Finnfund finances companies that operate in countries that often have challenges in context of human rights. Finnfund seeks to promote the respect for human rights in all the projects it finances with the means available.
Finnfund is committed to the UN Guiding Principles on Business and Human Rights and to respect human rights in accordance with the International Bill of Human Rights and the Human Rights Based Approach of the Finnish Ministry for Foreign Affairs.
The human rights perspective is embedded in Finnfund’s Environmental and Social Policy, and it also endorses the Principles for Responsible Financing of the European Development Finance Institutions (EDFI), of which it is a member. The assessment of human rights impacts laid down in the environmental and social policy is aligned with the UN Global Compact, the UN Guiding Principles on Business and Human Rights and the ILO Declaration on Fundamental Principles and Rights at Work.
Finnfund does not finance any companies or projects with human rights violations that cannot be prevented or remedied.
Finnfund’s approach to human rights was published on its website and in several connections as a general level commitment in 2015. The assessment of human rights aspects is a central part of Finnfund’s financing process. The human rights dimensions of potential projects are defined at an early stage of project preparation and, after the clearance in principal decision, during the environmental and social due diligence phase.
According to the UN Guiding Principles on Business and Human Rights, Finnfund and the companies it finances have a duty to respect and promote human rights. Finnfund applies the International Finance Corporation (IFC) Performance Standards on Environmental and Social Sustainability in the assessment and monitoring of human rights impacts. They are in line with the international human rights principles and the UN Guiding Principles on Business and Human Rights, and they emphasise the rights of employees and local communities. It is a prior condition of Finnfund financing that the recipient makes a contractual commitment to follow these standards.
Furthermore, in 2016 Finnfund created a separate human rights impact assessment tool based on the UN Guiding Principles on Business and Human Rights. The tool has been applied to all new direct investments since 2016. In 2017, the tool will be developed further to extend it to indirect investments.
The Finnfund human rights impact assessment process consists of five stages linked to the Finnfund financing process.
The assessment of human rights in the Finnfund financing process
At the early stages of project preparation, the human rights assessment is conducted by experts in the Impact and Communications team and the environmental and social responsibility advisers when assessing political risks and the operating environment of the project. When the investment decision is being prepared, human rights impact assessment is deepened and monitored by the experts on environmental and social responsibility. Finnfund also uses external experts whenever necessary.
Finnfund continuously develops its human rights approach and tools and provides its employees with the necessary training.