Ruggie “deeply troubled” by banks’ discussion paper on human rights principles

Leading human rights figure responds to recent paper by the Thun Group

Professor John Ruggie, the architect of the United Nations Guiding Principles (UNGPs) on Business and Human Rights and probably the world’s leading voice on human rights and investment, has said he is “deeply troubled” by a recent discussion paper by a group of banks about the principles that bear his name.

Ruggie was responding to the document from the Thun Group, an informal 11-member banking consortium that includes UBS, Barclays, BBVA, BNP Paribas, Credit Suisse, Deutsche Bank, ING, RBS, Standard Chartered, UniCredit and JP Morgan. In response, the group stressed the paper is clearly intended as a discussion document and invited direct dialogue with Ruggie.

The paper had said banks are liable for “adverse human rights impacts caused or contributed in their own activities”, but not those they finance.

This met with a strongly worded reaction from Ruggie, who says the document risks “confusing if not undermining” the common understanding of the ‘soft law’ UNGPs, known informally as the Ruggie Principles.

Ruggie, Professor of Human Rights and International Affairs at the Harvard Kennedy School of Government, oversaw the UNGPs in 2011. In a prefiguring of the current situation, Ruggie told Responsible Investor in 2015 that the UNGPs clearly apply to minority investors.

The new paper, Ruggie says, conflates the terms “cause” and “contributes to” in reference to human rights impacts. “There is no basis in the UNGPs for such an assertion,” he says. His argument is that the principles stipulate three categories of business involvement in human rights harm.

In a four-page letter on Harvard Kennedy School letterhead, he writes: “The critical distinction that banks (and other businesses) should be making is not only between ‘their own activities’ versus harms in which they may otherwise be involved.

“Perhaps even more important in practice, especially for banks, is the distinction between harm they may ‘contribute to’ and harm that may be committed by a third party to which they are ‘directly linked’ through their business relationships even without their having caused or contributed to the harm.“This distinction is important because the two situations have very different implications for what banks, or any other businesses, should do about that actual or potential harm, including in relation to remedy.”

While he welcomed the fact the banks were engaging with the issue, he feared “the misconstruing of core elements of the UNGPs” might do “serious damage and risks setting back some of the innovative work that we are seeing from individual banks”.

Ruggie is not the only figure to react against the paper. An open letter coordinated by BankTrack, calling on the Thun Group to withdraw and reconsider the paper, was supported by over 30 civil society organisations and academics, including Oxfam, Greenpeace, Global Witness and the OECD Watch network.

“Misconstruing core elements of the UNGPs”

In response, Christian Leitz, the Head of Corporate Responsibility Management at
UBS Switzerland AG, who is the Convenor of the Thun Group, told RI that the intention was always that the document is a discussion paper, saying: “We clearly invite discussion.” He added: “At the end of the day this is a process.”

He said the banks have taken “a very deep dive” on the issues, in terms of case studies. One area that all stakeholders can agree on, Leitz believes, is the importance of due diligence. Asked about Ruggie’s comment that the discussion paper risks undermining the UNGPs, Leitz said: “I just don’t see that.”

In a letter to Ruggie, Leitz invited Ruggie to attend the group’s forthcoming meeting in the Swiss town of Thun, after which the bank group is named, on June 19.