Highlighting the link between Swedish banks and human rights in Nigeria and DRC

Wednesday, April 10, 2019

Fair Finance Guide Sweden

The problem

Despite overwhelming evidence, for several years banks’ and companies’ involvement in serious human rights abuses have often been overlooked, demonstrating inconsistency with international human rights laws and standards. The UN Guiding Principles for Business and Human Rights explicitly states that companies have a responsibility even when they have not caused the violation but are linked to it through a business relationship.

Although some banks still fail to realize their responsibility in respecting human rights within the value chains they invest in, in a recent a turn of events a number of Swedish banks have blacklisted various companies that are known to have violated global norms and conventions, demonstrating an increase in respect for human rights.[1] In particular, much pressure has been exerted on improving human rights compliance within cobalt mines in the Democratic Republic of Congo (DRC) and in mining and oil operations in Nigeria.

Influencing activities

In June 2015, the Fair Finance Guide in Sweden (FFG Sweden) – in cooperation with Amnesty International – released a report, Irresponsible Investments, which called on banks to scrutinize their clients for breaches of human rights.[2] The study revealed that although the seven major Swedish banks (Danske Bank, Handelsbanken, Lansforsakringar, Nordea, SEB, Skandia and Swedbank) have all committed to principles of sustainability and social responsibility, all invest their clients’ money in companies whose involvement in human rights abuses are well known. FFG Sweden informed the banks that there would be a follow-up study in 2017 to measure improvements to their policies and practices in relation to human rights. Perhaps largely due to the pressure of knowing that they would come under scrutiny again, banks in Sweden began to seriously reconsider the companies they invest in.

Change in financial institutions

The follow-up study Still irresponsible investments published in 2018 by FFG Sweden and partners revealed that there had been some major changes to banks’ investment policies. Since the publication of the initial report, Sweden’s seven largest banks had all taken measures to ensure responsible investing, for example by employing Environmental, Social and Governance (ESG) specialists and excluding companies that abuse human rights.

In addition, Handelsbanken and SEB had both blacklisted Shell, the company in which they previously had their largest investments and whose oil exploration in the Niger Delta in Nigeria had resulted in two generations growing up with the devastating effects of chronic pollution.[3] The SEB Group also blacklisted Renault, which has been accused of child labour and hazardous conditions within its cobalt mining operations in the DRC, along with T-Mobile, which prohibited employees from discussing wages with one another.[4]

These welcome moves by Swedish banks clearly show that the race to the top, as intended by the FFGI, is effective in motivating banks to improve. For example, in the 2015 report it had been recorded that Handelsbanken had committed to just 28% of the human rights principles in the FFG method, and still had many major shortcomings. SEB, on the other hand, had committed to 66% of the human rights principles in the FFG method, but also had many major shortcomings due to its investments in Dow, Goldcorp and Shell, companies which had all been linked to human rights violations.[5] In the follow-up study, it was revealed that the two banks had significantly improved their stance on human rights. Specifically, SEB had committed to 74% of the human rights principles of the FFG method, and Handelsbanken had increased its commitment to 75%, demonstrating a major development in the willingness of these banks to become more socially responsible, fair and sustainable.

Danske Bank has also made significant improvements to its human rights policies. The bank now requires that security companies follow the Voluntary Principles on Security and Human Rights; that companies pay special attention to the rights of women and children; and last but not least, that companies have solid health and safety policies and mechanisms to handle labour disputes with relevant trade unions.[6]

However, several of the financial institutions named in the report expressed that as long as they witnessed willingness to improve, they would continue their relationship with the company in question. The risk is that without time-bound objectives, engagement dialogues could go on for years without actually improving the situation for the people whose rights are being abused.

Change in companies invested in

In addition to the improved policies of banks, since 2015 there have been notable changes in both the policies and practices of the companies the banks invested in. In 2017, Shell embedded human rights into its policies, business systems and processes, and claimed that it has made improvements to its oil-spill response and remediation system.[7]

Similarly, in September 2018, Renault put in place an active sustainable purchasing policy encompassing respect for human rights and labour law.[8] It also launched an action plan the same year to address human rights risk in the cobalt supply chain, whereby the company has started to disclose its list of suppliers in the cobalt supply chain and has committed to conduct five audits on the suppliers.[9] Renault has also taken a stake in Ionic Materials, a US firm developing materials for cobalt-free batteries.[10] These developments show that the race to the top initiated by the FFG not only motivates change among financial institutions, but also the companies they invest in.

In another example of this, in mid-2017 an external consultancy firm (BSR) reviewed Goldcorp’s fulfilments of the recommendations in its 2010 Human Rights Assessment concerning the Marlin mine, and concluded that Goldcorp had fulfilled the majority of the commitments. In dialogue with investors, Goldcorp has ensured that consultations with community members around the mine will continue for as long as this is requested by the affected population.[11]

Impact on the ground

Given that the majority of these changes have occurred in the last few years, their true impact on affected people will only become visible in the next decade. Nevertheless, such a marked improvement in the willingness and actions of both financial institutions and companies to ensure compliance within their investments and operations has many positive implications for long-term change and impact.

This was demonstrated with the inauguration of the Ogoniland Clean-up and Restoration Programme, which, according to the UN Environment Programme’s Executive Director, Achim Steiner, ‘marks a historic step toward improving the situation of the Ogoni people, who have paid this high price for too long’. Steiner acknowledged that ‘a clean-up and restoration effort like this cannot happen overnight, but I am hopeful that the cooperation between the Government of Nigeria, oil companies and communities will result in an environmental restoration that benefits both ecosystems and the Ogoni people of the Niger Delta.’[12]

Furthermore, in March 2018, the UK supply-chain audit company RCS Global began electronically tagging cobalt from five mines in the DRC, in the first systematic attempt to trace the world’s first ‘ethical cobalt’ from small-scale mines at source all the way to consumers of electric cars and phones.[13] Such a collaborative effort between several global brand consumer companies and the cobalt industry groups signifies a welcome trend toward establishing universal standards for ethical cobalt mining.

 

Read the full report here

 

 

[1] SvD Näringsliv. (2017). ‘SEB blacklisted Shell, Renault and more large companies’. https://www.svd.se/seb-svartlistar-shell-renault-och-andra-storbolag (last accessed October 9, 2018).

[2] FFG Sweden and Amnesty International Sweden. (2015). ‘Irresponsible Investments: a study of Swedish banks’ investments in companies linked to human rights abuses’. https://fairfinanceguide.se/media/60762/irresponsible-investments.pdf (last accessed October 9, 2018).

[3] FFG Sweden, Amnesty International and The Swedish Consumers’ Association. (2018). ‘Still Irreponsible Investments – a study of Swedish banks’ investments in companies linked to human rights abuses’. https://fairfinanceguide.org/media/494441/2018-09_report_stil_irresponsible_investments.pdf

[4] SvD Näringsliv. (2017). ‘SEB blacklisted Shell, Renault and more large companies’. https://www.svd.se/seb-svartlistar-shell-renault-och-andra-storbolag (last accessed October 9, 2018).

[5] FFG Sweden and Amnesty International Sweden. (2015). ‘Irresponsible Investments: a study of Swedish banks’ investments in companies linked to human rights abuses’. https://fairfinanceguide.se/media/60762/irresponsible-investments.pdf (last accessed October 9, 2018).

[6] Danske Bank: https://danskebank.com/societal-impact/sustainable-business

[7] Shell. (2017). ‘Shell Sustainability Report 2017’. http://reports.shell.com/sustainability-report/2017/working-together/human-rights.html (last accessed October 9, 2018).

[8] Renault. (2017). ‘Sustainable Purchasing’. https://group.renault.com/en/our-commitments/our-corporate-and-social-responsibility/sustainable-purchasing/ (last accessed October 9, 2018).

[9] Ibid.

[10] Ibid.

[11] BSR. (2017). ‘Marlin Mine at Closure: A Review of Goldcorp Commitments to the 2010 Human Rights Assessment’. http://csr.goldcorp.com/2016/_img/docs/BSR-Report-Marlin-Mine-at-Closure.pdf (last accessed December 5, 2018).

[12] UN Environment Programme. (2017). ‘Nigeria Launches $1 Billion Ogoniland Clean-up and Restoration Programme’. https://www.unenvironment.org/news-and-stories/story/nigeria-launches-1-billion-ogoniland-clean-and-restoration-programme (last accessed December 5, 2018).

[13] David Pilling. (2018). ‘Pilot scheme seeks to produce first “ethical cobalt” from Congo’. March 25, 2018. Financial Times. https://www.ft.com/content/dcea899a-2f8c-11e8-b5bf-23cb17fd1498 (last accessed December 5, 2018).

 

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