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Engagement: Human rights in the supply chain

‘A look ahead to 2023’ download our full report below

With climate and emissions reductions high on the agenda, companies in the renewable space are prospering. Unfortunately, this can have big human rights implications. For example, the production of batteries for electric cars rely on the supply of key minerals, which have been linked to human rights abuses, such as child labour in the mining industry. This illustrates that although it is important to have new products which help reduce emissions, the E of ESG should not monopolise attention to the disadvantage of social themes.

A sustainable society is not only one which transitions to net-zero, but also
one where all people can prosper and benefit from a fairer and more inclusive society.

Marie Payne, Responsible Investor Officer

Human rights are the universal right to be treated with dignity and without discrimination. Companies’ responsibility to respect human rights is based on internationally recognised frameworks. Investors have a role to play in shaping such a society where human rights are respected. The S of ESG represents a risk for investments with, for example, legal and reputational risks attached when investing in companies linked to controversies. It also represents an opportunity to bring real world impact. This double materiality is important to the Cardano ACTIAM sustainable investment vision.

We believe that social themes have an important place in the sustainability framework, with companies expected to have strong social and human capital management. This enables the transition to a just society – one which respects human rights and local communities and aids social equity, including income and gender equality.

Within our sustainable investment framework, stewardship plays an important role. Through active ownership we strive to influence companies’ behaviour. Engagement is one of the tools used and we do this mainly via collaborations with other investors. This allows for more efficient and impactful dialogue both for companies and investors. For social and human rights themes, Cardano ACTIAM is already part of a few collaborations such as the Investor Alliance for Human Rights and the ShareAction Good Work coalition. Positive outcomes have been achieved by these initiatives via effective engagement dialogue and co-filing resolutions.

To strengthen our stewardship activities around human rights and their importance for the renewables sector, Cardano ACTIAM joined the new PRI initiative Advance (Principles for Responsible Investment). With a focus on the renewable energy and extractives industries, it aims to advance respect for human rights by minimising negative outcomes and driving positive outcomes for people. Companies within the two focus sectors will be engaged on social and human rights issues in their operations. This collaborative approach is essential if we want to see real change in the whole industry (and not only ad hoc improvements by a few companies).

A real industry uplift in the respect of human rights down the value chain is essential. The clean energy sector, essential to a net-zero transition, drives upward the demand for conflict materials (Tantalum, Tungsten, Tin and Gold) as well as Cobalt but it should not prosper while disregarding human rights.

We look forward to effective and impactful dialogues with these companies to advance the respect for human rights in the renewables industry.

A look ahead to 2023

A year of reflection, consolidation and recasting strategies.

A look ahead to 2023

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