Global Stage: TozziniFreire Partner Clara Serva Addresses UN Forum on Investor Responsibility

Geneva, Switzerland — At the 4th UN Forum on Business and Human Rights, Clara Serva, a partner at TozziniFreire Advogados, delivered a powerful address to a plenary room on the critical issue of how banks, financial institutions, and other investors must evaluate and manage the human rights risks associated with their investments.

Speaking alongside Mary Beth Gallagher, Siniša Milatović, PhD, Leo Lou, and Kristel M. Tonstad, Serva represented both her law firm and The Global Business Initiative on Human Rights (GBI). She described the experience as fulfilling a dream and being "still at a loss for words."

The "Wallet" Organ and the Need for Better Due Diligence

Serva emphasized the financial sector’s profound influence on corporate behavior. "As I remarked during the panel, the most sensitive organ in the body is often the wallet," she noted. "When investors raise their expectations regarding respect for human rights, the broader business ecosystem shifts — and it shifts for the better."

However, she cautioned against simple blanket divestment, particularly from sectors or regions struggling with issues like modern slavery: "Divestment can worsen the conditions we seek to improve. Instead, the way forward lies in robust prevention and monitoring measures to ensure that violations do not occur."

The "Doctor" Analogy: Context is Key

Serva framed the human rights analysis process using a compelling medical analogy, arguing that a generic approach is insufficient.

"So, to start, I would say that to analyze human rights is like going to a doctor. So, when you get to a doctor, you first need to identify and understand the body and their habits... When you are analyzing if someone has cancer, you wouldn’t conduct the same exams that you would if you are analyzing a flu, right? So, it’s the same thing with human rights. You need to understand the context."

This context-specific due diligence, she argued, is essential because public data often fails to capture the full scope of human rights risks, especially in conflict-affected areas.

Data Limitations and Contextual Risks

Serva provided concrete examples from Brazil to underscore the dangers of relying solely on paperwork and standardized databases.
 

• Indigenous Rights: She pointed out the extreme vulnerability of indigenous groups, citing that "in Brazil, last year over 200 indigenous individuals were killed." This highlights a significant risk of indigenous violations for any company operating in rural areas with indigenous members.
• Modern Slavery & Child Labour: While "dirty lists and data made public" exist, Serva stressed that they "don’t cover not even a small percentage of the situations." Investors must instead understand the "level of inequality of poverty and other issues of the region" where a business operates.
• The Problem of "No Issues" Answers: Serva warned that a target company reporting "no reports on human rights violations" is often a "negative sign," indicating a failure to understand the local reality. She used the example of Brazil’s high levels of racism and racial discrimination: "If someone, a target answers that they do not have any kind of racism or racial discrimination, it isn’t a good sign, because they haven’t understand what racism is in Brazil."

Supply Chain and Local Verification

The Tozzini Freire partner concluded by emphasizing that proper assessment must extend beyond the company’s direct operations into the supply chain. She recounted a recent human rights analysis in a central part of Brazil where a target company claimed to have no issues with indigenous rights, but their suppliers did, as they operated near indigenous territories.

"And in this same region, one indigenous member was killed one week ago," she revealed, demonstrating that the context of the supply chain is "key to have a proper assessment of human rights impacts."

She recommended that companies "reassess what the questions and adjust the questions, the analysis, and if necessary, conduct in local analysis and verification so that they can really assess the real impacts," also endorsing the GBI guide on "what good looks like" for heightened human rights due diligence.