Geopolitical Risk and the Shadow of Human Rights: How Legal Turbulence Reshapes Investment in Emerging Markets

In 2025, the intersection of geopolitical risk and human rights has become a defining axis for global investors. Emerging markets, long seen as growth engines for capital, are now grappling with a surge in high-profile legal and human rights cases that are reshaping sector-specific risks and investor sentiment. From climate litigation to mining-related violence, the implications for portfolios are profound—and increasingly non-negotiable.

The IACtHR Climate Advisory Opinion: A Legal Tectonic Shift

The Inter-American Court of Human Rights (IACtHR) delivered a landmark 2025 advisory opinion on the climate emergency, declaring that states must align their policies with human rights obligations. This ruling directly challenges the architecture of older investment treaties, which prioritize investor protections over environmental and social safeguards. For instance, the court highlighted how Investor–State Dispute Settlement (ISDS) mechanisms—designed to shield foreign investors from regulatory overreach—can paradoxically deter governments from enacting climate policies.

The implications for investors are twofold:
1. Regulatory Uncertainty: Countries like Chile and Colombia, which sought the advisory opinion, now face pressure to reform treaties that could expose them to costly ISDS claims if they implement stricter climate regulations.
2. Corporate Accountability: The court emphasized the "polluter-pays" principle, urging states to embed corporate climate obligations into domestic law. This could lead to stricter carbon disclosure requirements and penalties for greenwashing, particularly in sectors like mining and energy.

Mining Protests and the Cost of Transition Minerals

The energy transition has intensified demand for critical minerals like lithium, cobalt, and nickel—resources concentrated in emerging markets. Between 2021 and 2023, these regions averaged 111 annual violent incidents tied to mining, with 89% occurring in lower-income countries. For example:
- Peru: 107 copper-related protests in 2023, including clashes over water rights.
- Indonesia: 62 nickel-related incidents, with communities blocking operations.
- Democratic Republic of Congo (DRC): 13 cobalt-related protests, highlighting labor and environmental grievances.

These disruptions are not abstract risks. The Las Bambas copper mine in Peru, owned by China's MMG, lost 600+ days of operations since 2016 due to protests. Similarly, New Caledonia's 2024 nickel riots caused price spikes, illustrating how social unrest directly impacts supply chains.

Investors must now weigh not only the environmental costs of mining but also the reputational and financial risks of operating in conflict-prone regions. The EU's Corporate Sustainability Due Diligence Directive (CSDDD) and similar frameworks are pushing companies to map supply chains and address human rights impacts—a trend likely to spread.

A Blueprint for Resilience: The Suraksha Framework

Amid these challenges, some investors are pioneering solutions. Multiples, an Indian private equity firm, launched the Suraksha framework in 2023 to address worker safety and human rights in its portfolio. By integrating UN Guiding Principles into operations across 14 companies, it reduced workplace incidents by 40% and improved transparency through digital ESG tracking. This case study underscores how proactive governance can mitigate risks while aligning with global standards.

Investment Advice: Navigating the New Normal

1. Prioritize ESG-Integrated Due Diligence: Investors should demand robust human rights due diligence (HRDD) from portfolio companies, particularly in high-risk sectors. Tools like algorithmic supply chain mapping and third-party audits are critical.
2. Diversify Supply Chains: Overreliance on single-source mining regions (e.g., DRC for cobalt) exposes portfolios to volatility. Diversification into recycling and alternative materials can reduce exposure.
3. Engage with Policy Reform: Support initiatives that align investment treaties with climate goals, such as the UN business and human rights treaty negotiations. Advocacy for mandatory due diligence laws in countries like the U.S. and China is also key.
4. Leverage Circular Economy Opportunities: The EU's Waste Framework Directive and advancements in battery recycling present avenues to reduce mineral demand while addressing sustainability.

Conclusion

The 2025 IACtHR ruling and the surge in mining-related unrest signal a paradigm shift. Investors can no longer treat human rights and geopolitical risks as peripheral concerns. Instead, they must become central to risk assessment and portfolio construction. For those who adapt—by embracing transparency, supporting legal reforms, and investing in sustainable innovation—the emerging markets of tomorrow may yet offer both ethical and financial returns.

As the COP29 summit approaches, the pressure to align capital with global climate and human rights goals will only intensify. The question is no longer whether investors will act, but how swiftly they can pivot to a future where profit and purpose are inseparable.