After the business community rejected the Norms on the Human Rights Responsibilities of Transnational Corporations and Other Enterprises, Dr. Ruggie was appointed by UN Secretary General Kofi Annan to clarify and achieve some level of consensus on the scope of the private sector’s human rights obligations. He is currently preparing his Final Report to the UN Commission on Human Rights, which will be completed by Spring 2007.

Examples of corporate complicity in human rights are well known, but banks also facilitate and benefit from human rights violations,” said Inez Louwagie of Netwerk Vlaanderen, a BankTrack member organization that has published two recent reports on the topic. “In fact, many activities that violate human rights simply cannot occur without banks’ financial backing."

Although the banking sector has made some progress in developing environmental financing standards in the last several years, banks’ understanding of their role and responsibility regarding human rights is relatively poor. The BankTrack letter offered several examples of how companies associated with human rights problems (including mining company Freeport McMoRan, electronics subcontractor Flextronics, and India-based National Hydroelectric Power Corporation) were backed by loans and capital raised by major financial institutions.

" Currently, only about eight major banks have developed their own human rights policies,” said BankTrack coordinator Johan Frijns, referring to a January 2006 BankTrack survey of best practices in bank financing standards. “but even from these statements it is not very clear how human rights considerations affect business decisions. That is no longer an acceptable situation".

For example, no banks currently prohibit financing transactions involving controversial economic stabilisation clauses, which can be included in Host Government Agreements (legal frameworks between investors and host governments). Such clauses are designed to reduce financial risks due to unexpected and significant changes in law – even labour and human rights laws.

"The HGA for the Baku-Tblisi-Ceyhan pipeline, for example, allows the BTC consortium to refuse any new human rights laws that the governments of Azerbaijan, Georgia and Turkey introduce in the next 40-60 years,” said Andrea Baranes of CRBM (Campagna per la Riforma
della Banca Mondiale). “This puts the desire of investors to make profit over the obligation of states to progressively fulfill human rights."

In addition, the letter points out that the Equator Principles, a well-known set of voluntary environmental and social project finance standards, “apply to only a tiny fraction of bank financing activities, and do not adequately address human rights.

"Project finance is not a common way to finance the production of electronics, footwear, apparel, or controversial weapons -- all sectors with known human rights problems,” explained Andreas Missbach of Berne Declaration, a BankTrack member group. “Even natural resource extraction is corporate financed to a large extent, and not subject to the Equator Principles.” Missbach authored a joint BankTrack report on Swiss banks and their financing of natural resource extraction activities associated with human rights abuses (2006)

The letter concluded by stressing the ability of banks to play a positive role in human rights. “Corporate clients are clearly within a bank’s sphere of influence,” said Techa Beaumont of MPI, a BankTrack member group. “If the banks exercise their influence to prevent human rights violations rather than enabling them, the banking community can make a valuable contribution towards supporting human rights."

Human rights obligations of the private financial sector will be one of the key issues for BankTrack to deal with in 2007.