Financial Sector

Background

Being major actors in the global economy, financial institutions play an important role in ensuring business respect for human rights. The UN Guiding Principles on Business and Human Rights (UNGPs) explicitly apply “to all business enterprises, both transnational and others, regardless of their size, sector, location, ownership and structure.” As such, the UNGPs apply to the financial sector. OHCHR has produced numerous resources to clarify how the UNGPs should be interpreted with respect to different financial actors. Notable examples of work include:

• February 2022: Remedy in Development Finance: Guidance and Practice: contextualizes current policies and practices of development finance institutions on remedy, analyzes gaps and opportunities for improving access, and generally seeks to demystify and normalize the concept that is all too often associated with finger-pointing and blame-shifting. OHCHR also engages with numerous development finance institutions directly to try to better embed human rights considerations into their safeguard policies and frameworks.
• August 2021: Advice regarding the application of the UNGPs where private sector banks act as nominee shareholders: in response to a request from BankTrack and OECD Watch, this note provides advice and clarification on the concept of business relationships in the context of nominee shareholdings, and how financial institutions should meet their responsibility to respect human rights in such cases.
• June 2017: Advice regarding the application of the UNGPs in the context of the banking sector: in response to a request from BankTrack, this note provides advice and clarification on the factors that would influence how a bank is involved with an adverse human rights impact (i.e., cause, contribution, and direct linkage); the responsibilities of banks with respect to remediation in situations where a bank has contributed to an adverse human rights impact; and the role of operational-level grievance mechanisms in this context.
• November 2013: Advice regarding the UNGPs and the financial sector: in response to a request from the Chair of the OECD Working Party on Responsible Business Conduct, this note provides advice on what is meant by being “directly linked” and the extent to which minority shareholders and investment in sovereign bonds are covered by this provision.
• April 2013: Clarification on the applicability of the UNGPs to minority shareholdings of institutional investors: in response to a request from SOMO and OECD Watch, this note provides guidance as to whether the UNGPs apply to institutional investors holding minority shareholdings, whether such shareholdings constitute a "business relationship," and the role of leverage in such circumstances.

Other resources

The Working Group on Business and Human Rights has also released numerous resources on the financial sector and human rights.