Although, at times, the financial sector may seem situated a long way away from human rights violations on the ground, they play an important role in the chain of events which impact the protection of human rights of many people.
“A growing number of financial institutions are seeking to integrate social and human rights criteria in their lending operations,” said UN High Commissioner for Human Rights Zeid Ra’ad Al Hussein.
Zeid also said emphasized the importance of pledging to standards and principles in guiding the work of the financial sector to prevent and mitigate human rights risks.
The UN Human Rights chief made his comments during the Business and Human Rights Forum.
The Forum, which is in its fifth year, brings together business executives, NGOs, activists and others to discuss ways to embed human rights in the world of business. This year, one of the focuses was on finding a way to harmonize the work of financial institutions with human rights.
“The biggest challenge has been that financial institutions have assumed that they have no leverage, or often citing that they are too far removed from human rights impacts. Often they are simply not aware of what they may be linked to through their transactions,” says Kamil Zabielski, the Head of the Sustainability Team at Norwegian Export Credit Guarantee Agency. Kamil was a panelist at the Business and Human Rights Forum which took place in Geneva.
There has been a growing mobilization within the financial sector to enhance their commitment to promoting human rights and actively fighting derogations and violations, particularly in the public sector. Genevieve Paul from Above Ground, Canada – an organization which aims to shed light on cases of human rights abuse involving Canadian companies abroad –called for public financial institutions to be more transparent in their due diligence processes, more pro-active and preventive in protecting rights, and encouraged more credible consultative processes with affected stakeholders.
“The most important thing is to identify potential human rights risks and make informed decisions,” said Zabielski addressing financial institutions. “Use your leverage where you can. Where you can’t - if the violations are of a grave nature – do not involve yourself in the transaction.”
By including the assessment of human rights risks beyond the existing social, environmental and labour risks, such institutions can encourage the companies they invest in to uphold holistic human rights standards in their business practices.
Zabielski also cautioned that progress would be difficult without the presence of strong leadership within institutions and support from governments. He said his financial institution benefited from both of the above in their work to incorporate the UN Guiding Principles in their institution, advocating that profit generation cannot be pursued at all costs.
The standards and principles also create new benchmarks for financial institutions and their clients. Such benchmarks can give competitive advantage to companies which preserve and promote rights by awarding reputational brownie points. Abiding by standards could elevate companies to be in a better position to attain additional financing for future projects, said Zabielski.
“It is better to get on the bandwagon now, than later when you may be forced to do it,” he said.
28 November 2016