Luxembourg’s Initiative pour un devoir de vigilance (IDV) and BankTrack today present the findings of a new study, “Luxembourg Human Rights Benchmark: commercial banks in the human rights spotlight”[1].

For the first time, twelve major commercial banks operating in Luxembourg have been assessed against fifteen criteria based on the United Nations Guiding Principles on Business and Human Rights. The study examines four areas: policy commitments, human rights due diligence, reporting and remedy.

The findings paint a worrying picture for a financial centre that aspires to play a leading role in sustainable finance. The banks show little Luxembourg-specific disclosure on human rights; and their average score of 5.2 out of 15 is below the 2024 global average [2]. None of the 12 banks assessed reaches the “leader” category, and all institutions studied show significant shortcomings in their human rights due diligence, reporting and, above all, consultations and access to remedy for affected communities.

These findings are also echoed in the testimonies of voices from the Global South, such as that of Diana Figueroa, coordinator of the Fair Steel Coalition: “Our experience with Luxembourg-based steel companies shows that banks in general are consistently failing to conduct meaningful human rights due diligence and failing to identify operational impacts across global corporate structures. Banks must hold their clients accountable for their climate, environmental, and human rights impacts, and integrate the vital testimonies of affected communities before taking final financing decisions”.

BankTrack human rights research consultant Lucilla Viola commented: "This study sends a clear message: the banks assessed in Luxembourg reflect a global trend of falling short on human rights performance. Banks are not showing that they have effective systems to identify their impacts, especially on vulnerable communities, and help ensure remedy when harm occurs. Banks must consider the impacts of their finance on communities and workers along all their value chains as material. These gaps demand urgent action."

Luxembourg must turn its sustainable finance ambitions into effective accountability.

In December 2022, the UN Working Group on Business and Human Rights called on Luxembourg to seize this opportunity to become a leader in sustainable finance by fully integrating human rights, the environment and climate change. Four years later, the study’s findings show that this call remains as relevant as ever.

“Luxembourg likes to present itself as a pioneer in sustainable finance. But for finance to be described as sustainable, full respect for human rights must be ensured. The United Nations challenged us back in 2022. Today, we have a study that clearly shows how far we still have to go. It is time to move from statements to action, and a window is opening for genuine accountability as the Corporate Sustainability Due Diligence Directive is transposed into Luxembourg law. Luxembourg retains room for political action. It can choose to settle for the regulatory minimum or finally give substance to its ambition to lead in sustainable finance.” says Jean-Louis Zeien, co-coordinator of the Initiative pour un devoir de vigilance.

Download the report here .

Notes for editors

Key findings

Despite some progress and certain examples of good practice, the report’s main conclusions include the following:

No bank achieves a score that would qualify it as a leader. Eight of the twelve banks assessed score less than half of the 15 available points. The average score is 5.2 out of 15, below the average of 5.9 out of 15 recorded in BankTrack’s 2024 global assessment, in which 50 banking groups were assessed worldwide.

Human rights policies are more considered than due diligence, reporting and remedy. Banks score 62.5% of the available points for policy commitments, but only 36.7% for due diligence, 33.3% for reporting and 11.5% for remedy.

People affected by the activities financed remain largely absent from due diligence processes. No bank receives full score for meaningful consultation with potentially affected rights-holders, nor for assessing whether it has caused, contributed to or is directly linked to adverse impacts or tracking the effectiveness of its responses. Half of the banks provide no evidence that they consult with the people and communities potentially affected by their financing; ten out of twelve banks do not demonstrate that they assess whether they have caused or contributed to adverse impacts.

The Benchmark also shows that human rights reporting remains limited despite the increasingly extensive sustainability reporting undertaken by banks.

Remedy is the weakest area. None of the twelve banks provides public evidence that it has provided or enabled remedy for harm linked to its activities. Nor does any bank demonstrate that its grievance mechanism fully meets the effectiveness criteria of the UN Guiding Principles.

Finally, the ten subsidiaries of international banking groups assessed rely heavily on policies set by their parent companies. However, it remains difficult to identify how these policies are implemented in practice in Luxembourg from the information published.

Calls to action

Based on the study’s findings, the Initiative pour un devoir de vigilance calls for concrete measures.

For commercial banks:

• Strengthen due diligence by placing people potentially affected by their financing at the centre of processes to identify, prevent and mitigate human rights abuses.
• Publish concrete information on the impacts of their financing, the measures taken to address them and the results achieved, rather than limiting reporting to policies and procedures.
• Establish grievance mechanisms accessible to affected people and contribute effectively to remedying harm.
• Demonstrate how policies set at international group level are implemented by their Luxembourg entities.

For the Luxembourg government:

• Establish due diligence requirements applicable to the financial sector by using the national discretion available when transposing and implementing European legislation on corporate sustainability due diligence (CSDDD).
• Place human rights at the heart of Luxembourg’s sustainable finance strategy.
• Lead in accordance with UN Guiding Principle No. 4 by example through banks in which the State holds a stake.

The study calls on organisations representing the financial sector, particularly the Luxembourg Bankers’ Association (ABBL) and the Luxembourg Sustainable Finance Initiative (LSFI), to promote rigorous implementation of international standards and develop practical tools to strengthen due diligence, transparency and remedy.