Righting Finance, 13 January 2015.
Last month in Geneva, at the UN Forum on Business and Human Rights, BankTrack launched a research report examining the performance of 32 large global banks against the UN Guiding Principles on Business and Human Rights. We developed 12 criteria, each closely based on the text of the Guiding Principles themselves, to assess where banks were making progress in implementing the Guiding Principles and where there were gaps, three and a half years on from their adoption by the Human Rights Council. So far, so uncontroversial, one may think.
However, the Thun Group of Banks, the informal discussion group of banks on human rights, responded to say that the exercise itself was “premature” – at least in its attempts to examine whether banks were meeting their obligations to provide access to remedy to victims of human rights abuse.This is because, they argued, the topic “continues to be subject to much debate … and has not been conclusively interpreted yet”. (The full response from the Thun Group is provided in the report.)
The report identified access to remedy (the “Third Pillar” of the Guiding Principles) as one of the main gaps in banks’ implementation of the Guiding Principles. None of the banks measured yet has a formal process in place to address human rights impacts they identify through their own due diligence, and none has established a grievance mechanism to allow those who feel their rights have been impacted by bank-financed projects to raise a complaint to the bank financing them.
The Thun Group (which includes Barclays, BBVA, Credit Suisse, ING Bank, RBS Group, UBS AG and UniCredit) is correct that the topic of banks’ responsibilities under the Third Pillar is still being debated. The banks themselves agreed earlier in 2014 to debate the issue, although they have not yet offered any timelines for this discussion, and at the Forum in Geneva, UBS remained tight-lipped about where banks’ discussions were heading.
However, this debate would have been concluded already, had it been addressed by the Thun Group’s previous Discussion Paper on the implications of the Principles for the banking sector, which was released in October 2013. The banking sector cannot expect society to wait indefinitely for the conclusion of these discussions.
Access to remedy was not the only gap that the report revealed in banks’ implementation of the Guiding Principles. Indeed, while some banks performed better than others, the average score on our twelve-point scale was just three. Only half of the banks covered were found to have developed policies that include a clear commitment to respect human rights, although this is one of the most fundamental requirements of the Guiding Principles. And a majority (17 out of 32) did not provide any reporting on human rights developments or impacts at the bank.
This is far from being a purely academic exercise. Banks studied in the report have financed companies and projects linked to forced removals of communities, military backed land grabs, and abuses of indigenous peoples’ right to self-determination. In a time of Indigenous Peoples’ resistance to extreme fossil fuel extraction and community resistance against deforestation for palm oil plantations, the struggle for businesses to respect human rights is intrinsically linked with wider struggles against climate change and for a sustainable economy based on social justice.
We consider the implications of the UN Guiding Principles to be far-reaching, and that full implementation by banks should result in better respect for human rights by businesses across the board. While this cannot be expected overnight, we consider that now is an appropriate point to take the temperature of banks’ progress, and hope that the report will spur faster action. Without it, the case for greater government action to regulate on this issue will only grow stronger.