Thun Group of Banks releases new Discussion Paper on implications of UN Guiding Principles for corporate & investment banking; commentaries provided
The Thun Group of Banks's new Discussion Paper aims to gain further understanding of how the UN Guiding Principles on Business and Human Rights should be applied in the banking sector.
Please send any comments to Christian Leitz, christian.leitz[at]ubs.com
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Author: Gabriela Schwarz, University of Zurich, Centre for Human Rights Studies
More than 80 representatives of banks, civil society, governments, international governmental organizations, academia, law and consulting firms plus other business enterprises gathered in Thun on 19 June 2017 for the Thun Group of Banks Annual Meeting. The aim of the meeting was i) to share knowledge on crucial developments around business and human rights with a focus on the banking sector and ii) to discuss the Thun Group's January 2017 publication titled "Discussion Paper on the Implications of UN Guiding Principles 13 and 17 in a Corporate and Investment Banking Context"... The most intensely debated issue concerned the three categories of potential business involvement in human rights harm (cause, contribute, directly linked) and... whether banks can, in principle, cause or contribute to human rights harm outside the realm of employee-related (or purely internal) matters... The bank representatives acknowledged the possibility of contribution to human rights harm through own activities... though they considered these as rare when providing financial products & services... Based on the outcomes of the panel discussions, the Thun Group agreed to clarify some of the statements in the 2017 Discussion Paper that had led to misunderstandings... [and] further recognized the need to make appropriate reference to the requirement of the UNGPs to review risks to rights-holders when providing financial services to corporate clients.
Author: Christian Leitz, Head, Corporate Responsibility Management, UBS
"Message sent by Thun Group of Banks to all attendees of the Thun Group's annual meeting (19-20 June 2017, Seepark Thun, Thun, Switzerland)", 29 June 2017
The Thun Group of Banks' [annual meeting in June 2017]...focus[ed] on our Group's second Discussion Paper...[as well as] on a range of other pertinent topics. We are now working on bringing together those many comments into a meeting report, which we will publish in July. At the same time, the Group is working on concrete steps that arise from the comments made at the meeting pertaining to our second Discussion Paper. In the first instance, this includes updating the Thun Group's Second Discussion Paper to clarify that this analysis is not intended to categorically exclude banks from 13a, which than can be used as the basis for further discussions and exploration.
Author: David Kinley, Univ. of Sydney Law School
The Thun Group’s recent and second contribution to the banks and human rights debate raises more questions than it answers...Though it might be said that [this paper] is more reflective than its predecessor, it appears to have taken the banks’ thinking backwards rather than forwards. At the root of this thinking lie the intertwined notions of ‘proximity’ and ‘directness’. That is specifically, the proximity of a bank to a human rights impact will be determined by the directness of its actions in effecting that impact. It is, according to the Thun Group, only when the bank’s actions are sufficiently direct that any responsibility or liability will be borne by the bank...It does seem odd, for example, for the banking sector to seek to restrict the reach of its power and responsibilities in respect of human rights outcomes, at the very time when other sectors - notably retail - are yielding to pressure to delve deeper into their supply chains to identify and address abusive practices.
...Firstly, as mentioned in our open letter, the Thun Group made a commitment following its last open meeting in June 2014 to define a stakeholder engagement strategy. However, this commitment has not yet been met. For constructive dialogue to take place it is vital that commitments made at such meetings are upheld. In addition, the absence of a meaningful and inclusive stakeholder engagement strategy is at the heart of the concerns we set out in our open letter. The UN Working Group made the point in its response to the Thun Group paper that initiatives like this paper, which seek to interpret the meaning of the UNGPs in a sector-specific context, “should be subject to a process of consultation and review by other stakeholders to ensure accuracy, robustness and legitimacy”. In line with this, we ask the Thun Group to meet its commitment to establish a stakeholder engagement strategy, and do so in a way which takes on board this recommendation from the UN Working Group, in time for its forthcoming meeting. Secondly, we have asked the Thun Group to withdraw and reconsider its recent paper...
John Ruggie raises concerns about discussion paper on financial sector's human rights responsibilities
Author: John G. Ruggie, Harvard Univ, former UN Special Representative on business & human rights
"Comments on Thun Group of Banks Discussion Paper on the Implications of UN Guiding Principles 13 & 17 in a Corporate and Investment Banking Context", Feb 2017
I welcomed the Thun Group of Banks' initiative to elaborate on the application of the UN Guiding Principles on Business and Human Rights (UNGPs) to banking when it first started up some five years ago...I am also keenly aware that, beyond their own walls, corporate and investment banking may face greater challenges resulting from diverse and complex business relationships than, say, a mining company. But banks are not alone in this respect...Having said that, I am deeply troubled by the discussion paper the Thun Group has just recently published. It misconstrues the central Guiding Principle regarding the corporate responsibility to respect human rights (UNGP 13)...I divide my comments into two parts, the first focusing on the analytical discussion in the paper, and the second on the illustrative cases.
Thun Group responds to concerns raised about its discussion paper on clarifying human rights responsibilities of finance sector
Author: UBS on behalf of Thun Group of Banks
The Thun Group of Banks welcomes the feedback received so far on our Discussion Paper and would like to thank the organisations and individuals for sharing their views on it. We are looking to generate a constructive discussion among banks and other stakeholders and therefore we see each of these comments as a very valuable component of this dialogue. We look forward to continuing the discussion with interested parties in forthcoming multi-stakeholders forums.
UN Working Group on business & human rights raises concerns about discussion paper on financial sector's human rights responsibilities
Author: UN Working Group on the issue of human rights and transnational corporations and other business enterprises
The Working Group finds that the Discussion Paper provides some useful practical considerations for banks in certain situations where they may be directly linked to human rights impacts through the financial products or services they provide to third parties which themselves may be contributing to or causing a human rights abuse. However, the Working Group would like to express our concern about some elements of the Discussion Paper that do not accurately reflect some key elements of the UNGPs. The Working Group believes that if left unaddressed, this can cause unnecessary confusion about the UNGPs, which may undermine attempts by banks and others to implement their responsibility to respect human rights...The Working Group has two specific concerns about aspects covered in the Discussion Paper: a) The question whether banks can contribute to adverse human rights impacts beyond its own employment practices. b) The extent to which the third pillar of the UNGPs – the need to ensure access to remedy for those affected by human rights abuse – is relevant for banks. Additionally, the Working Group would also like to make some observations about the process of developing these kinds of tools that seek to unpack key concepts of the UNGPs in a sector-specific context.
Joint CSO letter raises concerns regarding Thun Group discussion paper on human rights responsibilities of finance sector
Author: Banktrack, Greenpeace, Oxfam & 35 others
...The Thun Group paper seeks to develop a conceptual framework for considering Principle 13 of the UN Guiding Principles on Business and Human Rights (UNGPs) for banks in a corporate and investment banking context. However, it begins with the flawed assertion that only half of Principle 13 applies in the case of human rights impacts linked to bank finance...Building on this flawed starting point, the paper misrepresents the rights of people who may be affected by business activities to access to remedy, and goes on to omit the responsibility of banks to respect the (human) right to remedy - part of the responsibility to respect all human rights - and provide complaints channels for affected people....
Author: Thun Group of Banks
This discussion paper:
- a conceptual framework to help consider the meaning and reach of Principle 13 of the UNGPs…for banks in a corporate and investment banking context
- further consideration of the due diligence envisaged by Principle 17.
Determines that banks should, under the UNGPs:
- develop environmental and social (E&S) risk management policies and procedures to support identification, prevention and mitigation of impacts caused and/or contributed to by clients to which the bank provides financial products and services. These policies should include a requirement to perform due diligence on higher risk transactions and/or clients…
Introduces the concepts of:
- Proximity to an impact, which may indicate the “degree of directness” of linkage between the impact and the product and service offered by the bank, and
- Unit of analysis, as a means to inform the focus of a bank’s due diligence…
Illustrates, through case studies, under which circumstances direct linkage may apply depending on the unit of analysis.”…
Author: Thun Group of Banks
"Statement by the Thun Group of Banks: A Discussion Paper on the implications for corporate and investment banks of Principles 13 and 17 of the UN Guiding Principles on Business and Human Rights", 25 January 2017
…This Discussion Paper aims to gain further understanding of how the “UN Guiding Principles on Business and Human Rights" (“UNGPs”) should be applied in the banking sector…The…Paper suggests a conceptual framework to help consider the meaning and reach of Principle 13 of the UNGPs for banks in a corporate and investment banking context. Furthermore, consideration is given to the due diligence envisaged by Principle 17. This principle determines that banks should, under the UNGPs, develop environmental and social risk management policies and procedures to support identification, prevention and mitigation of impacts caused and/or contributed to by clients to whom the bank provides financial products and services…By publishing the Discussion Paper, we aim to generate constructive dialogue among banks and other stakeholders interested in the areas covered within it...[Please send comments to Christian Leitz, christian.leitz[at]ubs.com]