On Thursday
(2 November), the T.M.C. Asser Instituut hosted a roundtable on the role of financial
institutions in ensuring responsible business conduct and, in particular,
fostering respect for human rights. The discussion focused on the Dutch Banking Sector
Agreement on international responsible business conduct regarding human rights (DBSA or
Agreement), including details of its key features and the practicalities of its
implementation, alongside the theme of responsible banking more generally.
Panellists:
- Ruben
Zandvliet: Advisor Environmental, Social, and Ethical Risk & Policies at
ABN Amro
- Benjamin
Thompson: Program Officer, Business and Human Rights at PAX
- Tessel van
Westen: Senior Policy Officer International CSR Unit, Dutch Ministry of Foreign
Affairs
- Maryse
Hazelzet: Advisory Sustainability at NVB
- Ryan Brightwell: Researcher and Editor at
BankTrack
Our
panellists explored the background to the DBSA, negotiated and agreed under the
auspices of the Social and Economic Council of the Netherlands (SER). The
speakers emphasised the cooperative multi-stakeholder approach to decision
making (known as the Polder model) under the SER that led to the adoption of
the Agreement by its signatories, including the Dutch government, the Dutch
Banking Association (NVB), leading Dutch banks, trade union federations and
certain international civil society organisations. Each panellist gave their
organisation’s perspective on the hurdles apparent prior to and since
conclusion of the DBSA (such as action on sustainability that appeared to be at
odds with competition law constraints), their views of the aims and
expectations of the DBSA (including better transparency, due diligence
processes and complaints mechanisms) as well as their organisation’s role in
the DBSA’s implementation once agreed.
The speakers
discussed the prospects for and challenges in respect of the implementation of
the DBSA. While private codes of conduct may be precise and verifiable in terms
of the expected conduct, they are often set below the requirements of
international law. Further dialogue is required between the parties to
ascertain what conduct on the part of the banks is consistent with
international obligations. The panellists expressly recognised the advantages
of referencing international standards applicable to banking (such as more
stringent applicable human rights standards), however in need of implementing
provisions they may be. Among other objectives, the Agreement aims at solving
the interpretative ambiguities inherent in the UNGPs. There are however many
challenges. The speakers explored some of these difficulties, for example relating
to the nature of the relationships between banks and their clients, or pertaining
to the specificities of the financial industry such as in the case of
syndicated loans. Further difficulties discussed included banks’ lack of
visibility of the value chain in any given transaction and the ethical and
compliance issues arising in respect of financing activity affecting certain
industries including, for example, the arms trade and sex work.
The
discussion also touched on the next steps and specific ongoing processes in
implementing the DBSA in order to achieve positive human rights-consistent
outcomes. At this point, the panellists stressed the ‘work in progress’ status
of the DBSA and agreed that it would be premature to speculate at this point
whether the DBSA will achieve tangible, positive outcomes. There was, however,
a general consensus on the need for a continuation of the collaborative
multi-stakeholder approach leading to the adoption of the DBSA – a novel
approach in the banking industry that was largely seen to be “working”, at
least in respect of helping different stakeholders understand one another’s
concerns. The panellists generally agreed that multi-stakeholder dialogue
should permeate the way forward vis-à-vis
the implementation of the DBSA; ways should be found to further integrate
(particularly civil society and local) stakeholders into the monitoring and decision-making
processes of banks as well as when deciphering new ways to increase leverage in
relation to borrowing companies in order to increase human rights compliance “on
the ground”. The suggestion that clear guidelines for banks and companies
should be set in respect of their human rights responsibilities was welcomed,
and particular tools (including a working group) being set up to this end were
noted in the discussion. The speakers emphasised the importance of (and the
need to improve) the banking sector’s own internal due diligence and client
engagement processes.
The
roundtable concluded with a lively and thought-provoking discussion in the
Q&A section between the speakers and audience touching on a number of
topics including (inter alia and in
addition to some of the themes mentioned above): the desirability, nature and
potential functionality of binding due diligence legislation for banks; human
rights-related arbitration and applicable law clauses in contracts; and how new
digital technologies (such as blockchain) could help address problems and
difficulties faced by banks carrying out human rights due diligence.
The
panellists viewed the path ahead as undeniably challenging given certain
practical questions that need answering and the further work required with
respect to the implementation of the Agreement – yet they ultimately agreed
that this approach could have the potential to improve banks’ human rights
performance. The speakers now continue to be engaged in the operationalization
of the Agreement, which incorporates a timeframe for evaluating its impact and
effectiveness.