Abstract
The role of banks in projects which result in adverse human rights impacts has been brought to the fore in recent years. However, there are serious obstacles to regulate the (often extraterritorial) financing activities of banks under national law. The UN Guiding Principles on Business and Human Rights and OECD Guidelines for Multinational Enterprises attempt to respond to this ‘governance gap’, stipulating that all business enterprises have a responsibility to respect human rights. However, banks’ compliance with such standards has been frustrated by a failure to understand how these standards apply to them.In 2016, the Dutch Government collaborated with the Dutch banking sector and civil society to create the Dutch Banking Sector Agreement: a multistakeholder initiative initiated to improve adhering banks’ performance with respect to the UN Guiding Principles on Business and Human Rights and the OECD Guidelines on Multinational Enterprises. This article reviews how the actors involved drafted the Agreement in light of prevalent divergences in understandings over how human rights apply to banks’ financing activities. It then looks to scholarship on transnational private regulation, experimentalism governance, and social constructivism in mapping three roles the Dutch Banking Sector Agreement could play: regulation, experimentation, and advocacy.
Highlights
The role of banks in projects which result in adverse human rights impacts has been brought more into the fore in recent years, largely as a result of the increased role of commercial banks in infrastructure investment.[1]
In order to help overcome these governance gaps, the international community has endorsed the UN Guiding Principles of Business and Human Rights (UNGPs),[3] which were later adopted in a human rights chapter of the OECD Guidelines for Multinational Enterprises (Guidelines),[4] which stipulate that all businesses have a responsibility to respect human rights and States have a duty to protect human rights
Banks have to a large extent already incorporated many similar practices to those required under human rights due diligence across some of their activities, in their existing environmental and social (E&S) due diligence procedures, which they have adapted to include human rights risks
Summary
The role of banks in projects which result in adverse human rights impacts has been brought more into the fore in recent years, largely as a result of the increased role of commercial banks in infrastructure investment.[1]. In October 2016, ‘the Dutch Banking Sector Agreement on international responsible business conduct regarding human rights’ (the DBA)[8] was announced: a collaboration between the banking sector, the Government, trade unions, and civil society organisations (CSOs), all based within the Netherlands. This initiative is the first initiative representing banks, CSOs, and Government in relation to finance and human rights.
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