‘Conflict costs’ in renewables sector pose significant material risks, but are largely hidden, finds new report

With global energy security a pressing concern and raising demand for renewables, a new report launched today warns that the renewables sector is facing a less visible constraint - unmanaged conflict with communities, which is largely untracked despite the enormous material and operational risks it poses to the renewables roll out and achieving climate targets.

The Hidden Bill of Green Conflict: Derisking Renewable Energy by Strengthening Community Trust, published by the Institute for Human Rights and Business (IHRB), draws on two years of research and engagement with industry to examine how unmanaged company-community conflicts are becoming a critical constraint on renewables projects. 

In one rare example, a renewables developer quantified costs amassing to US$200 million in losses, 3.3GW of undeveloped electricity capacity, and over US$4 billion in potential clean energy investments lost over a ten year period, suggesting that what is often treated as a marginal concern may amount to portfolio-level risk across the sector, constraining regional and global renewable energy deployment.

Through detailed cases analysis of recorded company-community conflicts and more than 60 confidential interviews with renewable energy companies, investors, legal advisors, and civil society organisations, the report finds where community trust is prioritised early in the project lifecycle and embedded across core business functions, practitioners report reduced volatility, accelerated delivery, and strengthened long-term asset resilience.

The report provides practical tools to start to derisk projects, including a taxonomy  of conflict-related costs, new evidence of how conflict emerges, and four operational pathways to prevent costs and build value by strengthening community trust. 

Haley St. Dennis, IHRB’s Head of Just Transitions, said:

"The findings are compelling – unmanaged company-community conflict is no longer a peripheral issue for renewable energy - it’s a material business risk. What makes this dangerous is that the costs are largely hidden, fragmented across projects and functions, disconnected from their root causes, and not properly priced into decisions. If the sector doesn’t address this, it risks slowing down the very transition the world is trying to accelerate.

"What’s evident is that the speed and scale of the transition will depend not only on technology and finance, but on trust - built through meaningful engagement with affected stakeholders and fair distribution of benefits. Those companies that value trust will be better positioned to deliver projects on time, protect capital, and operate in increasingly contested environments."

• The company costs of green conflict are material - but largely hidden. They remain structurally hidden and often dispersed across project stages and decision points, making them difficult to aggregate and act upon. At the corporate level, costs are disconnected between functions such as legal and operations, with no central command. And at  site level, conflicts are tracked but with no connection back to project finances, making a complete and true cost of conflict difficult to identify, track, and manage across company portfolios.
  
• Costs are not being connected to their social root causes. Adding to the obscurity of costs  is that responses to conflict are usually not connected back to the root causes. These roots of company-community conflict are usually multiple and interconnected,  spanning issues including project size and proximity, impacts on land and livelihoods, cultural heritage risks, environmental degradation, and disputes over land rights and consent.
  
• Being “green” does not automatically grant a social license to operate. Securing a social license to operate - local legitimacy earned through trust, participation, and fair distribution of benefits - is therefore not optional, it is a core enterprise risk and governance imperative  for the renewables industry.

Practitioners interviewed for the research consistently identified meaningful engagement - grounded in respect for human rights and trust-based relationships - as the most effective approach to mitigating conflict risk. The report outlines recommendations for the renewables sector in the form of four practical pathways, ready to be operationalised to start derisking projects by strengthening community trust:

• Conflict prevention by design - Detect project-level issues, tensions, or opposition early, and integrate social risk into core project design and investment decision-making as fundamentally as technical, financial, and environmental risk.
• Relationship governance and early resolution - Build and maintain trust through structured, continuous stakeholder engagement - treating relationship governance as a core operational function. 
• Measuring and managing the “hidden bill” - Treat community conflict as a measurable enterprise risk - embedding cost visibility into governance and financial decision-making.
• Embedding equity and benefit sharing in project value - Advance social equity for stakeholders and long-term operating stability by ensuring communities experience tangible, fair value from projects.

Research interviews with renewables industry practitioners were undertaken on a confidential basis. Quotes have been anonymised:

“Social risk is financial risk, but it’s often invisible until it becomes very expensive.”

“We don’t track social conflict like we do health and safety incidents.”

“Some projects were cancelled under the argument that they were ‘no longer viable’. But the real reason was that the cost of conflict made them impossible to build.”

“Lack of meaningful, consistent and early involvement with local communities is the main root of conflict.”

Join IHRB for an online event to launch the report on Thursday 30th April 16:00 CET - 17:15 CET. Speakers from IHRB, Ørsted, Statkraft, AXA XL, Climate Fund Managers, and Clifford Chance LLC will explore the report’s evidence and what it means for how renewable energy can be designed, financed and governed in order to strengthen trust and reduce conflict with communities.

Register here.