The Paris climate agreement and the Sustainable Development Goals have signalled clearly that the future of energy is renewables – not only to curb the devastating effects of climate change but to provide clean and affordable energy to all. Investment in renewable energy projects has increased close to fivefold over the past 12 years, from $62 billion in 2004 to $287 billion in 2016.1As technology costs continue to drop, investments in renewable energy are increasingly recognised as providing a competitive advantage. However, the way in which these projects are developed and implemented matters – both for local communities and for investors. There has been a rise in reports of renewable energy projects negatively affecting the communities where they operate including impacts on land, indigenous peoples, threats, intimidation, and even killings. This causes operational delays, legal costs and reputational risks, which are likely to translate in diminished financial returns for investors, as well as increased operational and capital expenditure. Fifty companies involved in renewable energy projects were approached with 10 questions on their approach to human rights in November 2016; their responses revealed weaknesses in commitments and practices to prevent negativeimpacts on communities. Only 10% of companies referred to the international standard of free, prior and informed consent in their responses and three out of these five companies faced allegations from communities on implementing this commitment on the ground.

Investor Briefing: Renewable Energy Impacts on Communities

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Document Type: Report

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  • BHRRC

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Date: 2017

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The Paris climate agreement and the Sustainable Development Goals have signalled clearly that the future of energy is renewables – not only to curb the devastating effects of climate change but to provide clean and affordable energy to all. Investment in renewable energy projects has increased close to fivefold over the past 12 years, from $62 billion in 2004 to $287 billion in 2016.1As technology costs continue to drop, investments in renewable energy are increasingly recognised as providing a competitive advantage. However, the way in which these projects are developed and implemented matters – both for local communities and for investors. There has been a rise in reports of renewable energy projects negatively affecting the communities where they operate including impacts on land, indigenous peoples, threats, intimidation, and even killings. This causes operational delays, legal costs and reputational risks, which are likely to translate in diminished financial returns for investors, as well as increased operational and capital expenditure. Fifty companies involved in renewable energy projects were approached with 10 questions on their approach to human rights in November 2016; their responses revealed weaknesses in commitments and practices to prevent negativeimpacts on communities. Only 10% of companies referred to the international standard of free, prior and informed consent in their responses and three out of these five companies faced allegations from communities on implementing this commitment on the ground.

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