Promoting well-being and equality and respect for human rights are key principles of Finnfund's operations.
Finnfund assesses the social responsibility and human rights impacts of all its new investment decisions before the investment decision, and monitors and assesses the accountability through, inter alia, its own assessment tool and the Performance Standards of the IFC, Member of the World Bank Group (International Finance Corporation).
These standards include international human rights principles such as rights related to work and working conditions, the rights of vulnerable groups such as indigenous peoples or displaced groups, community consultation and involvement, and grievance mechanisms. Finnfund's funding is subject to the condition that the beneficiary is committed, as appropriate, to comply with these standards.
Finnfund finances companies that operate in countries that often have challenges in context of human rights. Finnfund is aware that the projects it funds, and its activities can have direct and indirect impacts on human rights. Finnfund actively strives to identify, prevent and mitigate the negative human rights impacts caused by its own operations or the projects it finances, and intervene 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’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.
Finnfund does not finance any companies or projects with human rights violations that cannot be prevented or remedied.
The essential human rights aspects of the project are defined for the first time at the early stage of project preparation, and after a clearance-in-principle as a part of the environmental and social responsibility assessment of the project.
At the early stages of project preparation, the human rights assessment is conducted by the development impact advisors 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.
The Finnfund human rights impact assessment process consists of five stages linked to the Finnfund financing process. The stages are described below.
The assessment of human rights in the Finnfund financing process
In 2017, Finnfund developed its tools, processes and know-how related to human rights. A human rights impact assessment was conducted in direct investment using the UNGP toolkit adopted during the previous year. In 2017, all new direct investment decisions were subject to a human rights assessment, and the results and corrective measures are included in the project's action plan.
In addition, Finnfund developed and piloted a similar tool for assessing indirect investments. At the same time, the criteria were developed to identify the risk level associated with human rights in different projects and to define a scope of the assessment needed before a clearance-in-principle decision. The development and implementation of the indirect investment assessment tool and the criteria will be continued in 2018.
In spring 2017, Finnfund also commissioned an external evaluation of Finnfund's human rights policies and practices in relation to the UNGP, and training for the whole staff. The results will be utilized in developing of the human rights approach which will continue in 2018.