The report, a follow on of a study of a 2020 study, documents how the European financial services industry factors human rights considerations into its operations, comparing it where possible to the status two years ago. The research focuses on banks and asset managers based predominantly in six European countries, namely France, Germany, Luxembourg, the Netherlands, Switzerland and the UK.
The report, commissioned by Luxembourg for Finance, and jointly conducted by Finance & Human Rights in Luxembourg, the Geneva Center for Business and Human Rights in Switzerland, and Löning – Human Rights & Responsible Business in Germany came to the following conclusions when comparing the 2022 data to that of 2020:
- The financial services industry remains highly aware of the relevance of human rights for its activities.
- Regulation is the main driver for addressing human rights.
- The financial services industry continues to acknowledge it has a key role to play in addressing human rights, while underlining the fact that governments have a duty to ensure the respect of human rights through regulation.
- While upper management continues to understand the need to address human rights, organisational challenges remain, and it has yet to trickle down to daily business operations.
- A lack of available and reliable data is the number one obstacle hampering the integration of human rights into core business operations.
The report recommends that financial services firms build increased capacity to advance human rights throughout their organisation and that they use their regulatory duty to report on human rights to drive further implementation of human rights due diligence. The authors further recommend that trade bodies should more actively ensure human rights aspects are presented in public debate and political discourse. Additionally, lawmakers should create consistent regulatory standards at a European level and clients should request that their sustainable finance products integrate human rights considerations.
Addressing human rights is associated with opportunities for better financial performance
Finance continues to have an important role to play relating to human rights and ensuring economic security for all according to almost all respondents who participated in the survey (91%). While addressing human rights remains largely a matter of risk mitigation, 76% of respondents agree that it is also compatible with better finance performance for themselves and their clients (73%).
Nicolas Mackel, CEO of Luxembourg for Finance, the development agency for the country’s financial sector, commented: “this study continues to build on the work done two years ago and, most importantly, brings awareness of the topic to the fore. Top level management clearly understand the importance of the topic and the role they can play, however they will need to ensure that this understanding permeates the entire organisation to ensure it is more appropriately addressed.”
A notable development has been the shift in the key drivers relating to addressing human rights, with regulation now being seen as the number one driver, while in 2020 it was the fourth. This is likely linked to the wave of new regulations, including the EU Taxonomy and SFDR, that have entered into force triggering the need to address human rights in a more concrete manner.
Professor Dorothee Baumann-Pauly, Director of the Geneva Center of Business and Human Rights, noted: “The topic of human rights in sustainable finance is gaining traction. Comparing the role that human rights play today at European financial institutions with our baseline data from 2020 clearly shows that legislation is having a strong effect on company’s engagement: human rights are no longer optional.”
Download the report here.