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On the fifth anniversary of the endorsement by the UN Human Rights Council of the UN Guiding Principles on Business and Human Rights today, BankTrack highlights three alarming gaps in the human rights practices of all banks, shown by its research into the human rights policies, processes and reporting of 45 international banks over the past three months.
BankTrack has evaluated banks against the requirements of the UN Guiding Principles for the forthcoming update of its "Banking with Principles?" benchmarking study. Its research uncovered three key issues where none of the banks evaluated are performing as required:
- Firstly, when conducting human rights due diligence, banks should "involve meaningful consultation with potentially affected groups", according to Principle 18. None of the 45 banks investigated are clearly articulating how their human rights due diligence takes into account meaningful consultation with people whose rights may be impacted. Some banks showed how their due diligence process involves consultation with external stakeholders like NGOs, but none are including the views of rights-holders in their human rights due diligence in a systematic manner.
- Secondly, banks should meaningfully report on how they address specific human rights impacts. Guiding Principle 21 states that human rights reporting should "provide information that is sufficient to evaluate the adequacy of an enterprise's response to a particular human rights impact". None of the 45 banks studies are reporting formally on how they address specific human rights impacts in a way that enables an evaluation of its response, for example by disclosing concrete actions taken or follow-up steps requested. Reporting by banks on specific human rights impacts identified remains rare.
- Thirdly, banks, like all business, are required to "establish or participate in effective operational grievance mechanisms", to enable individuals and communities whose rights may be impacted to raise complaints to the enterprise directly (Principle 29), Yet no bank has been found to operate a grievance mechanism that approaches meeting the Guiding Principles' effectiveness criteria.
Ryan Brightwell, BankTrack's Human Rights Campaign Coordinator, said: "Five years have passed since the adoption of the UN Guiding Principles, but banks have still not internalised what is perhaps their most important message: focus on risks to rights holders rather than risks to your business. While some progress has been made over the last 18 months, our research indicates banks are not yet finding ways to listen to the views of people and communities affected by the companies and projects they finance.
"Establishing direct and effective complaints channels, as required by the Guiding Principles, would help break down the barriers between banks and impacted communities. Yet even after a high-level UN panel last year specifically called out the finance sector's lack of progress on providing access to remedy, we still see no signs that banks have even started thinking about how to develop such mechanisms."
The "Banking with Principles?" 2016 update report will be released on Wednesday 29th June.
NOTES FOR EDITORS
The UN "Guiding Principles on Business and Human Rights," adopted by the UN Human Rights Council on June 16th 2011, are available here.
BankTrack's first "Banking with Principles?" report, published in December 2014, is available here. BankTrack has also investigated bank links to specific human rights impacts, in two Human Rights Impact Briefings, available here.
The UN Panel on "Sector-specific challenges: Providing access to effective remedy in the financial sector" at the UN Forum on Business and Human Rights 2015 can be viewed here.