Renewables projects must respect Indigenous Peoples and local communities. Here's how

The rapidly accelerating climate crisis warrants an urgent and thorough transformation of global energy systems. Emerging initiatives like the United States’ Inflation Reduction Act and the European Green Deal are already being adopted to accelerate the much-needed deployment of renewable energy projects. It is, however, critical that this transition is not only fast, but also fair.

Renewable energy projects are often highly land-intensive, but such projects can be carried out responsibly. When this is not the case, failure to effectively manage environmental and social risks can cause widespread harm to Indigenous Peoples and local communities, and pose significant legal, financial and reputational risks for businesses, financiers and governments alike. Fortunately, a broad range of key actors has real power to drive responsible renewables development, ensure just and rights-respecting outcomes, and mitigate the risks that flow from irresponsible behaviour.

The deployment of large-scale renewable energy projects – with significant differences across technologies – can be land-intensive, and compete with other local land uses. Those who stand to be most severely impacted include Indigenous Peoples, customary land holders, pastoralists, forest guardians and local farmers, who collectively manage a significant share of global forests and agricultural lands.

While these peoples and communities play a central role in land-based climate mitigation efforts, they are also among the groups most vulnerable to the impacts of climate change. Yet governments often fail to meaningfully consult them in public decision-making and in the planning and implementation of national climate policies. Renewable energy and green development policy-making often plays into existing, longstanding tensions between states and vulnerable groups. These often stem from a context of colonialism and the expropriation of ancestral lands for development.

Excluding these communities and peoples from large-scale development decision-making can lead to land-grabbing and harmful forced displacement. Such outcomes can cause widespread harm to Indigenous Peoples and local communities due to the loss of land, livelihoods and cultural integrity. One recent study recorded over 200 allegations of adverse human rights impacts linked to renewable energy projects between 2010 and 2020, which point to a widespread failure of key actors to meet their internationally recognized responsibilities to protect human rights. In the long run, such impacts and resulting conflicts can erode critical popular support for renewable energy technologies.

The case for responsible renewables development isn’t just an altruistic one. Businesses, development finance institutions and governments all face real risks when they don’t prioritize community interests and human rights. Companies that fail to adequately address human rights impacts can face legal risks, reputational harm and financial losses. For host governments, delays linked to community opposition could mean delayed or foregone realization of benefits from investments. Add to this the reputational risks that these host governments face, as human rights violations can damage the credibility of their energy security, net zero and broader sustainable development objectives.

For development finance institutions (DFIs), adverse human rights impacts can jeopardize their sustainability mandates and compromise their legitimacy as agents of sustainable development. Conflicts and delays can also lead to significant financial losses for DFIs in the form of failed loan repayments and project failure. A 2021 study showed that DFI-financed projects risk losing $25-40 million due to delays if they fail to proactively mitigate social risks.

These risks also apply to states where companies investing in renewable energy are based, whose emerging policy initiatives of promoting clean energy deployment in third countries may be threatened by community opposition and criticism experienced by their own companies. This is in addition to the community opposition, project delays or cancellations, and associated reduction of financial returns that companies, including state-owned utility companies, operating overseas may face if they cause or fail to address adverse human rights impacts of an investment.

Fortunately, there are practical and pragmatic ways to avoid these pitfalls and ensure positive and responsible development outcomes. While there is a need for companies to advance these goals through well-designed human rights programmes, less often talked about are development finance institutions (DFIs), intergovernmental organizations, and governments, who play important roles in shaping responsible business conduct. In a recently released briefing for policy-makers, the Columbia Center on Sustainable Investment (CCSI) provides guidance on key policy priorities that various agents of policy- and decision-making should pursue to advance a rights-respecting energy transition.

Governments, DFIs and intergovernmental organizations should recognize and respect human rights and tenure rights, facilitate meaningful engagement with affected peoples and communities, advance local-level development through co-equity models and benefit-sharing, institute systems to remediate harms, and protect the safety of environmental, land and human rights defenders.

These policy actors can mobilize a diverse range of policy strategies to advance these goals. For host state governments, tools such as investment assessment processes, investor-state contract negotiations, national climate policies and marshalling funds to build community agency are important avenues through which human rights can be protected.

Empowerment of local communities and Indigenous Peoples in advancing their self-determined development goals is an important part of building community agency. In addition to extending independent financial and technical resources to support this development, home governments can also advance just and inclusive co-equity models and prioritize the deployment of small-scale community-led projects by supporting initiatives like the Right Energy Partnership and the First Nations Clean Energy Network in Australia.

States can shape the conduct of companies domiciled in their jurisdictions through various strategies including mandatory human rights and environmental due diligence laws, sustainability disclosure requirements, and the renegotiation of international investment treaties. Countries like Germany have already begun adopting comprehensive regulation that require companies operating abroad to ensure that human rights are being respected across their entire value chains, and that enable overseas victims of human rights violations to seek remedy against companies in German courts. If implemented well, such frameworks can be instrumental for promoting rights-respecting renewable energy deployment.

DFIs, on the other hand, can leverage their environmental and social safeguarding policies, internal accountability mechanisms and other elements of their lending practices to positively influence conduct of their government and private sector clients. For example, the Inter-American Investment Corporation’s environmental and social sustainability policy has been praised by the Office of the United Nations High Commissioner for Human Rights as a good model, and by civil society groups for institutionalizing protection of human rights defenders.

International organizations, including those within the United Nations system, can positively influence the global narrative and push for improved policy standards and business practice. This can be done through various means, including the meaningful representation of Indigenous Peoples in global policy-making, the reform and implementation of loss and damage funds, building capacity of states in designing rights-based policy, and facilitating the implementation of international and regional conventions on human rights.

While the renewable energy sector remains vulnerable to adverse human rights impacts, these land-intensive investments can be done responsibly, and good policy lies at the heart of it. With rights-respecting policy approaches, governments, DFIs and international organizations can advance a global energy transition that is not only fast, but also fair.