The promotion of human rights is a long-standing priority in Norwegian development cooperation. How does development aid involving business affect human rights? To answer this question, Norad’s evaluation department commissioned an evaluation which assessed the systems and performance of Norfund and five other Norwegian public entities.

The evaluation team used the United Nations Guiding Principles on Business and Human Rights (UNGP) as its framework for analysis.

Key findings
The report of the evaluation team is now available at Norad’s webpage. It assesses six entities: the Ministry of Foreign Affairs, the embassies, Norad, Norfund, GIEK and Innovation Norway, and includes ten case studies from Tanzania and Mozambique. Key findings relating to Norfund’s operations include:

  1. The IFC Performance Standards on Environmental and Social Sustainability used by Norfund and other Development Finance Institutions (DFIs) contributes to achieving the same ends and outcomes as compared with an UNGP-based approach.

  2. Norfund has detailed procedures in place to ensure human rights due diligence among partners. Compared to the other entities, Norfund has a defined process for risk assessments which provides for a detailed and systematic assessment of risks up-front.

  3. Norfund has dedicated staff with responsibility of ESG issues, who have extensive experience in dealing with human rights due diligence.

  4. Case studies of six companies in Norfund’s portfolio show that Norfund has contributed to lifting the standards of human rights and reveal no adverse human rights impacts.

  5. Norfund requires investee companies to implement a stakeholder engagement plan and a project specific grievance mechanism.

Recommendations
The reports incudes two recommendations that are relevant to Norfund’s operations. The first suggests that Norfund’s statements on human rights should be revised to include an explicit reference to the UNGP (recommendation #4). Our current policy on corporate governance stipulates that we are committed to ensuring that human rights are protected and promoted. Norfund’s principles for environmental and social responsibility further specify that our investees must comply with recognised international environmental and social standards; that Norfund should seek to identify any negative social and environmental consequences of our investment projects and contribute towards mitigating any adverse effects.

The second recommendation is to strengthen systems for tracking human rights impacts. Norfund’s investee companies are required to have an Environmental and Social Management System, and to report regularly to Norfund on ESG issues. The evaluation team suggests that Norfund could be more systematic in tracking performance and addressing implementation gaps.

Norfund is about to initiate a new strategy process, which will also include a review of our policies and procedures. The input from the evaluation will be taken into consideration in this process and discussed with our owner.

Errors in the report
Unfortunately, the report includes a few errors in the description of the IFC Performance Standards, Norfund’s approach to assessing ESG risk, and the case study of African Century Real Estates. Norfund has therefore submitted a list of clarifying notes, which is available in “Stakeholder endnotes” at page 83 of the report.

 

The report was presented on Tuesday 18 September at 09:00.