Lux NGO calls for financial sector to face due diligence law on human rights

Luxembourg’s financial sector should be subject to mandatory due diligence legislation as soon as possible to address its insufficient commitment to human rights, according to a local NGO. The call from Action Solidarite Tiers Monde (ASTM) comes on the back of its recently published study, Luxembourg’s Financial Centre & Its Human Rights Policies. The report uses the United Nations Guiding Principles on Business and Human Rights (UNGP) as its benchmark. It reveals that just three of the firms analysed in the study mention human rights in their governance documents, and even these focus on the voluntary nature of their statement and do not include a recommendation to conduct human rights due diligence. None of the sectors, supervisory authorities or regulators mention human rights in their governance policies or recommendations. Particular attention was focused on the various trade associations and lobby groups operating in Luxembourg, which include the Luxembourg Bankers’ Association, the Luxembourg Insurance and Reinsurance Association, the Compliance Officer Association for the Financial Sector, and the Association of the Luxembourg Fund Industry. Only seven of the associations have published a code of conduct and human rights are only mentioned in three of these, in just a recommendatory sense, states the report. Consequently, the ASTM has called on the Luxembourg government to go further than the two national action plans for the implementation of the UNGP it has produced to date. “These awareness-raising efforts are clearly insufficient, as none of the actors analysed commits to the UNGP,” states the report. The report also highlights what it says is an imbalance between the industry’s lobby groups and the regulators in terms of staff strength. “This structural weakness might have a negative impact on the enforcement of possible mandatory human rights due diligence legislation in the future,” it states. A number of case studies are included in the report, which show a link between Luxembourg-based financial firms and human rights violations in China, Palestine and Latin America. "We need a law that will oblige businesses to verify whether their activities, services or products pose risks for human rights,” commented Nadine Haas of the ASTM. “And if a violation is detected, they should compensate the people affected.” While the European Commission has published a proposal to introduce more stringent human rights standards for corporates, the ASTM believes it is an insufficient measure when it comes to Luxembourg’s finance sector. The NGO would like to see the due diligence law applied to a company’s entire value chain, rather than just its own business. It would also like to see the scope of the UN’s proposed law extended. It currently applies only to EU companies with more than 500 employees and €150m in global net turnover, or companies operating in high-impact sectors with more than 250 employees or a turnover of more than €40m. “It’s a good proposal but it means that over 99% of Luxembourg companies will not fall under the legislation,” said the ASTM’s Jean-Louis Zeien at a press conference to launch the report. The ASTM also makes a series of recommendations to government and the trade associations. It calls on the former to “adopt mandatory human rights due diligence legislation that includes the financial sector, as soon as possible”, and for the latter to establish its own human rights requirements and hold its members accountable for implementing the measures. The world of sustainable finance is also included in the report and the ASTM states that there is a need to refocus the public discussion around the “overused and at the same time vague concept”, and instead make it more inclusive of human rights. Sustainable finance is understood by most financial firms to mean exclusively green or climate finance. “Even the recently launched image campaign by Luxembourg for Finance, while repeating that ‘the Luxembourg financial centre has been a pioneer in the field of sustainable financing for many years’, completely ignores human rights,” concludes the report.

Lux NGO calls for financial sector to face due diligence law on human rights

Want to read this article?

Read Next

International SOS warns of ‘burnout epidemic’

Strebel to replace Gonzalez as head of Swiss Re China

Risk managers want software providers to integrate more AI tools

Court says German government must tighten up climate protection

Premium increases continue to slow down in US commercial P&C market

International SOS warns of ‘burnout epidemic’

Strebel to replace Gonzalez as head of Swiss Re China

Risk managers want software providers to integrate more AI tools

Court says German government must tighten up climate protection

Premium increases continue to slow down in US commercial P&C market

Want to read this article?

Read Next

International SOS warns of ‘burnout epidemic’

Strebel to replace Gonzalez as head of Swiss Re China

Risk managers want software providers to integrate more AI tools

Court says German government must tighten up climate protection

Premium increases continue to slow down in US commercial P&C market

Related Articles