Inside Track: Planning, Environment & Sustainability - In the media, In practice and courts, Cases and Legislation - Real Estate and Construction

According to the sixth report of the Intergovernmental Panel on
Climate Change1 approved on February 27, 2022, to
evaluate the risks of climate change caused by human activities;
increasing heatwaves, droughts, and floods have already exceeded
the tolerance limits of plants and animals, causing mass death to
species such as trees and corals, as well as causing millions of
people in Africa, Asia, Central, and South America, the Lesser
Islands and the Arctic to suffer acute food and leaves water
insecurity. The impact of climate change on human life has also
been revealed by the World Health Organization
(“WHO“), another organization of the
United Nations. According to the WHO, between 2030 and 2050,
climate change is expected to cause approximately 250,000
additional deaths per year from malnutrition, malaria, diarrhea,
and heat stress.2

The United Nations has been discussing the environment as a
global issue for a long time. During this period, international
binding agreements were signed, including the Paris Climate
Agreement, which was approved by Türkiye on October 7, 2021,
aimed at protecting biological diversity and limiting the effects
of global warming. In addition to these binding agreements, the
United Nations recognized the right to food as part of the right to
an adequate standard of living in the Universal Declaration of
Human Rights of 19483, and the right to clean water and
sanitation as a human right with the resolution4 64/292
of the United Nations General Assembly dated 2010.

On July 28, 2022, the United Nations General Assembly
(“General Assembly“) recognized the
right to a clean, healthy and sustainable environment as a human
right. Maritza Chan Valverde (Costa Rica) speaking on behalf of the
Maldives, Morocco, Slovenia, and Switzerland presented the draft
resolution titled “human right to a clean, healthy, and
sustainable environment”, originally prepared by the
aforementioned countries at the General Assembly
(“draft resolution“). “The world is
facing an unprecedented triple environmental crisis, including
climate change, biodiversity loss, and pollution. As such, the
universal recognition of the human right to a clean, healthy and
sustainable environment provides a powerful and effective response
that could catalyse transformative changes in societies. The
resolution will contribute to enhancing and integrating the United
Nations response to the triple environmental crisis, as well as
supporting the Member States more coherently and effectively in
fulfilling their human rights obligations on environmental matters,
and scaling up efforts to guarantee a clean, healthy, and
sustainable environment for all.” she stated.

After Maritza Chan Valverde presented it, the draft resolution
was submitted to the voting of the member states. Representatives
of Belarus, Russia, and Iran abstained from voting on the draft
resolution, stating that the basis of their concerns is the
recognition of a human right that is not fully defined in
international human rights treaties and that the recognition of a
human right should be through international agreements. Along with
Belarus, Russia and Iran; Cambodia, China, Ethiopia, Kyrgyzstan,
and Syria abstained on different grounds. With a total of 8
abstentions and 161 favourable countries, the General Assembly
recognized the right to a clean, healthy and sustainable
environment as a human right, and adopted the resolution calling
for greater global efforts to ensure that this principle is
preserved.

Affirming that promoting the right requires the full
implementation of the multilateral environmental agreements, the
193 member bodies called upon the states, international
organizations, business enterprises, and other relevant
stakeholders to adopt policies, enhance international cooperation,
strengthen capacity-building and continue to share good practices
in order to scale up efforts to ensure a clean, healthy and
sustainable environment for all.

Reflections on Businesses

The General Assembly Decision, which invites commercial
enterprises and other relevant stakeholders to take responsibility,
is closely related to the ESG criteria, in which environmental,
social, and governance factors are taken into account. The
environmental component of ESG ponders how sensitive a company is
to environmental issues such as climate change, energy emissions,
waste management and pollution, resource depletion, etc. in its
decision-making process. The social component describes the
company’s relationship with its stakeholders. It covers
human-related factors including the protection of human rights
subjects in the operation of the companies, such as the prevention
of modern slavery and child labour, ensuring corporate security,
employee relations, consumer relations, diversity, supply chain
sustainability, psychological safety, and protection of personal
data. the corporate governance component of ESG engages in how a
company is run by the management on the subjects like executive pay
and compensation, stakeholders’ rights, separation of power,
transparency, etc.

ESG criteria have a big role in investors’ decisions apart
from the financial factors that have an impact on the performance
of companies. They demand more information and transparency in how
the company creates added value. According to the research of
Morgan Stanley, 80% of individual investors consider ESG criteria
as a supporting function to have higher profit rates and better
decisions for long-term investments.5 Investors are
integrating environmental, social, and governance indicators into
investment decisions every day as well as operational and financial
data. While deciding between companies with similar financial and
operational performance, they prefer the one with higher
sustainability performance for long-term success. Such effects
directly related to sustainability like lower capital costs and
higher profit margins, higher valuation multipliers, positive
correlations between share prices and good sustainability
practices, and access to long-term finance are observed in
companies with better ESG performance compared to other
companies.6

Environmental, social, and corporate governance factors address
topics whose financial implications have been neglected for many
years such as climate change, conflict, corruption,
etc.7 That’s why ESG standards are important in
terms of making the companies sustainable in the long run in the
increasingly complex business world and whereas it is also possible
to attract the attention of investors by achieving financial
success through the application of these standards. These can
sometimes be an obligation to comply with legal regulations, and
sometimes the voluntary compliance of companies within this scope
of ESG criteria plays a key role in achieving financial success and
avoiding possible reputational risks.

Within the scope of the responsibilities of companies to protect
human rights, avoid human rights violations while operating their
activities, and stop activities that cause human rights, the United
Nations’ recognition of a clean, healthy and sustainable
environment as a human right is a part of an effort to develop ESG
strategies without waiting for the regulation process. At the same
time, the United Nations High Commissioner for Human Rights
considers the principles of the human rights due diligence process
to be a responsibility to companies of all sectors, types, and
sizes, to respect human rights, and not to engage in activities
that may violate human rights, and to eliminate human rights
violations in the areas they are related to. The published Business
and Human Rights Guiding Principles8
(“Guidelines”) can guide companies in this regard.

Conclusion

Recognition of a clean, healthy, sustainable environment as a
human right should be considered another big step towards putting
the ESG criteria at the centre of global goals. In today’s
world, where environmental, social and governance factors besides
financial factors are also effective in order for companies to
achieve sustainable success, in the long run, companies should
change their policies within the scope of corporate responsibility
and without waiting for the regulatory regulations of the states,
as the United Nations recognizes the right to a clean, healthy and
sustainable environment as a human right. Thus, companies will be
able to avoid possible reputational risks, ensure long-term
financial stability and attract the attention of investors within
the scope of ESG.

The content of this article is intended to provide a general
guide to the subject matter. Specialist advice should be sought
about your specific circumstances.

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