A leading Fortune 500 industrial player approached Ksapa to assist in its decision to establish and activate a joint venture agreement with a Saudi partner in compliance with its environmental, safety and human right standards. While the project to build a factory in Saudi Arabia is intended to strengthen its production capacity, operating in Saudi Arabia required cautious engagement navigating potential human rights, environmental and safety risks. It was also a question of building alignment with the Saudi partner on the understanding of the risks and measures to be put in place in a joint venture.
Ksapa organised an environmental, safety and human rights risk screening of a factory development project in Saudi Arabia. The aim was to facilitate the client’s understanding of the issues and thus make an informed investment decision:
- Ksapa used a proprietary methodology to assess a hundred or so risks relating to human rights, environmental conservation, health and safety issues, etc., all in the light of international conventions as well as expectations expressed by investors.
- Our team organised interviews within the commissioning company and among its partners. These discussions confirmed the list of planned activities, their timetable and the roles and responsibilities of each of the members of the consortium. This highlighted the strengths of the proposed scheme, as well as areas for improvement to ensure that human rights are taken into account in the running of the project.
- By cross-referencing the results of our analysis and interviews, Ksapa has prioritised a series of risks to safety, environment and human rights posed by the project. This is based on their occurrence during the design, development and operational phases. The members will thus be able to position themselves as to the probability of each risk in relation to their operational realities and assess the relevance of their mechanisms (policy, operating mode, governance).
- Ksapa has developed a local guide ensuring compliance with Saudi regulations, best practices in country, and ensuring consistency with industrial practices already operationalized across operations in the US, Europe and South East Asia
- Ksapa also supported selection of industrial site as well as contractual engagement of construction service providers in country with close and rooted expertise located in Saudi providing extensive expertise working with local construction companies
The mission involved a Ksapa team including people based in the US, in Kingdom of Saudi Arabia and in Europe. The mission resulted in the prioritisation of critical risks that the project could pose to human rights in the specific context of Saudi Arabia. Ksapa has also made longer term recommendations for remediation of these risks, which include conducting a socio-environmental impact assessment of the proposed plant and demonstrating the absence of negative impacts on the surrounding communities.
RESULTS & NEXT STEPS
It is now a matter of materializing these considerations through contractual clauses indexed on a comprehensive review of Saudi and international standards, laws and norms, and ongoing monitoring of project execution and deployment.
Moreover, this project comes in the year of the adoption of the Green Taxonomy. This analysis therefore helps to clarify the conditions under which this project can be deemed compliant with the new European regulation from an investor perspective. Indeed, it prompts the mandated company to ensure that it does not cause any significant harm to the Taxonomy. In doing so, it also aligns with a number of minimum safeguards, including the OECD Guidelines for Multinational Enterprises and the UN Guiding Principles on Business and Human Rights.
More than a condition for the acceptability of the planned new industrial development, prioritising human rights risks enables the Group to embody its approach to excellence and continuous improvement. Ultimately, this tool should serve to raise awareness and increase the environmental, safety and human rights skills of all project partners.