Annual Report 2018 | September 2019
Besides the working groups, the banks worked hard to further implement the individual deliverables and are nearly compliant with these commitments in 2018. Naturally their responsibility doesn’t end here, since the implementation of the OECD Guidelines and the UNGPs is a continuous, ongoing process.
Insofar as this hadn’t been done already, banks have now set up their policies and procedures to avoid and mitigate adverse human rights risks and impacts. In 2018, all banks had already explicitly opened up their complaints procedures to third parties, such as affected stakeholders of adverse human rights impacts. The year 2018 was also the one in which banks developed and published a policy statement on human rights addressed, and further (re)identifed risks in their portfolios. Obviously, the outcomes of these risk and impact analyses differ depending on the bank’s size, portfolio and the context in which they are operating. Evaluating and reflecting on the outcomes needs to be a core part of the implementation process. Moreover, the business models of some banks, such as Triodos Bank and ASN Bank, means they automatically exclude high-risks sectors.
FPIC was also an important topic last year. For example, banks committed to actively promote their clients in corporate loans in order to ensure, in situations where there is a fair possibility of land rights violations, that FPIC is carried out.
Part of doing business with respect for human rights is that a bank be transparent about and accountable for its work. Several banks have therefore begun reporting on their human rights risks and how they manage them. The banks started identifying and reporting on the most severe human rights risks from a perspective that focusses on the bank’s risks and impact on people, instead of the risks and impact on a bank’s business activities. DBA parties and other stakeholders were also involved in providing feedback on the banks’ reporting. Moreover, since 2017 banks now publish yearly the sectorial breakdown of their outstanding loans.
In December 2018, the NVB launched their Advisory Panel on Responsible Banking. Organisations such as trade unions, NGOs, local stakeholders, human rights experts and banks can submit cases that illustrate common challenges when it comes to responsible banking. The panel will select two cases from the pilot period. The aim is to learn from cases that are relevant to the sector as a whole, and so promote responsible banking.
Learn more about the Advisory Panel on Responsible Banking.
More transparency about human rights practices
“Banks reporting on human rights based on a salience (severity) analysis is something new. Previously they reported on human rights, based on their own capabilities and approach to human rights, within integrated CSR or more general reports. In 2016, ABN AMRO was the first bank to produce a stand-alone human rights report. But since the launch of the DBA, more banks have followed suit, and other adhering banks promise to do likewise.
“The way banks report on human rights now provides much more transparency about their human rights practices. For instance, three banks (ING, ABN AMRO and Rabobank) have introduced tables showing on which (potential) human rights impacts the banks are in dialogue with clients. An openness that banks and clients alike are coming to realise benefits not only affected workers and communities, but also the image and credibility of the bank and its client.”
Important step, but a long way to go
“Since the DBA’s launch in 2016, several adhering banks have published human rights reports. In our dialogue with these banks within the scope of the agreement, but also outside it, especially through the Fair Finance Guide, we have encouraged and welcomed these important publications.
“But while their publication is an important step, much depends on the quality of these reports. Therefore, in autumn 2018 Oxfam Novib and PAX together responded publicly to ING's report. And more recently, along with other organizations within the DBA and Fair Finance Guide, Oxfam Novib shared feedback with ABN AMRO on its 2nd Human Rights Report, and followed this up by sharing extensive written comments on the report with ABN AMRO in May 2019.
“Despite some improvements in reporting, there is still a long way to go. For example, the banks’ recent reports give too little insight into how they use their leverage with their clients. It’s also too often unclear whether and how the banks engage in dialogue with stakeholders locally. To effectively tackle human rights violations, it is essential that banks enter into direct dialogue not only with their clients and Dutch NGOs, but also with the workers, farmers and local communities who are or may become victims of human rights violations.”
Reporting in Line with UNGP RF
Adhering banks have committed to reporting in line with the UNGP RF. This includes reporting on salient human rights issues, which asks for a shift of focus away from risk to business onto risk to people. Here some of the parties reflect on progress in this area under the DBA.
More transparency about human rights practices
Important step, but a
long way to go
Human rights at the
centre of decision-making
Putting human rights at the centre of decision-making
“Because the UNGPs are included in FMO’s policies, they’re also implemented in our daily practice. FMO has developed an internal toolkit that takes a rights holder’s perspective, rather than an impact-affected people’s perspective, when assessing the E&S risks for potential or actual clients. We refer to this toolkit as a contextual risk analysis, which broadens our risk assessment and ensures human rights are at the centre of our decision-making.
“So, a client with a project in Costa Rica might have a very different E&S and HR profile to one with a similar project in El Salvador. Adding the contextual analysis has led to more focused efforts in preventing HR infringements. For example, given past sensitivities around involuntary resettlement by the government, and subsequent violence, a client in Ethiopia put greater focus on developing an adequate resettlement action plan and continuous stakeholder engagement plan to ensure people were informed and consulted.
“This operationalization has given us increased knowledge of human rights in our projects, and a way to report on our first steps and performance via the UNGP RF. It also ensures we aren’t lagging behind in industry practices, but leading them.”
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