Climate change is an urgent human rights issue: Global temperature rises, associated biodiversity loss, rising sea levels and extreme weather events negatively impact our security, food production, water supplies, health and the habitability of our homes and cities. Forced displacement and the increased risk of conflict due to competition for scarce resources threaten all human rights, including the right to life. Without adequate planning, even the shift away from fossil fuels itself may have a severe impact on rights, such as the extraction and manufacture of materials for renewable technologies or fossil-fuel project closure without transition for dependent communities. The situation is critical. Technological and regulatory shifts are required – and required quickly – to achieve decarbonisation and the transition towards a sustainable global economy. In many jurisdictions these changes are emerging. However, for the decarbonisation transition to be made in a way that minimises harm to people, human rights must be at the centre of the response. The need for a ‘just transition’ is being increasingly recognised by influential global institutions and thought leaders. It is now acknowledged that business must take active steps to place human rights at the core of strategies to address climate change. Courts and statutory human rights institutions are using their respective judicial power and human rights mandates to begin to hold companies accountable for the human rights harms of climate change. Human rights expectations of investors in general have rapidly increased. However, our research indicates that institutional investors are still prioritising environmental impacts over harm to humans when addressing climate change risk in their portfolios. Environmental and social risk assessments are often siloed, meaning that climate-related human rights impacts are inadequately addressed. This gap is a risk to institutional investor trustees that must be addressed as an urgent matter of prudent risk management.
Our commitment to supporting investors: KPMG, and the Responsible Investment Association Australasia (RIAA)’s Member Human Rights Working Group have brought together our business, human rights, climate and financial sector expertise to support change for better. Institutional investors are uniquely placed to mitigate and address climate-related human rights risks. However, in 2021, the UN Working Group on Business and Human Rights found that institutional investors face significant capability challenges in relation to practically implementing consideration of human rights in their investment activities, including ‘knowledge of human rights… how human rights are defined, how they are relevant across ESG factors, and what meaningful human rights due diligence looks like.’ This is an emerging issue. Climate change risk was not a common feature of corporate reporting until fairly recently. However climate disclosures are now being increasingly regulated. We can expect disclosure of climate related human rights risks to follow a similar pathway. It is our hope that this guide will support investors to understand their responsibilities and embrace the opportunities presented by this moment in time. In addition to our expertise and research, we also incorporate material from in-depth research interviews with institutional investors and other key stakeholders to give readers insight into leading practice and case studies of practical approaches. This is a fast-moving space and investors will need to stay in touch with new trends and emerging risks. However, this guide offers practical steps and key first principles information to which investors can return as they shape and mature their response by focusing on risk to people and applying a human rights lens to climate risk assessments.

Human Rights & Climate Change: A guide for institutional investors

Resource Key: Q3TXRY3F

Document Type: Report

Creator:

Author:

  • KPMG
  • RIAA

Creators Name: {mb_resource_zotero_creatorsname}

Place: Sydney and Melbourne, Australia

Institution: KPMG Banarra; Responsible Investment Association Australasia

Date: 2021

Language: en

Climate change is an urgent human rights issue: Global temperature rises, associated biodiversity loss, rising sea levels and extreme weather events negatively impact our security, food production, water supplies, health and the habitability of our homes and cities. Forced displacement and the increased risk of conflict due to competition for scarce resources threaten all human rights, including the right to life. Without adequate planning, even the shift away from fossil fuels itself may have a severe impact on rights, such as the extraction and manufacture of materials for renewable technologies or fossil-fuel project closure without transition for dependent communities. The situation is critical. Technological and regulatory shifts are required – and required quickly – to achieve decarbonisation and the transition towards a sustainable global economy. In many jurisdictions these changes are emerging. However, for the decarbonisation transition to be made in a way that minimises harm to people, human rights must be at the centre of the response. The need for a ‘just transition’ is being increasingly recognised by influential global institutions and thought leaders. It is now acknowledged that business must take active steps to place human rights at the core of strategies to address climate change. Courts and statutory human rights institutions are using their respective judicial power and human rights mandates to begin to hold companies accountable for the human rights harms of climate change. Human rights expectations of investors in general have rapidly increased. However, our research indicates that institutional investors are still prioritising environmental impacts over harm to humans when addressing climate change risk in their portfolios. Environmental and social risk assessments are often siloed, meaning that climate-related human rights impacts are inadequately addressed. This gap is a risk to institutional investor trustees that must be addressed as an urgent matter of prudent risk management.
Our commitment to supporting investors: KPMG, and the Responsible Investment Association Australasia (RIAA)’s Member Human Rights Working Group have brought together our business, human rights, climate and financial sector expertise to support change for better. Institutional investors are uniquely placed to mitigate and address climate-related human rights risks. However, in 2021, the UN Working Group on Business and Human Rights found that institutional investors face significant capability challenges in relation to practically implementing consideration of human rights in their investment activities, including ‘knowledge of human rights… how human rights are defined, how they are relevant across ESG factors, and what meaningful human rights due diligence looks like.’ This is an emerging issue. Climate change risk was not a common feature of corporate reporting until fairly recently. However climate disclosures are now being increasingly regulated. We can expect disclosure of climate related human rights risks to follow a similar pathway. It is our hope that this guide will support investors to understand their responsibilities and embrace the opportunities presented by this moment in time. In addition to our expertise and research, we also incorporate material from in-depth research interviews with institutional investors and other key stakeholders to give readers insight into leading practice and case studies of practical approaches. This is a fast-moving space and investors will need to stay in touch with new trends and emerging risks. However, this guide offers practical steps and key first principles information to which investors can return as they shape and mature their response by focusing on risk to people and applying a human rights lens to climate risk assessments.

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