Germany - For the past four years, the Dirty Profits report has highlighted companies violating environmental and human rights norms and standards, as well as selected financial institutions which support them. The report has sought to, and continues to, advocate for stronger ethical regulations on the investment decisions made by financial institutions (FI). Each successive report makes the case clearer that despite voluntary guidance investors continue to have financial ties to harmful companies. This report is no different. The fourteen companies selected for this edition have violated human rights, directly caused environmental devastation, engaged in labour violations such as child labour practices, and have severe governance failures including corruption and embezzlement. All of which are factors that are claimed to be considered in ESG investment criteria.

In compiling this report 12 NGOs from 8 different countries including Israel, South Africa and Brazil, have contributed to both company research as well as drafting specific articles related to their expertise on human rights and environment. The financial institutions selected for this report, cover the largest banks in Europe based on the Global Financial Sectors Index 2016 - Deutsche Bank, ING, UBS, HSBC, and BNP Paribas.

The companies in this fifth edition of Dirty Profits include not only significant recent cases such as the Volkswagen emission scandal, but also those companies that have for decades operated in violation of norms and standards. The report includes some of the most often excluded companies, by investors, pension funds, and banks. These companies can therefore be considered as some of the worst offenders in terms of human rights and environmental violations. Many of them have been excluded from investment funds for decades without changing any of their operations or behaviours, for example Freeport McMoRan and Norilsk Nickel.

6 of the 14 companies in this report have not signed the UN Global Compact1, 8 have not shown any regard for the UN Guiding Principles on Business and Human Rights2, and 4 of the companies have acknowledged neither of these- this includes, unsurprisingly, the two defence companies, Leonardo and Hanwha, the mining company Centerra Gold, and the pharma company Mylan. While this alone should signal to investors that these companies lack clear policy commitments toward defending human rights and the environment, the FIs in this eport continue to invest in these companies, with Deutsche Bank for example providing a general corporate loan to Norilsk in 2013.

Climate Change has again been a key focus of this Dirty Profits report, with the inclusion of the oil and gas company BP PLC. Despite a history of environmental pollution and being the third largest historical global carbon emitter listed in the carbon majors report3 released in 2013, almost all of the banks have provided financing to BP, a company with countless instances

of misconduct resulting in penalties of USD 34,304.8 million in the US. With 2016 set to be the hottest year on record following record-breaking years in 2015, 2014 and 20134 and with the Paris climate agreement firmly in place, the carbon policies of FIs must quickly catch up with the regulations and shift financing from oil majors to renewable energy sources.

Freeport McMoRan, excluded by the Norwegian Government Pension Fund since 2006 for severe environmental destruction, continues its environmentally destructive practices in a politically tumultuous region, yet has been funded with direct corporate loans by Deutsche Bank, BNP Paribas, UBS, HSBC and ING - all of the banks in this report.

The biotechnology sector is currently being scrutinised due to a number of controversial mergers and acquisitions, the Bayer and Monsanto merger being one of the most notable. Bayer has had its own concerns recently in relation to the production and sale of its pesticides in the developing world violating human rights and environmental norms, but the merger with the controversial Monsanto raises further, serious ethical questions. The impact of which is being questioned by investors globally. Bayer has been financed by all of the FIs in this report. The financing of this controversial merger is being facilitated through a bridge loan of USD 56 billion, funded in part by HSBC.

Financial institutions play a pivotal role in ensuring sustainable business not only in their own operations, but also within the varied sectors they choose to finance. By providing financial resources to companies, FIs can be seen to be supporting and encouraging their activities. Where these are harmful this reflects negatively not only on the company but also the financiers. It is clear that FIs through choosing not to support harmful or socially unjust companies can set a precedent for other sectors.

Although initiatives which integrate social and environmental sustainability aspects in the financial sector have grown, this report shows once again that the sector continues to invest in companies that significantly violate environmental and human rights norms and standards. Hence this document again advocates for binding regulations on financial institutions (i.e. banks, asset managers, insurance companies, occupational and public pension funds etc.) to eliminate these harmful investments through the application of rigorous policy and due diligence (risk management) processes, as well as strong transparency and accountability commitments within FIs.

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