Sweden - In 2015 Amnesty International published a study within the Fair Finance Guide initiative examining how major Swedish banks act when they invest in companies involved in abuses of human rights. Holdings in the Dow Chemical Company (which during 2017 merged with I. du Pont de Nemours & Company and changed name to DowDuPont), Goldcorp, Shell and Vedanta, four companies linked to human rights abuses, were examined. The study found that the holdings infringed on the banks’ own policies and that the banks for the most part had not acted sufficiently to ensure that companies took responsibility.
The present study aims to look into whether the banks have improved their internal processes concerning human rights, whether their engagement has increased in quality and frequency and how transparent they are. Two new cases have been added to the study: Stora Enso regarding child labour in its supply chain in Pakistan, and Renault regarding cobalt that is mined under hazardous conditions and by children in the Democratic Republic of Congo (DRC).
The results show that all banks have improved their human rights policies since 2015. The banks’ implementation processes vary but many banks have increased the resources dedicated to sustainability issues within their investments and some have improved their internal processes. The greatest challenge for the banks is to integrate sustainability in the daily work of fund managers, especially to be proactive in identifying and acting on human rights risks in their investments.
Since 2015 the banks’ total investments in the companies have increased from 2,9 billion SEK to 4,9 billion SEK in 2017. Of the seven banks, Nordea and Swedbank have the largest investments in the companies highlighted in this study. Two banks, SEB and Handelsbanken, have excluded some of the companies due to sustainability concerns, leading to considerably lower holdings.
With respect to the engagement with the companies highlighted in this study, the frequency and quality of the engagement has improved since 2015. However, several banks ceased their engagement too early. The right to remedy is an important human right and from a human rights point of view, a case should not be considered closed until remedy has been provided. It is also clear that the engagement services that banks use from external consultants vary a lot, from fact-finding to more active and structured engagement dialogue. Swedbank and Skandia demonstrated the relatively best engagement processes, yet they scored only half of the scoring criteria. All the banks continue to show major shortcomings in the reporting of their engagement activities. Of the six companies in the report, the banks engaged most actively with Stora Enso. This indicates that Swedish banks react more strongly to abuses of human rights linked to a large Nordic company, where they usually have larger investments.
The case of Renault, which was included in the study in order to assess whether banks have systems to proactively identify human rights risks, revealed the banks’ passive approach to upcoming risks. The issue of cobalt and other minerals needed for rechargeable batteries being linked to serious human rights abuse, including the worst forms of child labour, has been the subject of news and civil society reports for a few years. The connection to electric vehicles has also been known for some time. Yet, only Nordea presented a proactive measure.
The other banks said that while they were aware that this was a risk for the sector in general, they were waiting for the direct link to Renault to be confirmed before they would take action. This does not meet the requirements of a human rights due diligence (HRDD) where the banks should be identifying, preventing, mitigating and accounting for how they are addressing negative human rights impacts. Since our questionnaire, two more banks have initiated a dialogue with Renault which we welcome. In February 2018, Renault published a list of cobalt smelters in its supply chain, a very welcome step.