

The Thun Group, an informal banking consortium focused on how the sector should adopt the UN Guiding Principles on Business and Human Rights, has released a discussion paper stating that banks are liable for “adverse human rights impacts caused or contributed in their own activities”, but not those they finance.
Among other things, the paper addresses the UNGP’s distinction between companies and institutions that ‘cause and contribute’ to human rights abuses and those that are ‘directly-linked’ through their business relationships. Those that cause and contribute are considered under the UNGPs to be liable to provide ‘access to remedy’ – through grievance mechanisms and remediation – to those effected. On the other hand, those that are directly linked are deemed to have less responsibility, and are expected only to try and mitigate the problem.
“A bank may, in certain circumstances, be directly linked to an impact caused or contributed to by a client,” says the discussion paper. “In this context, access to remedy, as considered by the UNGPs, does not apply. This requirement will generally apply to banks only in the context of adverse human rights impacts caused or contributed to via their own activities, notably through actions or omissions affecting their employment practices.”
Christian Leitz, Head of Corporate Responsibility Management at UBS, and one of the leading figures in the Thun Group, told RI: “That doesn’t mean at all that we don’t think banks should look at the human rights impact, what that means, and the extent to which they can play a role in supporting the identification, prevention and mitigation of such impacts caused and/or contributed to by clients”.
The report says that banks that are directly linked to human rights abuses through their financing decisions should “seek to identify, prevent and mitigate such impacts” via due diligence and “potentially, the use of leverage to try and influence the behaviour and actions of the client”.
Inadequate due diligence may result “in the bank’s failure to respect human rights”, the paper concedes, “but that does not change the proximity of the bank to an impact caused or contributed to by a client, nor lead to the assumption of responsibility by the bank”.
The claims seem to oppose those made by the UN Office of the High Commissioner for Human Rights, which told the OECD in 2014 that banks can be deemed to be contributing to human rights violations.
“Depending on the specific context, the financing could… contribute to a specific impact (such as if financing is provided for a project that will result in widespread displacement of local communities without safeguards in place),” it said in a statement at the time.Leitz explained that the 26-page paper focuses on the client-related side of banking activities, as that is the area where the interpretation of the UNGPs is “different and somewhat trickier to understand” for the financial sector. “It’s therefore important to do so in a relevant and tangible way” he added.
“We’re looking at this notably because of the work that the OECD is undertaking through its Responsible Business Conduct project,” Leitz continued, referring to ongoing research by the OECD, which is looking at human rights due diligence across all sectors, but also in specific sectors, including the banking sector.
“We want to inform that work with our thinking, but this is clearly a discussion that we also want to have directly with different stakeholders.” As a result, the Thun Group plans to address the paper at a “major multi-stakeholder discussion” at its next annual meeting in the Swiss town of Thun, which gives the group its name, in June.
“That meeting will give us the opportunity to have this discussion very directly with governments, other companies, NGOs and others,” explained Leitz.
This is the second discussion paper published by the Thun Group since it launched in 2011. The first, in 2013, garnered praise from BankTrack, a civil society body that monitors the responsible behaviour of banks globally.
“The Thun Group’s paper made an important contribution as a guide to the banking sector for operationalizing the UN Principles,” the NGO said at the time. “The paper recognised, in a first for the banking sector, that the UNGPs apply to all parts of a bank’s business, including asset management and personal banking as well as corporate and investment banking.”
Those involved in the latest publication include UBS, Barclays, BBVA, BNP Paribas, Credit Suisse, Deutsche Bank, ING, RBS, Standard Chartered, UniCredit and JP Morgan.
The Thun Group receives continued guidance and input from the University of Zurich Competence Centre for Human Rights – a member of the Swiss Centre of Expertise in Human Rights.
“We… are committed to respect human rights in our business activities,” the banks said in a letter accompanying the report. “The motivation for this commitment is twofold: it reflects responsible business practice by minimising related risks and underlines our desire to manage the impact of our business on society responsibly.”
The UNGP’s came into force as a “soft law” standard in 2011 and are known as the ‘Ruggie Principles’ after the Harvard professor who developed them.
The principles had been thought to apply mostly to corporates but institutional investors were drawn in via a de facto test case brought by a group of NGOs against Dutch pension fund manager APG and Norges Bank Investment Management back in 2012.