Renta 4 | CAF has announced the planned inclusion of the company in the UN database of companies for its participation in the Jerusalem light rail project. This document includes companies that participate, directly or indirectly, in some of the activities listed in the annual report of the United Nations High Commissioner for Human Rights.
It should be noted that the project, awarded in 2019 through a 50-50 joint venture between CAF and Israeli construction company Shapir, has a total value of approximately €1.8 billion. The scope comprises two key phases: a) the construction of the Green Line and the extension of the Red Line, with completion estimated for 2027; and b) the operation and maintenance of both lines for a period of 15 years (extendable to 25), an activity that already began in 2021.
Measures taken by CAF: CAF has demonstrated a rigorous approach to identifying, preventing and mitigating any adverse impacts, in line with the UN Guiding Principles. Key measures include: a) Prior legal analysis: Consultations with independent experts and professors of international law who confirmed the absence of any breaches prior to the signing of the contract; b) Judicial and administrative support: The decision is supported by a favourable ruling from the Versailles Court of Appeal and confirmation from the Spanish Administration that the project complied with international law; and c) Proceedings before the National Contact Point (OECD): In 2022, this interministerial body of the Spanish Government issued a final report without identifying any legal breaches by CAF or any violation of rights.
Positive impacts of the project: all reports produced by experts highlight the positive impacts of the project, corroborated by reports from independent experts. It is noted that the tramway is an essential public service infrastructure that acts as a catalyst for the fulfilment of human rights (freedom of movement, access to employment, healthcare and education) for all communities in a non-discriminatory manner. These reports highlight CAF’s high level of compliance with the main international standards on corporate social responsibility and sustainability and its compliance with due diligence in human rights matters in accordance with the UN Guiding Principles and the OECD Guidelines.
Assessment: Although CAF demonstrates in several reports that it complies with all international standards of due diligence in human rights in accordance with the UN Guiding Principles and the OECD Guidelines, its inclusion in this list may increase the voices pressuring CAF to withdraw from this contract. Negative impact.
We reiterate our Overweight recommendation with a target price of €57.1 per share.
