- BankTrack’s latest BankTrack’s Global Human Rights Benchmark finds that none of the 50 largest banks follows the requirements of the UN Guiding Principles on Business and Human Rights to the book.
- The most progressive banks – Citi, Mizuho Financial Group and Westpac – still have room for improvement, says Banktrack.
- 36 out of 50 banks are still reluctant to address the provision of ways for remediation to affected individuals and communities.
None of the 50 largest commercial banks by assets globally follow in full the requirements of the UN Guiding Principles on Business and Human Rights, according to a recent benchmarking study conducted by NGO BankTrack.
Proposed in 2011, the principles are a set of global standards for countries and companies to prevent, address and remedy human rights abuses committed in business operations.
Thanks to the World Cup, there has been a considerable discussion of the human rights principles for working in Qatar. Minky Worden, director of global initiatives at New York-based non-governmental organisation Human Rights Watch, has used the principles to highlight the “high human cost” of the footballing tournament.
This has brought the spotlight on financing for the sporting event. In particular, on the construction and hospitality sectors in Qatar – two sectors well-known for human rights violations. A report in early November from international civil society network Fair Finance International found that financial institutions provided $85.7bn loans and underwritings to support the World Cup.
“It’s imperative that banks get ahead of the curve and engage with lawmakers where appropriate to ensure that laws are effective and build upon existing requirements,” said Giulia Barbos, lead author of BankTrack’s latest report BankTrack’s Global Human Rights Benchmark, which was published on 17 November.
The 14 subcategories of the principles are divided into four main categories of policy commitment: human rights, due diligence processes, reporting, and the provision of ways for remediation to affected individuals and communities.
“Strong legislation covering the whole spectrum of the financial sector is urgently needed to ensure better outcomes for poor people and the planet,” Barbos said, speaking at a webinar to launch its findings.
BankTrack has been covering banks’ approach to human rights since 2014.
No adequate level of human rights implementation
The report makes for demoralising reading. Not only are none of the banks assessed fully aligned with all 14 subcategories of the UN’s principles, but 38 covered less than half of them.
“11 years on since the unanimous adoption of the UN guiding principles, no bank shows an adequate level of implementation,” said Barbos.
The leading banks – Citi, Mizuho Financial Group and Westpac – only followed nine of the 14 UN principles, while three of the four banks at the bottom achieved a score of only 0.5 – ICBC, Agricultural Bank of China, and China Construction Bank – while Bank of China notched up a score of zero [see chart].
A score of 0.5 means that the banks have indicated that they are deemed to be heading in the right direction in just one of the UN principles.
“Since the responsibility to respect human rights, as elaborated in the UN Guiding Principles, is a minimum expectation for all companies, a score of 100% is the expected level of performance,” the report says.
Still, the findings are an improvement on BankTrack’s last report in 2019.
The average score for banks in this report is five out of 14, better than the four out of 14 in 2019. More to the point, seven banks improved their scores by more than 3 points: Mizuho Financial Group, Société Générale, Bank of America, Banco Bradesco, Sumitomo Mitsui Financial, Toronto-Dominion Bank, and Royal Bank of Canada.
There have been specific improvements in human rights and integrating human rights due diligence.
A commitment to respect human rights in a statement of policy has been developed by 42 out of 50 banks, what Barbos called “a positive finding”, while banks improved their scores more on the due diligence criteria than in other areas. Banks are expected to draft their own policies in line with UN principles.
The former has been steadily improving since 2014. Then, only half of the banks assessed (16 out of 32) had adopted a commitment to respect human rights as a statement of policy. By 2019 it had increased to 35 out of 50 banks.
Three banks achieved only half a score for this category. Germany’s DZ Bank has signed up to the UN Global Compact, which BankTrack says is “not well-aligned with the UN Guiding Principles”, as well as BPCE Group and Crédit Agricole. Although both banks have “broad human rights considerations” neither bank has developed a standalone human rights policy.
Only five banks still have no policy or statement addressing human rights: State Bank of India and all four of the major Chinese banks.
As for integrating human rights due diligence, more than half (27) of the banks assessed improved by at least a half score in describing how they carry out human rights due diligence in one of the five categories: process, consultation, allocating responsibility, assessing relationship to impact and tracking effectiveness.
There was a particular improvement in having well-defined human rights due diligence process. Barbos called it “a silver lining”. A total of 43 banks had a full or half-score in this category.
In fact, the results were even better than they seem. Bank of Nova Scotia and Royal Bank of Canada scored a zero in this category because they don’t describe their process even though, as BankTrack says, the banks have “a clear commitment to respect human rights in a statement”.
Problems with remediation
But if there have been improvements in some areas, in others there are still problems, specifically the provision of ways for remediation to affected individuals and communities.
“Banks have not made any appreciable improvement since our last benchmark in 2019,” the report says.
The vast majority of banks (36 out of 50) it says are still reluctant to address the topic at all.
National Australia Bank and ANZ are the bright lights that have set up a grievance mechanism, and ABM Amro has indicated that it is working on one, though it is not yet finalised.
“Since 2019, ANZ has launched its very own grievance mechanism for human rights complaints associated with its corporate lending customers and this follows the decision,” said Barbos, calling it “the most well-developed grievance mechanism to date”.
Only 14 banks out of 50 have expressed a commitment to provide for or support remediation, but even this good news is tempered. They have done so “without describing the process and without giving examples of situations where the bank previously provided or supported with remediation,” the report said.
One of the few banks to receive any kind of praise, however faint it might be, is Citi, which the report said did disclose details of how it encouraged one client to provide remedial measures in one specific instance. In this instance, it said, workers were compensated. But BankTrack makes clear that “the bank did not make a clear policy commitment to provide for or cooperate in remediation”.
The report reaffirmed, Barbos said, the “slow progress of banks towards full implementation of their human rights responsibilities”.