Infrastructure

FIs should develop specific policies and procedures to address the most salient human rights risks in infrastructure financing. FIs’ infrastructure sector policies can set clear expectations and requirements of how to address human rights risks at all stages of infrastructure asset planning, construction, operations and decommissioning, and within the upstream value chain to the asset.

Infrastructure policies and procedures should include a recognition of the corporate responsibility to respect human rights as set out in the UNGPs, including implementing human rights due diligence which reflects sector-specific risks. It should also include a commitment to human rights standards based on the International Bill of Human Rights and the ILO Fundamental Conventions.

Policies and procedures can also include a commitment to key sector-specific standards, as well as to standards which address the most salient human rights issues in the sector. This can include sector-relevant ILO Conventions (including C167 on Safety and Health in Construction Convention and the Maritime Labour Convention, as well as the revised ILO Code of practice on safety and health in construction), ISO 45001 and other relevant voluntary frameworks, such as the G20 Principles for Quality Infrastructure Investment, the Voluntary Principles on Security and Human Rights and the Blue Dot Network Certification Framework. Infrastructure policies can also spell out the framework for human rights due diligence in line with the UNGPs, explaining how frameworks such as the Equator Principles / IFC Performance Standards are implemented to ensure this alignment.

Any commitments by FIs to these standards, or any concrete expectations for clients/investee based on these standards, should be accompanied by an explanation of how the human rights-related expectations embedded in these standards will be implemented.

Policies and procedures can also include human rights minimum criteria for the provision of financial services, such as:

• Integration of human rights considerations into all relevant scoping reports, environmental and social documents, including the Environmental Impact Assessment (EIA), Resettlement Action Plan (RAP).
• Requesting appropriate documents to address specific human rights risks, including ensuring free, prior and informed consultation and consent of Indigenous People (where applicable).
• Ensuring that vulnerable groups are part of the consultation process and including the establishment of a complaints mechanism for local communities and other relevant stakeholders.

For further information, see ‘Taking Action – Strengthen human rights in FI policies’.

See also ‘Policy commitments and human rights’ for practical guidance on how to develop policy commitments which are consistent with the UNGPs, and how to integrate relevant human rights commitments in other policies and procedures.

Human rights screening and risk assessment should include contractors and sub-contractors, as well as other key entities in the value chain, for example clients’ / investees’ business partners. FIs should screen their infrastructure portfolio to map and identity salient human rights risks, whether their clients’ / investees’ activities in the sector are likely to impact on vulnerable groups (workers, affected communities and asset-users), and to evaluate the systems that their clients have in place to mitigate and prevent these impacts.

FIs can seek to ensure that screening and risk assessments reflect key contextual risk factors in the infrastructure sector:

• Operational and geographical context: human rights risks will reflect the type and scale of the project (large-scale projects such as dams, highways, and airports often require significant land acquisition, for instance), and projects with a significant construction phase may entail higher risk of labour rights abuses, for example. Risk factors relating to geographical context include location and environment (such as remote areas, which may have limited oversight, or ecologically sensitive areas, where the livelihoods and health of local populations may be at greater risk), the regulatory environment (weak governance, conflict-affected areas – i.e. fragile and conflict-affected based on the World Bank classification) as well as social and economic conditions (vulnerable populations, limited local capacity to manage large projects)
• Type of business relationship: for new or greenfield projects, FIs should consider the human rights track record of any project partners (such as engineering, procurement and construction (EPC) firms), as well as any co-financiers. Where projects are delivered by contractors and sub-contractors, careful attention needs to be paid both to the working conditions of their workforces, including migrant workers and workers provided by labour intermediaries, as well as the impact of these workers on local communities, in the context of significant labour influx for instance. These requires the client / investee (project sponsor or developer) to identify and put in place contractual mechanisms to mitigate and monitor these risks, as well as instigating effective grievance mechanisms (see below).
• Client / investee specific risk factors: check reported instances of rights abuses associated with the (potential) client / investee; it is also useful to cross-reference any sustainability commitments of the project which include human rights commitments – for instance, the FAST-Infra Sustainable Infrastructure Label or Blue Dot Network certification, while noting that these are not equivalent to the UNGPs.
• Presence of vulnerable groups: infrastructure projects can impact various vulnerable groups, including: Indigenous Peoples (including risks relating to displacement and loss of access to land and resources); women and children (construction sites can increase the risk of gender-based violence and exploitation, disruption of communities can affect access to health services and education for children); migrant workers (high risk of labour rights abuses, often lacking legal protections and facing barriers to accessing justice); rural and farming communities (risks relating to displacement, livelihoods, environmental degradation); urban poor (risks relating to resettlement in particular); older and disabled persons (limited access to essential services); minority communities (may face heightened discrimination and lack of consultation in project planning); and coastal communities (ports or dams can disrupt fishing activities, access to coastal resources and impact community health).

Based on the type of risks identified and rightsholder, FIs can undertake heightened human rights risk assessment for transactions in the infrastructure portfolio:

• Incorporating a human rights lens into planning, design and due diligence in infrastructure projects, for almost all large-scale new build, expansion and development projects, will require an Environmental and Social Impact Assessment (ESIA), particularly where project debt financing is sought.
• A comprehensive ESIA undertaken to international standards allows both the project sponsor and financiers to assess the full range of potential environmental and social impacts related to a project development, operation and decommissioning. However, it is vital to ensure that human rights considerations are adequately addressed in the ESIA process – either through integrating specific human rights risks within the framework of a broad ESIA, and ensuring that these are assessed appropriately by qualified expert staff, or by commissioning a stand-alone Human Rights Impact Assessment, or specific assessments of particular rights risks. The outcomes of all rights-related due diligence must then be reflected in Actions Plans, financing commitments and monitoring and reporting requirements. In all cases the measures should be linked to the specific circumstances of the project.

See ‘Taking Action – Strengthen FI risk management systems and processes’. See also ‘Human Rights Screening and Risk Assessment’ for practical guidance on developing risk screening and assessment systems and processes.

Effective client engagement helps to build a common understanding of risks, gaps, and required actions. This ensures that measures can be adequately appropriated and implemented.

Throughout the financial cycle, FIs should gather information on how clients / investees are managing specific human rights risks and impacts relevant to Infrastructure.  This could include requiring clients / investees to provide information on:

• Impact assessment: Incorporating a human rights lens into planning, design and due diligence in infrastructure projects. Large-scale infrastructure projects may require an Environmental and Social Impact Assessment (ESIA). An approach that integrates specific human rights risks within the framework of a broad ESIA and ensuring that these are assessed appropriately by qualified exert staff, or by commissioning a stand-alone Human Rights Impact Assessment, or specific assessments of particular rights risks is a good starting point.
• Procurement: Measures in place to assess the human rights track record of any project partners (such as engineering, procurement and construction (EPC) firms), as well as any co-financiers.
• Land acquisition and use: How the company acquires land and ensures that land rights are respected, and how FPIC is implemented (where relevant); any land use agreements in place with local communities or indigenous groups – with particular attention to any terms related to land access and compensation. If relevant, this may also include identifying the type of land where project activities will be located, and measures in place in related to protected areas, indigenous reserves or other types of cultural heritage sites.
• Labour rights: Where low skilled workers / hazardous jobs are involved in construction activities, ask clients what policies, plans and procedures they have to recruit and employ workers, plans for contractor and accommodation management, and review grievance mechanism data.
• Worker influx: Where construction is likely to involve a significant worker influx, ask clients what policies, plans and procedures are in place to mitigate risks to local communities.
• Human rights claims or complaints, particularly regarding land and cultural rights, and natural resources submitted by communities in the project’s influence zone, along with the measures adopted to address them.
• Labour incidents and/or worker complaints, as well as the mitigation/ prevention measures taken. This should extend to contractors and sub-contractors’ workforces.
• Value chain, and measures implemented to promote respect for human rights with suppliers.
• Implementation: The outcomes of all rights-related due diligence must then be reflected in Actions Plans, financing commitments and monitoring and reporting requirements.  
• Consultation: approach to consultation with potentially affected groups and other relevant stakeholders, including processes, participants, findings and outcomes.

FIs can also engage directly with Infrastructure clients / investees and use or build leverage to require, facilitate, and incentivize respect for human rights throughout the financing cycle. This might include a focus on the following areas:

• Promoting client / investee HRDD along the value chain: depending on the specific investment, upstream value chains in these sectors tend may be long with multiple layers of intermediaries. Equally, human rights challenges may be concentrated in the primary phases of the upstream value chain, for example in the production of construction materials.
• Increasing client / investee upstream value chain visibility and transparency: FIs can encourage companies to create a comprehensive mapping of their value chains. By mapping their upstream value chains, businesses are able to begin to understand the possible human rights-related risks to which they are exposed, based on the countries where different commodities are sourced from. Having visibility over the length and complexity of the supply chain will also help clients / investees prioritise the actions needed to help identify, prevent and mitigate human rights risks.
• FIs can work with investees/ clients to raise awareness and promote mitigation action on key risk issues: For example, in relation to risks relating to worker influx and Gender Based Violence and Harassment (GBVH), FIs could require portfolio companies to take actions such as designing a protocol for dealing with sexual harassment / GBVH, and strengthening the grievance mechanism.
• Procurement practices: Leverage on human and labour rights outcomes in infrastructure projects is highly dependent on incorporating relevant requirements into the procurement and selection process. At the project level, these requirements can be supported through performance requirements in contracting and further risk-based due diligence further down the contracting chain.

See also ‘Taking Action – Client / Investee Engagement’.

Contractual requirements are a common tool to build leverage, and FIs should consider integrating human rights considerations into financing contracts with clients, based on organisational human rights policies and commitments.

Specifically, project procurement is a means by which project financiers can make human rights expectations concrete and binding on contractors and sub-contractors delivering the asset. At a minimum this should include establishing and communicating a code of conduct containing specific expectations for contractors and sub-contractors that requires good practice in relation to community health and safety, emergency preparedness, information disclosure, anti-retaliation, community relations and engagement, GBVH and security personnel. Where possible, these requirements can be supported through contracting requirements (in both Specifications and Particular Conditions) and ongoing risk-based due diligence on key human rights risk areas. FIs should seek specific information from clients on how expectations contained in codes of conduct will be implemented.

See also ‘Taking Action – Contractual provisions’.

To require and incentivise clients / investees to integrate human rights considerations in their policies, processes and risk management systems, FIs can support clients / investees in the development of mitigation plans, agree on timelines and specific actions.

FIs working with clients /investees in infrastructure sector should focus on identifying mitigants to risks in all the following stages of the project lifecycle:

• Land acquisition and planning – access to a clean, healthy and sustainable environment enjoyed by a local community, acquisition processes (including identifying whether resettlement is a relevant issue, and how this will be approached)
• Design – physical accessibility of the asset, choice of materials and value chain risks, inclusion and consultation of affected communities
• Materials sourcing – human rights risks in the value chains of materials being sourced
• Construction – labour rights of construction workers, particularly where vulnerable workers are present, risks relating to worker influx and Gender Based Violence and Harassment (GBVH), and public health concerns of local communities
• Management and use – rights of asset-users and maintenance to ensure their safety
• Demolition and redevelopment – hazardous working conditions in demolition, environmental rights and the rights of neighboring communities.

For more general information, see ‘Taking Action – Action Plans and Specific Mitigations’.

In the infrastructure sector, this could include for example: refraining from providing financing to infrastructure projects until the consultation and free, prior, and informed consent have taken place in accordance with international standards (when applicable) or until a site reclamation plan in accordance with environmental and social standards is in place. Alternatively, refraining from imposing time and cost conditions on project implementation that may impact the rights of workers.

See ‘Taking Action – Avoid actions and omissions that facilitate or incentivise human rights abuses’.

FIs should work collaboratively with stakeholders to inform their policies, identify risks, improve monitoring systems and grievance mechanisms, as well as to address entrenched human rights challenges in the infrastructure sector. This should involve meaningful consultation with potentially affected groups and other relevant stakeholders, as appropriate to the nature and context of the operation. The relevant stakeholders for FIs financing the infrastructure sector would include: other banks and investors with similar portfolios, industry associations, regulators (such as Ministries/Secretaries of transport, and entities coordinating state-owned sector enterprises), multilateral organisations, NGOs working on human rights issues linked to the sector, trade unions, academics, and rightsholders affected or potentially affected by client / investee activities such as Indigenous Peoples and other relevant communities, and their legitimate representatives.

In particular, FIs can engage with credible multi-stakeholder initiatives that promote human rights principles and standards in infrastructure sector – see ‘Sectoral initiatives and partnerships’.

FIs should ensure that clients / investees in the sector engage with community stakeholders at all stages in the project development. Affected communities should have a right to participate in decisions regarding infrastructure development, construction and operations, as well as access relevant information about environmental and health risks.

See ‘Taking Action – Stakeholder engagement and collaboration’. See also ‘Stakeholder engagement’ for guidance on collaborating, engaging and pursuing collective action.

FIs can enhance transparency and disclosure practices by providing stakeholders with access to sufficient, relevant and frequent information about finance and investments, including potential human rights impacts, mitigation measures, and grievance mechanisms. FIs can also develop and publish reports against clear indicators reflecting a human rights perspective, including salient issues, measures, and results.

FIs should encourage Infrastructure clients / investees to communicate externally how they address their human rights impacts, how effective they have been and what actions are planned for the future to address pending issues. Reporting should also include actions taken to address human rights impacts in the upstream raw materials value chain and elsewhere in the value chain. Reports and other communication materials should always be accessible, in particular to affected rights holders who have raised concerns. Human rights due diligence can also help companies comply with legal requirements.

See also ‘Taking Action – Transparency and disclosure’ for guidance on transparency and disclosure practices for human rights risks and impacts

In relation to the infrastructure sector, FIs can provide training and capacity building for FI staff on key human rights issues the identification, prevention, and mitigation of human rights abuses in the infrastructure sector.

FIs should also ensure that clients / investees have sufficient technical, financial and logistical resources available, including an interdisciplinary team that includes qualified with human rights expertise and knowledge on the local context. This might include fostering clients to provide human rights trainings for relevant employees at corporate and/or operational level, relevant security personnel and contractors on human rights policies and procedures.

FIs can also offer guidance and resources to clients to help them improve their human rights practices, and offer technical assistance and support to a client/investee in building the capacity of contractors and sub-contractors, including security personnel.

See also ‘Taking Action – Capacity building and training’ for further guidance on capacity building and training”.

FIs can work with clients / investees to establish robust monitoring and evaluation mechanisms to track the effectiveness of measures taken to prevent and mitigate human rights abuses. Policies and practices should be regularly reviewed and updated based on lessons learned and feedback from stakeholders.

At the operational level, FIs can support clients / investees to adopt monitoring mechanisms that are appropriate to the level of risk, and led by teams with relevant skills and expertise. In relation to Infrastructure FIs can focus on:

• Ongoing monitoring of construction impacts, such as dust, noise, air pollution, traffic and water which may affect local communities.
• Workforce indicators, including relating to wages, working hours, worker turnover and OSH.
• Accidents, emergencies and incidents associated with the ongoing operation of infrastructure assets.

FIs should also ensure that clients / investees have appropriate procedures in place to cascade monitoring through the value chain. Such measures include, improved grievance mechanisms, dialogue with worker committees / unions, KPIs to track potential negative impacts.

See ‘Taking Action – Monitoring and evaluation’ for practical guidance on monitoring and evaluation processes to track human rights risks and impacts associated with business activities

FIs should ensure that accessible and effective grievance mechanisms are in place to enable affected stakeholders to raise concerns and seek redress for any reported human rights abuses related to their investment or lending activities in infrastructure sector. This includes requiring clients/investees to have in place or to participate in a grievance mechanism aligned with Principle 31 of the UNGPs. FIs can set up their own grievance mechanisms, participate in one or more grievance mechanisms established together with other FIs, or participate systematically in clients’ / investees’ grievance mechanisms. It is vital to ensure that all project workers, including contractor and subcontractor workers, have access to a safe and effective grievance mechanism, both as a means of identifying risks of adverse impacts to these workers early on, and to provide a route to remedy.

Appropriate grievance mechanisms are also needed to allow communities to issues or voice their concerns effectively, constructively and safely. In the context of large infrastructure projects which may cause significant community impacts, these mechanisms may need to account for structural barriers to public participation and incorporate strong procedures that ensure confidentiality and protect against retaliation.

FIs should consider how many grievances have been raised, what types of complaints, what solutions they have provided, and how the grievance mechanism protects complainants from retaliation.

See ‘Taking Action – Improve and support the effectiveness of grievance mechanisms to ensure and enable remedy’ for detailed guidance on how to develop and improve grievance mechanisms, and key considerations in relation to remedy.