction or transaction to a specific customer or stakeholder. Doing due diligence at transactional level is most common and is more specific than doing due diligence at portfolio level.

Value chain – A business relationship of a product or process from production (including material sourcing, production) through to use or consumption and disposal/recycling processes. The value chain is often referred to in terms of upstream (production and inputs) and downstream (consumption, use, sale, disposal). It is referred to in human rights due diligence because value chains determine the activities and relationships within which business enterprises must respect human rights and avoid, prevent and mitigate adverse impacts, according to the UNGPs.  Value chain includes a broader scope of activities and relationships than supply chain. See supply chain definition.

Vulnerable groups – Individuals from groups or populations that may be at heightened risk of vulnerability or marginalization are those who face additional cultural, social, physical and financial impediments to the full enjoyment of their human rights, including barriers to accessing, using or participating in work, education, decision-making, public services, justice systems and civic spaces. Characteristics that might make a person vulnerable and marginalised are intersectional (they combine and relate to each other). Groups that are vulnerable and marginalised will vary in different contexts but might include ethnic minorities, religious minorities, children, women, people with disabilities, migrants and older people (non-exhaustive list).

Whistleblowing – A whistleblower is any person who reports or discloses information on a threat or harm to the public interest in the context of their work-based relationship, whether they work in the public or private sector.