Financial institutions

Of the sectors of focus, financial institutions were best represented. In all, 43 respondents classified themselves as being in this sector. Of this number, 57.14% had never conducted a human rights due diligence process or human rights impact assessment. This is the highest proportion of all the sectors of focus. The reason for this may lie in the fact that 94.12% of financial institutions respondents indicated that their company has never been connected to any allegations of human rights impacts.

Of this 57.14%, 66.67% have taken human rights into account in other due diligence processes, such as workplace health and safety (100%), labour rights (75%) equality/non-discrimination (75%) and community, indigenous or land rights (50%). In effect, this means that around 33.33% of financial institutions respondents had undertaken neither specific human rights due diligence nor other due diligence processes incorporating human rights considerations.

Of the 42.86% of respondents that have conducted a human rights due diligence process or impact assessment:

  • 67% have performed this process for themselves, 25% had the process performed for it by another entity, and 8.33% performed such a process for another entity.
  • In 83.33% of cases the process was integrated into other processes, including environmental impact assessments (66.67%), mergers and acquisitions (55.56%), providing finance for a new project/transaction (55.56%), engaging a new supplier or a new client (44.44% each) and entering a new market, developing a new product/service, engaging a new business partner or in investment decisions (33.33% each).
  • 60% of companies identified human rights impacts through their human rights due diligence process.
  • 60% of companies identified human rights impacts related to their third parties.
  • In 57.14% of responses, the function responsible for identifying the human rights impact was CSR.
  • 80% of respondents do not track, audit or monitor the actions taken as a result of a human rights due diligence process. Where tracking is done, it takes place through annual reviews, regular reporting or where a client returns for further transactions.

Human rights issues specific to the sector were identified in the survey as:

  • Involuntary relocation
  • Impacts on indigenous communities in the vicinity of the operations
  • Impacts on non-indigenous communities in the vicinity of the operations
  • Discrimination
  • Providing finance to governments known to abuse human rights or which international sanctions have been imposed for human rights abuses
  • Supply chain issues

This list of identified human rights issues is shorter than those for the extractive sectors, which may partially stem from the fact that a lower proportion of financial institutions undertake human rights due diligence. Involuntary relocation or other impacts on indigenous / non-indigenous communities could arise, for example, if a financial institution were to finance an infrastructure or extractives project in an inhabited area.

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