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Investor Summary

Kazakhstan, Georgia, and Armenia are all resource-rich, leading foreign financial institutions and corporations to invest significantly in extractives projects.

Although financial institutions and parent companies have significant influence over the extractives projects they invest in, they have rarely intervened in serious allegations of abuse. Even when communities alert investors and parent companies about the human rights issues they have experienced, they are often ignored, allowing abuses to continue. By failing to adequately address complaints, companies and financial institutions often violate their own social, environmental, and human rights standards. However, there is some hope in this regard, as some extractives companies have lost funding from investors over human rights violations and community opposition.

By the numbers

Of the 30 companies profiled, we found...

12

Western Investment

Many have ties to investment in Western Europe, Canada, and the U.S.

16

Western Ownership

Over half have owners based in Western Europe, Canada, and the U.S.

100%

Allegations of Abuse

All of the investee companies have allegations related to human rights and access to information.

Policies versus performance

Investors and shareholders set a variety of requirements for the projects they invest in, including human rights policies and impact assessments. However, the quality of these assessments and policies varies widely, and investees may continue to perform poorly on human rights despite investor requirements.

The research demonstrated a fundamental disconnect between public commitments and actual performance. For instance, 18 of the 19 companies with publicly available policies related to occupational safety, environmental management, and/or other human rights topics faced allegations of damage to water and the environment.

Many of the companies with the most comprehensive human rights policies also were accused of severe human rights allegations. For example, 7 of the 19 companies with human rights policies faced allegations around deaths or violence. Of these, 4 have Western shareholders or owners, and 4 have received foreign investment.

When they face human rights allegations related to extractives projects, investors have pointed to their human rights policies, saying they require impact assessments and public participation with affected communities. Whether such assessments and participation are actually effective or comprehensive is often unaddressed. Even in cases where investors have intervened or terminated their investment, such action has often come after several years of campaigns, formal complaints, activism, and negative media coverage.

See the extractives dashboard and key takeaways for more information on human rights issues related to extractives companies in Armenia, Georgia, and Kazakhstan. Click the company profiles below for more information on foreign investment and human rights allegations.

Recommendations

Set meaningful human rights due diligence requirements

Due diligence in Eastern Europe and Central Asia should pay particular attention to the eleven high-risk areas noted in our research. Due diligence should also take into account the local context and unique risks communities face. Sometimes, investors may determine a project is of high enough risk they decide to conduct their own due diligence or become directly involved in their clients’ due diligence processes.

Strengthen public participation requirements and monitor their implementation

Many investors and governments already require some level of public participation in decision-making. However, as many company profiles show, public participation in the region is often ineffective at best and fraudulent at worst. Unfortunately, investors in this region cannot simply take companies at their word that they held “public participation”; some level of oversight is needed. Some of the problems identified through the company profiles include: failure to consult with relevant communities or recognize them as affected by the project; threats and intimidation against project opponents; complete failure to hold any public participation whatsoever; incomplete or inaccurate information on the project’s potential impacts, with communities not informed about risks; and government involvement and intervention on behalf of the company during public participation processes.

Investigate and respond to community complaints in a timely manner

Investors hold significant leverage over the companies they invest in, placing them in a unique position to prevent and address complaints raised by communities. However, investors have rarely held companies accountable, even when communities submit multiple complaints. Investors should strengthen their grievance mechanisms, in line with their environmental and social governance policies and commitments to human rights and sustainable development.

Ensure early and timely access to information for affected rights-holders

Access to information is critical for preventing and addressing human rights impacts, as well as securing access to remedy for those who have been adversely impacted by extractives projects. However, such access to information is exceedingly poor in the region as a whole, meaning investors should pay particular attention to this topic when making investments.

Evaluate communities’ ability to access remedy should rights abuses occur

Access to remedy is often weak in Armenia, Georgia, and Kazakhstan. Domestic courts may not address communities’ concerns, and in many cases, victims of abuse do not have the means to seek judicial remedy. In all three countries, powerful politicians are involved in or own major extractives companies, further undermining communities’ ability to seek remedy. In such contexts, investors should determine whether it is responsible to invest in a given project, given the lack of accountability for clients who violate human rights standards.

Take a strong stand against reprisal of community members and human rights activists

This includes both physical attacks and legal attacks. Eastern Europe and Central Asia has a high rate of attacks on human rights defenders, making reprisals a significant risk. Financial institutions have significant leverage in pressuring local authorities to investigate and punish reprisals. Additionally, investors should adopt a zero tolerance position on reprisals and attacks on defenders. They should assess existing and potential human rights risks and impacts on human rights defenders prior to investing in a project, and at regular intervals throughout the project. Investors should also have plans for addressing these risks.

Pay particular attention to corruption and bribery risks

Many financial institutions already have anti-corruption policies and programs. Attention to anti-corruption efforts should be particularly high in Eastern Europe and Central Asia, where risks are high.


The UN Independent Expert on the promotion of a democratic and equitable international order has expanded on investor policies with regards to human rights in this document.

Digging in the shadows

Read our full key takeaways report on Eastern Europe & Central Asia's opaque extractives industry summarises the key issues uncovered, presents case studies and maps ownership structures.