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Finance & banking sector

The finance and banking sector plays a vital role in the world’s economy. For example, the world gross domestic product is valued at $79 trillion. (2017 figures, IMF), while the value of shares trading on stock exchanges is $78.2 trillion, almost equating the total amount of goods and services provided around the world. These numbers demonstrate that the finance and banking sector can exert substantial influence over the global economy, including the protection, or lack thereof, of human rights.

Finance and banking institutions can contribute both directly and indirectly to adverse human rights impacts. Examples of direct impacts include: a pension fund investing in a food and beverage company that systematically buys produce from farms using child labour; the management of assets belonging to a corporate or individual client involved in human rights abuses; or investing in a company that buys or uses prospected minerals in countries undergoing conflict. Financial instruments may also cause human rights violations indirectly by lending money to agricultural companies involved in land grabs and funding infrastructure projects that displace indigenous populations. (UN Working Group on the issue of human rights and transnational corporations and other business enterprises).

An informal group of bank representatives called the “Thun Group of Banks” has published two discussion papers on their interpretation of the UN Guiding Principles and what they mean for banks in practice. While these voluntary efforts have been applauded, their 2017 discussion paper on UN Guiding Principles 13 and 17 in a corporate and investment banking context has been criticised for misconstruing the central Guiding Principle regarding the corporate responsibility to respect human rights (Comments by Professor John Ruggie) by asserting that “banks, by definition, do not “contribute to” harm except through their own activities.”

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What National Action Plans say on Finance & banking sector