A human rights risk assessment is part of EKN’s business risk assessment and can help to reduce both financial risk and human rights risks. Short-term letter of credit guarantees, working capital credit guarantees and defence material transactions are exempted from the human rights risk assessment.
EKN’s assessment of human rights impacts places particular emphasis on the rights that are linked to business activities’ local impacts. These include, for example, working conditions, the effect on health and safety in the surrounding area, resettlement, indigenous peoples, vulnerable groups and cultural heritage.
How is EKN’s assessment made?
- When guarantee applications are received, EKN performs a screening to identify transactions with a high risk of negative impact on human rights.
- Where there is a high risk of negative impact, the application proceeds to a human rights review. The scope of the review is adapted according to the size of the transaction, what risks have been identified and EKN’s ability to influence the situation.
- EKN uses IFC’s Performance Standards and The World Bank Group’s Environmental, Health and Safety Guidelines in assessing whether human rights impacts have been managed to an acceptable standard. EKN also follows the UN Guiding Principles on Business and Human Rights (UNGPs) in assessing how risks are to be prioritised and what leverage EKN has to promote a positive change.
- Transactions are categorized on the basis of their risk of negative impact on human rights. Category A involves a risk of significant impact, B involves a risk of some impact and C involves little or no impact. In some cases, EKN includes conditions on managing impacts on human rights in the transaction to be guaranteed.
- If EKN does not receive the information that is requested, or if the potential impacts on human rights are unacceptable and without mitigating actions, the application cannot move forward to a decision making committee.
What should you do as an exporter?
- Answer the questions in the application on i) knowledge of any serious human rights risks at the buyer company; and whether ii) you have investigated possible social impacts (positive and negative) of the transaction.
- If the exported equipment will be used in a project, ask the buyer if there is an environmental and social impact assessment (ESIA). A project means that the export is going to a new enterprise (commercial, industrial or infrastructure) being established or to a significant expansion of an existing enterprise that involves an impact on human rights.
- Assist EKN with any questions to the buyer.
Keep in mind
- It is a good idea to inform the buyer at an early stage that an EKN guarantee may involve questions about managing social issues and human rights. The buyer is then prepared for the questions when EKN becomes involved.
- The more information EKN receives about the buyer, the faster the assessment of human rights risks.
- If there are known human rights risks, involve EKN at an early stage so that the issues can be managed in parallel with guarantee related issues.