POLITICS & INSTITUTIONS - ECONOMY

Placing human rights into sustainable finance agenda



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Charles Muller, an independent board director, wants the financial sector to take human rights issues more seriously. Photo credit: Maison Moderne 

Firms and investors are increasingly paying attention to environmental issues as part of their corporate governance, but less so to human rights. 

So said Charles Muller, a Luxembourg attorney specialised in investment fund regulation, and Markus Löning, who runs a corporate human rights consultancy, during workshops held in the grand duchy last week.

The sessions covered a discussion paper, “Human Rights & Finance” (PDF), that Löning and Muller published in February.

Delano spoke with Löning and Muller following the seminars.

Aaron Grunwald: What was the main point that you wanted to make during last week’s workshops?

Markus Löning: Our main point is that human rights need to be moved more into the spotlight of sustainable finance.

Charles Muller: Over the past few years, and following the adoption of the Paris climate agreement and the UN Sustainable Development Goals, sustainable (responsible or ESG) finance considerations have increasingly been in the spotlight. Although there is no definitive list of which issues or factors are covered by the term “ESG”, they are, according to the United Nations Environmental Programme Inquiry and the United Nations Principles for Responsible Investment, broadly defined as follows:

“(i) Environmental (E) issues relate to the quality and functioning of the natural environment and natural systems; (ii) Social (S) issues relate to the rights, well-being and interests of people and communities; and (iii) Governance (G) issues relate to the governance of companies and other investee entities.”

While environmental issues are very much in the focus and governance is also widely discussed (among others in terms of gender diversity and equality), less light has been shed on the “S” element, which very much relates to human rights issues. The main point we wanted to make is to put the “S” in the spotlight. To that effect we have produced a paper that we wanted to present and discuss with stakeholders, including trade bodies like ABBL, ALFI, ACA and the press.

AG: Do you think Luxembourg financial managers are taking human rights issues seriously? 

CM: This is a new area for everybody, not only in Luxembourg. It is only recently that the finance community internationally has started looking at their impact on human rights as investors, investment advisors, lenders, service providers or employers. We have encountered a lot of positive reactions but the question now is: ‘how do we go about this? How do we transform good intentions into an action plan?’ We were able to present potential solutions that are based on the “UN guiding principles for business and human rights” and their implementation into the Luxembourg action plan adopted by the government last year.

AG: Can you think of a financial structure that is doing a good job integrating human rights standards into their governance or investment system?

CM: Often, global players are first movers, and their policies also impact their Luxembourg-based subsidiaries. You will find examples in the paper [editor’s note: the paper cites policies put in place by Amundi, Blackrock, BNP Paribas, ING and Norges Bank].

AG: What is the next step that you’d like to see Luxembourg financial organisations take? 

CM: We are in the process of creating an ASBL [not-for-profit organisation] and have the following calls for action:

  • Policy makers: adopt a holistic view on sustainability, conceptually framing human rights in line with international standards, in particular considering the UN Guiding Principles. 
  • Financial entities associations: foster discussion among members on the relevance of human rights; develop capacity building on human rights through trainings and workshops.   
  • Financial service entities: revise current due diligence process to incorporate human rights in the investment decision-making process, upholding the UN Guiding Principles.  
Markus Löning, a former German federal human rights commissioner, wants human rights to be a core part of sustainable finance initiatives. Photo credit: Löning – Human Rights & Responsible Business
Markus Löning, a former German federal human rights commissioner, wants human rights to be a core part of sustainable finance initiatives. Photo credit: Löning – Human Rights & Responsible Business