“No news is bad news”

Published on: 13 April 2023

Financial institutions have a duty to investigate if the companies they invest in are at risk of being exposed to involvement in human rights violations. Reliable information is essential here, yet in many countries civil liberties are restricted to some extent. This comes at the expense of social debate. For this reason, APG and four other Dutch financial institutions investigated how to strengthen human rights risk assessment in countries where reliable information is scarce.

An open civic space means that citizens are free to organise and express their views, for instance. This enables them to assert their rights and participate in decision-making that affects their lives, say the organisations – which, apart from APG, included ING, ABN Amro, Robeco and Morningstar Sustainalytics – in their report. A healthy civic space also means that journalists can report freely on government corruption, workers are able to call for safer working conditions and members of (indigenous) communities are allowed to demonstrate to protect their water sources, for example.

Human rights
According to the report, respecting these rights is essential for ensuring a stable and sustainable environment in which businesses thrive and the economy grows. In a growing number of countries, however, civic space is under pressure. This increases risks for businesses, as they find it difficult to determine whether human rights are respected in the places where they operate. Accordingly, the title of the report, based on a quote from a participant at one of the sessions that led to its creation, is No news is bad news.

International standards, such as the UN Guiding Principles on Business and Human Rights, compel companies to do research (due diligence) into risks that their activities and those of their supply chain pose to people and the environment. Companies stand to gain a lot from this. By proactively and constructively engaging with human rights activists, trade unionists and members of indigenous communities, inter alia, they gain a better understanding of the risks their activities pose, and how to manage those risks. This enables companies to act more responsibly and offers them the opportunity to create long-term value.

The report offers several insights into how companies can improve risk assessment

Toewelhe research report by the five financial institutions offers several insights into how companies can improve risk assessment. One of the findings is that engagement with people who might be affected by certain activities of a company is of great importance, especially if the civic space in the country in question is limited. This form of engagement goes a long way towards quickly identifying and mitigating human and environmental risks. The role of financial institutions, including pension funds, in this process is to convey to their participants or clients, and the companies they invest in that they expect effective engagement with all stakeholders.

A second finding is that financial institutions traditionally rely on large, professional organisations to provide information on risk. These organisations, especially large ESG data providers, would do well to partner with civil society organisations. That way, the information available to both types of organisations can be integrated.


The third and final finding pertains to the issue that effective risk assessment involves a high level of expertise. The advice is that financial institutions can enhance their knowledge of the human rights situation in different countries by exchanging knowledge with academics and representatives of civil society organisations and ESG data providers, among others. Regular knowledge sharing on human rights issues in different areas keep financial institutions abreast of the latest news and insights from civil society. This allows them to determine where the risks are highest and to supplement their analysis of these by engaging with local human rights activists and other stakeholders, which in turn ties in with the first finding.  

“When it comes to assessing human rights risks, data is key and the quality of the information available can vary enormously”, says Anna Pot, Head of Responsible Investment Capital Markets at APG. “Countries with the poorest human rights records are usually those where it is a challenge to obtain credible information without jeopardizing the safety of human rights defenders. Filling in these gaps through collaborative attempts to devise methodologies and share data is vital. We strive to improve and enhance the quality of the information we provide on the impact of our investments and use our influence to improve human rights.” 


Read the report here.