Last week, ERI made a submission to the new UN Working Group on Human Rights and Transnational Corporations and Other Business Enterprises in advance of the working group’s first session, which will take place from January 16-20 in Geneva. ERI’s submission emphasizes the need for clarity on the application of the UN Framework and Guiding Principles on business and human rights to financial institutions, including multilateral, public and private banks.
The Working Group is a new expert body that has been established by the UN Human Rights Council to promote and disseminate, and ensure the implementation of, the UN Framework and Guiding Principles on business and human rights, commonly referred to as the “Ruggie Framework” after John Ruggie, the former UN Special Representative on business and human rights. The Framework and Principles outline what states and business enterprises should do to ensure that human rights are respected by business, and to ensure access to effective remedies for those whose rights have been adversely affected by business activity.
ERI’s submission presents two case studies that point to the troubling role played by banks in financing, insuring or investing in projects with significant human rights impacts.
The first example concerns the communities of Canaán de Cachiyacu and Nuevo Sucre in Perú, which have suffered environmental and health impacts from oil operations financed by the International Finance Corporation (IFC), despite IFC safeguard policies that are meant to prevent such adverse impacts. Since 1994, the communities have suffered from the harmful impacts of Maple Energy PLC’s oil operations on their land, including repeated oil spills into community drinking and bathing water, contamination of land used for cultivation, depletion of fish-supply, and troubling health problems as a result of the repeated spills. Despite the compelling evidence of harm documented by these communities, in 2007, the IFC granted an additional US $40 million to Maple Energy PLC to expand oil operations around the two communities.
The second case is the proposed Xayaburi Hydropower Dam in Laos, which threatens to trigger a cascade of up to ten other dams along the lower Mekong River. If built, these dams are likely to lead to a food security crisis as well as a severe loss of biodiversity and increased tensions between Cambodia, Laos, Thailand and Vietnam. Four major Thai banks have signaled their intention to finance Xayaburi with combined syndicated loans of 80 billion Thai baht. These same four banks have also already financed a number of major hydropower projects in Laos, all of which have been found to inadequately address social costs and environmental impacts
Both case studies draw to the attention of the Working Group the potential severity of the human rights impacts of privately financed projects and illustrate the need for fully elaborated standards that apply to all financial institutions. ERI’s submission emphasizes that states must play an active role in supervising the project and the transactions between the businesses and banks to ensure that lenders do not aid and abet violations of human rights. The submission also stresses that financial institutions themselves are business enterprises, and are thus charged with the Responsibility to Respect human rights, as are any other business enterprise covered by the Ruggie Framework. A critical component of this responsibility is human rights due diligence that can identify, prevent, and mitigate adverse human rights impacts of corporate activities.
In addition to this submission, ERI also joined with other members of the ESCR-Net Corporate Accountability Working Group in making a collective submission on the work plan of the Working Group more broadly. The ESCR-Net submission encourages the Working Group to make efforts to hear directly from affected communities, to consider specific cases of rights violations, and to move toward an international framework for remedying such violations.
