FMO considers salient human rights issues as those that in our assessment can pose the most severe negative impact on people through our customers activities or business relationships. These include potential and actual issues in our portfolio.
We have identified the following 5 salient human rights issues:
The right to life is the ‘supreme’ right and the most basic human right of all. As we select our clients and look at the way they manage their business, we strive to respect the right to life in three ways:
Some of FMO’s investments involve high-risk construction activities or work practices that could potentially result in a violation of this right if not properly managed. We therefore expect our clients to perform risk assessments, apply preventive measures, provide training in safe working methods, and record and learn from all accidents, incidents and near misses. We also expect them to systematically look at risks to community health and safety. For example, a project involving major construction requires traffic management and community engagement processes to avoid risks from surges of construction traffic on local roads and through communities. FMO also recognizes that inappropriate security actions can result in the violation of this inalienable right. We therefore work with our clients to ensure that adequate security training is provided – particularly in cases of armed security.
Lastly, we are seeing a disturbing trend. In many countries human rights defenders, environmental activists, forest rangers and journalists face oppression and threats. As a result, we are increasing our pre-investment due diligence activities to look at contextual risks, including risks to human rights defenders, in the countries and sectors we invest in.
Most of FMO’s investments require short or long-term skilled and non-skilled labor. Labor rights are therefore at the core of our due diligence activities. In fact, FMO expects clients to be compliant with the International Labour Organization’s (ILO) Core Labour Standards. In other words, they must prohibit child and forced labor, not discriminate, and allow freedom of association and collective bargaining. The prohibition of child or forced labor within our investments informs our list of excluded activities, and FMO also expects ILO’s basic terms and conditions of employment to be respected regarding wages, working hours, and occupational health and safety.
FMO also assesses working conditions beyond the boundaries of the company we directly finance, including the rights of contractors and workers in the supply chain. An initial analysis of the nature of the supply chain allows us to identify the most salient issues that need to be managed or mitigated.
But no institution can do everything on their own. We partnered with other European development banks in 2017 to contribute to ILO’s Decent Work Agenda. Together, we commission more in-depth research to identify actions that secure decent work for the people affected by our investments.
FMO’s objective is to make investments that support development and improve peoples’ lives. Making sure that vulnerable people share in the benefits of our investments – and that their rights are not infringed – is central to our way of working.
The context and nature of each investment defines who, if anyone, is potentially vulnerable. In some projects, women as a group are vulnerable through poverty or lack of voice. Some projects have a permanent impact on land use with an effect on the future rights of children as well as those who are adults when the project is developed. In other projects, ethnic or religious groups may be vulnerable to marginalization or discrimination, poor people may be powerless within a community, or disabled people may face discrimination.
When it comes to these types of vulnerable people, we work hard with our clients and their operations to:
Our due diligence for high risk projects therefore includes identifying vulnerable groups and individuals through contextual and project-specific analysis. For instance, the rights of Indigenous People include the right to giving (or refusing) Free Prior and Informed Consent (FPIC). This is required if a project uses land under traditional use by Indigenous People or makes use of traditional knowledge.
If an project FMO invests in requires people to move from their land, homes or businesses, their right to an adequate standard of living can be put at risk. This is of particular issue if the resettlement is involuntary. Sometimes this move is temporary, such as the use of land for construction equipment lay-down yards that can later be returned to its former use. Other times, however, it is permanent. Wherever possible, we try to avoid resettlement or minimize resettlement if it is unavoidable (particularly if this is involuntary). However, when it happens, our general guideline is that impacted people should not be worse off than before. In fact, our goal is for people to be better off.
FMO’s approach to land changes – including land acquisition and change of land use by the projects and businesses we invest in – is guided by the IFC Performance Standard 5 on Land Acquisition and the Voluntary Guidelines on Responsible Governance of Tenure. This is explained in detail in our position statement on Land Governance. Given the importance of land and natural resources to people’s identity and livelihoods, FMO has integrated a more systematic land check into our due diligence.
Why do we consider ‘the right to not being subject to cruel and inhumane or degrading treatment’ a salient human rights risk in FMO’s portfolio? Principally due to the high likelihood of our clients using security in the form of armed or unarmed security guards at gates and entrances of the investment. Companies normally hire private security forces for this, but in some cases they rely on government support either through the police and/or the military.
Having said that, whilst security incidents at FMO projects have been infrequent, we must acknowledge that some of our investments are in countries in which the escalation of labor or community protests can occur. Armed guards or police can then become involved, creating the potential for the use of unnecessary or disproportionate force that can cause grave human rights violations.
FMO’s approach is to focus on client vetting of the security company and training the security guards. Where needed, we place special emphasis on community engagement, conflict resolution and health and safety practices.