Category Archives: Finance

REPORT: IFC and the Uyghur genocide – due diligence gaps in IFC’s Xinjiang investments

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This is the second in a series examining IFC’s implementation of its Indigenous Peoples Performance Standard, PS7. See the first report here. See the third report on the hundreds of projects that bypassed PS7 completely here.

Download the full report here

Since 2017 the government of China’s Xinjiang Uyghur Autonomous Region has been imprisoning Uyghurs en masse, subjecting them to reeducation and forced labor, separating them from their children and forcibly sterilizing them.

Development actors and businesses are a key component of Uyghur subjugation. Agricultural commodities – specifically cotton and tomatoes –  are harvested by detainees or villagers targeted by authorities for “poverty reduction campaigns” that traffic them to remote villages. Manufacturing firms use detainees as a captive labor force, either for their operations or for short-term contracts. Tech companies have taken grants from Beijing to create a surveillance state in Xinjiang that has made the whole region a prison. The government has worked to dilute the Uyghur population by incentivizing businesses to set up shop in Xinjiang and import labor forces along with them.

Policy experts and, recently, the US government, has referred to this systematic campaign of repression as Cultural Genocide. Industry associations, government agencies and auditors have placed blanket bans on working in or sourcing goods from Xinjiang as a result.

The World Bank’s private lending arm, the International Finance Corporation (IFC) has taken no comparable stance. Although the IFC has environmental and social Performance Standards to govern the practices of its clients, implementation of these standards is not on display in Xinjiang. Of 10 investments IFC made in the region since the 2012 standards were launched, only one considered whether the region’s indigenous Turkic Uyghur population merited protections – and concluded they did not.

IFC’s investments in the region are in agriculture, manufacturing and IT. NomoGaia sought clarity on IFC’s due diligence processes in these investments starting in November 2020. Since then, IFC has divested from three of the 10 projects but has failed to demonstrate that its remaining clients are removed from the campaign of ethnic erasure underway.

The map below geolocates IFC’s investment, spread across the region.

Map of IFC investments in Xinjiang linked to a KMZ file
KMZ file for an interactive version of this map and location data

IFC was not aware of the footprints of many of these investments, making it impossible for it to have been monitoring land use changes or destruction of cultural heritage, as the bank has been unable to visit the region since mid-2019. Absent compelling data demonstrating that IFC is monitoring the complex business relationships that subjugate Uyghur people and culture in Xinjiang, IFC should terminate its remaining outstanding loans and commit to a development approach that recognizes no level of ‘poverty reduction’ can justify cultural erasure.

*Please note this report has been modified from its original version regarding Xinjiang Goldwind. A line of credit had been misstated to be higher than the actual value of the line of credit and has been corrected. A media source was modified to denote the original publication rather than the syndicated publication. The evolution of the relationship between Goldwind and the XPCC has been clarified. (September 20, 2022)

Download the full report here

How a handshake can hurt a company’s human rights record

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The growing importance of human rights to businesses

According to a recent BSR/GlobeScan survey, human rights are the single greatest sustainability concern for businesses. The Economist Intelligence Unit and UN Global Compact have also tracked growth in corporate concern about human rights.

The reason, as explained by business leaders themselves, because human rights touches every aspect of a business’s operations, and every dimension of a person’s welfare. It is, in the words of former UN Working Group on Human Rights and Business chair Margaret Jungk, “the essence of sustainability.”

The challenges that come with being “the essence of sustainability”

It is partly this all-encompassing nature of human rights that has made it so difficult for companies to manage. As the Wall Street Journal reported last week, companies struggle to locate human rights in any one department of their existing management structure. It is not well placed within the legal, community relations, human resources, security or environmental departments, but it has a role in all of those.

Likewise, companies have found it challenging to tackle a single human rights issue at a time (look at child labor in the cocoa industry – sparking outrage for 15 years now and a persistent priority for the likes of Hershey, Mars and Nestle).

Beyond those challenges, companies with complex business relationships face unique hurdles. Companies with large supply chains are increasingly held accountable for the human rights violations committed by their suppliers. Financial institutions are being asked to ensure that their loans and equity agreements do not violate human rights. Companies partnering with governments are called on to avoid being complicit in the human rights violations of the host states with which they do business.

How to make it easier for companies

Companies need a clearer way to identify the risks of their business relationships. This is a two-step process. First, they need a screening tool to identify the contexts and operations that, in their very nature, pose the greatest risk of implicating the company in human rights risks. Second, they need a risk assessment tool that can be carried out quickly and efficiently, and which incorporates the perspectives of rightsholders.

Human Rights Risk Assessment

We’ve been building these tools. The screen will come live as an app early next year. The Human Rights Risk Assessment (HRRA) tool will be out next month. What we’ve produced below is a “business person’s guide to HRRA.” It is directed at corporate actors concerned about human rights and business relationships. It explains the point and process of HRRA, so that companies can be informed and proactive in seeking the help they need from qualified human rights practitioners.

Have a read and tell us what you think: info@nomogaia.org


Download the
HRRA Guide for Biz
(1.5MB)

Jordan’s Disi Pipeline

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Today, Jordan set the Guinness Record for the world’s longest slip-n-slide. The self-described 2nd water-poorest country in the world shot hoses down more than 2000 feet of plastic sheeting, to cheers and fanfare. This just two weeks after the World Bank committed $250 million to help Jordan manage its water sector.

The waste from Jordan’s slip-n-slide is symbolic, but it underlines the need for reform and undermines the perception that Jordan is serious about tackling its water crisis.

NomoGaia has been following Jordan’s water sector for 5 years, assessing the impacts of a newly tapped water source, the Disi Aquifer, on Jordanians’ Right to Water. The Disi Water Conveyance Project was funded by international banks with an aim to alleviate water stress in the capital city of Amman. Instead, NomoGaia has found that it has largely served to allow Jordan’s wasteful agriculture sector to resist reforms.

Simultaneously, water from Disi poses health risks to users, and environmental risks to the country at large. Our in-depth analysis of these risks and impacts are available at the link below:

Disi HRIA Narrative – 102815

This assessment is a pilot of a new Tool NomoGaia is developing — one geared toward the financial sector. Investors in the Disi Water Conveyance Project poorly understood the human rights implications of the project, which has had serious repercussions for the effectiveness of the project (and for the likelihood that loans will be repaid).

 

World Bank in Burma: What’s at Stake?

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[nomogaia_download year=”2014″ month=”08″ file_name=”Human-Rights-Risk-Assessment-DRAFT-Thaton-WB.pdf”] Download the HRRA file (2MB)[/nomogaia_download]

In June we started fieldwork on a human rights risk assessment of a World Bank funded power plant project in Mon State, Myanmar. The new power plant will double the electrical output of the power plant without increasing emissions. As project documents note, “Thaton’s plant is more dangerous than other plants, and is in need of urgent improvement to meet international safety regulations.” There is a clear need to modernize Maynmar’s electricity infrastructure, and, done right, Thaton is a useful place to start.

However, there are also significant risks associated with carrying out development projects in a region that endured 60 years of active conflict, ending in a shaky peace agreement in 2012.

NomoGaia is assessing the human rights risks associated with Thaton, with the aim of empowering the World Bank to manage and eliminate them.

Our first-phase assessment is available here.

Human Rights Risk Assessment – DRAFT – Thaton – WB

The World Bank’s response, from June 2015 is available here.

WB response to NOMOGAIA