Vestas’ blueprint for leading a responsible and inclusive energy transition

Kristian Heydenreich
Senior Director and Global Head of Compliance & CSR
Published on 23rd of September 2020

Although progress remains steady, political commitment to low-carbon energy systems is increasing across a growing number of nations. As a result, the renewables industry is poised to gain a larger foothold in the global energy system, and this impending growth signals an urgent need to ensure that the industry is operating sustainably. Leaders across the renewable energy value chain must focus on minimizing the possibility for negative societal impacts from renewable projects – and this should include considering the social, as well as environmental issues. As one of world’s most dominant players in the renewable supply footprint, Vestas is working to implement sustainable practice across its value chain, to ensure the interests of future generations are safeguarded as we continue to spearhead the energy transition. Earlier this year, we launched our Sustainability strategy, entitled Sustainability in everything we do, to guide our sustainability performance. Amongst other considerations, this strategy prioritizes the social impact of our work, with one of the outlined goals to become ‘The safest, most inclusive, and socially responsible workplace in the energy industry’.

As more and more renewable energy projects are realized across the world, the network of stakeholders that could be impacted is vast and complex, and particularly opaque in emerging markets where governance infrastructures may not be as developed, but where renewable projects are expanding rapidly. To navigate this, the consideration of human rights needs to span the entirety of the chain of stakeholders that are involved in any given project. This is why at Vestas, we are working to ensure that human rights are respected across the value chain of the renewables industry.

For the past decade, we’ve been working to develop and promote a new approach to respecting human rights, one that isn’t used by any other renewables supplier in the industry. Our Human Rights Due Diligence framework centers on working closely with all stakeholders involved in any given wind project, to ensure that a project can earn and maintain a Social License to Operate (SLO). This is an approval, granted by the local communities within which we develop, that can be revoked at any point if any promises are breached.

Our SLO approach ensures that respect for human rights is considered as early as possible in the project development process, and that all stakeholders are involved. We do this for every project we’re involved in, to help prevent unintended impacts. Our approach involves working to ensure that our own evaluation of potential impacts, and our plan to address these impacts is closely aligned with our customers, as well as all other stakeholders involved. By working this way, we can nurture a close collaboration with our customers, partners, investors, contractors and local stakeholders, to focus more on human rights. Furthermore, we can avoid potential negative impacts such as disruption to local livelihoods, community health and safety and strain on local resources. A collaborative approach can also contribute to identifying opportunities to create positive impacts, such as enhanced educational opportunities, enhanced employability for local community members and job creation.

This approach builds a healthy foundation of community acceptance, approval, and trust of the wind farm throughout its lifetime, and if it were to be implemented at scale, could form the backbone of a responsible and inclusive energy transition. However, Vestas cannot drive this in isolation.

At present, there’s no uniform guidance, or industry standard, that mandates a multi-stakeholder approach to human rights due diligence within the renewable industry. Most projects must comply with national legislation, and this often only addresses a siloed approach, failing to consider the need for cross-stakeholder collaboration. In most cases, the asset owners are solely responsible for the environmental and social management of wind farm projects in the eyes of the law. This means that suppliers or other stakeholders are not mandated to proactively consider human rights.

For this reason, respect for human rights is not where it should be across the energy transition today.

We believe this needs to change.

An industry standard could of course be supported by an international legislation, mandating this type of work for those who, like us, want to affect a more responsible and inclusive energy transition. Currently, the EU is considering a new legislative proposal for mandatory Human Rights Due Diligence (mHRDD). A drafted version is expected in 2021, followed by an open consultation phase. Once finalized, this legislation would introduce an international standard for businesses to comply with when carrying out human rights and environmental due diligence. As an industry leader with an extensive backlog of experience with creating value for local communities, we believe it’s our responsibility to lend our expertise to the development of such legislation, as a globally standardized approach would ensure the most optimal human rights practice across the renewable energy industry.

In 2017, Vestas worked with Ostro (nowReNew) to build a wind park of 100 MW in the Karnataka state of India. By appointing a dedicated CSR resource at the outset of the project to actively collaborate with all stakeholders, we were able to anticipate potential negative impacts, design interventions, and identify opportunities to proactively generate value for local communities. The collaboration resulted in almost 5000 children from across 15 villages benefitting from improved educational facilities, more than 2000 community members benefitting from preventative health checkups, and almost 2000 communities’ members benefitting from our capacity building program.

With the right legislation in place, the scope for our industry to create similar levels of value, at a global scale, could increase exponentially.

The energy transition is coming, and with more commitments to decarbonization across more nations than ever before, we can see that it’s coming fast. It’s now up to us, the industrial leaders of this transition to ensure that it develops inclusively. To act on this is not just an ethical obligation, it’s a question of sustainability. To disregard the interests of future generations will only lead to another crisis on the horizon. As the pioneers of a zero-carbon energy system, let’s work together to ensure that the sustainable energy transition is an inclusive one, for the benefit of everyone.