"Civil society groups file OECD complaint against Swiss and UK banks over private prison stock", 16 Jan 2024

Today, civil society groups BankTrack, the Coalition for Immigrant Freedom, and Worth Rises filed a complaint with the National Contact Points (NCPs) of Switzerland and the UK against Swiss-based banks UBS and Swiss National Bank and UK-based banks Barclays and HSBC. The complaint alleges that the banks’ financial involvement with private prison operators CoreCivic and GEO Group contravenes their responsibilities under the OECD Guidelines on Responsible Business Conduct. 

The complaint alleges that the banks have breached the OECD principle to carry out adequate human rights due diligence with regard to their investments in CoreCivic and GEO Group, and that they have failed to seek ways to prevent or mitigate adverse human rights impacts to which they are directly linked...

While public filings fail to disclose the full exposure of the banks to CoreCivic or GEO Group, they each own at least tens of thousands of shares, and in some cases hundreds of thousands of shares, sometimes spread between various subsidiaries. Some shares are held outright while others are held through index funds, primarily US small cap index funds. 

Guidance documents by the United Nations Office of the High Commissioner for Human Rights and the OECD make it clear that holding shares establishes a business relationship under the OECD Guidelines.

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Engagement with the Respondents

The Complainants have first sought engagement with the Respondents on May 20, 2022, by sending a letter addressed to the banks’ Chief Executive Officers, which described the issues raised in this complaint. The letter laid out each bank’s shareholdings in CoreCivic and GEO Group, described the human rights violations the companies are causing, and asked for dialogue with the banks about their responsibilities under the Guidelines. Following this first communication, the following interactions occurred:

1. Regarding Barclays: In a letter dated August 18, 2022, Barclays’ Sustainability & ESG team, based in Barclays’ London headquarters, responded acknowledging an existing credit commitment with GEO Group but stating that it would allow it to expire and that the bank did not plan to enter new lending arrangements with either company...
2. Regarding HSBC: In an email dated 16 June 2022, [HSBC] responded, citing client confidentiality, and indicating that the bank’s name may appear on company share registers where the company is part of an index, or where the bank holds shares on a custodial basis. [HSBC] also welcomed the opportunity to discuss the bank’s approach to human rights further...
3. Regarding UBS: In an email dated 24 June 2022, [UBS] responded to the Complainants’ letter by stating that investors — including UBS — invest in a wide range of companies which are often listed in financial indices, and do so often on behalf of clients. [UBS] also described the bank’s responsible investment approach, indicating UBS engages with its investee companies where risks and opportunities are identified, and with leading sustainability index providers and industry initiatives to promote human rights. No details or evidence of such engagements were disclosed, as [UBS] further stated these are held confidentially, but that aggregated statistics and case studies are provided in the bank’s annual stewardship report...
4. Regarding Swiss National Bank: In a letter dated June 10, 2022, ... Swiss National Bank ... responded to the Complainants’ letter stating the bank does not comment on individual investments. [They] also indicated that Swiss National Bank in applying its investment policy has two main objectives, namely, to preserve the value of currency reserves, and to ensure that its balance sheet can be used for monetary policy at any time. [Swiss National Bank] indicated that the bank’s equity portfolio is managed passively, and that the bank does not invest in shares and bonds of companies whose products or production processes grossly violate values that are broadly accepted at 18 societal level, further adding information about the bank’s investment policy...

[Further information is available in the complaint. For further information on the private prison operators, including where available their responses to some of the concerns raised, please see the company pages on CoreCivic and GEO Group.]