Fair Finance Guide
International
Methodology 2020
A methodology for the assessment of responsible
investment and finance policies of financial
institutions

Original: June 2014
Last update: February 2020

About this report
This report has been commissioned by Oxfam Novib on behalf of the Fair Finance International
network of civil society organisations. It presents a methodology that is used to assess and rank
financial institutions’ finance and investment policies regarding their principles on sustainable
development and corporate social responsibility. The methodology is developed by Profundo
together with the civil society organisations collaborating in Fair Finance International, and is basedon international standards and initiatives.

About ProfundoWith profound research and advice, Profundo aims to make a practical contribution to asustainable world and social justice. Quality comes first, aiming at the needs of our clients.
Thematically we focus on commodity chains, the financial sector and corporate social responsibility.
More information on Profundo can be found at www.profundo.nl.

AuthorshipThis report was updated by Jan Willem van Gelder and Lennart van Loenen, based on earlier
versions. Correct citation of this document: Van Gelder, J.W. and L. van Loenen (2020, February),
Fair Finance Guide International Methodology 2020, Amsterdam, The Netherlands: Profundo.
Front page cover photograph: FFGI Lab 51 | No. 52519550

Acknowledgements
The authors would like to thank the valuable feedback received by the coordinators of andcoalitions in the Fair Finance International network.
The work of Fair Finance International is financially supported by SIDA.

Disclaimer
Profundo observes the greatest possible care in using information and drafting publications but
cannot guarantee that this report is complete and assumes no responsibility for errors in thesources used. The report is provided for informational purposes and is not to be read as providing
endorsements, representations or warranties of any kind whatsoever. Opinions and information
provided are made as of the date of the report issue and are subject to change without notice.
Profundo will not accept any liability for damage arising from the use of this publication.

Table of contents
Introduction .................................................................................................................... i
Chapter 1

Objective and methodology .............................................................. 1

1.1

Overview ....................................................................................................... 1

1.2

Objective and principles .............................................................................. 1

1.3

Financial sector............................................................................................. 3

1.4

Assessment of policies................................................................................. 9

1.5

Case studies ................................................................................................ 20

Chapter 2

Cross-cutting themes ........................................................................ 21

2.1

Animal welfare ........................................................................................... 21

2.2

Climate change ........................................................................................... 33

2.3

Corruption .................................................................................................. 49

2.4

Gender equality .......................................................................................... 55

2.5

Health .......................................................................................................... 66

2.6

Human rights .............................................................................................. 76

2.7

Labour rights .............................................................................................. 88

2.8

Nature ......................................................................................................... 95

2.9

Tax ............................................................................................................. 104

Chapter 3

Sector themes ..................................................................................112

3.1

Arms .......................................................................................................... 112

3.2

Financial sector......................................................................................... 121

3.3

Fisheries .................................................................................................... 128

3.4

Food........................................................................................................... 136

3.5

Forestry ..................................................................................................... 155

3.6

Housing and real estate........................................................................... 165

3.7

Manufacturing industry .......................................................................... 180

3.8

Mining ....................................................................................................... 189

3.9

Oil and gas ................................................................................................ 205

3.10

Power generation..................................................................................... 218

Chapter 4

Operational themes ........................................................................228

4.1

Consumer protection ............................................................................... 228

4.2

Financial inclusion .................................................................................... 240

4.3

Remuneration ........................................................................................... 251

4.4Transparency and accountability ........................................................... 259

References ..................................................................................................................268

Introduction
Twelve years after the financial crisis of 2008, which forced governments to bail out banks trying to
avoid a total collapse of the financial system, the world faces a new wave of deregulation. Many
believe the crisis of 2008 originated from the irresponsible investment and risk-taking behaviour ofbanks across the globe. It showed the huge impact financial institutions have on society as a whole.
While international agreements on strengthening financial sector, regulations have taken somesteps to prevent massive bailouts of banks in the future, they fall short of addressing thefundamental changes needed in this sector. Responsible financial institutions are much needed to
face all social and environmental challenges the global community is confronted with, a strong andresponsible financial sector is needed to efficiently allocate investment funds, find risk-sharing
solutions and provide adequate financial services for all.
The burden of the negative social and environmental effects of financial institutions loans andinvestments is carried disproportionally by people living in poverty. Until now it is mostly civilsociety organizations that report on these issues and are holding companies and financial
institutions accountable for this.
One of these civil society initiatives is the Fair Finance International network, launched in January
2014; based on the experience of the Fair Finance Guide in the Netherlands. The Fair FinanceInternational is a collaborative effort of coalitions from civil society organizations (CSOs) in
Belgium, Brazil, France, Germany, India, Indonesia, Japan, the Netherlands, Norway, Sweden and
Thailand. In each country, these coalitions set up websites which customers and other interested
parties can use to compare the finance and investment policies of their financial institutions on a
range of cross-cutting issues and industries. Additionally, the coalitions regularly publish casestudies on specific topics, trying to assess if and how the financial institutions apply sustainability
criteria in their daily practices. Furthermore, they pressure the assessed banks, insurers and otherfinancial institutions to improve their policy and practice, and influence regulators to develop andimpose adequate regulation.
With this project, Fair Finance International will hopefully be successful in stimulating financial
institutions to rethink their role in society. Developing clear and ambitious policies onenvironmental, social and governance issues, is a necessary first step in that direction.
This document presents the Fair Finance Guide International methodology for assessing andranking financial institutions’ policies. Through the collective expertise and experience of all
involved in the Fair Finance International network we trust this methodology is based on the mostcurrent insights and international standards when it comes to environmental, sustainability andhuman rights issues.
We are convinced this document will help the present and future CSO coalitions collaborating inFair Finance International as well as the financial institutions across the world, to embark upon thisroad towards a fair and sustainable financial sector.
We thank all the researchers and experts from the coalitions within the Fair Finance International
network as well as the staff from Profundo for their tireless work and contribution to developing
this methodology.

Jan Willem van Gelder

Ioan Nemes

director Profundo

coordinator Fair Finance international

Chapter 1
1.1

Objective and methodology

Overview

This methodology is meant to verify which sustainability issues play a role in the policy that
financial institutions apply when assessing credit requests and selecting investments. It sets out theelements against which the CSOs collaborating in Fair Finance International will measure financial
institutions’ environmental, social and governance criteria in its finance and investment policies.
These elements are grouped under three headings:•••

cross-cutting themes (see Chapter 2);
sector themes (see Chapter 3); andoperational themes (see Chapter 4).

Chapter 1 gives an overview of the Fair Finance Guide International methodology. The objective ofFair Finance International is to encourage corporate social responsibility (CSR) at financial
institutions. Section 1.2 describes the principles of CSR and explains the role financial institutions
have in promoting CSR amongst companies they invest in or finance. Furthermore, in this section it
is explained how the Fair Finance Guide International methodology hopes to stimulate a race tothe top by enabling consumers to compare financial institutions’ level of social and environmental
responsibility.
In section 1.3 five types of financial institutions are listed. The role of commercial banks,
investments banks, insurance companies, pension funds and asset managers in the financial sector
is explained.
The assessment of investment and finance policies is explained in section 1.4. It describes whatissues and sectors are taken into account and how certain principles should be applied by afinancial institution to be granted a score. The section elaborates on the scope of investment
policies, the sectors that are relevant to particular financial institutions, the documents that should
be assessed and the collective policies that could be taken into account.
The chapter is concluded by section 1.5 on the use of case studies to supplement the policy
assessments based on the Fair Finance Guide International methodology.

1.2

Objective and principles

This methodology has been developed for the Fair Finance International network, which is acollaborative effort of CSO coalitions in Belgium, Brazil, France, Germany, India, Indonesia, Japan,
the Netherlands, Norway, Sweden and Thailand.
The objective of Fair Finance International is to encourage corporate social responsibility (CSR) by
financial institutions. According to ISO 26000:2010 Guidance on social responsibility, CSR can be
defined as the “responsibility of an organization for the impacts of its decisions and activities onsociety and the environment, through transparent and ethical behaviour that contributes tosustainable development, including health and the welfare of society; takes into account the
expectations of stakeholders; is in compliance with applicable law and consistent with international
norms of behaviour; and is integrated throughout the organization and practised in its
relationships.”1 The OECD Guidelines for Multinational Enterprises argue that corporations should“contribute to economic, environmental and social progress with a view to achieving sustainable
development.”2

Page | 1

This means companies (including financial institutions) should not only adhere to legislation andregulations in the countries where they operate, but also are expected to comply with widely
supported international conventions, standards, and initiatives that recognise sustainability
problems and offer solutions for them - even where these standards are not included in local
legislation. Companies should comply with these standards in the business operations of their own
enterprise and its subsidiaries, but they should also expect their suppliers to comply. (See the EU
2014 Compendium of Corporate Social Responsibility National Public Policies for a comprehensive
overview of CSR standards.)3
According to Fair Finance International, financial institutions’ CSR efforts should primarily concern
their core activity: providing capital. Financial institutions offer their clients a wide range of financial
services with which they enable companies, governments, and private clients to acquire capital for
all kinds of activities. This can encompass activities that lead to human rights violations orenvironmental pollution, as well as activities that contribute to ending malnutrition or improving
biodiversity.
The question Fair Finance International raises is, therefore, to what extent financial institutions
support, through their financial services, activities that contribute to a socially just and sustainable
world. According to Fair Finance International, financial institutions should expect companies towhom they provide capital, as well as their suppliers, to comply with widely supported international
standards and initiatives.
Financial institutions should record these expectations and make them publicly known in theirpolicies for specific issues and sectors. When assessing these policies, in most cases, legislation andregulations are not explicitly considered, because the Fair Finance Guide assumes that financial
institutions expect the companies to whom they provide capital to comply with the law. Due to thisfocus on financial services, issues related to financial institutions’ own business operations, such as
their human resources policies and paper, water and energy use, are largely left out of theequation.
In the framework of Fair Finance International, websites are being set up in a number of countries at present Belgium, Brazil, France, Germany, Indonesia, Japan, the Netherlands, Norway andSweden - which customers and other interested parties can use to compare the policies andpractices of the main banking groups in their country. The Fair Finance International network
primarily focuses - through these websites, publications and the media - on consumers who are
customers of one of the financial institutions (by means of a current account or checking accounti,
savings account, credit card, mortgage loan, insurance, or an investment account).
The Fair Finance International network enables consumers, the media and other interested parties
to compare financial institutions and to encourage them (and their subsidiaries in asset
management and insurance) to grant financial services in a responsible way.
By comparing financial institutions both on the contents of their policy as well as on the choices
they make in practice when supplying financial services, the CSOs collaborating in Fair FinanceInternational stimulate competition between financial institutions with regard to Corporate Social
Responsibility. The Fair Finance International network hopes to stimulate a process that leads toincreasing tightening of social, environmental and economic policies (race to the top) and toenhance the constructive role financial institutions can play in creating a just and sustainable world.

i

Current Accounts in British English, Checking Accounts in US English.

Page | 2

1.3

Financial sector

1.3.1 Commercial banks
Banks are intermediaries in the money and capital markets: they ensure that the capital of, interalia, private clients and institutions such as pension funds with money to invest, is allocated to(other) private clients and institutions who need money to finance their activities. The banks
broadly fulfil this role in two ways:••

Commercial banking: commercial banks use the savings of individuals, organisations,institutions and companies to provide loans and other financial products to other individuals,organisations, institutions and companies. We discuss this role in this section;
Investment banking: Investment banks do not lend money directly: they are intermediaries
between different groups of clients, including companies, governments, wealthy individuals andinstitutional investors. These clients pay a fee to investment banks for financial services, such as
issuing shares or bonds and selling these to investors. We discuss this role in section 1.3.2.

Traditional commercial banks, which usually operate retail banking (for the public) and corporatebanking (for businesses and other larger institutions), attract monies from individuals,organisations, institutions and companies in the form of savings or deposits, and invest thesemonies by providing loans and other financial products to other individuals, organisations,institutions and companies. Banks set out these amounts in their balance sheets in two columns: on
the right, how the bank has obtained the monies (the liabilities), and on the left, how the bank has
spent the monies (the assets). Below we describe both categories:•

Liabilities
The liabilities of the bank – all its incoming capital - can be divided into debts and own capital.
The own capital represents the monies of the owners of the bank. These can be its
shareholders, other financial institutions or - in case of a cooperative bank, its members, who
may be its customers, employees or other local banks. Their capital consists of:••monies raised by selling shares in the bank; andthe net profit the bank has made in past years.

The debts of the bank include all other monies it attracts, including:••••monies that private clients, institutions and companies have deposited in current (checking)and savings accounts;
loans from other banks;
bonds that the bank has sold to investors; andfinancial derivatives: debts due to swapsi, futuresii, or options.

iA swap is a derived financial product where two parties swap money flows. For example, at an interest swap twobanks may swap the interest payments of two loans with one another. The objective of this can be to mitigate the riskof, for example, an interest increase or even to speculate on an interest decrease. So in case of a swap, banks haveboth a debt as well as an asset.

ii

A future is a financial contract between two parties who commit themselves to trade a certain amount of a product orfinancial instrument for a predetermined price at a given point in time.

Page | 3

•AssetsAll incoming monies at a bank are invested in various types of assets. In other words: the sumof the liabilities is always exactly equal to the sum of the assets. Banks may have invested in thefollowing types of assets:
•
•
•
•
•
•
•

the offices and furnishings of the bank itself;other real estate, such as offices, parking lots and shopping centres;
mortgage loans and credit to private clients;
loans and other types of credit to companies, governments and investors such as hedge
funds;
loans to other banks;
investments in shares and bonds of companies and in bonds of governments, but also in
private equity (see section 1.3.3); andinvestments in financial derivatives: swaps, futures and options.

Not all banks invest in all these types of assets. Savings banks mainly invest in investments inshares and bonds, mortgage banks mainly in mortgage loans and commercial banks mainly inloans to companies and governments. Over the last decades, some commercial banks have started
to invest more in financial derivatives.
All monies that have been placed with a bank in current (checking) and savings accounts by privateclients, institutions and companies, may in principal be used by the bank for all possible bankinvestments: from mortgage loans to private clients to investments in international companies andfinancial derivatives. This means that someone who has placed money in a current or savings
account at a bank will not necessarily know what his or her money is used for. Banks are free toinvest the monies of savers at their own discretion. Therefore, it is of great importance that banks
provide insight into what policy is maintained for its investments.
1.3.2 Investment banks
As well as acting as intermediaries on the money and capital markets in the traditional way
discussed in section 1.3.1, some banks are active in investment bankingi: this means that rather
than lending money directly, they act as intermediaries between different groups of clients,
including companies, governments, wealthy individuals and institutional investors. These clients
pay a fee to investment banks for their financial services.
Broadly, two main activities can be distinguished:•

Underwriting: Investment banks are mainly involved in assisting companies or governments toraise finance by issuing and selling securities such as shares and bonds to investors. For
companies and governments, selling securities to pension funds, insurance companies, asset
management companies and private investors is an important way to attract new capital. The
investment bank will value the company, write a prospectus, promote the securities and“underwrite” the securities.

i

The term investment bank may be confusing, as investment banks themselves typically invest less than traditional(commercial) banks. Investment banks mainly help other financial institutions to invest.

Page | 4

Underwriting means that the investment bank buys the securities from the company for a fixedprice and in the days after that, tries to sell the securities to institutional investors for a slightly
higher price. In this way, the revenue for the company is guaranteed. The investment banks
aims to ensure that there are sufficient buyers for the securities and that their clients, thecompanies and governments raising the finance, receive the best possible revenue. On apredetermined date the investment bank purchases the shares and bonds of its client at a fixedprice, and sells them to the investors who can sign within a few days.
•

Brokerage (sometimes called corporate finance): in this case, the investment bank doesn’tpurchase anything itself, but only acts as a broker who mediates between the buyer and theseller.

Investment banking services are mostly provided to listed companies and governments, but they
can also be granted to non-listed companies. For most banks that are involved in investmentbanking, it is a matter of course that they apply the policy for bank investments for these financial
services (see section 1.3.1). In the case of underwriting this is also very logical, because the banks
themselves invest in the respective shares and bonds - although usually only for a few days. The
risks the banks take are therefore comparable to those of other bank investments.
In case of banks that are only involved in brokerage, the bank does not make an investment, and itis therefore not always the case that the policy for bank investments also applies to brokerage
accounts. However, the Fair Finance International network believes that for these types of financial
services, the same sustainability criteria should apply as for commercial banking, because in thisrole banks also provide capital to companies and governments.
1.3.3 Insurance companies
An insurance company hedges risks. An insurance is a contract which ensures that the insurancecompany pays damages to the insurant in certain situations (such as damages caused by fire or byan accident, in the event of death, or for medical costs due to disease) in exchange for a certain
premium the insurant pays.
When the parties conclude the contract they don’ t know whether damages will ever have to be
paid or, if so, how much damages will be paid. The insurance companies invest the premiums thatpeople pay for their insurance. This is why insurers are key players on the capital market: theycreate a flow of society’s capital from private people and institutions such as pension funds,
towards (other) private people, companies and governments who need money in order to financetheir activities.
Insurance companies receive money from several sources and they invest this money in several
ways in private people’s, companies’ and governments’ activities. On the insurers’ balance sheetthese flows are put next to each other: on the right you see how the insurer obtained his money(the liabilities), on the left you see how the insurer spent the money (the assets). An explanation ofthese two categories follows:

Page | 5•Liabilities
An insurer’s liabilities – i.e. all the money the insurer has received – may be divided into
obligations and equity. The equity is the money of the insurer’s owners. They may be private
people, other financial institutions or – in the case of a cooperative insurance company – theinsurants themselves. The equities consist of:••money that has been obtained by selling the insurance company’s shares to the owners;
the net profit made by the insurer over the years.

All other money obtained by the insurer falls within the insurer’s obligations. Especially:
•
•
•
•
•

premiums paid by private people, institutions and companies;
loans of other financial institutions;bonds sold by the insurer to investors;
financial derivatives: debts due to swapsi, futuresii or options.

AssetsAll the money received by an insurer is invested in several kinds of assets (properties andclaims). In other words: the liabilities always are always equal to the assets. An insurer may
invest in the following types of assets:
•
•
•
•
•
•

the offices, including furniture, where the insurance company staff works;
other real estate like office buildings, multi-story car parks and shopping malls;
mortgage loans and consumer credits to private people;
loans to other financial institutions;investments in i.a. assets and bonds of companies and government bonds, as well as inprivate equity (see 1.3.3);
investments in financial derivatives: swaps, futures or options.

Not every single insurance company invests in all these kinds of assets. Moreover, insurers deal
with investments on their own account and risks and investments on the policyholder’s account.
With regard to the latter kinds of insurances, the insurant bears the risk more or less. Insurants may
decide for some part how their money is invested, usually according to a certain kind ofinvestments profile that brings along either more or less risks. However, in the end the insurer is
responsible for the choices made with regard to the investments.
Basically, the insurance company can freely use the premiums paid by private people, institutions
and companies, for all kinds of possible investments: varying from mortgage loans to private
people, to investments in international companies and financial derivatives. This means thatsomeone who pays insurance premiums, may not know what exactly his or her money is invested
in. The insurers are free to invest the insurants’ money on their own discretion - including thepremiums on their own account. For this reason it is very important that insurers are transparent
about their policy regarding investments.

i

A swap is a derivative in which two parties swap cash flows. E.g. in the case of an interest swap, two insurers swap theinterest payments of two loans. The aim may be a limitation of the risks of, say, an increase of the interest rate orperhaps to speculate upon a decrease of the interest rate. Thus when engaging in a swap transaction the insurer both
has a debt as well as property.

ii

A future is a financial contract between two parties to buy or sell at specified future date a certain quantity of a
product or a financial instrument for a price agreed upon today.

Page | 6

1.3.4 Pension funds
Pension funds are established by employers to provide pensions for their workers when they retire.
The fund, paid for by the employer and employees, is a common asset pool meant to generate astable income over the long term. Larger companies may run their own pension funds, but often afinancial intermediary runs the fund. In many countries, pension funds are the largest institutional
investors.4
Pension funds receive money from their clients, also called participants, and they invest this money
in diverse assets and investment strategies.
On the pension fund’s balance sheet these flows are put next to each other: on the right you see
how the fund obtained its money (the liabilities), on the left you see how the insurer spent themoney (the assets). An explanation of these two categories follows:•

Liabilities
A pension fund’s liabilities – i.e. all the money the pension fund has received – may be divided
into technical provisions, financial derivatives and loans. Together they amount to the pay-outs
that a pension is obligated to make.

•

AssetsThe money received by pension funds is invested in in different types of assets:
•
•
•
•

•
•

•

public listed equities, consisting of publicly traded stocks of large corporations;
corporate bonds that are issued by a corporation to raise money to expand its business;government bonds that are issued by a national government to fund public services, goods
or infrastructure;
private equity, consisting of investments in unlisted companies, ranging from venture
capital investments in start-ups, to mezzanine financing for established companies aiming
for a trade sale or public listing, to buy-outs of public companies;5
commodities, which are natural resources or derivatives of natural resources, like food,energy and metals;
hedge funds, which are aggressively managed portfolios of investments that use advanced
investment strategies such as leveraged, long, short and derivative positions in both
domestic and international markets with the goal of generating high returns;6
real estate, consisting of a wide range of products including home ownership for
individuals, direct investments in rental properties and office and commercial space for
institutional investors, publicly traded equities of real estate investment trusts, and fixedincome securities based on home-loans or other mortgages.

In 2014, the average asset allocation of the seven largest pension markets in the world (Australia,
Canada, Japan, Netherlands, Switzerland, United Kingdom, United States) was: 42.3% equities,
30.6% bonds, 2.3% cash and 24.8% other assets (including property and other alternative).7
There is a growing recognition among pension funds and an increasing demand from stakeholders
that Environmental, Social and Governance (ESG) issues are a fundamental part of assessing thevalue and performance of investments. Pension funds’ investor views and motivations to adopt
responsible investment strategies are embedded in five main interrelated categories: fiduciary duty,
risk management, financial performance, expectations from stakeholders and universal ownership.
The pension fund has a fiduciary duty that involves creating optimal value for the participant of thefund. Value in this case includes both financial return and ESG considerations.8

Page | 7

While in some countries the pension market is dominated by autonomous pension funds, in othercountries the assets of the pension schemes are managed by large independent asset managers or
asset management subsidiaries of banks and insurance companies. In order to cover a large part ofthe market, different types of pension providers may need to be selected. In such cases, it could
happen that an asset manager offering pension products that is of particular interest for a Fair
Pension Guide is also part of a banking or insurance group that has been selected for the Fair Bank
or Insurance Guide of that coalition.
To accommodate this situation and to make a meaningful assessment in both guides, FFGI has
decided to focus the assessment of pension providers on their so-called pension related activities.
This means that when a Fair Finance Guide coalition selects a banking or insurance group for its
Fair Pension Guide, the banking or insurance activities within the group will not be taken into
account. Consequently, the policies applied and dedicated exclusively to those activities will not be
used for scoring this financial institution’s pension related activities.
ESG factors are an important dimension of investment expectations and ESG factors should be partof a pension funds’ overall expectations for their fund’s performance. Furthermore, pension funds
should make sure that the asset managers they hire act in line with the pension funds’ risk
management procedures as well as with participants expectations. As a vast majority of pension
funds have outsourced management tasks to external providers and to create a shared vision of
ESG risks and possibilities, the pension fund should communicate a coherent set of ESG
expectations to agents acting on their behalf.9 Pension funds as ‘universal owners’ are investors in a
broad cross-section of the economy and they should use their position as capital providers to denynotorious polluters and human rights offenders access to capital, stimulate the large majority ofcompanies to invest in sustainable development and production methods and grant smaller, truly
innovative companies easier access to capital.10
Many investors refer to the Principles for Responsible Investment (PRI) or the UN Global Compact.
Financial institutions that adhere to the PRI or the UN Global Compact inherently already make an
intentional statement on ESG issues. This shows their awareness on the subject and intention to
apply responsible (financing) policies to their investment decisions. Being a member of the PRI or
adhering to the Global Compact, however, is not a guarantee for sustainable practices.
1.3.5 Asset managers
Often, large financial institutions do not only provide capital to companies and governments bymeans of corporate loans or investments and investment banking. They may also have one or more
subsidiaries which are involved in asset management. These asset management subsidiaries invest
in shares, companies and government bonds along with other types of investments. They do sowith monies from private investors, pension funds, policy holders and other clients. For these asset
management activities, financial institutions don’t always apply the same policy that they apply for
their lending and investment banking.
This is to some extent due to the differences between saving and investing. Savers cannot choose
where their money is invested, but on the other hand they enjoy the security of a relatively fixedsavings interest rate and, in many countries, a government guarantee on savings deposits.

Page | 8

However, investors are generally more at risk, although their returns may be higher. Moreover,investors are free to make choices as to how their money is invested. For example, they can choose
from the range of investment funds the financial institution offers them (often including funds
marketed as ‘sustainable’). Therefore, some financial institutions do not see the need to apply a‘responsible investment policy’ to all asset management activities: it is reasoned that the investingclients who consider this important will opt for the sustainable funds the financial institution offers.
The Fair Finance International network primarily focuses on customers with a current or savings
account at a bank. For them, the main concern is which policy the bank applies for its lending andother financial services. The policy that the subsidiaries of the bank apply for asset management is
not directly relevant for these savers, because the money of savers is not managed by these asset
management subsidiaries. Yet, many savers do consider the policy of the financial institution for
asset management to be important. As clients, they expect that their bank operates responsibly inall these aspects, including in its asset management, regardless of whether this concerns
investments with their own savings.
For customers of a financial institution’s asset management division (i.e. investors), insurance
customers or customers who commission the financial institution to invest for them (i.e. privatebanking customers), an assessment of the policy for asset management is also important.
The Fair Finance International network believes that financial institutions may also be expected toact in a responsible way regarding their activities in the field of asset management, and therefore,
the policy of the financial institutions towards asset management is also assessed. In making thedecision to include an assessment of the policy for asset management, it was of great importancefor the Fair Finance International network that most financial institutions can play a role in creatinga just and sustainable world through their asset management activities. As asset managers, they
can choose which investments to offer to their clients. Such choices may have consequences forthe availability of capital for companies and governments.

1.4

Assessment of policies

1.4.1 Themes
The Fair Finance International network has chosen to assess the policies that the investigatedfinancial institutions apply to the investment categories corporate credits, project finance, asset
management for own account and asset management for the account of clients, with regard to
cross-cutting themes and sector themes. The cross-cutting themes entail the main internationalsustainability issues that are paramount to the work of the organisations collaborating in the Fair
Finance International network and are relevant to all or most of the industrial sectors a financial
institution may finance or invest in:
•
•
•
•
•
•
•
•
•

Animal welfare
Climate change
Corruption
Gender equality
HealthHuman rights
Labour rights
NatureTaxPage | 9

The Fair Finance International network believes that all financial institutions should have a clear
policy on all these cross-cutting themes.
When a financial institution invests in, or grants financial services to, companies in certain sensitive
industrial sectors (i.e. those where sustainability problems are particularly likely), then the financial
institution should also have specific policies for these sectors. Presently, the Fair Finance Guide
International methodology includes the following sector themes:
•
•
•
•
•
•
•
•
•
•

Arms
Financial sector
Fisheries
Food
Forestry
Housing and real estate
Manufacturing industry
MiningOil and gas
Power generation

Besides the themes that merely assess a financial institution’s investment and finance policy andthe expectations therein regarding the investee companies’ and/or clients’ behaviour, the Fair
Finance Guide International methodology also include themes that solely assess the internal
operations of a financial institution. These themes are indirectly related to the investment decisions
made by the financial institutions and consist of:••••Consumer protection
Financial inclusion
Remuneration
Transparency and accountability

The operational themes Consumer protection and Financial inclusion have been developed
primarily for assessing policies regarding personal banking and insurance products and will be left
out the assessment of pension providers. Furthermore, the theme Remuneration is expected to be
not or hardly relevant for pension providers, especially not for pension funds. As the theme is notmandatory, coalitions may decide to leave it out of the assessment.
The coalitions that are collaborating in the Fair Finance International network have agreed that a
number of themes will be used by all coalitions to assess the selected financial institutions’ policies.i
The other themes can be added by coalitions depending on the public debate, the priorities andobjectives of the organizations within the coalition.
In the future, new themes may be included in this methodology. For all these themes, the policiesof the financial institutions are compared to national and international norms, standards andinitiatives for sustainable development and Corporate Social Responsibility, and to other criteriathat are considered important in the opinion of the organisations that make up the Fair FinanceInternational network.

i

These are: Climate change, Corruption, Gender equality, Human rights, Labour rights, Nature, Tax, Transparency andAccountability, and Arms.

Page | 10

1.4.2 Contents of policy
To underpin and structure the comparison of financial institutions’ policies, this methodology
describes the selected cross-cutting themes (in Chapter 2), sector themes (in Chapter 3) andoperational themes (Chapter 4). Each selected theme is dealt with in a separate section, beginningwith “What is at stake?”, a description of the sustainability issues involved. This is followed by anoverview of applicable and widely supported international standards, such as declarations,conventions, guidelines, certification schemes, and codes of conduct (“International standards andinitiatives”). Next, the elements a financial institution should include in its policy for investments
and financial services are described (“Assessment elements”).
These elements lists the expectations from FFGI network towards financial institutions in thecontext of their corporate social responsibility. The methodology references a wide range ofinternational standards and initiatives. In many cases, they contain specific requirements offinancial institutions or business in general, in which financial institutions invests or finance, which
are then listed as assessment element in this document. Other international standards have clear
implications for the financial sector or for businesses they invest in or finance, but the standard
itself does not specify these at the level needed for the aim of this research. In these cases, the FFGI
network has analysed the logical implications of the standard and converted these implications
into assessment elements. In defining the assessment elements the following considerations arefollowed:•

Assessment elements formulated as principles
The assessment elements are formulated as principles. Principles can be applied by the financial
institutions in various ways, for new and existing investments and financial services. For
example, the principles can be included by the financial institutions in the conditions for newloans and be applied as selection criteria for new investments and financial services. For
existing loans and investments they can be applied as a guideline for engagement activities
and for agreements on improvements with the companies in which the financial institution has
existing investments. Based on these principles, financial institutions could ultimately decide toterminate an investment relation.
The Fair Finance Guide International methodology does not evaluate the processes which
financial institutions should follow to apply the principles to their investments and financial
services, but does expect that they explain their method of working in their policies. The
financial institution would inter alia have to indicate what the principles mean for various typesof investments and financial services. If the financial institution only establishes a certain
condition for a specific type of investment or for certain financial services, it is difficult to claimthat the financial institution applies a principle. The Fair Finance Guide International
methodology assumes that principles need to have a meaningful link to the activities or
products of a company for all types of investments in companies and all financial services tocompanies.

•

Definition of unacceptable activities
Multiple principles consider certain activities to be ‘unacceptable’ and are worded as: “Activity X
is unacceptable”. The Fair Finance International network strongly disapproves these activities.
However, because the Fair Finance Guide International methodology does not prescribe how
financial institutions should apply their investment principles, the word ‘unacceptable’ should
not be read as ‘excluded’.

Page | 11

In other words: the Fair Finance Guide international methodology does not expect thatcompanies involved in unacceptable activities should be excluded from all financing andinvestments immediately. The Fair Finance Guide International methodology is aware of thedifferent instruments and steps financial institutions could take for implementing suchprinciples. Financial institutions could for example start a clearly defined engagement process
to convince the company to stop the unacceptable activity within a clear timeframe.
The Fair Finance Guide International methodology does expect, however, that a policy thatclaims to consider certain activities as undesirable or unacceptable, describes which steps will
be taken and is convincingly implemented. A policy that mentions limitations or exceptions,such as a threshold on revenues companies earn with involvement in the undesired activity, canreceive a score for this element. On the other hand it could also lose scores if in the Fair
Finance Guide International methodology elements about these limitations are included, basedon the expectations of the companies it should apply to.
When the financial institution explains its method of working, its objectives are of importance,
because the financial institution can use them to indicate how and when it will ensure that theentire investing portfolio and all granted financial services comply with the principles
formulated in its policy. This is mainly important if the existing portfolio of the financial
institution does not yet entirely comply with the policy. The Fair Finance Guide International
methodology expects that such objectives have been included in the policy and investigatesthis inter alia by means of case studies.
•

Types of assessment elements
In its assessment of the policies of financial institutions, The Fair Finance Guide International
methodology does not principally address the way the financial institution takes decisions on
its investments and financial services. Rather, the focus is on the underlying principles or
expectations of the financial institution with regard to the companies it finances or invests in. In
the tables with assessment elements for each cross-cutting theme and each sector theme,
these principles or expectations are introduced as “the following elements are crucial for apolicy regarding the companies a financial institution invests in.”
The Fair Finance Guide International methodology does, however, include four operational
themes. The assessment elements included in these themes largely concern the business
operations of the financial institution, including the way decisions on investments and financial
services are taken.
A few elements that concern operational activities of the financial institution have been
included in the other cross-cutting and sector themes as well. These assessment elements are
introduced separately as “the following elements are crucial for a policy regarding the financial
institution's internal operations.”

1.4.3 Scope of policy
To assess the investment policies of financial institutions, the Fair Finance Guide has developed anumber of assessment elements which are deemed crucial for a good policy on the themes which
are evaluated by the Fair Finance Guide. These elements are described and explained in Chapter 2,
Chapter 3 and Chapter 4. The Fair Finance Guide policy assessment then verifies whether theseelements are included in the public policy documents of a financial institution.

Page | 12

However, not only the content, but also the scope of the financial institution’s policy document isof importance. Policy documents sometimes cover only a small share of all investments made by
the financial institution. This can especially be the case with large international banking groups,
which often have multiple subsidiaries in different countries which offer different products andservices to various client groups. As the Fair Finance Guide aims to assess the policies which areapplied across the entire banking group, including all subsidiaries, the scope of policy documents
is integrated in the assessment methodology.
Experience with the assessment of investment and credit policies learns that there are generally
four situations in which a financial institution’s policies might insufficiently cover the full scope of
all investments made, and financial services offered, by the financial institution:••••

The policy is not adopted by all subsidiaries within the financial institution;
The policy is not applied to all categories of investments and financial services;
The policy is not applied to all countries the financial institution invests in; andThe policy is not applied to all activities of a company (e.g. only if the investment is earmarked
for certain activities).

The last two situations are found less often and are not always mentioned in the policies
themselves. The third is also, if mentioned, often part of risk assessment procedures. As these are
difficult to trace back to policies and in order to simplify the scoring model, the Fair Finance Guide
does not take those situations into account further.
In order to take into account the first two situations in its scoring methodology, the Fair Finance
Guide has selected four categories of investments (or financial services) that are considered
relevant for most financial institutions the Fair Finance Guide investigates. This selection is basedon the description of the various types of financial institutions in section 1.3 and on research doneon the scope of the investment and credit policies of financial institutions. To assess the scope of
the policies of a financial institution, the Fair Finance Guide considers the following categories ofinvestments (or financial services):•

Corporate credits
Financial institutions provide loans and other forms of credits to (listed and unlisted)companies, which allow the companies to finance short-term expenses and/or long-term
investments. Corporate credits usually carry an interest rate and are secured by specific assets(as in the case of mortgage loans) or by the entire balance sheet of the company. Further,financial institutions also underwrite shares and bond issuances for companies. This service tocompanies is also included in corporate credits category for the Fair Finance Guide assessment.
Obviously, the scope of corporate credits does not include loans and credits to private
customers.

•

Project finance
Financial institutions also provide loans in the form of project finance. Project finance isconsidered a specific form of corporate credits to finance a specific infrastructure or industrial
project. Unlike corporate credits, the loan is secured by the projected cash flows of the projectrather than by the balance sheet(s) of its sponsor(s), i.e. the company/companies involved in
the project.

Page | 13

•Asset management for own accountFinancial institutions invest their money in shares and (sovereign and corporate) bonds andother types of securities. This investment can be done by purchasing individual stocks andbonds or through mutual funds. Since these investments require specialization, it is mostly
done through an asset manager. This can be the financial institution’s asset management
subsidiary or an external asset management company, and is often referred to as externallymanaged assets or assets managed by third party. Whether the assets are managed internallyor by a third party, these investments are listed on the financial institutions’ balance sheet andtherefore called asset management for own account.

•

Asset management for the account of clients
The financial institutions also offer investment solutions such as mutual funds or index trackers
to their clients. These clients could be institutional investors like pension funds, churches,insurance companies, but also private customers (in which case the asset managers offering thesolutions are often referred to as private banking, retail services or wealth management). The
management of a client's investments in all types of securities by a financial services company,
such as an investment bank, a private bank, an investment manager or an asset manager iscalled asset management for the account of clients.
Sometimes, clients may demand highly specialised investment products, deviating fromstandard investments by asset class, geographical coverage, sector coverage or financial vehicle
that a financial institution may not offer. In such a scenario, the financial institution outsources
the agreed amount of its client’s assets to an external asset manager and this is referred to asexternally managed assets. Third-party asset managers can provide asset class expertise that
may not otherwise be available with in-house investment managers or financial institutions.
Again, either managed externally or internally, this is still called asset management for theaccount of clients.
These investments are usually not listed on the balance sheet of the financial institution. This
category includes all funds and mandates which are managed actively or passively for clients, aswell as all forms of investment advice offered to clients. The definition of asset management
used here does not apply to trading platforms managed by financial institutions, where
financial institutions do not provide investment services.

The Fair Finance Guide International methodology integrates other investment categories into thescoring model of the sector theme Housing and Real estate and the operational themes Consumer
protection and Financial inclusion. These are explained in the themes separately. For each financial
institution, the Fair Finance Guide researcher determines which of the investment categories are
relevant, as (one or more subsidiaries of) the financial institution is actively making this type ofinvestments or is offering these financial services. How this assessment of relevant categories ismade, is explained further in section 1.4.5.
1.4.4 Scoring system
For every theme, the score of each financial institution is based on the proportion of elements
included in the policy, corrected for the relevant investment categories that the policy is applied to.
In its scoring system, the Fair Finance Guide therefore takes into account both the contents and thescope of the policies of the financial institution.

Page | 14

This is done in the following way. For each principle included in the policies of the financial
institution that corresponds with an element of the Fair Finance Guide methodology a contents
score of 1.0 is assigned.
This contents score is multiplied by the scope of the policy, expressed as a percentage. If thefinancial institution does not clarify the scope of this policy, it is assumed that 50% of the financial
institution’s activities are covered. For each investment category to which the financial institution
explicitly applies the policy, 12.5% is added. If the policy is applied to all investment categories, thescope is therefore 100% and the total score for each element can reach 1.0 as maximum.
The above is based on the assumption that the financial institution is active in all four investment
categories mentioned in section 1.4.3. If the financial institution is active in only three, two or oneof these investment categories, the basic scope percentage remains 50%. For each investment
category to which the policy is explicitly applied, then respectively 16.67%, 25% or 50% is added tothe scope. When a financial institution applies its policies to all investment categories it is active in,the scope will therefore always be 100%.
In some situations the content score will not be multiplied by the scope of the policy and thus will
be limited to 50%:•••

The researcher assessing the policy finds a clear commitment but the scope is unclear;
the text of the policy is vague, but still quite credible according to the researcher assessing thepolicy; andthe financial institution has taken an initiativei which supports the principle but which is notformally stated in the finance and investment policy and does not cover a whole investment
category.

Fair Finance Guide acknowledges that smaller and locally oriented banks could be less exposed tosustainability risks than financial institutions targeting midsize, large and multinational companies,
operating in countries all over the world and with long, complicated supply chains. Therefore it ispossible to handle situations differently when a financial institution, in a credible way, candemonstrate that an element is not really relevant. If, due to its business orientation or
geographical presence, the financial institution is not exposed to the risk of breaching the principle
specified in the assessment element, the element can be considered "not applicable”. Elements canalso be considered fulfilled if effective national legislation is in place in the countries where all thecompanies, that a bank lends to or invests in, are active.
The scores for all elements included in a theme are added together and then divided by the total
number of elements. This results in the final score for a theme. Fair Finance International coalitions
are free to present the outcome as a single number between 0 and 10 or as a percentage. Eachcoalition can also attach qualifications of their choice, such as sufficient, good or excellent, to thisscore.
1.4.5 Determining relevancy
The Fair Finance Guide International methodology determines relevancy and materiality of theinvestment categories and industrial sectors according to the following considerations:iSuch initiatives could be, among others: setting up or participating in meetings with business clients or othercompanies and stakeholders; participating in a round table or something similar; signing an investor statement;
engaging in collective dialogue; and publishing brochures describing the issues and suggesting solutions or steps.

Page | 15

•Corporate credits
The Fair Finance Guide International methodology expects that a financial institution has apolicy for corporate credits if the corporate credits portfolio makes up:••

more than 0.5% of the total balance sheet; ora minimum of EUR 50 million of total corporate credits.

The number of corporate loans, the size of the companies receiving the corporate loans andthe amount loaned per company are not of importance in assessing the relevancy of thisinvestment category.
Corporate credits are considered to be outside the scope of the assessment of pension
providers, including when the pension provider is part of a banking group.
•

Project finance
The Fair Finance Guide International methodology expects that a financial institution has apolicy for project finance if the project finance portfolio makes up:••

more than 0.5% of the total balance sheet; ora minimum of EUR 50 million of total corporate credits.

The number of project finance loans, the size of the companies or projects receiving the project
finance loans and the amount loaned per project are not of importance in assessing therelevancy of this investment category.
Project finance is considered outside to be the scope of the assessment of pension providers,
including when the pension provider is part of a banking group.
•

Private mortgages
The Fair Finance Guide International methodology focuses on the financial relationships
between companies and financial institutions. A category like private mortgages therefore
initially falls outside the scope of the Fair Finance Guide International methodology, but forsome banks it is an important asset. However, the sustainability challenges within many of theselected themes are not directly relevant for this type of investment. The Fair Finance Guide
International methodology only integrates this type of investment into the scoring model ofthe sector theme Housing and Real estate and the operational themes Consumer protection
and Financial inclusion.
Private mortgages are considered to be outside the scope of the assessment of pension
providers, including when the pension provider is part of a banking group.

•

Asset management for own accountTo determine the relevancy of the investment category ‘asset management (or ‘investments’)for own account’, The Fair Finance Guide International methodology analyses the following
asset classes in the financial institution’s financial reporting:
•
•
•
•
•

Government bonds;
Shares and corporate bonds;
Derivatives;
Real estate and securities; andOther/undefined.

Page | 16

The Fair Finance Guide International methodology does not assess investment policies
regarding government bonds. If a financial institution only invests in government bonds, thecategory ‘asset management for own account’ is considered as not relevant for this financial
institution.
•

Asset management for the account of clients
Financial institutions involved in asset management for the account of clients hardly everdevelop a common policy for all their asset management activities. This is due to theorganisation's structure. Financial institutions often have several subsidiaries in the field of asset
management, and these could all have their own policies. Often they even use specific policies
for each specific product, such as individual investment funds and mandates. As a result, there
might be hundreds of different investment products that all may have their own specific policy.
This makes the policy assessment for this investment category difficult.
Furthermore, The Fair Finance Guide International methodology does not assess all types ofasset management for clients, because they are not all relevant. The asset management
subsidiaries of financial institutions are not always free to choose whether to provide capital tocertain companies or governments. And sometimes it is not possible for these asset
management companies to deploy instruments on ‘responsible investment’. Based on thefollowing criteria it has been determined whether the various asset management activities areincluded in the assessment by the Fair Finance Guide International methodology:•••

Will capital be at the disposal of companies as a result of this kind of asset management?
Will the financial institution have freedom of choice and/or responsibility when providing
this kind of asset management (possibly under certain conditions)?
Is the financial institution able to use sustainable investment instruments when providing
this financial service?

Based on these criteria, the Fair Finance Guide International methodology includes thefollowing types of asset management in the scope of the assessment of the policies of eachfinancial institution:
•
•

•
•
•

The financial institution’s own investment funds: investment funds that have beenassembled and offered by the financial institution itself to private and institutional investors;
Private banking: all forms of discretionary management of private investors’ money,
meaning both direct investments in shares and bonds regarding other parties' investment
funds;
External Mandates: investments in shares and bonds or in investment funds, using
institutional investors’ money (i.e. pension funds, insurance companies);
Internal client relations: investments in shares and bonds or in investment funds, using
internal clients' money (including insurance premiums paid by external clients).i
Trading platforms where clients may invest by themselves in shares, bonds and investment
funds of other parties (execution only services);

Types of asset management not included in the assessment of the scope of the policy are:•i

Advice regarding private banking;Investments using insurance premiums are on the parent company’s balance sheet and they therefore fall within thescope of investments using the bank’s own resources and are not part of asset management for the account ofclients. Since these investments are not part of the banking branch of the financial institution and therefore may not
be financed with saver’s money, they are categorized as asset management.

Page | 17

•Taking charge of shares for private or institutional investors (custodian services).

Under certain circumstances, the category asset management for clients may not be part of thepolicy assessment of pension providers. This is specifically when autonomous pension funds
have an in-house asset manager that also manages the assets of other pension funds, who arethen considered the clients of the asset manager. Previous research by FFGI shows that thelatter pension funds have their own responsible investment policies. Because the coalition thenassumes that all these pension funds have their own responsible investment policies, it is lessrelevant to consider the client asset management activities of these asset managers in the
research. That becomes even more apparent when only part of the selected pension providers
has asset manager subsidiaries working for other clients and most of these clients are subjectof FFGI research themselves.
Depending on the situation in the country, the selection of financial institutions for the guide,
the relevant activities of the selected entities and the priorities and strategies of the coalition
setting up the guide, coalitions may decide not to assess the policies of these asset managers.
The research then only includes the FFGI scope category asset management for own account.
Finally, in order to be able to take into account the scope of responsible investment policies for
asset management, The Fair Finance Guide International methodology looks at the total
volume of assets that are managed and to which a responsible investment policy is applied. If afinancial institution has different responsible investment policies for their different products,
the policy that applies to the highest part of assets under management will be assessed.
If this is the case for other investment categories, the same rule applies.
•

Sectors
General policies often apply to all investments and financial services, while sector policies
merely concern a limited part of the investments of a financial institution. Therefore, principles
that have been included in the financial institution’s sector policy and only apply to companies
active in a specific sector do not count for the assessment of the cross-cutting themes.
If the financial institution can prove or explicitly and publicly states that it is not involved withcompanies operating in a certain sector, the financial institution is not expected to have apolicy for this sector. In that case the contents score is not multiplied with scores for the type ofinvestment this applies to, but given the notification “not applicable” (n.a.). If it is the case for all
types of investments researched, the sector as a whole can receive this qualification.
If a financial institution does not make an explicit statement that it is not active in a particularsector, the decision for applying n.a. can be made based on information about the portfolio in
the annual report(s) of the financial institution and its subsidiaries. For defining the maximum
level of investments in one of the investment categories (threshold), the Fair Finance Guide
International methodology uses the breakdown of the portfolio:••

If the sector is explicitly mentioned in the breakdown of its, for example, corporate credit
portfolio, apply n.a. when less than 0.2% and a maximum of EUR 1 million of total corporate
credits is lend to that specific sector.
If the sector is mentioned together with other sectors (e.g. public administration, defence
and social security), then apply n.a. when this is together less than 1.0% and a maximum of
EUR 5 million of total corporate credits.

Page | 18

•••If the sector is not mentioned explicitly, but only overarching and overlapping sectors anddefinitions such as manufacturing, other, or ‘building materials and construction’, do not
apply n.a.
The same applies to the other types of investment (project finance, asset management for
own account and asset management for the account of clients).
If there is not enough information available regarding the portfolio, the qualification n.a.
cannot be given.

Note that the companies operating in a certain sector do not only include primary producers. Also
trade, transport, warehousing, processing, and finally, retail companies are part of the supply chain
and therefore belong to this sector.
1.4.6 Documents assessed
The Fair Finance Guide International methodology expects that the policy of the financial
institution, or at least a summary of it, is made public, for example through its website or in theannual report. The name or the topic of the policy document is not relevant, for example elementson labour rights can be included in a human rights policy.
Sometimes a financial institution makes a statement about a decision considering a certain issue ina newsletter or press release. In the first year after publication, the Fair Finance Guide International
methodology considers these as valid sources of information, but it also expects the financial
institution to integrate the decisions in its investments policy – as the employees who will make thedecisions about investments will not take all these newsletters, brochures etc. into account. When
updating the policy review, the Fair Finance Guide International methodology requires to check
whether the principle is part of the general policy documents. If a financial institution published aprinciple in newsletters or documents in the period before the previous update was published, andhas not integrated this principle into policy documents, it will not be considered as a principle forthis year’s policy update.
The policy assessment is based on the public documents of the assessed financial institution.
Information provided by third parties, such as the external asset managers hired by pension
providers, is not taken into account.
Previous research showed that pension providers, especially the smaller pension funds, tend to relyon the external asset managers and their detailed policies. As per exception, the documents ofexternal managers may be used for the assessment in case the pension provider has published acommitment declaring that it aims to invest responsible, outsources the asset management to one
or more external parties and refers to their policies as being applicable to the assets of the pension
provider. Moreover, the documents of the external parties mentioned in the commitment must be
available on the website of the pension provider. In case a pension provider refers to policies ofvarious asset managers, the policy that covers most assets will be taken into consideration.
The policy assessment for the theme Consumer Protection (see section 4.1) uses as reference more
specific documents in addition to the documents and information sources commonly used in the
FFGI methodology. Preference is given to official sources and sources recognized by the financial
institutions themselves, to minimize disputes and to maximize the objectivity of the analysis.
Documents may include:••

Ombudsman reports of an ombudsman for the banking sector; andReports on consumer complaints of public consumer protection institutions.

Page | 19

1.4.7 Scoring standards and initiatives
Ideally, financial institutions write a policy presenting the principles that are used in the process for
decision making regarding finance and investments. Alternatively, they can state whichinternational standards and initiatives they expect companies to comply with. Some of thestandards and initiatives the FFGI Methodology references, are considered sufficient for scoring
when used in the process for decision making regarding finance and investments.
When assessing the policies of financial institutions, not only the policies that the financial
institution has developed itself but also the broader standards and initiatives adopted or endorsedby the financial institution are taken into consideration. These include sustainability initiatives
which can be undersigned by financial institutions, such as the Equator Principles, and thePrinciples for Responsible Investment. Undersigning these initiatives represents an obligation to
apply certain sustainability criteria on the investments and financial services of a financial
institution.
Other initiatives and standards, such as the IFC Performance Standards and the accompanying
Environmental, Health and Safety Guidelines, UN Global Compact, the UN Guiding Principles for
Business and Human Rights, the OECD Guidelines for Multinational Enterprises and others, cannot
be undersigned by financial institutions or its does not include the obligation to apply the criteria
to its investments and financial services. But financial institutions can adopt these initiatives, bystating explicitly that they apply in full the procedures and criteria described in these documents
when taking financing and investment decisions.
Such an explicit statement of the above mentioned sustainability initiatives and standards, thusmeans that a financial institution could adhere to one or more of the principles (elements) definedin the assessment methodology, although the element as such is not mentioned in the policy
documents of the financial institution itself. Financial institutions that have signed a standard or
initiative, or mention a standard or initiative in their policies, and make clear that it is applied to thefinancing of and investment in companies, therefore receive a content score for each element thatis clearly included in that particular standard. This score will be multiplied with the scope score foreach investment category to which the policy is explicitly applied as well.

1.5

Case studies

The Fair Finance International network hopes to stimulate a process that leads to ever increasingtightening of the norms used by financial institutions (race to the top) in social, environmental andeconomic fields and to enhance the constructive role these financial institutions can play increating a just and sustainable world. Naturally, the policy the financial institution has formulated isonly one of the necessary steps.
Equally important is the issue whether the financial institutions themselves, when making decisions
on their investments, in practice comply with the norms recorded in widely supported international
standards, such as conventions, guidelines, certifications and codes of conduct. Therefore, in casestudies the CSOs collaborating in the Fair Finance International network investigate the operational
practices, strategies and instruments and evaluates the investments and financial services of theresearched financial institutions. The outcomes of these studies are reported on the websites aswell and linked to the themes involved, but do not lead to a downgrade or upgrade of the policy
assessment score.

Page | 20

Chapter 2
2.1

Cross-cutting themes

Animal welfare

2.1.1 What is at stake?
Animals are – similar to people – sentient beings that deserve respect and protection. Based on thisfundamental principle, animal protection organisations advocate measures to protect the welfareof animals. These efforts are met with growing interest from governments and the corporate world.
In a protocol of the Amsterdam Treaty (1997), and its successor the Lisbon Treaty (2007), theEuropean Union officially recognizes animals as sentient beings. The plea of animal protection
organisations also resonates increasingly among European civilians, as indicated by the
Eurobarometer.11 In countries outside Europe, animal welfare is also increasingly becoming an issueof concern for the general public. The World Animal Protection’s plea for a Universal Declaration
on Animal Welfare (UDAW), drafted in 2011, has since been signed by over 2 million people allover the world.12
It is also increasingly understood that the welfare of animals is important for the wellbeing and thehealth of large groups of people. About one billion people depend on the health and productivityof the animals they work with for their income, food and clothing.13 To this effect, the UN Food andAgriculture Organisation (FAO) has decided to pay more explicit attention to animal welfare.
According to the FAO, animal welfare is related to food security, food safety, health, sustainability,
working conditions, rural developments, gender equality and social justice.14
For these reasons, the corporate world is also waking up to the importance of animal welfare. In
terms of economic sectors, animal welfare issues affect the largest numbers of animals in theintensive livestock sector. Intensive livestock farming is a farming system that is landless: animal
feed is delivered to the farm and manure has to be removed from the farm. The system ischaracterised by the absence of a natural cycle and shifting the consequences of environmental
pollution (eutrophication and acidification) towards society.15 In 2016, over 70% of the world’s farmanimals were raised in intensive livestock farming systems.16 The welfare of animals in thesefarming systems is under pressure because the animals are kept in circumstances that are notsuitable for the species and are not worthy of the animal's dignity. Intensively farmed animals,
including pigs, poultry, beef and dairy cattle, rabbits, goats and fish farmed in intensive
aquaculture, are kept in high concentrations, often undergo un-anaesthetised surgery (cutting tails,clipping beaks, teeth filing, dehorning) and tend to lack the opportunity to behave naturally(grazing, free ranging, grubbing).
Due to population growth and changing consumption patterns in emerging markets the worldwide
demand for livestock products - meat, dairy products, eggs - is increasing rapidly. To meet thisdemand in a way that pays attention to animal welfare standards is a major challenge.17
Intensification of livestock production under current circumstances will almost certainly result inthe suffering of even more animals.18
Ignoring animal welfare and animal health in the livestock industry also leads to increasing healthrisks for humans. Bacteria in humans, food and animals continue to show resistance to the mostwidely used antibiotics. A 2017 report from three EU agencies – European Food Safety Authority,
the European Medicines Agency and the European Centre for Disease Prevention – confirms thelink between antibiotic consumption and antibiotic resistance in both humans and food-producing
animals. Reducing the unnecessary use of antibiotics will have an impact on the occurrence ofresistance.19 The routine use of antibiotics is instrumental to livestock rearing in densely packed,

Page | 21

unhygienic conditions and is often practiced as a way of hiding bad living conditions. Therefore, achange in animal housing and husbandry practices is necessary to effectively eliminate or reduce
the use of antibiotics.20
Other animal welfare aspects in the livestock sector deserving urgent attention are the conditions
during the transport of animals over long distances and the conditions prior to, and during, theslaughter of animals. During transportation animals may have to deal with bad ventilation, too little
space, shortage of food and water, bad treatment during the loading and unloading procedures,
bad health conditions of the animals prior to the transport and exposure to germs. Animaltransport may therefore result in exhaustion, dehydration, anxiety, injury, diseases and may evenlead to the death of the animals involved.21 Slaughter methods in many countries pose severe
concerns. Problematic slaughter methods include CO2 stunning for pigs, electrical stunning forpoultry via the water bath method and unstunned slaughter.22
Animal welfare is also of importance in economic sectors outside the livestock industry:
•

•

•

•

•

The pharmaceutical and cosmetics industries, as well as scientific institutions, regularly makeuse of laboratory animals. The animals are used for the development of medicines andvaccines, for studying animals’ and humans’ bodily functions, and for testing the safety ofvarious types of chemicals. Depending on the context, animals may be exposed to various kindsof suffering, even as the exact need, effectiveness and justification for animal testing is
debated;23
Relatedly, techniques for genetically altering animals are increasingly applied in both laboratory
and farming settings. Genetic modification can serve various goals, from using laboratory
animals as models for studying human diseases to increasing the nutritional value of farmanimals. Aside from socio-economic and environmental concerns (threats to biodiversity, thepropertisation of genetic information), the potential for animal suffering due to genetic
alteration is significant;24
Breeding and trading pets (dogs, cats, etc.) to be sold to households has grown into an
important industry in many countries. According to animal protection organisations, for every
lucky companion animal treated as a family member in a household, many others experience
nothing but suffering, abuse, and sadness. Pet breeders, traders and pet shops further
contribute to the overpopulation of companion animals in shelters and on the streets;25
The fur and leather industry, including farmers, trappers, auction houses, brokers and buyers,
design centres, dressers and dyers, manufacturers and retailers, is increasingly facing legalbans.26 Especially in Europe, the industry is responding to the criticism from animal protection
organisations that it is morally unacceptable to keep animals solely for their fur, by launching
animal welfare assessment programs and certification systems;27
In the recreation industry, animals are deployed for sports and entertainment: equestrianism,
circuses, zoos and tourist attractions like elephant riding and shows with birds of prey. Finally,in pleasure pursuits such as hunting, hunting tourism, as well as in fishing and fighting gameswith pets, the welfare of animals is profoundly at stake.28

The United Nations’ 2030 Agenda for Sustainable Development, of which the Sustainable
Development Goals (SDGs) are part, envisions a world in which humanity lives in harmony withnature and in which wildlife and other living species are protected.29 Although animal welfare is notdirectly mentioned in the SDGs, it is crucial for achieving many targets set by some SDGs. For
example, various targets under SDG: 2 Zero Hunger and SDG: 3 Good Health and Well-being
cannot be achieved without ensuring animal welfare in the food production systems.30 Similarly,
SDG: 12 Responsible Consumption and Production cannot be possible without ensuring animal
welfare in the production of food.31 It also covers animal welfare in other sectors such as leather
Page | 22

goods and healthcare. Further, SDG: 14 Life Below Water and SDG: 15 Life of Land also mentions
protecting biodiversity. These goals cannot be achieved without adopting responsible practices
while dealing with oceans and forests and protecting any form of cruelty on animals.32
The investment and finance policies of financial institutions should take the welfare of animals into
account when investing in or financing of companies in all the industries mentioned (livestock,fisheries, fur and leather, pharmaceutics, cosmetics, pet breeding, recreation, sports andentertainment. This moral obligation follows from recognizing animals as sentient beings capableof feeling pain and stress, as humans do. Furthermore, neglecting the welfare of animals may also
have consequences for human health and the environment. When developing policies in thisrespect, financial institutions can make use of the international standards described in the following
section. They should be aware however, that they may not be sufficient to safeguard animal welfare
at an appropriate level - either because norms are open for interpretation or requirements are notyet stringent enough.
2.1.2 International standards and initiatives
Standards concerning animal welfare differ in scope, application and the level of protection they
offer. It is possible to differentiate between generally accepted principles, international standards,
EU legislation, national law and (inter)national private standards. The main standards on animal
welfare are summarised per topic, followed by assessment elements which are formulated by the
FFGI as a result:•

In general
The Five Freedoms are often taken as a principle for preparing standards on animal welfare.
This concept arose from the Brambell Report published in Great Britain in 1965 and thefollowing request of the UK Minister of Agriculture to the Farm Animal Welfare Council (FAWC)
to revise the Welfare Codes for cattle, pigs, domestic fowl and turkeys. This has led to thefollowing list of five freedoms that are relevant for all animals.
An animal has to live free from:
•
•
•
•
•

Hunger, thirst and malnutrition (direct access to fresh water and solid food to stay healthyand strong).
Any thermal or physical discomfort (having suitable, comfortable housing that offers
tranquillity).
Pain, injury and diseases (by means of prevention or diagnosing and treating quickly).
Fear and chronic stress (by circumstances that avoid suffering and stress).
The denial of natural (species-specific) behaviour (by supplying sufficient space, sufficientand proper provisions and company from animals of the same species).

In a protocol at the Amsterdam Treaty (1997), the European Union officially recognises animals
as sentient beings and indicates that European civilians and institutions in the field ofagriculture, fishery and science have to take the welfare of animals into account. This protocol
has also been fully included as Article 6b in the successor of the Amsterdam Treaty, the Lisbon
Treaty (2007), which came into force on December 1, 2009.
The World Trade Organization (WTO) Agreement on the Application of Sanitary andPhytosanitary Measures (SPS Agreement) encourages its members to base their sanitary
measures on international standards, guidelines and recommendations, where they exist.

Page | 23

The World Organisation for Animal Health (OIE) is the WTO reference organisation forstandards relating to animal health and zoonoses. Its standards are intended to safeguard thehygienic safety in the trade in animals and animal products. The Terrestrial Animal Health Code,published in 1968, and the Aquatic Animal Health Code, published in 1995, aim to assure thesanitary safety of international trade in terrestrial animals and aquatic animals, and theirproducts. The Codes traditionally addressed animal health and zoonoses, but have in recent
years expanded to cover other animal welfare aspects, mainly with respect to transport,slaughter, and killing animals to prevent the spread of diseases and stray animals. This isconsistent with the expanded mandate of the OIE which is ‘to improve animal healthworldwide’. The OIEs Manual of Diagnostic Tests and Vaccines for Terrestrial Animals andManual of Diagnostic Tests for Aquatic Animals provide a harmonised approach to diseasediagnosis by describing internationally agreed laboratory diagnostic techniques.
ISO 26000:2010 Guidance on social responsibility recognises the importance of animal welfare
in the principle ‘Ethical behaviour’. The underlying values - fairness, justice and integrity - imply
caring for people, animals and the environment. Ethical behaviour encompasses respecting thewelfare of animals, including providing effective resolutions if an organisation affects the life
and the existence of animals.33
This leads to assessment elements•

1

Companies respect the Five Freedoms of animals.

13

Companies integrate animal welfare criteria into their procurement and operational policies.

14

Companies include clauses on the compliance with criteria on animal welfare in their contracts with
subcontractors and suppliers.

Genetic modification of animals
The UN Convention on Biological Diversity (CBD) demands that companies that want to haveaccess to genetic material from abroad have to obtain prior permission from the exporting
country and have to make clear agreements for the use of the material. The Bonn Guidelines
are recognized as a useful first step in the implementation of relevant provisions of the UN
Convention on Biological Diversity (CBD) and are meant to assist stakeholders in developing
access to genetic resources and benefit-sharing strategies.
The Cartagena Protocol on Biosafety to the Convention on Biological Diversity (Cartagena
Protocol) speaks about Living Modified Organisms (LMOs) which are in every day usage known
as Genetically Modified Organisms (GMOs). These are defined as any living organism thatpossesses a novel combination of genetic material obtained through the use of modern
biotechnology. The Cartagena Protocol does not prohibit the use of GMOs in itself but hasdeveloped a framework for the safe handling, transport and use of GMOs that may have a
harmful effect on biodiversity and human health and entail trans-boundary risks. The protocol
also requires permission from the importing country before it is permitted to import GMOs.
These standards aim to protect genetic material and lack provisions on animal welfare when
producing and using GMOs. In 2015 the European Parliament voted to adopt regulationprohibiting the cloning of animals for farming purposes, because this is considered not to be inline with general minimum welfare standards for animals bred or kept for farming purposes (aslaid down in Council Directive 98/59/EC). It takes into account that the health and welfare of asignificant proportion of cloned animals is seriously affected and mortality is considerably
higher than with sexually reproduced animals.34

Page | 24

Furthermore, a resolution issued by the Trans Atlantic Consumer Dialogue (TACD) in 2016,expresses consumer concerns about amongst other topics, animal welfare issues related to new
genetic engineering technologies for farm animals. The resolution urges US and EU
governments to: “Fully consider the welfare of animals altered using new genetic engineering
techniques prior to approval.”This leads to assessment element
4•

Genetic modification of animals for food and the production of derived food products is
unacceptable, unless clear animal welfare benefits can be demonstrated

Laboratory animals
The European Convention for the protection of vertebrate animals for experimental and otherscientific purposes concerns the use of animals in experiments. There is also European
legislation on the housing of, and caring for laboratory animals and there are rules forassessing animal tests. EU Regulation 1223/2009 bans animal testing for cosmetics and the useof great apes for testing purposes.
This leads to assessment element2Non-medical animal testing (including but not limited to cosmetics testing) is unacceptable.

When planning and conducting animal experiments, one can strive for improvement as
described already in 1959 by the researchers W.M.S. Russel and R.L. Burch, in their 3R-strategy
Replacement, Reduction and Refinement. This suggests to apply three strategies with regard toanimal testing: 35
Replacement: laboratory animals are replaced by non-animal alternative test objects asmuch as possible.
Reduction: the number of animals used is reduced as much as possible.
Refinement: discomfort (pain/inconvenience) of laboratory animals is prevented as much as
possible, both prior to, as well as after testing.

•••Directive 2010/63/EU of 2010 “spells out the principle of the ‘Three Rs’ and makes it a firm legal
requirement. The principles of Replacement, Reduction and Refinement must be consideredsystematically at all times when animals are used for scientific purposes in the EU”.36
There are initiatives from the industry as well. For example in the Netherlands, research
institutions have signed the Animal Experiments Openness Codes in which they oblige
themselves “to systematically shift to Replacement, Reduction, and Refinement of animal
testing (3 Rs)”.
This leads to assessment element
3

Requirements are set for the use of laboratory animals for testing medical products in order tolimit animal suffering and the number of animals used as much as possible and demonstrably look
for alternatives to animal testing (the so-called 3R-strategy).

Page | 25

•Farm animals
The Council of Europe (CoE) has adopted several conventions to protect farm animals.i In theEuropean Convention for the Protection of Animals kept for Farming Purposes (adopted in
1976 and amended in 1992) minimum guidelines for livestock farming with respect to welfare
have been included. In addition, conventions on transport (ETS No. 193) and on slaughter (ETS
No. 102) have been adopted. These conventions are further elaborated in specific rules forcertain animal species and topics.
Distinct from conventions by the CoE, European Union directives are binding to all members.
Council Directive 98/58/EC concerning the protection of animals applies to all farm animals andlays out several general animal welfare requirements with respect to, amongst others, freedomof movement, accommodation, feed and breeding practices. Furthermore, directives from theCouncil have been adopted on animal transport (EC No 1/2005), as well as on the keeping ofspecific species of animals (broilers, laying hens, pigs, calves). Regulations on slaughter (EURegulation 2018/723) have also been issued by the European Commission.
In the long run, some abuses in intensive livestock farming are phased out, such as keeping
calves in crates (prohibited since 2007), hens in bare battery cages (prohibited as of 2012) andkeeping sows in feeding cubicles (prohibited as of 2013). Note that no specific EU legislation
exists for widely farmed animals such as dairy cows, rabbits, ducks, turkeys, trout and salmon. In
recent years, out of discontent with the inability of EU standards to safeguard animal welfare,private standard initiatives have emerged.
This leads to assessment element
6

Extremely restricted housing methods including calves in crates, hens in battery cages and sows in
feeding cubicles are unacceptable.

The International Finance Corporation (IFC) states in its Good Practice Note that businesses"that address or enhance animal welfare are likely to win or retain a competitive advantage in
the global marketplace”.37 and presents some best practices and recommendation for farmers
and meat producing companies.
The Business Benchmark on Farm Animal Welfare is an annual benchmark of food companies’
performance on farm animal welfare, supported by World Animal Protection (WAP),
Compassion in World Farming (CIWF) and private equity firm Coller Capital. "Its aims are:38•••

To provide investors with the information they need to understand the business
implications of farm animal welfare for the companies in which they are invested.
To provide investors, governments, academics, CSOs, consumers and other stakeholders
with an independent, impartial and reliable assessment of individual company efforts toadopt higher farm animal welfare standards and practices.
To provide guidance to companies interested in improving their management andreporting on farm animal welfare issues.

The benchmark assesses food producers, restaurants and bars and food retailers andwholesalers, covering the entire food supply chain".

i

The Council of Europe (CoE) is not to be confused with the European Council (EC) or the Council of the European
Union. The former is a distinct, consultative body outside of the European Union in which 47 countries participate,and has no binding legislative powers. The latter are integral parts of the European Union’s institutional structure.

Page | 26

Coller Capital also initiated the Farm Animal Investment Risk and Return (FAIRR) initiative,
which aims to improve investor’s understanding of risks related to factory farming. FAIRR statesthat “animal factory farming is exposed to at least twenty-eight environmental, social andgovernance issues that could significantly damage financial value over the short or long-term.
Many of these risks are currently hidden from investors”.39
The International Federation of Organic Agricultural Movements (IFOAM) has developed theNorms for Organic Production and Processing. The IFOAM norms consist of the IFOAM
Standard and the corresponding Accreditation Criteria. All producers worldwide adhering to
the IFOAM norms are included in the Organic Guarantee System. With respect to animal
welfare, the certification standard includes detailed requirements for housing, freedom of
movement, feed, pest and disease management, transport and slaughter.
The Sustainable Agriculture Network (SAN) published the Sustainable Agriculture Standards.
The norms are based on guidelines of, among others, the United Nations, the European Unionand the International Labour Organization and comprise of ten criteria for sustainableagriculture, of which one is about dealing with wild animals on farms.
The Dutch Society for the Protection of Animals has introduced the Better Life Label in 2007 foranimal products. It is specifically aimed at so-called intermediate segments (farming systems
that operate in between the intensive and the organic livestock farming systems regarding thewelfare of animals). This three-star system (the more stars, the better the animal welfare) has
been developed to challenge the corporate world to improve the wellbeing of animals in
livestock farming. The quality requirements that the Dutch Society for the Protection of Animals
has set for wellbeing are recorded in agreements with suppliers of meat and are checked byindependent bodies.
The Global Animal Partnership (GAP) has defined animal welfare in order to improve farming
and ranching systems and practices. Under its GAP 5-Step Animal Welfare Rating Program it
has customized standards for each species, including beef cattle, broiler chickens, turkey, sheep,
pigs, goats, bison and laying hens. As part of its program for broilers chickens, GAP aims toreplace fast-growing chicken breeds by 2024.
The Farm Animal Responsible Minimum Standards (FARMS) were developed in 2019 by acoalition of animal welfare organizations, and emphasize the role of financial institutions inadvancing animal welfare in farm animals. Based on the Five Freedoms, the OIE Terrestrial
Health Code, existing EU legislation and the IFC’s Good Practice Note, the FARMS initiative
identifies a number of ‘welfare risks’ and mitigation strategies that apply to all farm animals,
covering a range of topics including:
•
•
•
•
•
•
•
•

Space;
Stocking density;
Living environment;
Diet;
Breeding practices;
Painful procedures;Transport;
Slaughter.

Page | 27

Additionally, the FARMS initiative defines a host of minimum standards specific to five of themost commonly farmed animals (dairy cows, beef cattle, broiler chickens, laying hens andpigs).40 By combining previous governmental regulations and private initiatives, theResponsible Minimum Standards (RMS) provide a comprehensive set of principles for
improving welfare in farm animals.
This leads to assessment elements•

7

Companies shift from intensive livestock farming to animal friendly production.

8

Livestock farming companies are certified according to the criteria of certification schemes that
include animal welfare requirements (mentioned in section 2.1.2).

Fish
In contrast to other major forms of livestock agriculture, there is a paucity of scientificinformation on the welfare of fish raised under intensive aquaculture conditions. This reflects anadherence to the belief that these animals have not evolved the salient biologicalcharacteristics that are hypothesised to permit sentience. However, there is scientific evidence
for the existence of sentience in fish, and in particular, their ability to experience pain, fear andpsychological stress. Anatomical, pharmacological and behavioural data suggest that affective
states of pain, fear and stress are likely to be experienced by fish in similar ways as in tetrapods.
This means that fish have the capacity to suffer, and that welfare considerations for farmed fish
should take these states of pain into account.41
The Global Aquaculture Alliance (GAA), an initiative from a number of American companies, hasdeveloped the Best Aquaculture Practices (BAP) facility certification standards, monitored andcontrolled by ISO 65-accredited certification bodies. BAP certification defines the mostimportant elements of responsible aquaculture and provides quantitative guidelines by whichto evaluate adherence to those practices for processing plants, farms, hatcheries and feed mills.
The BAP includes standards for shrimp, tilapia and channel catfish cultivation, as well as for thefish processing industries. A number of animal welfare criteria are included in the BAP,
particularly regarding pain and anxiety. The number of BAP-certified facilities worldwide grows
daily. BAP is mainly active in the Americas, South East Asia, Australia and New Zealand; within
Europe only in Iceland, Norway and the United Kingdom.
In 2010, WWF and IDH (Dutch Sustainable Trade Initiative) founded the Aquaculture
Stewardship Council (ASC). The ASC aims to be the world's leading certification and labelling
programme for responsibly farmed seafood, by managing the global standards for responsible
aquaculture, which were developed by the WWF Aquaculture Dialogues.
ASC collaborates with aquaculture producers, seafood processors, retail and foodservice
companies, scientists, conservation groups and consumers in order to: 42“Recognise and reward responsible aquaculture through the ASC aquaculture certification
programme and seafood label;
Promote best environmental and social choice when buying seafood; andContribute to transforming seafood markets towards sustainability.”•••

Other issues related to fish and fisheries are discussed in section3.3.
This leads to assessment element
9

Fish farms are certified according to the criteria of certification schemes that include animal welfare
requirements (mentioned in section 2.1.2).

Page | 28

•

Fur and leather
Within the European Union, there are rules for the use of traps to catch animals for their fur(Council Regulation 3254/91/EEC). There is a ban on the trade in cat and dog fur (Regulation
1523/2007/EC) and an import ban on seal fur (Council Directive 83/129/EEC and Regulation
1007/2009/EC).
In several European countries the farming of animals for fur production has been prohibited.43
As of January 2013 it is illegal in the Netherlands to keep or kill animals if the only objective isusing their fur. All existing activities in this sector must be phased out before 2024.44
In the Netherlands, the Nature Conservation Act contains rules on hunting, the authorisedmeans of hunting and damage control.
This leads to assessment element
5•

Capturing and/or keeping animals for their skin or fur and manufacturing, trading and selling(derived) fur products is unacceptable.

Entertainment sector
According to animal protection organisations, circuses and dolphinariums that deploy animals
for entertainment purposes do not meet the Five Freedoms criteria. Animals are unable toexpress their natural behaviour and suffer fear and chronic stress. Moreover, often use is madeof animals that were captured in the wild. According to animal protection organisations, suchactivities are unacceptable.45
Various countries have implemented legislation to prohibit the use of (wild) animals in circuses.
Below, we will limit the information to the countries currently represented in the Fair FinanceInternational network:
•
•

•

•
•

Belgium has a national ban on the use of wild animals in circuses as of March 2014.
In Brazil, a national ban on the use of wild animals in circuses was adopted in 2009 by theCommission of Education and Culture. In several districts there is a ban on the use of all
kinds of animals in circuses.
In France there is a national ban on the use of certain wild animals in circuses, by means ofa positive list, effective from 18 March 2011. Several cities prohibit circuses that use wild
animals.
In the Netherlands, the prohibition of the use of wild animals in circuses is effective from
September 15, 2015.
In Sweden there is a national ban on the use of certain species of wild animals in circuses,
effective from 1994. There is a ban on the use of monkeys, carnivores, rhinos, giraffes,
kangaroos, hippos, seals, birds of prey, ostriches, crocodiles, deer, elephants and sea lions.
This leads to assessment element
10 Entertainment activities in which wild animals are involved or animals are hurt (including circusesand other entertainment shows with wild animals, dolphinariums, elephant rides, fighting gameswith animals) are unacceptable.

•

Transport
Council Regulation EC 1/2005 of the European Union lays down rules for livestock transport. In
September 2017, the European Commission published five guides to good practices for thetransport of the main livestock species. Implementation and enforcement continue to be a
grave concern. Welfare risks are exacerbated by the long transport times.46
Page | 29

After the release of shocking footage material in a ZDF documentary and over 1 million
signatures from EU citizens, the European Commissioner for Health and Food Safety, Vytenis
Andriukaitis, put animal transport high on the agenda in September 2017. He announced the
setup of a sub-group dedicated to live transport within the EU Platform for Animal Welfare
focusing on the need to revise the current system and rules governing long distance animaltransport, and put in place a long term strategy to replace this inhumane trade. Ministers from
Austria, Belgium, Denmark, Germany, The Netherlands and Sweden have joined the Ministerial
Animal Welfare Alliance’s call on the European Commission to significantly shorten journey
times for live animals and improve transport conditions. The Commission reiterated the need tohave more Member States on board.47
This leads to assessment element
11•

Companies reduce the time limit of animal transport to a maximum of 8 hours.

Antimicrobial resistanceAccording to the World Health Organisation (WHO), antimicrobial resistance (AMR) is one of
the biggest threats to global health, food security, and development today. As antibiotics
become less effective a growing list of infections are becoming difficult and sometimes
impossible to treat. The WHO Global Action Plan on Antimicrobial Resistance, endorsed at theWorld Health Assembly and adopted by the assemblies of the FAO and the World Organisation
for Animal Health (OIE) in 2015, has five strategic objectives:48
1. “to improve awareness and understanding of antimicrobial resistance through effective
communication, education and training;
2. to strengthen the knowledge and evidence base through surveillance and research;
3. to reduce the incidence of infection through effective sanitation, hygiene and infection
prevention measures;
4. to optimize the use of antimicrobial medicines in human and animal health;
5. to develop the economic case for sustainable investment that takes account of the needs of
all countries and to increase investment in new medicines, diagnostic tools, vaccines andother interventions.”
The objectives are also aimed at the use of antimicrobials in food-producing animals, for which
the WHO has developed specific guidelines. The OIE Strategy on Antimicrobial Resistance and
the Prudent Use of Antimicrobials is aligned with the Global Action Plan. The FAO has also
drafted an Action Plan to support the food and agriculture sector in implementing WHO’s
Global action plan.
Guidelines on AMR in the Codex Alimentarius aim to assess the risk to human health associatedwith the presence in food and animal feed and the transmission through food and animal feed,of AMR micro-organisms and determinants and to provide advice an appropriate risk
management.
As the majority of antibiotics produced are given to livestock,49 the Farm Animal Investment
Risk and Return (FAIRR) initiative has brought together a coalition of investors that call uponcompanies to end the routine non-therapeutic use of antibiotics in their Global investor
statement on antibiotic stewardship. As part of their engagement, FAIRR has drafted a bestpractice policy on antibiotics stewardship that includes a number of commitments based on thefollowing principles:50

Page | 30

Antibiotics should only be used to treat the diagnosed presence of disease in animals, andin limited circumstances to control disease outbreaks. Antibiotics should not be used topromote animal growth or for routine disease prevention.
Antibiotic use should be supervised by a veterinarian familiar with the premises and theanimals.
Livestock producers should report their use of antibiotics so that oversight agencies and the
public can track progress in meeting use-reduction goals and identify resistance risks andtrends.
Livestock producers should rely on better husbandry practices to improve animal healthand welfare, and to minimize the need for routine antibiotics use on farms.

•

•
•

•

This leads to assessment element
12•

Companies apply a prudent use of antimicrobial medicines (antibiotics) in food-producing animals
in order to minimize antimicrobial resistance.

Procurement and supply chains
Companies are often part of long production chains. They can monitor one another andquestion how they respect local and national legislation and international norms on animal
welfare. The requirements that companies set for their suppliers can be included in contractual
agreements. The importance of this also recognised in the OECD Guidelines for Multinational
Enterprises. However, these guidelines do not cover the topic of animal welfare.
The importance of this also recognised in the OECD Guidelines for Multinational Enterprises.
However, these guidelines do not cover the topic of animal welfare. The importance of animal
welfare is recognized in the OECD/FAO Guidance on Responsible Agricultural Supply Chains,which is part of a series of sectoral guidance on the OECD Due Diligence Guidance for
Responsible Business Conduct. This provides practical support to companies on theimplementation of the OECD Guidelines for Multinational Enterprises by providing plain
language explanations of its due diligence recommendations. Implementing theserecommendations can help companies avoid and address adverse impacts that may be
associated with their operations, supply chains and other business relationships.
But ISO 26000:2010 Guidance on social responsibility does acknowledge animal welfare as partof an organisation’s responsibility to behave ethically and connects the topic with multiple core
subjects. It also recognises the importance of supply chain responsibility, because “the impactsof an organization's decisions or activities can be greatly affected by its relationships with otherorganizations”.51 A company’s sphere of influence includes relationships within and beyond anorganization’s supply chain. Moreover, ISO 26000:2010 Guidance on social responsibility
recommends setting contractual provisions or incentives as a means of exercising influence.52
In addition, ISO 20400:2017 Sustainable procurement – Guidance provides guidelines fororganizations, independent of their activity or size, on integrating sustainability withinprocurement, as described in ISO 26000:2010 Guidance on social responsibility. It is intended
for stakeholders involved in, or impacted by, procurement decisions and processes.
This leads to assessment elements
13

Companies integrate animal welfare criteria into their procurement and operational policies.

14

Companies include clauses on the compliance with criteria on animal welfare in their contracts with
subcontractors and suppliers.

Page | 31

2.1.3

Assessment elements

Financial institutions can influence the welfare of animals if they finance or invest in industries
where animals are used, captured and/or (re)produced, such as fishery, livestock farming, thepharmaceutical industry and other companies with an animal testing facility like the cosmetics
industry, the recreation industry, the fur industry and pet breeding.
The following elements are crucial for a policy regarding the companies a financial institution
invests in or finances:
1. Companies respect the Five Freedoms of animals.
2. Non-medical animal testing (including but not limited to cosmetics testing) is unacceptable.
3. Requirements are set for the use of laboratory animals for testing medical products in order tolimit animal suffering and the number of animals used as much as possible and demonstrably
look for alternatives to animal testing (the so-called 3R-strategy).
4. Genetic modification of animals for food and the production of derived food products is
unacceptable, unless clear animal welfare benefits can be demonstrated
5. Capturing and/or keeping animals for their skin or fur and manufacturing, trading and selling(derived) fur products is unacceptable.
6. Extremely restricted housing methods including calves in crates, hens in battery cages and sowsin feeding cubicles are unacceptable.
7. Companies shift from intensive livestock farming to animal friendly production.
8. Livestock farming companies are certified according to the criteria of certification schemes that
include animal welfare requirements (mentioned in section 2.1.2).
9. Fish farms are certified according to the criteria of certification schemes that include animal
welfare requirements (mentioned in section 2.1.2).
10. Entertainment activities in which wild animals are involved or animals are hurt (including
circuses and other entertainment shows with wild animals, dolphinariums, elephant rides,
fighting games with animals) are unacceptable.
11. Companies reduce the time limit of animal transport to a maximum of 8 hours.
12. Companies apply a prudent use of antimicrobial medicines (antibiotics) in food-producing
animals in order to minimize antimicrobial resistance.
13. Companies integrate animal welfare criteria into their procurement and operational policies.
14. Companies include clauses on the compliance with criteria on animal welfare in their contracts
with subcontractors and suppliers.

Page | 32

2.2

Climate change

2.2.1 What is at stake?
The climate on earth is changing: globally the temperature is increasing. Due to this, ecosystems
are changing, extreme weather (hurricanes, heatwaves, drought, floods, etc.) will occur more often
and societies around the world are likely to suffer significant negative consequences. This process
is a direct result of human activities that increase the concentration of greenhouse gases (GHG) in
the atmosphere.53 The importance of climate change as a global phenomenon and problem iswidely accepted by the international community. Since the UN Framework Convention on Climate
Change (UNFCCC) was adopted in 1992, a Conference of the Parties to the UNFCCC (COP) has
been organised almost every year to try to agree on climate change mitigation and adaptation
measures. During the landmark 21st session of the Conference of the Parties (COP21) in Paris in
2015, 195 nations decided to aim for keeping the global temperature rise well below 2°C above thepre-industrial average, and preferably below 1.5 °C, in 2100.54
Already in 2006, the influential research report Stern Review on the Economics of Climate Change
projected that the concentration of greenhouse gases in the atmosphere would be twice as muchin 2035 (550 parts CO2 per million) as it was before the industrial revolution, which in turn would
cause a rise in global temperatures of 2°C or more. This is likely to have an enormous impact on
the world, especially considering that average global atmospheric temperatures are currently only
5°C warmer than during the last ice age, which ended about 10,000 years ago.55
The leading international authority on this topic, the Intergovernmental Panel on Climate Change(IPCC), regularly publishes scientific research on the causes and impacts of climate change. In its
Fifth Assessment Report the IPCC concluded that the average global temperature increase since
the mid twentieth century has been largely caused by the observed increase of greenhouse gases
concentrations (such as carbon dioxide, methane, nitrogen oxide and some other gases), releasedby human activity. The main greenhouse gas is carbon dioxide (CO2), which is released with the
combustion of fossil fuels.
The report, published in 2014, states that it is highly likely that human activities have caused morethan 50% of the noticed temperature increase between 1951 and 2010.56 The IPCC estimates that,
depending on future developments, global temperatures will increase between 0.3°C and 4.8°C inthe 21st century. This will increase the likelihood of severe, pervasive and irreversible impacts forpeople and ecosystems.
Recent climate changes have had widespread impacts on human and natural systems: 57•••

The globally average land and ocean surface temperatures show a rise of 0.85 °C over theperiod from 1880 to 2012;
Across the world, glaciers have continued to shrink, spring snow cover has continued todecrease, and permafrost temperatures have increased;
Over the period 1901 to 2010, the global mean sea level rose by 19 cm.

The IPCC assesses that it is very likely that:58••••

heat waves will occur more often and last longer:
extreme precipitation events will become more intense and frequent in many regions;the ocean will continue to warm and acidify; andglobal mean sea levels will rise - in ranges of 26 to 82 cm.

Page | 33

These developments not only lead to extraordinary and unprecedented risks for the global
environment, but can also have profound and disastrous consequences for human economies,
societies, and health. The Stern Review as well as IPCC reports project the following climate change
consequences:59
•

•

•

•

•

•

•

•

Melting glaciers will cause a steep increase in the average water level of some rivers. The
availability of water will increase in some areas, while elsewhere drought and a lack of drinking
water will occur.
Of all plant and animal species globally, 15 to 40% are at risk of extinction if the averagetemperature increases by more than 2°C. This will lead to a rapid degradation of ecosystems
and the acidification of oceans, which in turn will have major consequences for marine
ecosystems. Global climate belts will shift, with drastic consequences for flora and fauna.
Climate change undermines food security. While the global food production will increase withlocal temperatures that increase between 1-2°C, it in turn will decrease as soon as thetemperature increases further. Higher frequencies of periods of drought, floods, hurricanes andheat waves will also affect the production of local crops; mainly in areas close to the equatorthat already produce little food.
Climate change will increase the risk of peat fires worldwide, leading to substantial andsustained CO2 emissions as peat fires can smoulder for years and have the highest CO2
production of all fires. Haze caused by peat fires also causes serious long-term healthproblems.60
Coastal areas will be exposed to higher risks by the increasing sea level and coastal erosion.
Not only coral reefs and wetlands are at risk, but also huge cities in developed and developing
countries. The melting or breaking down of ice floes will ultimately threaten the residential
areas of 1 in every 20 people.
If the existing climate change scenario becomes a reality, almost half the world’s population will
be living in areas of high water stress by 2030. This is including between 75 million and 250
million people in Africa. Furthermore, water scarcity in some arid and semi-arid places willcause the displacement of between 24 million and 700 million people.61
Poor communities are even more vulnerable because their adaptability is limited and because
they are more dependent for their livelihood on climate sensitive provisions such as local waterand food supplies.62
Climate change will influence the health of millions of people, mainly of those who havedifficulty in adapting. Those groups already physically weakened by malnutrition are the mostvulnerable for the expected increase in heat waves, floods, storms, fires and droughts,
accompanied by an increase in metabolic diseases and parasitic diseases such as malaria or
dengue.63

To reduce climate change risks both mitigation and adaptation are necessary. Mitigation in the firstplace requires a global reduction of GHG emissions. The IPCC’s Fifth Assessment Report calculated
that, in order to limit global temperature rise to 2°C, it is necessary that average global emissionsof GHG should be reduced by 40 to 70% in 2050 compared to 2010 emissions levels.64
While in 2020 the energy related emission of CO2 should not exceed 32 Gigatons, in 2018 global
energy related emissions already reached a historic 33.1 Gt. According to the International Energy
Agency (IEA), the objective not to increase the average temperature on earth by more than 2°C will
be very difficult to realise if CO2-emissions keep increasing at this rate.65

Page | 34

The 2015 Paris Agreement recognized that much greater emission reduction efforts will be
required than submitted by the countries in their intended nationally determined contributions(NDC).66 Calculations by Climate Action Tracker confirm that current NDCs would result in around
2.9 °C of global warming in 2100.67 If only a few countries would increase their reduction targets,
this would already reduce the 1.5°C gap by 20-34%.68
In 2018 the IPCC published a Special Report on Global Warming of 1.5°C. Expanding on earlier
reports through a review of over 6,000 peer-reviewed scientific articles, the main findings of thereport include: 69
•
•

•
•
•

Climate change is already affecting people, ecosystems and livelihoods all around the world.
There are clear benefits to keeping warming to 1.5ºC rather than 2ºC or higher. The negative
consequences for human and natural systems are projected to be significantly worse for a
warming of 2°C than for 1.5°.
Limiting warming to 1.5ºC is possible within the laws of chemistry and physics but would
require unprecedented transitions in all aspects of society.
Limiting warming to 1.5ºC can go hand in hand with achieving other global goals such as theSustainable Development Agenda. Every year matters and every choice matters.
Recent trends in emissions and the level of international ambition indicated by nationallydetermined contributions, within the Paris Agreement, deviate from a track consistent withlimiting warming to well below 2°C.

The overall implications of these findings are summed up in the report’s foreword: “without
increased and urgent mitigation ambition in the coming years, leading to a sharp decline ingreenhouse gas emissions by 2030, global warming will surpass 1.5°C in the following decades,
leading to irreversible loss of the most fragile ecosystems, and crisis after crisis for the mostvulnerable people and societies”.70
Companies in many industries will be confronted with climate change consequences and risks.
Climate change itself creates physical risks, for instance because agricultural operations will sufferfrom drought, mines will lose access to sufficient water sources, air transport will be hampered
significantly by storms, and factories and various forms of infrastructure will be destroyed by floods
or hurricanes.
Separately, the different responses to climate change by consumers, markets, and governments(including new legislation on mitigating emissions), also create transition risks. Companies indifferent sectors need to grasp opportunities to develop new, carbon-free products, services andproduction processes, requiring innovations. If companies are not able to live up to thesechallenges and reinvent their business models fast enough, they run the risk that their production
facilities and other assets turn in to stranded assets which can no longer be used for economic
benefit in the changing regulatory and market circumstances.
Companies that produce, process, transport, or use fossil fuels in large volumes will certainly berequired to consider changing their business model. Research has indicated that up to eighty percent of the world’s coal reserves, thirty per cent of known oil reserves and fifty per cent of gas
reserves can not be used for energy production anymore if the world is to stay below the goal of a
maximum of 2°C of global warming, which does not even address the goal of limiting warming to
1.5°C.71 Many in this sector put their hopes on projects for CO2-storage and CO2-removal from theatmosphere, but research shows that many of these types of projects do not lead to concrete
greenhouse gas reductions and moreover may have negative consequences for other sustainability
aspects.72

Page | 35

While the world is still struggling with the challenge to mitigate climate change, the topic ofadaptation to climate change also deserves urgent attention. The Sendai Framework for Disaster
Risk Reduction 2015-2030, adopted in March 2015, considers climate change as one of the driversof disaster risk. Investing in disaster reduction for economic, social, cultural, and environmental
resilience of persons, communities and countries and the environment, is one of the four top
priorities. “Such measures are cost effective and instrumental to save lives and prevent and reduce
losses”, the United Nations report argues.73
To be able to adapt to the consequences of climate change, large scale investments are required,
particularly in developing countries.74 At the COP15 negotiations in Copenhagen in 2009,
developed countries set a goal of mobilizing USD 100 billion in climate finance towards developing
countries by 2020. This commitment was reiterated in the Paris Agreement in 2015 and collective
mobilisation of climate finance from developed countries has increased to USD 71 billion in 2017.75
However, in 2018 Oxfam International estimated that net climate-specific assistance is likely to bemuch lower, and that assistance for climate adaptation, as well as to Least Developed Countries(LDC), remains too low.76 Nor is it clear that financial goals set in earlier agreements will not be
sufficient to close the climate finance gap.77 It will be vital to negotiate a finance package thatrecognises the true scale of the climate change challenge, while remaining responsive to the needs
and specific circumstances in given countries. For example, for sub-Saharan Africa alone by 2050
an additional USD 60 billion is needed per annum for a 2°C-consistent international agreement on
finance for climate change adaptation.78 To win the battle against climate change, the most CO2intensive industries - energy, construction, food, heavy industry and transport - have to change
structurally.79
According to conservative estimations by Eurodad and other civil society organizations (CSOs),developing countries’ climate finance needs are thought to be between USD 27 and USD 66 billion
per year by 2030 for adaptation and USD 177 billion per year for mitigation. Global civil society
organizations call upon financial institutions to play a major role in financing climate adaptation.80
The issue of climate change is central to the Sustainable Development Goals (SDGs). Climatechange is dealt with in SDG: 13 Climate Action and includes targets such as strengthening capacity
towards climate related hazards, integrating climate change in policies, strategies, and planning.81
Climate change is also reflected in other SDGs such as SDG 11: Sustainable Cities and Communities,
which includes a target to reduce per capita adverse environmental impact of cities by 2030. It also
includes making cities resource efficient and mitigating and adapting to climate change.82 SDG 2:
Zero Hunger includes a target to ensure sustainable food production systems that helps maintainecosystems, that strengthens capacity for adaptation to climate change, extreme weather, drought,
flooding and other disasters and that progressively improves land and soil quality.83 Similarly, oneof the targets of SDG: 3 Good Health and Well-being is to reduce the number of deaths andillnesses from hazardous chemicals and air, water and soil pollution and contamination.84
Integrating climate change in financial decision making has evolved from being seen as part of‘extra-financial criteria’ or ESG-criteria to a potential major financial risk threatening the businessmodels of companies, and financial stability in general. In 2015, the Financial Stability Board (FSB)
created an industry-led Task Force on Climate-Related Financial Disclosures (TCFD) to identify
which financial assets will lose value due to climate related risks and to “develop voluntary,consistent climate-related financial disclosures for use by companies in providing information tolenders, insurers, investors and other stakeholders”.85 In June 2017 the TCFD published its
Recommendations of the Task Force on Climate-related Financial Disclosures.86

Page | 36

The United Nations Environment Programme (UNEP) has initiated an Inquiry into the Design of a
Sustainable Financial System (UNEP Inquiry) and published its final report in October 2015. It
presents policy options to deliver a step change in the financial system’s effectiveness in mobilizing
capital towards a green and inclusive economy that also addresses climate change risks.87
For financial institutions, the challenge is to deal with climate change risks in a proactive way, bymeasuring and reporting the carbon footprint of their financial portfolios and presenting strategies
to make their portfolio’s consistent with the internationally agreed 2°C limit of global temperature
increase and preferably also with a 1.5°C scenario. This also requires having a strategy for thetransition to a low-carbon economy, including the switch from using fossil fuel to renewableenergy sources. Besides encouraging companies in which they invest to measure, disclose andreduce emissions, financial institutions should also phase-out investments in and financing ofactivities with unacceptably high GHG emissions. Furthermore an investment and finance policy
regarding climate change should include criteria on compensation, adaptation and lobbying
against governmental climate change regulation.
When developing policies in this respect, financial institutions can make use of the international
standards described below.
2.2.2 International standards and initiatives
The main international standards on climate change are summarised per topic, followed by theassessment elements that are formulated by the FFGI as a result:•

Setting measurable reduction objectives
The climate problem is global by nature and therefore requires an internationally coordinatedset of answers. The world community has worked on this since the 1990s through several
international conventions on climate change:•••

The 1992 UN Framework Convention on Climate Change (UNFCCC) formulates global
objectives and principles and asks all member states to annually report their emission ofgreenhouse gases. Virtually all countries in the world take part in the UNFCCC, including theUnited States.
The 1997 Kyoto Protocol is based on the principles and objectives of the UNFCCC andestablishes objectives and timelines for industrialised countries to limit their emissions. On
average, the Kyoto Protocol demands an emission reduction (during the period 2008-2012)of 5.2% of the greenhouse gases in comparison to the level of 1990. Because of differencesin levels of economic and social development, not all countries are expected to contributeto the same extent to this goal. Hence, Nationally Determined Contributions (NDCs) areagreed for all signatories of the protocol.
The 2015 Paris Agreement is considered historic, since it brings 195 nations together intheir aim to keep global temperature rise below 2°C, and preferably below 1,5°C, in 2100.
The Paris Agreement also noted that the estimated aggregate greenhouse gas emission
levels in 2025 and 2030 resulting from the intended Nationally Determined Contribution(NDC) plans of individual countries do not fall within 2˚C scenarios. The Paris Agreement
therefore requires signatory countries therefore to submit updated NDCs every five years
that are no less ambitious than existing ones.

Although the Kyoto Protocol was a first step in reducing global emissions of greenhouse gases,
scientists argued that the established reduction objectives were far too low to halt climatechange, let alone undo it. To even limit the global temperature increase to 2 to 2.4°C - which

Page | 37

will in any way lead to drastic social, economic, and environmental problems - according to the
IPCC, the annual global emission of greenhouse gases should be 40% to 70% lower in 2050
than in the year 2010, on average.88
Of specific importance for the financial sector is that the Paris Agreement, in Article 2, point 1,bullet c, states that it aims to strengthen the global response to climate change by, inter alia:“Making finance flows consistent with a pathway towards low greenhouse gas emissions andclimate-resilient development”.89
The Climate Action 100+ initiative was launched in 2017 and is an investor initiative that seeks
to pressure the 100 largest corporate GHG emitters – accounting for two-thirds of annual
global emissions – to take action on climate change.90 The initiative aims to encourage boards
and senior management of major corporate GHG emitters to:91
Implement a strong governance framework which clearly articulates the board’s
accountability and oversight of climate change risk and opportunities;
Take action to reduce greenhouse gas emissions across their value chain, consistent with
the Paris Agreement’s goal of limiting global average temperature increase to well below 2
degrees Celsius above pre-industrial levels; andProvide enhanced corporate disclosure in line with the final recommendations of the Task
Force on Climate-related Financial Disclosures (TCFD).

•••

As of January 2020, the Climate Action 100+ Sign-on Statement has been signed by over 370
investors globally, representing a total of over USD 35 trillion in assets under management.
The Net-Zero Asset Owner Alliance (AOA) was convened in 2019 by UNEP FI and PRI. It is a
network of institutional investors committing to “transitioning their investment portfolios tonet-zero GHG emissions by 2050 consistent with a maximum temperature rise of 1.5°C above
pre-industrial temperatures, taking into account the best available scientific knowledge
including the findings of the IPCC, and regularly reporting on progress, including establishingintermediate targets every five years in line with Paris Agreement Article 4.9”.92 As of January
2020, it had 12 members with a combined total of USD 4 trillion in assets under management.
This leads to assessment elements
1

For its own direct and indirect greenhouse gas emissions, the financial institution establishes
measurable reduction objectives that are aligned with limiting the maximum global temperature
increase of 1.5°C.

2

For its own internal operations, the financial institution is committed to using only renewableenergy sources.

5

For large scale project financing, the financial institution makes environmental impact
assessments that include data on greenhouse gas emissions and climate risks.

6

For its financed greenhouse gas emissions the financial institution establishes measurable
reduction objectives that are aligned with limiting the maximum global temperature increase to
1.5°C.

12

Companies disclose their direct and indirect greenhouse gas emissions.

13

Companies reduce their direct and indirect greenhouse gas emissions.

Page | 38

•Measuring and reporting greenhouse gas emissions
In order to be able to set reduction objectives it is necessary to first measure and report on
emissions. Globally, the standards of the Greenhouse Gas Protocol (GHG Protocol) are the mostused standards to measure and manage greenhouse gas emissions. Amongst others the GHG
Protocol has developed a standard for the emissions of products and the corporate value chain.
The GHG Protocol is consistent with the IPCC guidelines for reporting CO2-emissions.
The Carbon Disclosure Project (CDP) is a coalition of institutional investors that asks the world’s
largest companies to release their annual emissions and other information on climate change.
The CDP also acts as the Secretariat for the Climate Disclosure Standards Board (CDSB),
established at the annual meeting of the World Economic Forum in 2007, as a response to theincreased demand for standardised reporting guidelines for financial information related toclimate change. Its Climate Change Reporting Framework was launched in September 2010 andlast edited in 2012.
The Portfolio Decarbonisation Coalition (PDC), by the UNEP, CDP and the UNEP FinanceInitiative, also strives to encourage financial markets to drive economic decarbonisation.
The Montréal Carbon Pledge, launched in September 2014, commits investors to measure andpublicly disclose the carbon footprint of their investment portfolios on an annual basis.
The Asset Owners Disclosure Project (AODP) encourages asset managers, insurance groups andpension funds to be transparent about the CO2-emissionsand identifying climate change risks
concerning their portfolios. The AODP will publish rankings on asset managers, insurancegroups and pension funds in 2018. The methodology is “fully aligned to the TCFD
recommendations for the sector”.93
In 2017 the Financial Stability Board’s Task Force on Climate-Related Financial Disclosures(TCFD) published its recommendations for financial institutions and companies.94 The
recommendations provide a consistent categorization of the financial impacts of climaterelated risks and opportunities. The Task Force has also issued a guidance for the
implementation of the recommendations, which include sector specific recommendations forthe financial sector, as well as other sectors.95
The TCFD includes four “widely adoptable recommendations tied to:
•
•

•
•

Governance: Disclose the organization’s governance around climate-related risks andopportunities;
Strategy: Disclose the actual and potential impacts of climate-related risks andopportunities on the organization’s businesses, strategy, and financial planning where suchinformation is material;
Risk management: Disclose how the organization identifies, assesses, and manages climaterelated risks; andMetrics and targets: Disclose the metrics and targets used to assess and manage relevant
climate-related risks and opportunities where such information is material.”96

The TCFD expects companies and financial institutions to disclose direct and indirect emissions
and the related risks. In addition, banks “should describe significant concentrations of credit
exposure to carbon-related assets. Additionally, banks should consider disclosing their climaterelated risks (transition and physical) in their lending and other financial intermediary businessactivities”.97

Page | 39

The recommendations of the TCFD have seen significant take-up from public as well as privateorganisations. In 2018, the UN Environment Programme Finance Initiative (UNEP FI) convened
16 banks to pilot the implementation of the TCFD recommendations and published a reportand guidance for understanding and managing climate related risks and opportunities.
The European Commission published its own Guidelines on reporting climate-related
information in 2019, as part of the EU 2030 Climate & Energy Framework.98 These guidelines
integrate the recommendations of the TCFD with the EU’s guidance and policy on non-financial
disclosure.
Some financial institutions have developed initiatives to standardise and encourage themeasurement of carbon footprints by banks and investors. The Dutch Platform Carbon
Accounting Financials (PCAF) published its methodology for carbon accounting of mortgages,
listed equity, project finance, commercial real estate, corporate debt, corporate loans (includingSMEs) and government bonds in 2017.99
The 2degrees Investing Initiative launched the Paris Agreement Climate Transition Assessment(PACTA) project in 2018. The PACTA methodology allows financial institutions to assess
exposure to climate risks in their financing and enables them to compare their portfolios to therequirements of science-based transition pathways that are in line with a 2°C rise in global
temperatures.
The Science Based Targets (SBT) initiative is a collaboration between CDP, the United Nations
Global Compact (UNGC), World Resources Institute (WRI), and the World Wide Fund for Nature(WWF). The initiative enables companies to develop emissions targets in line with the mostrecent scientific insights. Companies can submit a target for validation to SBT, which is thentested against what climate science indicates is required to keep global temperature increase
below 1.5 or 2°C.
This leads to assessment elements•

3

For its financed greenhouse gas emissions, i.e. the emissions of the companies in which thefinancial institution invests, the financial institution discloses its share of the emissions of a
selection of companies and/or a specific sector it invests in.

4

For its financed greenhouse gas emissions, the financial institution discloses its share of all thecompanies and projects it invests in.

5

For large scale project financing, the financial institution makes environmental impact assessmentsthat include data on greenhouse gas emissions and climate risks.

7

The financial institution measures and discloses climate-related impacts in line with therecommendations by the Task Force on Climate-related Financial Disclosures.

12

Companies disclose their direct and indirect greenhouse gas emissions.

Transition to a low-carbon economy
The third working group that contributed to the IPCC’s Fifth Assessment Report, published in2014, focused on mitigating climate change, and showed that the world must significantly
reduce its reliance on fossil fuels in the coming decades, thus transitioning to a low-carbon
economy. The IPCC projected that over the next two decades (2010 to 2029), annual investment
in conventional fossil fuel technologies for electricity supply sector would decline, with a
median projected rate of decline being around 20%. At the same time, annual investment in
low-carbon electricity supply (including renewable energy, nuclear power and electricity
generation with carbon capture and storage) is projected to rise by 100% compared to 2010 on

Page | 40

the same median basis.100
There are various initiatives within the corporate world and the financial industry to makeagreements and to exchange experiences on stimulating the transition to a low-carbon
economy:•••

The Ceres Investor Network on Climate Risk (INCR);
the Institutional Investors Group on Climate Change (IIGCC); andthe Global Business Leadership Platform on Climate Change.

Fossil fuel-fired power generation and especially coal-fired power generation, causes highcarbon emissions. According to the Institute for New Economic Thinking of Oxford School the
carbon reduction goal of the Paris Agreement can only be met by complete decarbonisation of
the electricity sector: “even under the very optimistic assumption that other sectors reduce
emissions in line with a 2°C target, no new emitting electricity infrastructure can be built after
2017 for this target to be met, unless other electricity infrastructure is retired early or retrofittedwith CCS”.101
Similarly, in its 2018 Special Report the IPCC emphasizes that even though limiting global
warming to 1.5°C is technically feasible, all of the modelled emission pathways consistent withsuch a target require rapid decarbonisation of the global energy infrastructure.102
The UN Environment Programme Emissions Gap Report 2019 emphasizes that the world is on
the brink of missing the opportunity to limit global warming to 1.5°C, and that meeting thattarget would require global emissions cuts of 7.6% per year on average.103 A rapid transition of
the global energy sector is considered key to meeting these targets and requires at least:104
•
•
•
•
•

“Expanding Renewable Energy for electrification;
Phasing out coal for rapid decarbonization of the energy system;
Decarbonizing transport with a focus on electric mobility;
Decarbonizing energy-intensive industry; andAvoiding future emissions while improving energy access.”

This is in line with earlier iterations of the Emissions Gap Report, which in 2017 had asserted
that "between 80 and 90% of coal reserves worldwide will need to remain in the ground, if
climate targets are to be reached. This compares with approximately 35% for oil reserves and
50% for gas reserves”.105
The World Energy Outlook 2019 of the International Energy Agency charts a possible scenario
which would be in line with the target of keeping global temperature increases well below 2°C.
While the scenario would be fully aligned with the goals outlined in the Paris Agreement, thereport stresses that it requires “rapid and widespread changes across all parts of the energy
system”, and that “the breadth of the world’s energy needs means that there are no simple orsingle solutions. Sharp cuts are achieved across the board thanks to multiple fuels andtechnologies providing efficient and cost-effective energy services for all”.106
Oil Change International and a coalition of CSOs argued in 2016 that “the reserves in currently
operating oil and gas fields alone, even with no coal, would take the world beyond 1.5°C”. The
organisations therefore recommend that:•“No new fossil fuel extraction or transportation infrastructure should be built, andgovernments should grant no new permits for them.

Page | 41

Some fields and mines – primarily in rich countries – should be closed before fully
exploiting their resources, and financial support should be provided for non-carbon
development in poorer countries.
This does not mean stopping using all fossil fuels overnight. Governments and companies
should conduct a managed decline of the fossil fuel industry and ensure a just transition for
the workers and communities that depend on it”.107••

In 2017, Urgewald and partners published the Coal Exit Database, which “provides key statistics
on over 770 companies whose activities range from coal exploration and mining, coal trading
and transport, to coal power generation and the manufacturing of coal plants”,108 because“investments in new coal power capacity are incompatible with the Paris climate goals as eachnew coal plant locks-in high CO2 emissions for decades to come”.109
WWF published an Asset Owner Guide to Oil & Gas Producers in 2019, outlining the growing
financial risks of continued investment in the oil and gas industries, as well as providing
recommendations for asset owners seeking to align their portfolio with the Paris agreement.
This leads to assessment elements
14

Companies switch from using fossil fuels to using renewable energy sources.

15

Unabated coal-fired power generation (i.e. without operational carbon capture and storage) is
unacceptable.

16

Coal-fired power generation is unacceptable.

17

Fossil fuel-fired power generation is unacceptable.

18

Thermal coal mining is unacceptable.

19

Extracting oil from tar sands is unacceptable.

20

Extracting oil and gas is unacceptable.

Shifting towards a low-carbon economy requires moving away from economic activities withhigh GHG emissions to low emission generating activities. From this perspective, activities suchas extracting fossil fuels and using them for power generation are considered unacceptable(even if they would have operational carbon capture and storage technology). An investment
and finance policy that makes such statements is more credible if it is not followed by all kindsof exceptions and thresholds.
This leads to assessment elements
8

The financial institution does not finance, or invest in, companies which are active in coal-fired
power generation and/or coal mining for more than 30% of their activities .

9

The financial institution does not finance, or invest in, companies which are active in fossil fuelfired power generation and/or extraction of oil and gas for more than 30% of their activities.

10

The financial institution does not finance, or invest in, companies which are active in coal-fired
power generation and/or coal mining for more than 0% of their activities.

11

The financial institution does not finance, or invest in, companies which are active in fossil fuelfired power generation and/or extraction of oil and gas for more than 0% of their activities.

Page | 42

•Biomass for energy generation
Whether biofuels could be helpful in reducing greenhouse gas reduction emissions ultimately
depends on the conditions under which the biomass used for biofuel production is grown. As
such, biomass crops are typically grown on agricultural land that was already used for growing
food or feed. Agricultural production is consequently displaced to other areas, leading toconversion of forests or natural grasslands to agricultural lands elsewhere.
This process is called Indirect Land Use Change (ILUC). ILUC is crucially important for assessing
the sustainability impacts of the expansion of growing crops for biofuels. ILUC especiallyconcerns first generation biofuels, as second- or third generation biofuels can also be madefrom waste of feedstock used for food or feed, and hence do not directly require cropland.
Because of the ILUC problem, no real positive climate impact can be achieved through firstgeneration biofuels.110
The Roundtable on Sustainable Biomaterials (RSB) offers Global Standards that apply to any
type of bio-based feedstock worldwide and EU-RED Standards that apply to feedstock entering
the EU market and comply with the EU Renewable Energy Directive (RED) regarding land-use
and GHG criteria.111 The global RSB Principles are: 112
1. Biofuel operations shall follow all applicable laws and regulations.
2. Sustainable biofuel operations shall be planned, implemented, and continuously improved
through an open, transparent, and consultative impact assessment and management
process and an economic viability analysis.
3. Biofuels shall contribute to climate change mitigation by significantly reducing lifecycle
GHG emissions as compared to fossil fuels.
4. Biofuel operations shall not violate human rights or labour rights, and shall promote decent
work and the well-being of workers.
5. In regions of poverty, biofuel operations shall contribute to the social and economic
development of local, rural and indigenous people and communities.
6. Biofuel operations shall ensure the human right to adequate food and improve foodsecurity in food insecure regions.
7. Biofuel operations shall avoid negative impacts on biodiversity, ecosystems, andconservation values.
8. Biofuel operations shall implement practices that seek to reverse soil degradation and/or
maintain soil health.
9. Biofuel operations shall maintain or enhance the quality and quantity of surface and groundwater resources, and respect prior formal or customary water rights.
10. Air pollution from biofuel operations shall be minimized along the supply chain.
11. The use of technologies in biofuel operations shall seek to maximize production efficiency
and social and environmental performance, and minimize the risk of damages to theenvironment and people.
12. Biofuel operations shall respect land rights and land use rights.
The RSB standards are accompanied by a set of guidelines such as the RSB-Impact Assessment
Guidelines and the RSB-Screening Tool.113

Page | 43

The European Parliament intends to reduce the CO2 emissions of the cultivation for biofuels.
For instance, by 2020 the EU aims to have 10% of the transport fuel of every EU country comingfrom renewable sources such as biofuels. Fuel suppliers are also required to reduce thegreenhouse gas intensity of the EU fuel mix by 6% by 2020 in comparison to 2010.114 Moreover,Directive EU 2015/1513 and the revised 2018 Renewable Energy Directive (RED) haveintroduced measures to reduce the risk of ILUC, including phasing out the use of unsustainablepalm oil as a basis for biofuels.
This leads to assessment element
22•

The production of biomass for energy generation complies with the 12 principles of theRoundtable on Sustainable Biomaterials (RSB).

CO2-compensation
CO2-compensation is a mechanism developed to compensate the CO2 emissions caused bycertain economic activities by investing in other activities which would reduce global CO2
emissions. Investments in tree planting and crops are most popular in this respect (since plants
sequester carbon), but investments in energy saving measures or in renewable energy canserve the same purpose.
Some companies make CO2-compensating investments themselves, to compensate for some
CO2 emissions made during their production processes. Other companies, such as airlines, forexample offer their customers the option to voluntarily pay more for their services, thereby
promising to use the extra income for CO2-compensation. Many airlines have their own CO2compensation price calculation for a green seat. The amount of CO2-emissions is often wrongly
estimated, and not all the greenhouse gases that are emitted during flights are mentioned.115
To guarantee the accuracy and quality of CO2-compensation efforts, a number of independentcertification schemes has been developed:

•

•

•

The Gold Standard for CO2-compensating investments - developed by WWF - identifies
investments that contribute to sustainable development. The Gold Standard contains strict
criteria for certification. These criteria are maintained by means of monitoring, reporting andprocesses of verification.
The Fairtrade Climate Standard is the result of a strategic partnership between Gold Standard
and Fairtrade International. Its Fairtrade Carbon Credits are in essence Gold Standard verified
emissions reductions (VERs) generated by producer organisations that meet Fairtrade eligibility
criteria and achieve a Fairtrade minimum price and premium in the market. The Fairtrade
Minimum Price ensures producers receive prices that cover the average cost of setting up asustainable carbon project. It is calculated according to the project type and related costs andis the starting point for price negotiations between the producer and/or the Facilitator with the
Fairtrade buyer. The selling price may differ from the minimum price, depending on how mucha buyer is willing to pay at the end of the value chain.116
The Verified Carbon Standard (VCS) is voluntary standard for CO2-compensation, developed
and administered by the non-profit organization Verra. In order to guarantee the adequacy of a
CO2-compensation programme, projects are required to adhere to a set of rules andrequirements and are subject to audits by independent third-party experts and Verra staff. The
VCS programme can be combined with the Climate, Community and Biodiversity Standards,
which includes additional requirements and monitoring of the ecological and social aspects of
CO2-compensation projects.

Page | 44

•

The Plan Vivo Standard is another certification framework for CO2-compensation, focused oncommunity land use and forestry projects. The standard puts strong emphasis on improving
the livelihoods of the participants of compensation projects as well as local ecosystems.
This leads to assessment element23•

CO2-compensation is certified according to the criteria of relevant certification schemes for CO2
compensation (mentioned in section 2.2.2).

Lobbying practices
To achieve the reduction targets for GHG emissions agreed in the Kyoto Protocol, the European
Union has for a long time tried to reduce the emission of certain industries consuming highvolumes of fossil fuels, by creating the Emissions Trading System (ETS). Under the ETS,
companies receive an amount of “carbon credits”, corresponding to their present GHG emission
levels. These carbon credits can be traded with other companies, for instance in case othercompany has expansion plans. This mechanism should make increasing GHG emissions more
expensive for companies, while simultaneously making investments in clean energy and energy
saving measures and technologies more profitable – as the excess carbon credits could then be
sold. Once this mechanism would work properly, the European Union would be able tostimulate further reductions by taking carbon credits out of the market.
In practice ETS has never worked properly, also because various companies (such as steel
company Arcelor Mittal) have successfully lobbied against European intervention in theemissions market. Arcelor Mittal’s top executive wrote a letter to the European Commission in
2006, in which he threatened to close down its factories if the Commission would put
restrictions on the issuing of carbon credits.117
Similar lobbying efforts were undertaken by the European steel and chemical industries’ branchorganizations. In 2013 they wrote a letter to the European Parliament, stating that the emission
market should not be changed as this would only increase the costs and aggravate thecompetition between the industries in Europe.118 The Parliament then voted for a proposal, in
which the plans had been diluted, as late as July 2013. In October 2014, the Indian-owned
Dutch steel company Tata Steel wrote a letter to the Dutch government, urging it to consider
the competitive position of the company, as well as its role as employer, in the discussions with
the European Commission about European climate and energy policy.
In 2012 Sandbag published a report with an overview of Belgian companies that benefit fromthe loopholes in Europe’s Emissions Trading System (ETS). According to Sandbag these are allcompanies that (through their branch organisations) actively lobby against improving theclimate policy.119
In 2016 Influence Map published a report estimating five oil and gas companies and tradeassociations “spent almost USD 115 million per year combined on obstructive climate
influencing activities”.120
In its official Guidelines for Multinational Enterprises, the OECD recommends that “in general,
enterprises avoid making efforts to secure exemptions not contemplated in the statutory or
regulatory framework related to human rights, environmental, health, safety, labour, taxation,and financial incentives among other issues, without infringing on an enterprise’s right to seekchanges in the statutory or regulatory framework”.121

Page | 45

This leads to assessment element
24•

Companies do not participate in lobbying (attempting to influence decisions made by regulators)
aimed at weakening climate policies.

Procurement and supply chains
Companies are often part of long procurement and supply chains. This offers companies thatare linked together in these chains the opportunity to monitor one another and to question
how their trading partners respect local and national legislation and international norms on
climate change. The requirements that companies set for their suppliers can be included incontractual agreements.
The importance of this also recognised in the OECD Guidelines for Multinational Enterprises
since its revision in 2011. The OECD Due Diligence Guidance for Responsible Business Conduct
provides practical support to companies on the implementation of the OECD Guidelines forMultinational Enterprises by providing plain language explanations of its due diligence
recommendations. Implementing these recommendations can help companies avoid andaddress adverse impacts that may be associated with their operations, supply chains and otherbusiness relationships.
Also ISO 26000:2010 Guidance on social responsibility recognises the importance of supply
chain responsibility, because “the impacts of an organization's decisions or activities can begreatly affected by its relationships with other organizations”.122 A company’s sphere of
influence includes relationships within and beyond an organization’s supply chain. Moreover,ISO 26000:2010 Guidance on social responsibility recommends setting contractual provisions or
incentives as a means of exercising influence.123
In addition, ISO 20400:2017 Sustainable procurement – Guidance provides guidelines fororganizations, independent of their activity or size, on integrating sustainability withinprocurement, as described in ISO 26000:2010 Guidance on social responsibility. This
procurement guideline is intended for stakeholders involved in, or impacted by, procurement
decisions and processes.
The Climate Action 100+ investor initiative seeks to encourage companies to “take action to
reduce greenhouse gas emissions across their value chain, consistent with the Paris
Agreement’s goal of limiting global average temperature increase to well below 2 degrees
Celsius above pre-industrial levels”.124
This leads to assessment elements
25

Companies integrate climate change criteria in their procurement and operational policies.

26

Companies include clauses on the compliance with criteria on climate change in their contracts
with subcontractors and suppliers.

2.2.3 Assessment elements
Investments that take place today determine the CO2-intensity of all future activities. Therefore, it is
crucial that strict reduction objectives are set now and companies are stimulated to emit less CO2.
Being important financiers of energy projects, financial institutions can play a leading role inshifting investments to a less CO2-intensive economy. Hereby, financial institutions should apply
CO2-avoiding standards in line with the UN-objectives, in order to limit global warming.

Page | 46

The following elements are crucial for a policy regarding the financial institution's internal
operations:
1. For its own direct and indirect greenhouse gas emissions, the financial institution establishes
measurable reduction objectives that is aligned with limiting the maximum global temperature
increase of 1.5°C.
2. For its own internal operations, the financial institution is committed to using only renewableenergy sources.
The following elements are crucial for a policy regarding the financial institution’s management of
its portfolio of corporate loans and investments:
3. For its financed greenhouse gas emissions, i.e. the emissions of the companies in which thefinancial institution invests, the financial institution discloses its share of the emissions of a
selection of companies and/or a specific sector it invests in.
4. For its financed greenhouse gas emissions, the financial institution discloses its share of theemissions of all the companies and projects it invests in.
5. For large scale project financing, the financial institution makes environmental impact
assessments that include data on greenhouse gas emissions and climate risks.
6. For its financed greenhouse gas emissions the financial institution establishes measurable
reduction objectives that are aligned with limiting the maximum global temperature increase to
1.5°C.
7. The financial institution measures and discloses climate-related impacts in line with therecommendations by the Task Force on Climate-related Financial Disclosures.
8. The financial institution does not finance, or invest in, companies which are active in coal-fired
power generation and/or thermal coal mining for more than 30% of their activities.
9. The financial institution does not finance, or invest in, companies which are active in fossil fuelfired power generation and/or extraction of oil and gas for more than 30% of their activities.
10. The financial institution does not finance, or invest in, companies which are active in coal-fired
power generation and/or thermal coal mining for more than 0% of their activities.
11. The financial institution does not finance, or invest in, companies which are active in fossil fuelfired power generation and/or extraction of oil and gas for more than 0% of their activities.
The following elements are crucial for a policy regarding the companies a financial institution
invests in or finances:
12. Companies disclose their direct and indirect greenhouse gas emissions.
13. Companies reduce their direct and indirect greenhouse gas emissions.
14. Companies switch from using fossil fuels to using renewable energy sources.
15. Unabated coal-fired power generation (i.e. without operational carbon capture and storage) is
unacceptable.
16. Coal-fired power generation is unacceptable.
17. Fossil fuel-fired power generation is unacceptable.
18. Thermal coal mining is unacceptable.
19. Extracting oil from tar sands is unacceptable.
20. Extracting oil and gas is unacceptable.
21. Conversion of peatland and high-carbon stocks for agricultural development is unacceptable.
22. The production of biomass for energy generation complies with the 12 principles of theRoundtable on Sustainable Biomaterials (RSB).
23. CO2-compensation is certified according to the criteria of relevant certification schemes forCO2-compensation (mentioned in section 2.2.2).

Page | 47

24. Companies do not participate in lobbying (attempting to influence decisions made byregulators) aimed at weakening climate policy.
25. Companies integrate climate change criteria in their procurement and operational policies.
26. Companies include clauses on the compliance with criteria on climate change in their contracts
with subcontractors and suppliers.

Page | 48

2.3

Corruption

2.3.1 What is at stake?
Corruption has significant negative political, social and environmental consequences. Politically,
corruption forms a large obstacle to developing the rule of law. Government representatives lose
their legitimacy when many abuse their office for personal gain. Bribery and corruption undermine
the trust of the people in the political system, which leads to frustration and apathy. It clears theway for leaders, whether chosen democratically or not, to appropriate national assets forthemselves without supervision. And if corruption is the norm, honest and capable civilians will
leave the country.125
The Transparency International (TI) Corruption Perceptions Index shows that corruption mainly
occurs in poorer countries.126 In many countries, the tax system suffers from corrupt practices.
Corruption lowers tax revenues and limits the possibilities of governments to meet their
obligations.127
Corruption also has negative economic consequences. It leads to capital flight and to expenditureof scarce public funds on unprofitable prestige projects, instead of necessary investments in vital
infrastructure and services like schools, hospitals or drinking water supplies. It also hinders thedevelopment of markets and disturbs free competition. In addition, corruption leads to large scaleplundering of natural resources, such as wood, gemstones and minerals. Large scale, strongly
polluting projects are given free rein in a climate of corruption, often leading to public money
ending up in private hands.128
However, corruption is not limited to poorer countries only. In the Netherlands, the Dutch National
Bank (DNB) investigated corruption risks at Dutch banks and insurers in 2014. The DNB found that
corruption risks, both connected to internal operations as to clients and investee companies, aresufficiently identified, but are not adequately taken care of.129
Lobbying practices can have similar effects as corruption. Although lobbying as such cannot be
regarded as corruption per se, sometimes lobbyists will go so far in striving to influence legislatorsand regulators, for instance by treating them to sponsored conferences or other events, that it canalmost be considered corruption. The influence of the corporate world on the development ofinternational norms is often large and is an important reason for lagging legislative progress.130
Policy measures to prevent corruption are often stronger than those to avoid unwanted lobbying
practices. On the one hand, public institutions have formulated clear rules for their employees towhich they must comply in order to prevent bribery and unwanted influence of particular interestsin public activities. On the other hand, the participation of social and commercial organisations in
the decision-making process is far from transparent. Canada, the United States (USA) and theEuropean Union (EU) have over time adopted measures to improve the transparency of lobbying
practices. Canada and the United States have for instance created mandatory registers fororganisations wishing to participate in decision-making processes. In the EU, a voluntary registerhas been created.

Page | 49

Corruption is covered by Sustainable Development Goal (SDG) 16: Peace, Justice and Strong
Institutions. One of the targets of this goal is to substantially reduce corruption and bribery in all
their forms. Another target is to develop effective, accountable and transparent institutions at alllevels, which also underpins the importance of corruption-free institutions.131 Further, SDG 10:
Reduced Inequalities is based on the premises of reducing corruption for increasing equality
amongst people and countries.132 SDG 1: No Poverty indirectly targets the reduction of corruption
to completely eradicate poverty.133
Money laundering is the practice of making illegally gained sums and flows of money appear legal,
and of a wide variety of strategies to conceal the true source of the money. This is obviously
problematic since it enables individuals and organizations that have not obtained their money
through legal means to participate in the wider economy through regular channels.
One can expect from responsibly operating financial institutions that they do not deliberately assist
clients in money laundering and paying or receiving bribes, and that they do not accept or pay
bribes themselves. Moreover, financial institutions have the responsibility to only grant financial
services to companies that do not engage in corruption and negatively influencing thedevelopment of international norms. When developing policies on corruption, financial institutions
can make use of the international standards described below.
2.3.2 International standards
The main international standards on corruption are summarised per topic, followed by theassessment elements that are formulated by the FFGI as a result:•

Anti-money laundering and beneficial ownership
The international standard in the field of money laundering is set by the Financial Action Task
Force (FATF), a working group established by the OECD in 1989. The FATF comprises 37
members, mostly governments of OECD-member states. The FATF aims to promote thesuccessful implementation of legal, regulatory and operational procedures for combating
money laundering, the financing of terrorists and other associated threats to the integrity of theinternational financial system.
The FATF has developed a set of Forty Recommendations that are considered to be theinternational standards for the combating of money laundering. These recommendations offer
guidelines and tools to governments and financial institutions to fight money laundering andcriminal earnings at all levels. The recommendations were first published in 1990 and the latest
update stems from June 2019. The FATF has also published several Interpretative Notes, which
provide guidance on the application of the guidelines in practice.
Recommendation 12 deals with Politically Exposed Persons (PEPs) and their relatives. Whendealing with PEPs, financial institutions are required to have enhanced due diligence and riskmanagement systems in place.
The Forty Recommendations have been adopted by numerous international institutions, suchas the World Bank and the International Monetary Fund (IMF), as well the governments ofmany countries. In May 2015, the European Union included the latest edition of the Forty
Recommendations in the Fourth AMLD (EU Directive 2015/849).

Page | 50

In December 2014 the European Parliament and Council agreed on listing the ultimate ownersof companies on central public registers. In May 2018 the EU’s Fifth Anti-Money Laundering
Directive (AMLD) was adopted, further strengthening the measures laid out in the earlier EU
anti-money laundering directives. Any company and trust registered in an EU member state is
now required to provide information about its “beneficial owner” including: name, month andyear of birth, nationality, country of residence and as well as the nature and extent of thebeneficial interest held.
In a 2011 report the World Bank's Stolen Asset Recovery Initiative developed a guidance on
how to prevent corruption via the hiding of stolen assets. The report examines the links
between large-scale corruption by high-level public officials and the concealment of stolen
assets through opaque shell companies, foundations, and trusts. The initiative urges all financial
institutions to collect beneficial ownership information about the company and continue tomonitor whether this information is accurate.134
The Wolfsberg Group, a group of 11 international banks that undertake many activities in thefield of private banking (banking for rich private clients), published a revised edition of theWolfsberg Anti-Money Laundering Principles on Private Banking in May 2012. In theseprinciples, the Forty Recommendations are further elaborated on asset management andprivate banking. In addition, the Wolfsberg Group has also published various other principles in
the field of money laundering, financing of terrorism and corruption.
This leads to assessment elements•

2

The financial institution has an anti-money laundering policy.

3

The financial institution has a policy to prevent terrorist financing and financing of proliferation.

4

The financial institution properly verifies the ultimate beneficial owner(s) of a company.

7

Companies publicly disclose their ultimate beneficial owner or owners including full name, date ofbirth, nationality, jurisdiction of residence, number and categories of shares, and if applicable theproportion of shareholding or control.

Corruption and bribery
The 2004 UN Convention against Corruption (UNCAC) contains minimum standards in order toprevent corruption as well as money laundering. It explains what states would have to do toprevent, and bring to trial, corruption and money laundering and provides recommendations
on international cooperation and recovery of capital. As of November 2019, the convention has
been signed by 140 nations.135 In 2011, these nations agreed to establish a Mechanism for the
Review of Implementation of the UNCAC.
The main international standard with respect to fighting international corruption is the OECD
Convention on Combating Bribery of Foreign Public Officials in International BusinessTransactions, which came into force in February 1999. The convention obliges countries tomake paying bribes to foreign public officials a criminal offence. As of November 2019, allOECD member countries and eight other countries have ratified the convention, which obliges
them to implement this convention in their national legislation.136
The 2011 OECD Guidelines for Multinational Enterprises state: “Enterprises should not, directly
or indirectly, offer, promise, give, or demand a bribe or other undue advantage to obtain or
retain business or other improper advantage.” This is further elaborated in seven detailed
guidelines.

Page | 51

In 2013 Transparency International published the Business Principles for Countering Bribery, aframework that can help companies to draft an effective anti-corruption policy. The reportstresses the importance of implementing principles and policies in anti-bribery programmes.
Although a lot of large companies have an anti-corruption policy, the implementation often
leaves much to be desired and in practice bribes are still regularly being paid.137 In addition,
Transparency International published an edition of the business principles specifically for small
and medium enterprises (SMEs). To help companies with the implementation of their anticorruption policy, TI provides the Corruption Fighters’ Tool Kit.
The 2017 Wolfsberg Anti-Bribery and Corruption Guidance, a revised, extended and renamed
version of the Wolfsberg Statement against Corruption, includes measures with which financial
institutions can prevent corruption in their own organisation and protect themselves against
abuse of their institutions for corruption practices.
This leads to assessment elements•

1

Offering, promising, giving and requiring, either directly or indirectly, bribes and other undue
advantages in order to acquire and to maintain assignments and other undue advantages, isunacceptable.

8

Offering, promising, giving and requiring, either directly or indirectly, bribes and other undue
advantages in order to acquire and to maintain assignments and other undue advantages, isunacceptable.

9Companies have a management system which results in immediate actions if suspicions arise that
employees or suppliers are guilty of corruption.

Lobbying practices
Non-transparent lobbying practices can have similar effects as corruption. Various national andregional initiatives try to provide insight into the interests of organisations within legislation
processes. The European Commission has drafted a voluntary register for interest
representatives in 2008 within the framework of the European Transparency Initiative. It aims to
inform the public which general or specific interests groups influence the decision-making
process of the European institutions and what budget they have. Organisations that register
can make clear that they work in a transparent and legitimate way. By registering, they promise
to comply with the Transparency Register Code of Conduct. Because the register is voluntary,social organisations call upon the European Commission to adopt the example set by theUnited States and Canada where registration is obliged.
This leads to assessment elements•

6

The financial institution reports on its participation in the decision-making processes ofinternational norms and legislation (lobby practices).

10Companies report on their participation in the decision-making processes of international norms
and legislation (lobby practices).

Procurement and supply chains
Companies are often part of long procurement and supply chains. They can monitor one
another and question how they respect local and national legislation and international norms
on tax and corruption. The requirements that companies set for their suppliers can be included
in contractual agreements.

Page | 52

The importance of this also recognised in the OECD Guidelines for Multinational Enterprises
since its revision in 2011. The OECD Due Diligence Guidance for Responsible Business Conduct
provides practical support to companies on the implementation of the OECD Guidelines forMultinational Enterprises by providing plain language explanations of its due diligence
recommendations. Implementing these recommendations can help companies avoid andaddress adverse impacts that may be associated with their operations, supply chains and otherbusiness relationships.
Also ISO 26000:2010 Guidance on social responsibility recognises the importance of supply
chain responsibility, because “the impacts of an organization's decisions or activities can begreatly affected by its relationships with other organizations”.138 A company’s sphere of
influence includes relationships within and beyond an organization’s supply chain. Moreover,the ISO 26000 Guidance recommends setting contractual provisions or incentives as a means of
exercising influence.139
In addition, ISO 20400:2017 Sustainable procurement – Guidance provides guidelines fororganizations, independent of their activity or size, on integrating sustainability withinprocurement practices, as described in ISO 26000:2010 Guidance on social responsibility. It is
intended for stakeholders involved in, or impacted by, procurement decisions and processes.
This leads to assessment elements
11

Companies integrate criteria on corruption in their procurement policies and operational policies.

12

Companies include clauses on the compliance with criteria on corruption in their contracts with
subcontractors and suppliers.

2.3.3 Assessment elements
For financial institutions, the issue of corruption is relevant in two ways. Firstly, international
financial institutions are multinational corporations themselves and therefore can be expected tohave a policy to prevent them from paying or receiving bribes, or becoming involved in any othercorruption practice. Secondly, the possible involvement in corruption practices is an issue on which
financial institutions should assess all companies they invest in or finance, even if the financial
institution does not actively facilitate the corrupt payments made by the company.
The following elements are crucial for a policy regarding the financial institution's internal
operations:
1. Offering, promising, giving and requiring, either directly or indirectly, bribes and other undue
advantages in order to acquire and to maintain assignments and other undue advantages, isunacceptable.
2. The financial institution has an anti-money laundering policy.
3. The financial institution has a policy to prevent terrorist financing and financing of proliferation.
4. The financial institution properly verifies the ultimate beneficial owner(s) of a company.
5. The financial institution applies additional safeguards when it enters into indirect or directbusiness relations with Politically Exposed Persons.
6. The financial institution reports on its participation in the decision-making processes ofinternational norms and legislation (lobby practices).
The following elements are crucial for a policy regarding the companies a financial institution
invests in or finances:

Page | 53

7. Companies publicly disclose their ultimate beneficial owner or owners including full name, dateof birth, nationality, jurisdiction of residence, number and categories of shares, and if applicable
the proportion of shareholding or control.
8. Offering, promising, giving and requiring, either directly or indirectly, bribes and other undue
advantages in order to acquire and to maintain assignments and other undue advantages, isunacceptable.
9. Companies have a management system which results in immediate actions if suspicions arisethat employees or suppliers are guilty of corruption.
10. Companies report on their participation in the decision-making processes of international
norms and legislation (lobby practices).
11. Companies integrate criteria on corruption in their procurement policies and operational
policies.
12. Companies include clauses on the compliance with criteria on corruption in their contracts with
subcontractors and suppliers.

Page | 54

2.4

Gender equality

2.4.1 What is at stake?
Gender refers to socially constructed identities, attributes and roles for women and men.140 In
short, gender determines what is expected, allowed and valued in a women or a man in a given
context. Gender equality refers to the equal rights, responsibilities and opportunities of women andmen.141 Equality between women and men requires that women’s and men’s rights, responsibilities
and opportunities do not depend on whether they are born male or female.
While gender inequalities also affect men and transgenders and can be applied also at the level ofsexual orientation (lesbian, gay, bisexual), this chapter focuses on gender inequalities in relation to
women. The gendered construction of women’s identities, attributes and roles in society hashistorically produced an imbalance of power between men and women. To offer some examples:
•

•

•

•
•

•

Poverty rates are higher for women than for men, particularly when it comes to non-partnered
women with children in developed and developing regions and older women in one-personhouseholds;142
Women have less access to formal financial systems: in 2017, only 65 per cent of women had anindividual or joint payments or savings account at a formal financial institution, compared to 72
per cent of men. This shows a persistent gender gap of 7 percentage points worldwide. In
developing economies the gender gap remained at 9 percentage points.143
Legal rights of women remain unequal compared to the rights of men in most countries: a 2019
World Bank’s study concluded that while there has been significant progress over the last
decade, only in six out of the 187 studied countries women are on a completely equal legal
standing.144
Women are less likely to be employed than men and, when they are employed, they are more
likely to be paid less than their male colleagues or receive insufficient parental leave;145
Gender-based violence affects at least 35% of women globally, according to 2013 figures by
the World Health Organisation (WHO).146 Moreover, in the majority of countries, less than halfof the women who experience violence seek help.147
Women remain a minority among senior managers in the private sector: a 2019 Equileap studyof over 3,000 companies found that only 10% had gender-balanced boards and only 6% had
gender-balanced executive teams.148

Companies can impact the entire range of gender issues and have an enormous impact on
people’s lives and the communities in which they operate. For example, the fact that one billion
women still do not use or have access to the financial system creates difficulties for women incollecting and saving income, makes women more vulnerable to economic and social exclusionand challenges the effective enjoyment of their economic, social and cultural rights.149 Moreover,the highly visible inequality between women and men in leadership and decision-making positions
both in public and private institutions, may infringe the right to equal access to public services andthe right to equality and non-discrimination. These situations also serve to illustrate how businessactivities may create or exacerbate gender inequalities.150
The impacts that businesses have on gender equality have largely been documented by civilsociety organisations (CSOs).151 The Gender, Business and Human Rights Reference Group for the
Office of the High Commissioner on Human Rights (OHCHR) emphasizes that an ostensibly
gender-neutral approach to policymaking renders invisible important gender issues, andmarginalizes women’s experiences.152 Many CSOs instead suggest adopting a gendermainstreaming approach.153

Page | 55

Gender mainstreaming refers to the process of assessing the implications for women and men of
any planned action, including legislation, policies or programmes, in all areas and at all levels.154
This is a strategy for making women’s as well as men’s concerns and experiences an integral
dimension of the design, implementation, monitoring and evaluation of policies and programmes.
If, for example, a community is resettled as a result of a large-scale infrastructure project, a gendermainstreaming approach would require companies to consider whether such resettlement may
have different, disproportionate or unforeseen impacts on women and men, including familial
responsibilities, economic opportunities and child care.
Gender equality is addressed in many of the Sustainable Development Goals (SDGs). SDG: 5 on
Gender Equality focuses on improving gender balance in countries. The ambitious targets under
this goal include eliminating all forms of gender discrimination, violence, sexual exploitation, earlymarriages, improving equal rights to economic resources, and strengthening legislation to promote
gender equality and empowerment of women.155 SDG: 10 on Reduced Inequalities also aims toempower and promote the social, economic and political inclusion of all, irrespective of age, sex,
disability, race, ethnicity, origin, religion or economic or other status by 2030.156
SDG: 1 on No Poverty focuses on eradicating poverty. One of the targets is to ensure that all men
and women have equal rights to economic resources, as well as access to basic services, ownershipand control over land and other forms of property, inheritance, natural resources, appropriate newtechnology and financial services, including microfinance by 2030. Another target is to createsound policy frameworks at the national, regional and international levels, based on pro-poor andgender-sensitive development strategies.157
SDG: 4 on Quality Education, focusing on ensuring good education to every child, also includes agender approach: “By 2030, eliminate gender disparities in education and ensure equal access to alllevels of education and vocational training for the vulnerable, including persons with disabilities,
indigenous peoples and children in vulnerable situations.”158 SDG: 8 on Decent Work and Economic
Growth includes a target to achieve decent work for all men and women with equal pay for work ofequal value by 2030.159
While gender mainstreaming for policies and programmes is a specific focus of internationalorganizations, such as the International Labour Organisation (ILO) and the United Nations (UN),this is not the case for the private sector. For businesses, considering gender specific impact is still
an emerging issue. Corporate governance codes and guidelines, including responsible investment
and finance policies, rarely adopt a ‘gender perspective’ or ‘gender mainstreaming approach’.160
Moreover, Marston Consulting concludes in a research paper that “as of the most recent research,
there is little or no systematic guidance to help companies mainstream and report on gendersensitive practices globally”.161 Since 2016, Equileap has been publishing one of the few tools thatexist for measuring gender equality in the private sector.162
Gender equality relates to the other cross-cutting themes in the FFG methodology not only
because of the inherent gender-based human rights risks associated with environmental, social andgovernance issues. A number of studies have pointed out that increased board diversity incompanies is associated with better performance on corporate sustainability and social
responsibility indicators.163 Hence, promoting gender equality in companies and financial
institutions’ operations provides the potential for indirectly advancing positive change throughout
the different sectors and themes analysed in the FFG Methodology.

Page | 56

As shown in section 2.4.2, a large number of international standards exist which could help
companies – including financial institutions – to promote gender equality. The policies of financial
institutions, both as a direct employer and as an influencer of the companies they are financing orinvesting in, can have a great impact on achieving gender equality.
2.4.2 International Standards and initiatives
Equality between women and men has been widely recognized in specific human rights andsustainability standards. The main international standards on gender are summarised below,
followed by the assessment elements that are formulated by the FFGI as a result:•

United Nations Charter, the Universal Declaration of Human Rights and the International
Bill of Rights
Gender equality is at the very heart of human rights and United Nations values.164 The United
Nations Charter was adopted in 1945 and establishes as a fundamental principle the "equal
rights of men and women".165
Moreover, the 1948 United Nations' Universal Declaration of Human Rights formulates the rightto equality and non-discrimination: “Everyone is entitled to all the rights and freedoms set forthin this Declaration, without distinction of any kind, such as race, colour, sex, language, religion,
political or other opinion, national or social origin, property, birth or other status”.166 The rightto equality and non-discrimination is also recognized in the United Nations' International
Covenant on Civil and Political Rights and the International Covenant on Economic, Social andCultural Rights.
This leads to assessment elements•

1

The financial institution has an explicitly gender-sensitive zero tolerance policy commitment
towards all forms of gender-based discrimination in employment and occupation, including
psychological harm and verbal, physical and sexual harassment.

8

Companies have an explicitly gender-sensitive zero tolerance policy towards all forms of genderbased discrimination, including psychological harm and verbal, physical and sexual harassment.

Convention on the Elimination of all forms of Discrimination against Women
The Convention on the Elimination of all forms of Discrimination against Women (CEDAW) is
the main international treaty for women’s rights. Adopted by the United Nations in 1979, it
defines what constitutes discrimination against women and sets up an agenda for national
action to end such discrimination.167
CEDAW provides the legal basis for developing international legal regulation on women,
business and human rights when imposing the obligations to prevent violations by private
individuals and actors:••

According to the Committee on the Elimination of all forms of Discrimination against
Women (CCEDAW) state parties must “protect women from discrimination by private
actors”.168 In that sense, state parties must “react actively against discrimination against
women, regardless of whether such acts or omissions are perpetrated by the State or by
private actors.”169
In addition, state parties must “formulate and implement a policy that is targeted as clearlyas possible towards the goal of fully eliminating all forms of discrimination against womenand achieving women’s substantive equality with men.”170 The policy “must becomprehensive” and “apply to both public and private economic spheres”.171 Moreover, thisPage | 57

“policy must engage the private sector, including business enterprises, the media,
organizations, community groups and individuals, and enlist their involvement in adopting
measures that will fulfil the goals of the Convention in the private economic sphere”.172
Finally, “the full implementation of the Convention requires States to take positive measures
to eliminate all forms of violence against women”.173•

Although the state party is ultimately responsible for carrying out the obligations under
CEDAW, non-state actors, including business entities, play a critical role in ensuring that womenenjoy their rights to non-discrimination and substantive equality. For example, in the
concluding observations, CEDAW has made recommendations directly to the media and healthcare providers.174
This leads to assessment elements•

1

The financial institution has an explicitly gender-sensitive zero tolerance policy commitment
towards all forms of gender-based discrimination in employment and occupation, including
psychological harm and verbal, physical and sexual harassment.

7

Companies have made a policy commitment to mitigate the human rights risks faced by people asa result of their gender.

8

Companies have an explicitly gender-sensitive zero tolerance policy towards all forms of genderbased discrimination, including psychological harm and verbal, physical and sexual harassment.

International Labour Organization conventions
Gender equality is a main element for the International Labour Organization (ILO) in reachingits primary goal of promoting opportunities for women and men to obtain decent work.175 Thisis reflected in relevant international labour standards, but also in the increasing research focusof the ILO on gender equality.176 The four key ILO gender equality Conventions are thefollowing:••••

The 1951 Equal Remuneration Convention (No. 100);
The 1958 Discrimination (Employment and Occupation) Convention (No. 111);
The 1981 Workers with Family Responsibilities Convention (No. 156); andThe 2000 Maternity Protection Convention (No. 183).

Conventions 100 and 111 are also among the ILO Declaration on Fundamental Principles andRights at Work, making clear that equality and non-discrimination are also at the very heart of
the ILO.
In addition, the ILO has specifically addressed multinationals and the private sector in the 2017
fifth edition of its Tripartite Declaration of Principles Concerning Multinational Enterprises andSocial Policy (MNE Declaration). The MNE Declaration contains two relevant references togender equality that are aligned with ILO Conventions 100 and 111. These are the following:••Multinational enterprises should be guided by the principle of “equality of opportunity andtreatment” throughout their operations.177
Multinational enterprises should base hiring procedures on qualifications, skills andexperience, and offer staff training on all levels and to avoid discrimination of employees(based on ethnicity, gender or social background).178

Page | 58

This leads to assessment elements•

1

The financial institution has an explicitly gender-sensitive zero tolerance policy commitment
towards all forms of gender-based discrimination in employment and occupation, including
psychological harm and verbal, physical and sexual harassment.

1

The financial institution has systems in place to actively manage pay equity.

2

The financial institution has systems in place to prevent and mitigate gender discrimination of its
customers.

8

Companies have an explicitly gender-sensitive zero tolerance policy towards all forms of genderbased discrimination, including psychological harm and verbal, physical and sexual harassment.

9Companies have systems in place to actively manage pay equity.

United Nations Guiding Principles on Business and Human Rights
The United Nations Guiding Principles on Business and Human Rights (UNGPs) make brief, but
valuable mention of the principle of non-discrimination and the unique risks women and men
face in the context of business activities:••

The preamble reads: “These Guiding Principles should be implemented in a nondiscriminatory manner, (…) and with due regard to the different risks that may be faced by
women and men”.179
In addition, when conducting human rights due diligence “business enterprises should pay
special attention to any particular human rights impacts on individuals from groups or
populations that may be at heightened risk of vulnerability or marginalization, and bear inmind the different risks that may be faced by women and men”.180

The Gender, Business and Human Rights Reference Group has elaborated how to integrate agender perspective into the business responsibility to respect human rights.181 Its main
recommendations are the following:182••

Include gender mainstreaming within policies and procedures;Collect and analyse sex‐disaggregated data for assessing and addressing human rights
impacts;

In 2019, the Human Rights Council (HRC) published a report on the gender dimensions of the
UNGPs. Drawing on the principle on non-discrimination and the need for special attention to
the human rights risks faced by women, the report provides guidance on how to include agender framework in the implementation of the Guiding Principles. In line with the UNGPs’
emphasis on the three elements of policy, due diligence and remedy (see section 2.6.1), thereport suggests that addressing gender through the UNGPs requires:183•••

Gender-responsive assessment, capable of responding to “differentiated, intersectional anddisproportionate adverse impacts on women’s human rights”;
Gender-transformative measures, capable of “bringing change to patriarchal norms andunequal power relations that underpin discrimination, gender-based violence and genderstereotyping”; andGender-transformative remedies, similarly capable of mitigating and altering discriminatory
and unequal power relations.

This provides an opportunity to further elaborate the meaning of the UNGPs for women’s
rights issues in the context of business and how they can be applied.

Page | 59

This leads to assessment element
7•

Companies have made a policy commitment to mitigate the human rights risks faced by people asa result of their gender.

Beijing Declaration and Platform for Action
The Beijing Declaration and Platform for Action was produced after the 1995 United Nations'
Fourth World Conference on Women. The Beijing Declaration contains a standard for genderbalance in decision-making positions. According to the Beijing Declaration, “removing all the
obstacles to women's active participation in all spheres of public and private life through a fulland equal share in economic, social, cultural and political decision-making”, is fundamental forthe achievement of gender equality.184 In that regard, the Beijing Declaration calls on
governments and the private sector to “take measures to ensure women's equal access to andfull participation in power structures and decision-making”.185
This objective has been operationalized by, among other indicators, requiring gender quotas
for senior level positions and corporate boards. In this context, the European Commission has
repeatedly proposed directives to set a minimum objective of 40% of the under-represented
sex in non-executive board-members position in publicly listed companies in Europe.186
Moreover, a number of EU member states, including Belgium, France, the Netherlands, andSweden have adopted (before the European Commission’s Directive proposal) different typesof laws, including binding and voluntary gender quotas, for company boards.187
This leads to assessment elements•

3

The financial institution guarantees at least 30% participation and equal access of women and men
at senior level positions.i

4

The financial institution guarantees at least 40% participation and equal access of women and men
at senior level positions.

11

Companies guarantee at least 30% participation and equal access of women and men at seniorlevel positions.

12

Companies guarantee at least 40% participation and equal access of women and men at seniorlevel positions.

OECD Guidelines for Multinational Enterprises
The OECD Guidelines for Multinational Enterprises also contain relevant standards forresponsible enterprise behaviour on gender equality:••iEnterprises are expected to “promote equal opportunities for women and men with special
emphasis on equal criteria for selection, remuneration, and promotion, and equal
application of those criteria, and prevent discrimination or dismissals on the grounds ofmarriage, pregnancy or parenthood”.188
Moreover, business enterprises should pay special attention to any particular human rights
impacts on individuals from groups or populations that may be at heightened risk inparticular industry and context, as for example women.189‘Senior level positions’ in this methodology implies the Board of Directors, executive positions and senior
management. In absolute numbers this percentage means that for a Board of Directors consisting of two or threemembers, at least one is female, and for a BoD consisting of five members, at least two are female.

Page | 60

The OECD Guidelines recognizes that companies are often part of long production chains.
They can monitor one another and question how they respect local and national legislationand international norms on gender equality. The requirements that companies set for their
suppliers can be included in contractual agreements.190•

This leads to assessment elements•

1

The financial institution has an explicitly gender-sensitive zero tolerance policy commitment
towards all forms of gender-based discrimination in employment and occupation, including
psychological harm and verbal, physical and sexual harassment.

1

The financial institution has systems in place to actively manage pay equity.

2

The financial institution has systems in place to prevent and mitigate gender discrimination of its
customers.

6

The financial institution provides targeted professional development for employees to promoteequal access for women to senior level positions.

7

Companies have made a policy commitment to mitigate the human rights risks faced by people asa result of their gender.

8

Companies have an explicitly gender-sensitive zero tolerance policy towards all forms of genderbased discrimination, including psychological harm and verbal, physical and sexual harassment.

9Companies have systems in place to actively manage pay equity.

10

Companies have systems in place to prevent and mitigate gender discrimination of its customers.

13

Companies provide targeted professional development, and where necessary also education andtraining, for employees to promote equal access for women to senior level positions.

IFC Performance Standards
The relevant IFC Performance Standards on gender equality are the following:“The client will base the employment relationship on the principle of equal opportunity andfair treatment, and will not discriminate with respect to any aspects of the employment
relationship, such as recruitment and hiring, compensation (including wages and benefits),
working conditions and terms of employment, access to training, job assignment,
promotion, termination of employment or retirement, and disciplinary practices”.191"The client will take measures to prevent and address harassment, intimidation, and/or
exploitation, especially in regard to women".192••

This leads to assessment elements
1

The financial institution has an explicitly gender-sensitive zero tolerance policy commitment
towards all forms of gender-based discrimination in employment and occupation, including
psychological harm and verbal, physical and sexual harassment.

1

The financial institution has systems in place to actively manage pay equity.

6

The financial institution provides targeted professional development for employees to promoteequal access for women to senior level positions.

8

Companies have an explicitly gender-sensitive zero tolerance policy towards all forms of genderbased discrimination, including psychological harm and verbal, physical and sexual harassment.

9Companies have systems in place to actively manage pay equity.

13

Companies provide targeted professional development, and where necessary also education andtraining, for employees to promote equal access for women to senior level positions.

Page | 61•

Women’s empowerment principles
The Women’s Empowerment Principles (WEP) are a joint undertaking of the Global Compact
and UN Women. These principles provide a tool for business to assess and benchmark theirown business policies and practices against gender equality international standards. The
principles are the following:193•

Establish high-level corporate leadership for gender equality. Relevant organizational goals
are:
•

•

Treat all women and men fairly at work - respect and support human rights and nondiscrimination. Relevant organizational goals are:
•
•
•

•

Establish a zero-tolerance policy towards all forms of violence at work, including verbal
and/or physical abuse and prevent sexual harassment.

Promote education, training and professional development for women.
Implement enterprise development, supply chain and marketing practices that empower
women. Relevant organizational goals are:
•
•
•

•
•

Pay equal remuneration, including benefits, for work of equal value and strive to pay aliving wage to all women and men.
Ensure that workplace policies and practices are free from gender-based discrimination.
Implement gender-sensitive recruitment and retention practices and proactively recruitand appoint women to managerial and executive positions and to the corporate boardof directors.

Ensure the health, safety and well-being of all women and men workers. Relevantorganizational goals are:•••Ensure that all policies are gender-sensitive.

Support gender-sensitive solutions to credit and lending barriers.
Ask business partners and peers to respect the company’s commitment to advancing
equality and inclusion.
Ensure that company products, services and facilities are not used for human trafficking
and/or labour or sexual exploitation.

Promote equality through community initiatives and advocacy.
Measure and publicly report on progress to achieve gender equality. Relevantorganizational goals are:••••Make public the company policies and implementation plan for promoting genderequality.
Establish benchmarks that quantify inclusion of women at all levels.
Measure and report on progress, both internally and externally, using data
disaggregated by sex.
Incorporate gender markers into ongoing reporting obligations.

As to the implementation of these principles and the tools for measuring progress, the WEP’s
recommend:194••

Define clearly company’s strategic case for advancing gender equality within theorganization and in its field.
Prominently publicize an explicit company statement that prohibits gender-based
discrimination in hiring, retention policies, promotion, salaries and benefits.

Page | 62

This leads to assessment elements•

1

The financial institution has an explicitly gender-sensitive zero tolerance policy commitment
towards all forms of gender-based discrimination in employment and occupation, including
psychological harm and verbal, physical and sexual harassment.

1

The financial institution has systems in place to actively manage pay equity.

2

The financial institution has systems in place to prevent and mitigate gender discrimination of its
customers.

6

The financial institution provides targeted professional development for employees to promoteequal access for women to senior level positions.

8

Companies have an explicitly gender-sensitive zero tolerance policy towards all forms of genderbased discrimination, including psychological harm and verbal, physical and sexual harassment.

9Companies have systems in place to actively manage pay equity.

10

Companies have systems in place to prevent and mitigate gender discrimination of its customers.

13

Companies provide targeted professional development, and where necessary also education andtraining, for employees to promote equal access for women to senior level positions.

The UN Declaration on the Rights of Indigenous Peoples
The UN Declaration on the Rights of Indigenous Peoples adopted by the UN General Assemblyin 1997 calls on States to pay particular attention to the rights and special needs of indigenous
women when measures are taken to ensure continuing improvement of economic and social
conditions. It also calls for full protection and guarantees against all forms of violence anddiscrimination against women.195
This leads to assessment elements•

1

The financial institution has an explicitly gender-sensitive zero tolerance policy commitment
towards all forms of gender-based discrimination in employment and occupation, including
psychological harm and verbal, physical and sexual harassment.

8

Companies have an explicitly gender-sensitive zero tolerance policy towards all forms of genderbased discrimination, including psychological harm and verbal, physical and sexual harassment.

Other guidelines for companies
The Gender Equality Global Report and Ranking is a private initiative developed by Equileap
that aims to accelerate gender equality in the workplace. The ranking is part of acomprehensive tool-kit designed to make the gender performance of public companies
transparent and comparable, and to enable corporations to understand how they can improve
performance. Equileap scores companies in four categories:••••

A: Gender Balance in Leadership and Workforce
B: Equal Compensation and Work/Life Balance
C: Policies Promoting Gender Equality
D: Commitment to Women’s Empowerment

Within category A, Equileap measures the percentage of male and female in the Board of
Directors, executive positions and senior management.196

Page | 63

This leads to assessment elements•

3

The financial institution guarantees at least 30% participation and equal access of women and men
at senior level positions. i

5

The financial institution guarantees at least 40% participation and equal access of women and men
at senior level positions.

11

Companies guarantee at least 30% participation and equal access of women and men at seniorlevel positions.

12

Companies guarantee at least 40% participation and equal access of women and men at seniorlevel positions.

Procurement and supply chains
Companies are often part of long procurement and supply chains. They can monitor one
another and question how they respect local and national legislation and international norms
on labour rights. The requirements that companies set for their suppliers can be included incontractual agreements.
The importance of this has also been recognised in the OECD Guidelines for Multinational
Enterprises since its revision in 2011. The OECD Due Diligence Guidance for Responsible
Business Conduct provides practical support to companies on the implementation of the OECD
Guidelines for Multinational Enterprises by providing plain language explanations of its due
diligence recommendations. Implementing these recommendations can help companies avoid
and address adverse impacts that may be associated with their operations, supply chains andother business relationships.
Furthermore, ISO 26000:2010 Guidance on social responsibility recognises the importance of
supply chain responsibility, because “the impacts of an organization's decisions or activities canbe greatly affected by its relationships with other organizations”.197 A company’s sphere of
influence includes relationships within and beyond an organization’s supply chain. Moreover,ISO 26000:2010 Guidance on social responsibility recommends setting contractual provisions or
incentives as a means of exercising influence.198
In addition, ISO 20400:2017 Sustainable procurement – Guidance provides guidelines fororganizations, independent of their activity or size, on integrating sustainability withinprocurement, as described in ISO 26000:2010 Guidance on social responsibility. It is intended
for stakeholders involved in, or impacted by, procurement decisions and processes.
This leads to assessment elementsi14Companies include gender and women’s rights criteria in their procurement and operational
policies.

15

Companies include clauses on the compliance with gender and women’s rights criteria in theircontracts with subcontractors and suppliers.

‘Senior level positions’ in this methodology implies the Board of Directors, executive positions and senior
management. In absolute numbers this percentage means that for a Board of Directors consisting of two or threemembers, at least one is female, and for a BoD consisting of five members, at least two are female.

Page | 64

2.4.3 Assessment elements
The following elements are crucial for a policy regarding the financial institution's internal
operations:
1. The financial institution has an explicitly gender-sensitive zero tolerance policy commitment
towards all forms of gender-based discrimination in employment and occupation, including
psychological harm and verbal, physical and sexual harassment.
2. The financial institution has systems in place to actively manage pay equity.
3. The financial institution has systems in place to prevent and mitigate gender discrimination of
its customers.
4. The financial institution guarantees at least 30% participation and equal access of women andmen at senior level positions.i
5. The financial institution guarantees at least 40% participation and equal access of women andmen at senior level positions.
6. The financial institution provides targeted professional development for employees to promoteequal access for women to senior level positions.
The following elements are crucial for a policy regarding companies a financial institution invests inor finances:
7. Companies have made a policy commitment to mitigate the human rights risks faced by people
as a result of their gender.
8. Companies have an explicitly gender-sensitive zero tolerance policy towards all forms ofgender-based discrimination, including psychological harm and verbal, physical and sexual
harassment.
9. Companies have systems in place to actively manage pay equity.
10. Companies have systems in place to prevent and mitigate gender discrimination of its
customers.
11. Companies guarantee at least 30% participation and equal access of women and men at seniorlevel positions.
12. Companies guarantee at least 40% participation and equal access of women and men at seniorlevel positions.
13. Companies provide targeted professional development, and where necessary also educationand training, for employees to promote equal access for women to senior level positions.
14. Companies include gender and women’s rights criteria in their procurement and operational
policies.
15. Companies include clauses on the compliance with gender and women’s rights criteria in theircontracts with subcontractors and suppliers.

i‘Senior level positions’ in this methodology implies the Board of Directors, executive positions and senior
management. In absolute numbers this percentage means that for a Board of Directors consisting of two or threemembers, at least one is female, and for a BoD consisting of five members, at least two are female.

Page | 65

2.5

Health

2.5.1 What is at stake?
Good health is of great value, for individuals as well as for economies. Globally, health care costs
are rapidly increasing and for many developing countries these costs are hard to bear.199
Furthermore, illness or handicap decrease labour productivity and also limits the abilities ofindividuals to contribute to the society in which they live. For this reason it is of great social andeconomic importance that companies put health on the agenda.
The right to health is an acknowledged human right, first formulated in 1946 at the foundation of
the World Health Organisation (WHO) as “the enjoyment of the highest attainable standard ofhealth”.200 The right to health is also recognized in the International Covenant on Economic, Social
and Cultural Rights (ICESCR) as “the right to enjoy the highest possible standard of physical andmental health”.201 The right to health is also mentioned in Article 25 of the Universal Declaration of
Human Rights.
The right to health is broader than merely access to healthcare. It includes access to safe drinking
water, proper sanitary provisions, safe food, housing, healthy working conditions, education andinformation on health, and gender equality. In addition, healthcare provisions have to be accessible
to everyone both physically as well as economically. This interpretation of the right to health has
been endorsed by the WHO, the Office of the High Commissioner of Human Rights (OCHCR) andthe Committee on Economic, Social and Cultural Rights (CESCR).202
The WHO points out that, while governments must take responsibility for protecting the right tohealth, companies have a responsibility to do so as well. However, there is not yet (scientific andpolitical) agreement as to the extent and the exact interpretation of this responsibility.203 According
to ISO 26000:2010 Guidance on social responsibility, companies should first prevent affecting thehealth of their employees, clients, and nearby residents with their products and production
processes.204
Furthermore, companies should ensure that their employees and employees of their suppliers are
not exposed to hazardous substances, that they do not incur diseases during their work, and thatthey do not have to work in dangerous circumstances.205 According to the International Labour
Organisation (ILO), 2.8 million people die every year as a result of occupational accidents or workrelated diseases. The number of non-fatal accidents at work, many of these resulting in extended
absences from work, is estimated by the ILO at 374 million each year globally.206
Unsafe or inadequate water, sanitation, and hygiene are linked to transmission of diseases such as
cholera, diarrhoea and dysentery. Drinking contaminated water causes approximately 485.000
deaths annually. Almost 1 billion people lack access to safe drinking water. Sharp geographic,sociocultural and economic inequalities persist. Women, children, and the economicallydisadvantaged are the most severely affected by water quality impacts. Sectors such as agriculture,
fishing, and animal husbandry all rely on the presence of sufficient and clean water, while climatechange, population growth, demographic changes and urbanization pose challenges for watersupply systems. Moreover, by 2025, half of the world’s population will be living in water-stressed
areas. Management of all water resources will need to be improved to ensure provision andquality.207
Air pollution is a major health problem, with WHO data showing that air pollution kills an
estimated seven million people worldwide every year.208 The WHO has emphasized that reductionof emissions of greenhouse gases (GHGs) through better transport, food and energy-use choices

Page | 66

can also result in improved health.209 The harmful health effects of pollution caused by transport
have also been recognized by the European Environment Agency. Especially in cities, air quality
levels are a fundamental issue for public health.210 Moreover, air quality is at risk from an increaseof peat fires. Haze caused by peat fires can cause serious long-term health problems. The WHO
estimates that each year around 110,000 deaths associated with particulate matter exposure in
Southeast Asia can be attributed to peat fires.211
Globally, tens of thousands of chemical compounds are released into the environment every year.
Such chemicals can spread far over land and oceans and may be absorbed by plants, animals, andhumans, including through the skin or the mouth. This carries significant risks, because information
about consequences for the environment and human health is available for only around 14% of themost widely used chemical compounds.212 The use of these chemicals often precedes scientificinsight into their environmental and health effects, and legislation in turn tends to lag behind thelatest scientific insights. This implies a clear responsibility on the part of companies to apply
precaution in their use and handling of chemicals. Parties involved have to do more than merelycomply with the existing rules: as a precautionary measure, the use of any toxic substance of which
the consequences are unknown should be avoided. This precautionary principle can be applied
widely but certainly has to be applied to two specific groups of chemicals:213••

Endocrine Disrupting Chemicals (EDCs): these are chemicals such as BPA, phthalates and BFRs,
that block, imitate, or otherwise disturb naturally produced hormones. Hormones are thechemical messengers of the body that control how organisms develop and function.
Persistent Organic Pollutants (POPs): these are chemicals that degrade slowly in nature or do
not degrade at all. Once they enter into a human being or animal they accumulate in the body.

As well as preventing health damage to employees, consumers and nearby residents, companies
should consider how they can support access to essential health provisions, clean drinking waterand adequate sanitation. Furthermore, it is important to pay attention to improving health, such as
stimulating a healthy lifestyle, discouraging the consumption of unhealthy products andsubstances and contributing to accessible medication and vaccinations. Special attention should be
paid to food for children.214
One in every four humans has insufficient access to essential, reliable and affordable health care.215
According to the Access to Medicine Foundation, better access to medication could save the livesof ten million people that die of avoidable or treatable diseases such as HIV/Aids, malaria andtuberculosis every year.216 The fight against HIV/Aids, malaria and other diseases is one of theseventeen Sustainable Development Goals (SDGs).217 Pharmaceutical companies could play animportant role in developing vaccines or medication for common tropical diseases, but sincepeople suffering from these diseases do not represent a group with significant purchasing power,
investment in that field is severely lagging. Moreover, some pharmaceutical companies tend to
stick to their patents as long as possible, which makes it impossible to bring existing medication to
the market at an affordable price.218
Microorganisms in humans, food and animals continue to show resistance to the most widely used
antimicrobials for treatment of amongst others tuberculosis, malaria, HIV, and influenza.
Antimicrobial resistant-microbes are found in people, animals, food, and the environment (in water,
soil and air) and they can spread between people and animals.219 In Europe, 7% of all antibiotics
used in 2016 were taken without prescription, with two main sources being over-the-counter (OTC)
sales and use of leftover antibiotics. Lack of knowledge among patients and pressure on healthcare
professionals to provide antibiotics without prescription were highlighted as two key factors
contributing to this issue.220

Page | 67

Reports also confirm the link between antibiotics use and antibiotic resistance in both humans andfood-producing animals. Reducing the unnecessary use of antibiotics will have an impact on theoccurrence of resistance.221 The WHO considers antimicrobial resistance as a complex problem that
endangers achievement of the SDGs and requires coordinated action. Therefore it works closelywith member states, the Food and Agriculture Organisation (FAO) and the World Organisation for
Animal Health (OIE).
Breastfeeding is demonstrably better for the health of infants than bottle-feeding.222 However, thenumber of women who are breastfeeding is low: only around 40% of children under 6 months ofage are exclusively breastfed. Among the causes for declining breastfeeding rates are societal
beliefs that breast milk is insufficient, lack of adequate knowledge and support for breastfeeding
mothers and the aggressive promotion of infant formula and other breast-milk substitutes.
According to figures by the WHO, around 820,000 children under five years old could be savedannually if all children were properly breastfed.223
Tobacco is widely known to cause various forms of cancer and heart disease, as well as otherdiseases. It kills up to half of its users and is characterized by the WHO as “the only legal drug thatkills many of its users when used exactly as intended by manufacturers”.224 In total, around 7
million people die every year from tobacco use, and second-hand smoking is estimated to cause
another 1.2 million deaths annually.225 Around 80% of the world’s 1.1 billion smokers live in lowerand middle income countries.226 While anti-smoking legislation has been effective in lowering
tobacco consumption in some countries, in many places such legislation is often still lacking –often in part due to extensive lobbying efforts by the tobacco industry.227
SDG 3: Good Health and Well-being lays out the overall importance of health to sustainable
development. It includes targets to reduce the global maternal mortality ratio, end preventable
deaths of new-borns and children under five years of age, end the epidemics of AIDS, tuberculosis,
malaria and neglected tropical diseases and combat hepatitis, water-borne diseases and othercommunicable diseases, achieve universal health coverage, and many more.228
SDG 6: Clean Water and Sanitation aims to improve health conditions by targeting to achieveaccess to adequate and equitable sanitation and hygiene for all. It also seeks to improve water
quality by reducing pollution, eliminating dumping and minimizing release of hazardous chemicals
and materials, halving the proportion of untreated wastewater and substantially increasing
recycling and safe reuse globally.229
Financial institutions should take all these aspects into account when developing policies on health.
To do this, financial institutions can make use of the international standards described below.
2.5.2 International standards and initiatives
The main international standards on health are summarised per topic, followed by the assessment
elements that are formulated by the FFGI as a result:•

Adequate standard of living
According to Article 25 of the Universal Declaration of Human Rights (UNDHR), “everyone has
the right to a standard of living adequate for the health and well-being of himself and of his
family, including food, clothing, housing and medical care and necessary social services, andthe right to security in the event of unemployment, sickness, disability, widowhood, old age orother lack of livelihood in circumstances beyond his control”.

Page | 68

These rights have also been protected by The International Covenant on Economic, Social andCultural Rights (ICESCR). Article 12 of this Covenant guarantees the right to an adequate
standard of living including adequate food, clothing, housing and continuous improvement ofliving conditions. This Article has also been interpreted as including access to sufficient waterand sanitation.
An important indication of the standard of living for countries is life expectancy. To compare
countries, the United Nations developed the Human Development Index (HDI), a combinationof per capita income, life expectancy and illiteracy percentage.
Another important indication of the standard of living for countries is if and how the Human
Right to Water and Sanitation is respected. The Institute for Human Rights and Business has
published a report in 2011 to help business integrate human rights consideration in relation towater into business policies and practices.230 In 2015 the UN Global Compact launched the CEO
Water Mandate initiative on water and sanitation, which is intended to help companies
translate their responsibility to respect these rights into their existing water management
policies and practices.
This leads to assessment element
1•Companies prevent the health of employees, clients and nearby residents to be deteriorated by theirproducts or production processes (according to the precautionary principle).

Health and safety at work
Employers are responsible for the health and safety of their employees and this responsibility isrecognized in various international standards. The Occupational Health and safety Convention(No. 155) adopted in June 1981 by the United Nations International Labour organisation (theILO) is the main international standard on health and safety at work. The treaty clarifies what
responsibilities companies have in this respect and what rights employees have. Over thecourse of time this convention has been completed and solidified with ILO-conventions thatconcern specific dangers for the health and safety of employees, such as the Asbestos
Convention (No. 162) and the Chemicals Convention (No.170), as well as on specific industries
such as the Safety and Health in Agriculture Convention (No. 184), the Safety and Health in
Mines Convention (No. 176) and the Safety and Health in Construction Convention (No. 167).
Moreover, the ILO publishes the so-called Codes or Practice for 35 various industries and issues
with concrete measures to improve health and safety.231
However, maintaining minimum standards on health and safety proves not to be sufficient.
According to the ILO, a continuous and systematic pursuit to improve the health and safety of
employees is necessary. With that objective in mind, in 2006 the Promotional Framework for
Occupational Safety and Health Convention (No. 187) was adopted. In this convention,
countries and companies are encouraged to do more to systematically improve the health andsafety of employees and develop a preventive culture in the field of health and safety.232
The United Nations Food and Agriculture Organisation (FAO) published the International Codeof Conduct on the Distribution and Use of Pesticides, which sets the standard on theapplication, processing, and disposal of pesticides.
The international standard ISO 45001:2018 Occupational health and safety provides globally
applicable requirements for management systems regarding occupational health and safety.
This standard provides requirements for a risk management system. It applies to all kinds oforganisations and it serves to guarantee the health and safety of both employees and external

Page | 69

stakeholders, for example contractors’ staff and visitors. With such a management systems risks
can be structurally surveyed and evaluated.
This leads to assessment elements•

1

Companies prevent the health of employees, clients and nearby residents to be deteriorated bytheir products or production processes (according to the precautionary principle).

2

Companies respect labour rights concerning health and safety at work, as described in the ILO
conventions and the MNE Declaration.

3

Companies work on systematically improving the health and safety of employees and develop a
preventive culture in the field of health and safety.

Ban on production and use of certain toxic substances
There are various international agreements that prohibit or phase out the production and useof various hazardous or toxic substances. The main examples are:••

The Montreal Protocol on Ozone Depleting Substances was drafted in September 1987 andhas been repeatedly tightened since. The protocol prohibits the production and the use of
products that affect the ozone layer, such as chlorofluorocarbons (CFKs and HCFKs), halonsand methyl bromide.
The Stockholm Convention on Persistent Organic Pollutants was drafted in May 2001. This
convention focuses on banning Persistent Organic Pollutants (POPs). POPs are chemicals
that remain in the environment for a long period of time and that spread over large areas,
accumulate in the fat of living organisms and are highly toxic for human beings andanimals. POPs that have been prohibited globally include DDT, dieldrin, dioxins and PCBs.
Many of these substances have been used in pesticides. The list is updated regularly andthe latest change dates from May 2019.233

This leads to assessment elements•

4Companies respect international agreements on the production and the use of hazardous or toxic
substances as described in the Montreal Protocol (on substances that deplete the ozone layer).

5Companies respect international agreements on the production and the use of hazardous or toxic
substances as described in the Stockholm Convention (on POPs).

International trade in chemicals and chemical waste
The international trade in chemicals and chemical waste, which carries the risk that chemical
waste and chemicals prohibited in one country are dumped in another, less developed country,
is constrained by two international conventions:•

In the 1989 Basel Convention on the Control or Transboundary Movements of Hazardous
Wastes and their Disposal, clear agreements have been made on the international trade in,and safe processing of, hazardous (chemical) waste. The 178 signatory countries oblige
themselves to restrict the international trade in hazardous waste as much as possible, toprocess hazardous waste as close as possible to the place where it is created and to limit
hazardous waste as much as possible. In December 2019 the Basel Ban Amendment, initiallyadopted by the parties to the second Basel Convention in 1995, entered into force asinternational law.234 This effectively prohibits the export of hazardous wastes from countries
that have ratified the Basel Convention to all other countries.

Page | 70

•The Rotterdam Convention on the Prior Informed Consent Procedure for Certain Hazardous
Chemicals and Pesticides in International Trade was established in 1998. The convention
determines that certain pesticides and other hazardous chemicals prohibited in their own
country may not be exported to other (developing) countries.

This leads to assessment elements•

6

Companies respect international agreements on trade in chemicals and chemical waste as stated in
the Basel convention.

7

Companies respect international agreements on trade in chemicals and chemical waste as stated in
the Rotterdam convention.

Control of the environment and health consequences of chemicals
The international community increasingly acknowledges the need to understand the possible
long-term consequences of chemicals to human health and the environment in advance. The
precautionary principle entails that companies need to be responsible and proactive in
avoiding certain risks. When the risks involved with the use of a substance cannot besatisfactorily quantified and removed, even if a cause and effect relationship has not been fully
proven scientifically, then this substance should not be used. The burden of proof for the safetyof a chemical should lie with the company and not with the public. This is also the case when asubstance is not restricted or regulated by the government. Furthermore, the principle alsoentails considering alternatives and considering the full impacts of a substance over time.235
Various agreements focus on a better analysis of the possible consequences and on a morecautious approach to introducing, producing, and using chemicals of which the effects are
uncertain.
•

•

•

•

In 1980, the International Programme on Chemical Safety (IPCS) was established by theWHO, the ILO, and the United Nations Environment Programme (UNEP). The IPCS
disseminates scientific knowledge on the environment and health consequences ofchemicals and helps governments to enhance their capacity in this field. The IPCS publishes
an authoritative classification of pesticides based on the health risks they pose, the WHO
Recommended Classification of Pesticides by Hazard.
During the World Summit for Sustainable Development in Johannesburg in August 2002, it
was decided that the Globally Harmonized System of Classification and Labelling ofChemicals (GHS) be introduced, which was revised in 2007. With the GHS system that is
now implemented and led by the United Nations Economic Commission for Europe,chemical substances all over the world are classified in the same way. In this way, rapid
exchange of information on environmental and health effects is improved.
In February 2006, the Strategic Approach to International Chemicals Management (SAICM)
was adopted by the International Conference on Chemicals Management (ICCM). SAICM,
which operates under the flag of the UNEP, provides governments with a policy frameworkfor dealing with chemicals, including chemical waste and by-products, in a safe andsustainable way.
In June 2007, the European regulation for the Registration, Evaluation, Authorisation andRestriction of Chemicals (REACH) came into force. This regulation was adopted in order tobetter protect people’s health and the environment from the risks of chemical substances.
Simultaneously, it should enhance the competitive position of the chemical industry in the
EU. It should also ensure a decrease in animal testing. The European Chemicals Agency(ECHA) is in charge of implementing REACH.236

Page | 71

REACH requires companies to identify and control the risks related to the substances they
produce or introduce on the market within the EU. They must show how the substance canbe used safely and they must announce to their users how the risks are reduced. If the risks
cannot be prevented, the authorities may limit the use of these substances in line with the
precautionary principle. Member States or ECHA can also propose a substance to be
identified as a substance of very high concern (SVHC). In REACH, compounds known as
Endocrine Disrupting Chemicals (EDC) are considered at levels of concern similar to
SVHCs.237 In the long term the most dangerous substances must be replaced. Under REACH
all companies in a supply chain of chemical substances (producers, importers, users, buyers)
are responsible. REACH relies on the precautionary principle and is an example of how thiscan be operationalised.238•

The European Union has various reference documents for emissions of harmful substances
to water and air for several industries, for example regarding the Ceramic Manufacturing
Industry or for the Manufacture of Organic Fine Chemicals. These dictate the use of the Best
Available Technology (BAT). European companies are also expected to comply with
European standards outside the EU and other companies may be expected to follow theexample of these European standards.

The OECD Guidelines for Multinational Enterprises recommend companies to educate and train
their employees in issues concerning the environment and health and safety, including thehandling of toxic substances. In addition, companies should ensure that their products andservices meet all health and safety standards for consumers. Companies also have to informconsumers on this.
While both legislation and scientific insight tend to lag behind the use of potentially dangerous
chemicals, ISO 26000:2010 Guidance on social responsibility stresses that this cannot be used
as an excuse to delay measures that prevent harm to the environment and to people’s
health.239 In addition to avoiding the use of banned chemicals, ISO 26000:2010 therefore
advises companies to systematically identify and avoid the use of chemicals “identified byscientific bodies or any other stakeholder with reasonable and verifiable grounds as being ofconcern. An organization should also seek to prevent use of such chemicals by organizations
within its sphere of influence”.240This leads to assessment elements•

8Companies reduce the emission of harmful substances (to soil, water, and air) by making use of thebest available technologies (BAT).

9

Companies restrict the use of chemicals suspected to be harmful to health in scientific literature
and, if necessary, only in a responsible way (precautionary principle).

Access to medicine
The standard on access to medicine is set by the Access to Medicine Index. The Access to
Medicine Index is supported by 60 leading global investment institutions that together manage
assets with a value over USD 5.31 trillion. The index shows that the 20 largest pharmaceuticalcompanies significantly vary in their efforts to give patients in developing countries moreaccess to affordable medication and vaccines. The last edition of the index was published in2018 and found moderate progress since the 2016 edition. All companies pursued improved
access to medicine in some degree, although the bulk of activity was accounted for by only ahandful of companies.241

Page | 72

This leads to assessment element
10•

Pharmaceutical companies ensure that patients with avoidable and treatable diseases have the rightto access to medication.

Antimicrobial resistanceAccording to the WHO, antimicrobial resistance is one of the biggest threats to global health,food security, and development today. As important antimicrobial medicines such as antibiotics
become less effective, a growing number of infections is becoming difficult and sometimes
impossible to treat. The WHO Global action plan on antimicrobial resistance, endorsed at theWorld Health Assembly and adopted by the assemblies of the Food and Agriculture
Organization (FAO) and the Organization for Animal Health (OIE) in 2015, has five strategic
objectives:242
1. “to improve awareness and understanding of antimicrobial resistance through effective
communication, education and training;
2. to strengthen the knowledge and evidence base through surveillance and research;
3. to reduce the incidence of infection through effective sanitation, hygiene and infection
prevention measures;
4. to optimize the use of antimicrobial medicines in human and animal health;
5. to develop the economic case for sustainable investment that takes account of the needs of
all countries and to increase investment in new medicines, diagnostic tools, vaccines andother interventions.”
The plan involves various industrial sectors (agriculture and food, pharmaceutical industry,finance, healthcare), but also regulatory bodies and consumers. Regarding antimicrobial
medicines for humans, it is particularly important to promote a prudent use of antibiotics, inline with the recommendations from the European Commission report Antimicrobial Resistanceand causes of non-prudent use of antibiotics in human medicine in the EU.
This leads to assessment element
11•

Companies apply a prudent use of antimicrobial medicines (antibiotics) in human beings in order tominimize antimicrobial resistance.

Bottle feeding
Since 1981 the WHO’s International Code of Marketing of Breast-milk Substitutes has
prohibited advertising breast-milk substitutes. Virtually all countries in the world have signed
this code, but not all countries have included the code and in their own legislation.
The International Baby Food Action Network (IBFAN) is therefore committed to realise that
manufacturers always and everywhere comply with the WHO-code and the additional
resolutions.
The Access to Nutrition Index provides a ranking of companies that produce breast-milk
substitutes (BMS), in which the compliance of manufacturers of BMS manufacturers with the
WHO Code and subsequent World Health Assembly resolutions is assessed.243
This leads to assessment element
12

Manufacturers of bottle-feeding comply with the WHO-code and additional resolutions on
advertisements for breast-milk substitutes.

Page | 73

•TobaccoThe Framework Convention on Tobacco Control of the World Health Organisation (WHO) is
ratified by 168 states. Governments, but also companies, can make use of therecommendations in this framework to reduce the demand and supply of tobacco and passive
smoking.
A number of governments however, has not yet developed relevant legislation regarding this
topic. WHO reports on the tobacco epidemic have repeatedly revealed that the tobacco
industry continues to hamper government efforts to implement measures to prevent andcombat tobacco use.244 Subsequently, the UN Global Compact has excluded the tobacco
industry from its initiative, citing the incompatible nature of the industry with the goals ofsustainable development.245 This decision aligns with the UNGC’s policy with the WHO
Framework Convention on Tobacco Control and was lauded by a coalition of health CSOs:“Tobacco products are fundamentally misaligned with UNGC’s commitment to advancing
business action towards 2030 Agenda’s Sustainable Development Goal 3 (SDG 3) to “ensure
healthy lives and promote well-being for all at all ages”, and is in direct conflict with the right topublic health”.246
While the Fair Finance Guide International methodology expects companies to comply with the
WHO Framework Convention on Tobacco Control, it also rewards policies that avoid
investments in the tobacco industry.
This leads to assessment elements•

13

Tobacco manufacturers comply with the WHO Framework Convention on Tobacco Control andadditional resolutions on the protection of current and future generations against the health,social, environmental and economic consequences of (passive) smoking.

14

Production of tobacco and tobacco-based products is unacceptable.

Procurement and supply chains
Companies are often part of long procurement and supply chains. They can monitor one
another and question how they respect local and national legislation and international norms
on labour rights. The requirements that companies set for their suppliers can be included incontractual agreements.
The importance of this has also been recognised in the OECD Guidelines for Multinational
Enterprises since its revision in 2011. The OECD Due Diligence Guidance for Responsible
Business Conduct provides practical support to companies on the implementation of the OECD
Guidelines for Multinational Enterprises by providing plain language explanations of its due
diligence recommendations. Implementing these recommendations can help companies avoid
and address adverse impacts that may be associated with their operations, supply chains andother business relationships.
Furthermore, ISO 26000:2010 Guidance on social responsibility recognises the importance of
supply chain responsibility, because “the impacts of an organization's decisions or activities canbe greatly affected by its relationships with other organizations”.247 A company’s sphere of
influence includes relationships within and beyond an organization’s supply chain. Moreover,ISO 26000:2010 Guidance on social responsibility recommends setting contractual provisions or
incentives as a means of exercising influence.248

Page | 74

In addition, ISO 20400:2017 Sustainable procurement – Guidance provides guidelines fororganizations, independent of their activity or size, on integrating sustainability withinprocurement, as described in ISO 26000:2010 Guidance on social responsibility. It is intended
for stakeholders involved in, or impacted by, procurement decisions and processes.
This leads to assessment elements
15

Companies integrate health criteria in their procurement and operational policies.

16

Companies include clauses on the compliance with criteria on health in their contracts with
subcontractors and suppliers.

2.5.3 Assessment elements
A solid policy on health should ensure that financial institutions only finance or invest in companies
that take their responsibility towards health seriously and act based on the precautionary principle.
The following elements are crucial for a policy regarding the companies a financial institution
invests in or finances:
1. Companies prevent the health of employees, clients and nearby residents to be deteriorated bytheir products or production processes (according to the precautionary principle).
2. Companies respect labour rights concerning health and safety at work, as described in the ILO
conventions and the MNE Declaration.
3. Companies work on systematically improving the health and safety of employees and develop
a preventive culture in the field of health and safety.
4. Companies respect international agreements on the production and the use of hazardous or
toxic substances as described in the Montreal Protocol (on substances that deplete the ozone
layer)
5. Companies respect international agreements on the production and the use of hazardous or
toxic substances as described in the Stockholm Convention (on POPs).
6. Companies respect international agreements on trade in chemicals and chemical waste asstated in the Basel convention.
7. Companies respect international agreements on trade in chemicals and chemical waste asstated in the Rotterdam convention.
8. Companies reduce the emission of harmful substances (to soil, water, and air) by making use of
the best available technologies (BAT).
9. Companies restrict the use of chemicals suspected to be harmful to health in scientific literature
and, if necessary, only in a responsible way (precautionary principle).
10. Pharmaceutical companies ensure that patients with avoidable and treatable diseases have theright to access to medication.
11. Companies apply a prudent use of antimicrobial medicines (antibiotics) in human beings inorder to minimize antimicrobial resistance.
12. Manufacturers of bottle-feeding comply with the WHO-code and additional resolutions on
advertisements for breast-milk substitutes.
13. Tobacco manufacturers comply with the WHO Framework Convention on Tobacco Control andadditional resolutions on the protection of current and future generations against the health,social, environmental and economic consequences of (passive) smoking.
14. Production of tobacco and tobacco-based products is unacceptable.
15. Companies integrate health criteria in their procurement and operational policies.
16. Companies include clauses on the compliance with criteria on health in their contracts with
subcontractors and suppliers.

Page | 75

2.6

Human rights

2.6.1 What is at stake?
Human rights are rights and freedoms inherent to all human beings, whatever their nationality,
place of residence, sex, national or ethnic origin, colour, religion, language, or any other status.249
The rights and freedoms that are generally considered as human rights comprise of civil andpolitical rights – such as the right to life, freedom of expression and equality before the law – andeconomic, social and cultural rights – such as the right to an adequate standard of living, the rightto food, work and education. Human rights also include collective rights, such as the rights todevelopment and self-determination.
On 10 December 1948, the United Nations General Assembly adopted the Universal Declaration of
Human Rights (UDHR) that for the first time in human history spelled out 30 basic civil, political,
economic, social and cultural rights that all human beings should enjoy. It has over time been
widely accepted as the fundamental principles of human rights that everyone should adhere to.
Through a series of international human rights treaties and other instruments these human rights
have developed into a body of legal international human rights. While international treaties andcustomary law form the backbone of international human rights law, other instruments, such as
declarations, guidelines and principles adopted at the international level contribute to its
understanding, implementation and development.
There are particular groups who, for various reasons, are vulnerable or have traditionally been
victims of violations and consequently require special protection for the equal and effective
enjoyment of their human rights, such as women and girls, children, disabled persons, migrant
workers and indigenous peoples. Specific human rights instruments, such as the Convention on the
Rights of the Child (UNCRC) or the Convention on the Elimination of All Forms of Discrimination
against Women (CEDAW), have been developed to set out additional guarantees for persons
belonging to these groups.250 Descent-based discrimination, including discrimination against
members of communities based on forms of social stratification such as caste and analogous
systems of inherited status, is a concern in a number of countries.251
Globalisation presents new and complex challenges for the protection of human rights. Economic
actors, especially multinational companies that operate across national borders, have gained
unprecedented power and influence across the world. Companies have an enormous impact on
people’s lives and the communities in which they operate. Sometimes their impact is positive - jobs
are created, new technology improves lives and investment in the community translates into real
benefits for those who live there. But there are also countless instances when corporations have anegative impact, such as when they exploit weak or poorly enforced domestic regulations.252
In some economic sectors, such as the mining, oil & gas, and agriculture sectors, the risks forhuman rights abuses are particularly high. Traditional livelihoods can be destroyed through landacquisition (land grabs), land contamination and water pollution.253 In these scenarios, economic,
social and cultural rights at stake are for example the right to food, work, housing, health and ahealthy environment. Moreover, the impact can be particularly severe for certain specific groups,
such as indigenous peoples, because their way of life and their identity is often closely related totheir land. Far too often, companies operating across borders are involved in severe abuses, suchas child labour, forced labour or forced evictions. In addition, affected communities are frequently
denied access to information about the impact of company operations. This means that they are
excluded from participating in decisions that affect their lives. And, often when communities
attempt to get justice, they are thwarted by ineffective legal systems, corruption or powerful state-

Page | 76corporate alliances. Worryingly, when the poor cannot secure justice, companies learn that theycan exploit poverty without consequences.254
In 2018, 321 human rights defenders were killed for peacefully speaking out to defend humanrights. 77% of activists killed were working on land-related issues: defending land, environmental
or Indigenous peoples’ rights.255 The killings of land defenders is frequently linked to global
industries: agribusiness is now the most deadly industry, followed by mining, logging, poachingand dams.256 Similarly, the UN Special Rapporteur on the rights of Human Rights Defenders hasrecognised defenders working on land-related issues as among of the world’s most vulnerable of
Human Rights Defenders.257 This establishes land-related human rights abuses as some of the mosturgent and dire to address. Forced evictions constitute a gross violation of human rights.258 In 2016
the International Criminal Court released a statement that land grabs and environmental crimewere among the least prosecuted in the world and identified this as a priority area.259
Banks have recognised land as a key issue – for example, with Free, Prior, and Informed Consent(FPIC) being a key issue raised leading into the Equator Principles’ current review. FPIC isconstituted as a commitment under the Equator Principles, but only for “designated countries” (i.e.
developing countries). Equator Principles banks have raised the need to have a more coherent
approach to FPIC.260
Human rights risks are particularly prevalent in situations of armed conflict and in territories under
occupation. International human rights law (IHL) therefore prohibits various kinds of activities in
occupied territories, such as population transfer, forcible displacement and confiscation of private
land. Given these prohibitions, companies have a special responsibility to prevent their activities
from contributing to or exacerbating human rights violations in occupied territories.
Under international human rights law, states have an obligation to protect human rights, which
requires them to take measures to ensure that other actors, including companies, do notundermine or violate human rights. However, government failure to protect human rights does not
absolve non-state actors from responsibility for their own adverse human rights impacts. As
described in section 2.6.2, it is now widely accepted that companies have a responsibility to respecthuman rights.
The corporate responsibility to respect human rights was formulated in 2008 as part of the Protect,
Respect and Remedy Framework by professor John Ruggie, the former UN Special Representativeof the Secretary-General on Business and Human Rights. This framework rests on three pillars:261•••

the state duty to protect against human rights abuses by third parties, including businessenterprises;
the corporate responsibility to respect human rights; andthe need for greater access by victims to effective remedy, both judicial and non-judicial.

At the request of the UN Human Rights Council (HRC), the Protect, Respect and Remedy
Framework has been operationalised as the United Nations Guiding Principles on Business andHuman Rights (UNGPs), which were unanimously endorsed by the HRC in June 2011.262 The UNGPs
are currently considered the main global standard addressing the risks of adverse impacts onhuman rights that are linked to business activities. It is well established that this corporate
responsibility also applies to the entire range of financial institutions and actors, includingcommercial banks, retail banks, investment banks, rating agencies, financial service providers, andinstitutional investors.263

Page | 77

In 2014 the HRC adopted resolution 26/9 “to establish an open-ended intergovernmental working
group on transnational corporations and other business enterprises with respect to human rights,
whose mandate shall be to elaborate an international legally binding instrument to regulate, ininternational human rights law, the activities of transnational corporations and other businessenterprises.”264 The fifth session to discuss the elements for a draft legally binding instrument washeld in 2019.265
Human rights are central to the Sustainable Development Goals (SDGs) as well. They form the basisof many goals such as SDG 1:No Poverty, SDG 2: Zero Hunger, SDG 3: Good Health and Wellbeing, SDG 4: Quality of Education, SDG 5: Gender Equality, SDG 6: Clean Water and Sanitation,
SDG 10: Reduce Inequalities, and SDG 16: Peace, Justice and Strong Institutions.266 Additionally,
SDG 8: Decent Work and Economic Growth also aims to: “eradicate forced labour, end modern
slavery and human trafficking and secure the prohibition and elimination of the worst forms ofchild labour, including recruitment and use of child soldiers, and by 2025 end child labour in all its
forms.”267 SDG 8 also includes a target on protecting labour rights and promoting safe and secure
working environment for all workers, including migrant workers, in particular women migrants, andthose in precarious employment. An extensive discussion of labour rights is found in section 2.7
2.6.2 International standards and initiatives
The main international standards on human rights are summarised per topic, followed by theassessment elements that are formulated by the FFGI as a result:•

United Nations Human Rights Conventions
Because companies can have an impact on the entire spectrum of internationally recognizedhuman rights, their responsibility to respect applies to all such rights. In practice, some humanrights may be at greater risk than others in particular industries or contexts, and therefore theseshould be the focus of heightened attention. However, situations may change, so all humanrights should be the subject of periodic review.
An authoritative list of the core internationally recognized human rights is contained in theInternational Bill of Human Rights, consisting of the Universal Declaration of Human Rights(UDHR) and the main instruments through which it has been codified: the International
Covenant on Civil and Political Rights (ICCPR) and the International Covenant on Economic,
Social and Cultural Rights (ICESCR), coupled with the principles concerning fundamental rights
in the eight ILO core conventions as set out in the Declaration on Fundamental Principles andRights at Work (for the latter, see section2.7).
On 10 December 1948, the UN General Assembly adopted the Universal Declaration of Human
Rights (UDHR), including civil, political, economic, social and cultural rights and freedoms in asingle international human rights instrument. Examples include the right to life, to freedom of
movement, to peaceful assembly, to thought, conscience and religion. According to the UDHR,
everyone is entitled to all these rights and freedoms without distinction of any kind, such as
race, colour, sex, language, religion, political or other opinion, national or social origin,property, birth, or other status.268
The International Covenant on Civil and Political Rights (ICCPR) was adopted in 1966 andcomprises 55 articles that focus on civil and political rights and freedoms, such as the freedomof religion and expression, the freedom from torture, right to privacy, the right to a fair trial, or
the rights participate in political and public life.

Page | 78

The International Covenant on Economic, Social and Cultural Rights (ICESCR) was adopted in1966 and comprises of 31 articles related to the workplace, social security, family life,
participation in cultural life, or access to housing, food, water, health care and education. The
content of the rights protected by the ICESCR has been elaborated by the Committee on
Economic, Social and Cultural Rights. According to this committee, State Parties to theCovenant have to make sure that water and food are available, accessible and of goodquality.269 The right to health refers to the right to a healthy living environment as well as theright to physical and mental health.270
This leads to assessment elements•

1

The financial institution respects all human rights as described in the United Nations Guiding
Principles on Business and Human Rights.

2

Companies respect all human rights as described in the United Nations Guiding Principles on
Business and Human Rights.

United Nations Guiding Principles on Business and Human Rights
The 2011 United Nations Guiding Principles on Business and Human Rights (UNGPs) establishthat companies, including financial institutions, should respect human rights. The responsibility
to respect human rights is a global standard of expected conduct for all companies wherever
they operate. It exists independently of states’ abilities and/or willingness to fulfil their own
human rights obligations, and does not diminish those obligations. Furthermore, this
responsibility exists over and above compliance with national laws and regulations protecting
human rights.
The responsibility to respect human rights requires that companies:271••

Avoid causing or contributing to adverse human rights impacts through their own activities,
and address such impacts when they occur; andSeek to prevent or mitigate adverse human rights impacts that are directly linked to theiroperations, products or services by their business relationships, even if they have notcontributed to those impacts.

According to Principle 15 of the UNGPs, in order to meet the responsibility to respect humanrights, companies should have in place:•••

A policy commitment to meet their responsibility to respect human rights;
A human rights due-diligence process to identify, prevent, mitigate and account for how
they address their impacts on human rights; andProcesses to enable the remediation of any adverse human rights impacts.

UNGPs 16 to 24 provide operational guidance on how the required policies and processes
should be put into practice.
The UNGPs instead expect companies, including financial institutions, to identify general areas
where the risk of adverse impacts is most significant and to prioritize due-diligence on theirclients accordingly, through screening and monitoring clients when the risk is high, and/or
when a risk is brought to the attention of the company (e.g. by an external stakeholder).
According to the UNGPs, if a company identifies a risk that it will cause an adverse impact, it iswithin its powers to cease or prevent that impact and should make sure to do so. If a company
identifies a risk of contributing to an adverse impact, it has control over its contribution andshould therefore cease or prevent its contribution and use its leverage with other entities also

Page | 79

contributing to the adverse impact to persuade them to cease or prevent any further impacts
and to mitigate any remaining impacts to the greatest extent possible. In both cases, theenterprise should provide or contribute to a remedy.272
If a company identifies a risk or is made aware of adverse impacts being directly linked to its
operations, products, and services through its business relationships, it should seek to use its
leverage to influence the entity causing the adverse impact to prevent or mitigate that impact
and future impacts. This can be done by the company itself or in co-operation with otherentities, as appropriate.273
In July 2017, the Office of the High Commissioner for Human Rights (OHCHR) published aninterpretative advice note on the banking sector’s responsibilities for managing the humanrights impacts of its finance. The OHCHR stressed that banks can contribute to adverse humanrights impacts through their finance. In such circumstances, the bank may be responsible for
remediating the human rights impact together with its client. The OHCHR also stated that abank may be directly linked to a human rights impact through its finance, without contributing
to it, in which case it would not be responsible for remedying the impact, although it may takea role in doing so.274
The OECD Guidelines for Multinational Enterprises and the fourth version of the Equator
Principles have both aligned their human rights recommendations with the UNGPs.
This leads to assessment elements•

1

The financial institution respects all human rights as described in the United Nations Guiding
Principles on Business and Human Rights.

2

Companies respect all human rights as described in the United Nations Guiding Principles on
Business and Human Rights.

3

Companies have a policy commitment to meet their responsibility to respect human rights.

4Companies have a human rights due diligence process to identify, prevent, mitigate and accountfor how they address their impact on human rights.

5Companies have processes to enable the remediation of any adverse human rights impact which
they cause or to which they contribute.

Grievance mechanisms
In the UNGPs, the lack of grievances procedures is mentioned as a weak point of companies. Inan earlier report the Special Representative for Business and Human Rights had indicated that
“In the absence of an effective grievance mechanism, the credibility of such initiatives andinstitutions may be questioned.”275
Guiding Principle 29 therefore expects companies to establish or participate in effective
operational-level grievance mechanisms for individuals and communities who may be adversely
impacted. Guiding Principle 31 details the criteria to ensure the effectiveness of grievancemechanisms. It also includes expectation that mechanisms must be:276
•
•
•
•
•
•

Legitimate;
Accessible;
Predictable;
Equitable;
Transparent;
Rights-compatible;

Page | 80

A source of continuous learning, andBased on engagement and dialogue.

••

This leads to assessment element
6•

Companies establish or participate in effective operational-level grievance mechanisms forindividuals and communities who may be adversely impacted.

Land rights, conflicts and forced evictions
Human rights, particularly Economic, Social and Cultural (ESC) rights, play a central role in landrelated issues. Those who face threats to their land are being denied many rights such as theright to food, the right to water, the right to housing and the right to work. These rights areincluded in the above-mentioned International Covenant on Economic, Social and Cultural
Rights (ICESCR).277 Land is thus a critical cross-cutting issue at the nexus of social,environmental and governance rights. The links between land human rights, environmental
issues and governance challenges such as corruption and extrajudicial violence are renderedinvisible if land-related responsibilities are not articulated specifically. This principle has been
well established in the business sector for several years.
The right to adequate housing encompasses the right to live in security, peace and dignity. To
realize this right, governments have an obligation to guarantee security of tenure, which
essentially means a set of arrangements in the context of housing and land that will protect theoccupants from forced evictions and other threats and harassment.278
As noted by the UN Special Rapporteur on Adequate Housing Raquel Rolnik: “Involuntary
resettlement amounts to a forced eviction when it occurs without the provision of, and access
to, appropriate forms of legal or other protection.”279 The effects of forced evictions can be very
serious, especially for people who are already living in poverty. The former UN Commission on
Human Rights (currently the Human Rights Council) has described forced evictions as a “grossviolation of human rights, particularly the right to adequate housing.”280
The protection measures that should be applied to all evictions have been clearly articulated in
the Basic Principles and Guidelines on Development-based Evictions (2007) developed by theformer UN Special Rapporteur on Adequate Housing, Miloon Kothari. The principles reflect
existing standards and jurisprudence on this issue and include detailed guidance on steps thatshould be taken prior to, during and following evictions in order to ensure compliance with
relevant principles of international human rights law.
The former UN Special Rapporteur on the right to food, Olivier de Schutter, has developed a setof core principles and measures to address the human rights challenge of large-scale landacquisition and leases. Outlined in 2009, these principles include the notion that any shifts inland use can only take place with the Free, Prior and Informed consent (FPIC) of the local
communities concerned.281 This is particularly important for indigenous communities, in view ofthe discrimination and marginalization they have been historically subjected to.282
The FAO developed the Voluntary Guidelines on the Responsible Governance of Tenure ofLand, Fisheries and Forests in the Context of National Food Security (VGGT) in 2012, to improve
the governance of tenure of land, fisheries and forests with the overarching goal of achieving
food security for all and to support the progressive realization of the right to adequate food in
the context of national food security.

Page | 81

In May 2011, the Tirana Declaration was adopted by over 150 representatives of civil society
organisations, social movements, grassroots organizations, international agencies, andgovernments - including the members and strategic partners of the International Land
Coalition (ILC) such as the World Bank, the Food and Agriculture Organization (FAO), theInternational Institute for Environment and Development (IIED) and the International Fund for
Agricultural Development (IFAD). The Declaration defines land grabbing as: “acquisitions orconcessions that are one or more of the following:
1. in violation of human rights, particularly the equal rights of women;
2. not based on free, prior and informed consent of the affected land-users;
3. not based on a thorough assessment, or are in disregard of social, economic andenvironmental impacts, including the way they are gendered;
4. not based on transparent contracts that specify clear and binding commitments about
activities, employment and benefits sharing, and;5. not based on effective democratic planning, independent oversight and meaningful
participation.”283
The extension of FPIC beyond merely indigenous communities (see next paragraph) to allaffected communities, including communities with customary tenure rights, is an emerging
good practice.284 A large majority of local communities in Africa and developing countries,
often depending on land and natural resources for their livelihoods and food security and mostat risk of losing access to the land they use, are still left insufficiently protected.285 FPIC has theadvantage to correspond to a well-established definition with clear steps for the consultation.
A company should not acquire land, natural resources or associated licenses which – in theirprovenance – have been acquired illegally or in violation of local peoples’ rights, even whereformal land titles have been issues, creating confusion with legitimate land rights holders.286
The issue of land-related rights violations means that these need to be seen as ongoing
criminal acts until such time as land is returned to the rightful owners and custodians. This has
been raised, for example, by groups such as the Interlaken group.287
This leads to assessment elements•

7

Companies prevent conflicts over land rights and acquire natural resources only by engaging inmeaningful consultation with local communities and obtaining free, prior and informed consent(FPIC) when it concerns indigenous peoples.

8Companies prevent conflict over land rights and acquire natural resources only with free, prior andinformed consent (FPIC) of peoples with customary tenure rights.

Indigenous peoples’ rights
Indigenous peoples often face a number of land related challenges. Some of the most common
include forced evictions due to development projects, discrimination, failure to respect andsupport indigenous modes of production such as pastoralism and subsistence
hunting/gathering, dismissal of their customary systems of governing land and other natural
resources, or disregard of their sacred sites and the spiritual relationship with their lands.
Moreover, indigenous peoples’ traditional lands are often located in remote areas that havefragile ecosystems which makes them more vulnerable to natural disasters.288
The UN Declaration on the Rights of Indigenous Peoples (UNDRIP), adopted in 2007, sets out
the individual and collective rights of indigenous peoples, including their right to selfdetermination and to maintain and strengthen their distinct political, legal, economic, socialand cultural institutions. The Declaration also prohibits discrimination against indigenous
Page | 82

peoples. Moreover, it recognizes the rights of indigenous peoples to their land, habitat andother resources that they traditionally own, cultivate or otherwise use. In addition, indigenous
people are guaranteed in the Declaration the right not to be forcibly removed from their lands
or territories, and that no relocation shall take place without their free, prior and informed
consent (FPIC) and after agreement on just and fair compensation and, where possible, with theoption of return.289
Additionally, article 8(j) of the Convention on Biological Diversity (CBD), adopted in 1992,
considers the fair and equal use and the advantages of biological diversity, and requires thattraditional knowledge of indigenous and local communities can only be used with theirpermission. According to the related Nagoya Protocol on Access and Benefit-Sharing, adopted
in 2010, this also applies to access to and utilization of genetic resources. Furthermore, the2004 Akwé: Kon Voluntary Guidelines set out a guidance for the conduct of cultural,environmental and social impact assessments regarding developments proposed to take placeor which are likely to impact on sacred sites and on lands and waters traditionally occupied orused by indigenous and local communities.
The International Labour Organisation (ILO) has also developed relevant international standards
for indigenous peoples. The Convention concerning Indigenous and Tribal Peoples (No. 169)
protects countries and habitats of indigenous peoples. The convention describes measures toprotect the rights of these peoples on the use of areas they had traditionally access to and thatare important for their livelihood and traditional activities. It includes the right of indigenous
peoples to Free, Prior and Informed Consent (FPIC) on decisions that can influence theirhabitats and natural resources.i
The Voluntary Guidelines on the Responsible Governance of Tenure of Land, Fisheries andForests in the Context of National Food Security (VGGT) refer the need for states and otheractors to recognize the “social, cultural, spiritual, economic, environmental and political value”
of lands, fisheries and forests to indigenous peoples.290 The VGGT refer to the UN Declarationon the Rights of Indigenous Peoples and require participation, meaningful consultation and
FPIC when indigenous lands or territories are affected.
At the regional level, it is relevant to highlight that the Inter-American Development Bank
recognises in its 2006 multisectoral Operational Policy on Indigenous Peoples and Strategy for
Indigenous Development that the life and the culture of peoples that live in voluntary isolationor have not yet been in contact with the outside world have to be protected against potential
investments. The bank obliges itself not to invest in or finance any project that may havenegative consequences for these peoples.291

i

In its Working Paper on FPIC the United Nations Workgroup Indigenous Peoples of the Sub-Commission on the
Promotion and Protection of Human Rights describes the right of indigenous peoples to Free, Prior Informed Consent(FPIC) on decisions that can influence their habitats and natural resources. The FPIC-principle requires the full andtimely publication of information on the potential consequences of proposed investment plans. Communities havethe right to respond to this in a negotiation process. This gives them more influence in decision-making processes,
offers them the opportunity to negotiate any direct advantages and to speak out in favour of or against the plans.

Page | 83

This leads to assessment elements•

7

Companies prevent conflicts over land rights and acquire natural resources only by engaging inmeaningful consultation with local communities and obtaining free, prior and informed consent(FPIC) when it concerns indigenous peoples.

8Companies prevent conflict over land rights and acquire natural resources only with free, prior andinformed consent (FPIC) of peoples with customary tenure rights.

Children’s rights
The Convention on the Rights of the Child, adopted in 1989, contains the fundamental rights ofchildren that State Parties need to respect, protect and fulfil, including the rights to survival, tobe able to fully develop, to be protected from harmful influences, abuse and exploitation andto fully participate in the family and in social and cultural life.
In 2012, UNICEF, UN Global Compact and Save the Children released the Children’s Rights andBusiness Principles, which is the first comprehensive set of principles to guide companies on
the full range of actions they can take in the workplace, marketplace and community to respectand support children’s rights.
Moreover, the UN Declaration on the Rights of Indigenous Peoples calls on States to pay
particular attention to the rights and special needs of indigenous children when measures aretaken to ensure continuing improvement of economic and social conditions. It also calls for full
protection and guarantees against all forms of violence and discrimination against children.292
This leads to assessment element
9•

Companies have special attention for respecting the rights of children.

Activities in occupied territories
International Humanitarian Law (IHL) applies in situations of armed conflict. It seeks to limit theeffects of armed conflict by protecting persons who are not participating in hostilities, forexample civilians, and by restricting and regulating the means and methods of warfare bycombatants. IHL is inspired by considerations of humanity and aims to mitigate humansuffering. IHL also includes provisions for situations of occupation and sets out obligations forthe party occupying an area to ensure the rights of the population in that area.
IHL regulating occupation is described in the Fourth Geneva Convention from 1949, most ofwhich has become customary international law. Among others, this convention prohibitstransfer of the occupying country’s population into the territory, forcible transfer andconfiscation of private land and property of the protected population, and changing the laws of
the occupied territories. It also sets out that some of these violations (e.g. forcible transfer)amount to war crimes.
Settlements in occupied territories are consequences of, maintain and constitute various
violations of IHL and customary international law. Beyond that, settlements and theinfrastructure that enables settlements also violate human rights of the protected population,
triggering human rights responsibilities of enterprises.293
The UNGPs prescribe that enterprises should respect human rights and IHL. Therefore,
companies that endorsed the UNGPs are expected to have knowledge of both human rights
and IHL, to ensure that the conduct of the businesses they support is in line with it. Companies
need to make sure they do not enable settlements, including their economic activities, in
occupied territories.
Page | 84

This leads to assessment element
10•

Companies do not enable settlements, including their economic activities, in occupied territories inrespect of International Humanitarian Law.

Other guidelines for companies
The OECD Guidelines for Multinational Enterprises are recommendations by governments tomultinational corporations. They contain voluntary guidelines and standards for responsible
enterprise behaviour in line with relevant legislation. According to the guidelines, companies
have to respect the human rights of people affected by their activities. In the 2011 update, therecommendations were entirely aligned with the UNGPs.
The OECD Due Diligence Guidance for Responsible Business Conduct provides practicalsupport to companies on the implementation of the OECD Guidelines for Multinational
Enterprises by providing plain language explanations of its due diligence recommendations.
Implementing these recommendations can help companies avoid and address adverse impacts
that may be associated with their operations, supply chains and other business relationships.
The various IFC Performance Standards consider human rights as a cross-cutting theme andstress the importance of avoiding human rights violations and addressing all negative humanrights impacts that companies may have.
The fourth version of the Equator Principles, published in November 2019, have also aligned
their guidelines on human rights with the UNGPs.
This leads to assessment elements
1

The financial institution respects all human rights as described in the United Nations Guiding
Principles on Business and Human Rights.

2

Companies respect all human rights as described in the United Nations Guiding Principles on
Business and Human Rights.

11

Companies integrate human rights criteria into their procurement and operational policies.

The ISO 26000:2010 Guidance on social responsibility recognise the importance of humanrights. In this guideline for social responsibility of organisations, ‘respect for human right is oneof the seven principles. In the core issue, the main underlying topics – risk situations, due
diligence, avoiding complicity, solving grievances, discrimination and vulnerable groups, civil
and political rights, economic, social and cultural rights and fundamental principles and labour
rights – are elaborated further into actions and expectations.294
ISO 26000:2010 also recognize the importance of integrating human rights criteria inprocurement. The guidelines state that companies are often part of long production chains, andask companies to monitor one another as well as question how they respect local and national
legislation and international norms on labour rights. The requirements that companies set for
their suppliers can be included in contractual agreements.295
In addition, ISO 20400:2017 Sustainable procurement – Guidance provides guidelines fororganizations, independent of their activity or size, on integrating sustainability withinprocurement, as described in ISO 26000:2010 Guidance on social responsibility. It is intended
for stakeholders involved in, or impacted by, procurement decisions and processes.
The UN Global Compact also contains relevant principles, such as the following:

Page | 85

Businesses should support and respect the protection of internationally proclaimed humanrights.
Businesses should make sure that they are not complicit in human rights abuses.

••

This leads to assessment elements
1

The financial institution respects all human rights as described in the United Nations Guiding
Principles on Business and Human Rights.

2

Companies respect all human rights as described in the United Nations Guiding Principles on
Business and Human Rights.

4Companies have a human rights due diligence process to identify, prevent, mitigate and accountfor how they address their impact on human rights.

11

Companies integrate human rights criteria into their procurement and operational policies.

12

Companies include clauses on compliance with human rights criteria in their contracts with
subcontractors and suppliers.

2.6.3 Assessment elements
Although financial institutions are usually not directly involved in violations of human rights, they
can be held jointly responsible if the companies or governments in which they invest violate humanrights. After all, the responsibility to respect human rights requires companies not only not tocause, or contribute to, a negative impact on human rights with their own activities, but also to try
to prevent or mitigate a negative impact on human rights made by their business relationships,
when such is directly linked to their own operations, products or services, even if they did notcontribute to this impact directly.296
The following elements are crucial for a policy regarding the financial institution's internal
operations:
1. The financial institution respects all human rights as described in the United Nations Guiding
Principles on Business and Human Rights.
The following elements are crucial for a policy regarding the companies a financial institution
invests in or finances:
2. Companies respect all human rights as described in the United Nations Guiding Principles on
Business and Human Rights.
3. Companies have a policy commitment to meet their responsibility to respect human rights.
4. Companies have a human rights due diligence process to identify, prevent, mitigate andaccount for how they address their impact on human rights.
5. Companies have processes to enable the remediation of any adverse human rights impact
which they cause or to which they contribute.
6. Companies establish or participate in effective operational-level grievance mechanisms forindividuals and communities who may be adversely impacted.
7. Companies prevent conflicts over land rights and acquire natural resources only by engaging inmeaningful consultation with local communities and obtaining free, prior and informed consent(FPIC) when it concerns indigenous peoples.
8. Companies prevent conflict over land rights and acquire natural resources only with free, priorand informed consent (FPIC) of peoples with customary tenure rights.
9. Companies have special attention for respecting the rights of children.

Page | 86

10. Companies do not enable settlements, including their economic activities, in occupied
territories in respect of International Humanitarian Law.
11. Companies integrate human rights criteria into their procurement and operational policies.
12. Companies include clauses on compliance with human rights criteria in their contracts with
subcontractors and suppliers.

Page | 87

2.7

Labour rights

2.7.1 What is at stake?
Protecting people in their working environment is a fundamental responsibility of companies andgovernments. According to the International Labour Organisation (ILO), companies should engage
in fair recruitment practices and should be able to prove that their employees have a safe work
environment, that they are not discriminated against or mistreated, that they can deal freely withcolleagues, labour unions and representative organisations, and that they are remunerated in a fair
way for their services. These basic rights apply to all employees, without distinction of any kind,such as race, colour, sex, language, religion, political or other opinion, national or social origin,property, birth, or other status. Meeting these conditions helps when developing a strong workforce that can contribute to the development of sustainable human capital. In addition, ensuring
labour rights can contribute to the democratisation of societies, which leads to a more favourable
investment climate for the corporate world.
A living wage and more stringent maximum working hours, investments in professional training
and respect for equality lead to better trained and more satisfied employees. In addition, safety
requirements are essential to prevent accidents and to minimise the number of people that needhealth care. Protection of employment agreements can encourage employees to think innovatively
and choose new paths. Furthermore, developing direct communication channels between
employees and employers and setting up grievance and mediation procedures can contribute toproductivity growth and to a greater stability of the labour market.297
Special attention for the position of women in the labour market is important. If women earn an
income, this contributes strongly to the health and productivity of families and even communities,
as well as to improved prospects for their children and future generations.298 The UN Convention
on the Elimination of All Forms of Discrimination Against Women (CEDAW) endorses the right ofwomen not to be discriminated against regarding education, labour relations, and economic andsocial activities.299 Working environments where men and women are treated equally are of great
importance in helping to reduce poverty and improve standards of living. In addition, it isimportant that such factors are also considered for women during and around the period ofpregnancy. Sustainable Development Goal 5 is aimed at ending discrimination against women andgirls and eliminating all forms of violence against women and girls.300
Special attention is also needed for the position of migrant workers. With globalisation, thenumber of people moving abroad to work is rapidly increasing. A 2018 ILO report estimates that
migrant workers account for 164 million out of 258 million international migrants.301 While this may
provide migrant workers with significant opportunities to improve their livelihoods, in the absenceof proper regulations they are also vulnerable to a host of violations, from unfair recruitment
practices to outright exploitation and horrific working conditions.302
The financial and economic crises the last decade have had a significant impact on the job market:
there is less security and more precarious work for employees. In 2018 – ten years after the global
financial crisis – the rate of global unemployment had finally recovered to its pre-crisis level ofaround 5.0% (172 million people). However, even among wage and salaried workers, job insecurity
is a major problem, as less than half have a permanent contract. The ILO concludes that the worldcommunity is facing a challenge to strengthen labour market institutions and ensure the proper
design of social protection systems. In particular, financial reform is required to ensure that
financial institutions perform their role of channelling resources into the real economy and into
investments for sustainable enterprise expansion and job creation.303

Page | 88

This is also the aim of SDG 8: Decent Work and Economic Growth: “Promote sustained, inclusive
and sustainable economic growth, full and productive employment and decent work for all”.304 Oneof the targets aims to: “eradicate forced labour, end modern slavery and human trafficking andsecure the prohibition and elimination of the worst forms of child labour, including recruitment anduse of child soldiers, and by 2025 end child labour in all its forms.” A 2019 joint report by the ILO,
the OECD, UNICEF and the International Organization for Migration (IOM) estimated that 152
million children are in child labour, while around 25 million adults were in forced labour, including
in global supply chains. While this indicates a clear responsibility for states to step up efforts, thereport also emphasizes the need to foster and incentivize responsible business conduct in global
supply chains.305
The Sustainable Development Goals also include targets on protecting labour rights andpromoting safe and secure working environment for all workers, including migrant workers, inparticular women migrants, and those in precarious employment.306 SDG 10: Reduced Inequalities
is also related to labour rights and working conditions as it focuses on adopting and improving
fiscal, wage and social protection policies for achieving greater equality.307
The policies of financial institutions have to ensure they only invest in or finance companies that
respect labour rights and provide decent jobs, ensuring proper working conditions. Whendeveloping policies in this respect, financial institutions can make use of the international standards
described below.
2.7.2 International standards and initiatives
The main international standards on labour rights are summarised per topic, followed by theassessment elements that are formulated by the FFGI as a result:•

ILO fundamental principles
The body that establishes international labour standards is the United Nations International
Labour organisation (ILO) in which governments, employers, and employees cooperate. As of
2019, the ILO has adopted 190 conventions and 206 recommendations that together deal witha wide spectrum of labour issues.i
With the adoption of the ILO Declaration on Fundamental Principles and Rights at Work in
1998, the ILO identified eight of its conventions as “fundamental” conventions. These eightcover four topics that are considered as the fundamental principles and rights at work:308••••

The freedom of association and the effective recognition of the right to collective
bargaining;309
The elimination of all forms of forced and compulsory labour;310
The effective abolition of child labour;311 and
The elimination of discrimination in respect of employment and occupation.312

In some countries, some of these principles and rights are not yet guaranteed within financial
institutions’ internal operations and supply chain policies. Therefore, it is necessary to havepolicies in place regarding the relevant ILO principles that apply to financial institutions
themselves.313

i

For a complete overview see the NORMLEX database, online:
www.ilo.org/dyn/normlex/en/f?p=NORMLEXPUB:1:0::NO:::, viewed in November 2019.

Page | 89

This leads to assessment elements•

1

The financial institution respects the ILO Declaration on Fundamental Principles and Rights at
Work.

2

The financial institution integrates at least the labour standards of the ILO Declaration on
Fundamental Principles and Rights at Work in its procurement and operational policies.

3

Companies uphold the freedom of association and the effective recognition of the right tocollective bargaining.

4

All forms of forced and compulsory labour are unacceptable.

5Child labour is unacceptable.

6

Discrimination in respect of employment and occupation is unacceptable.

Working conditions
Another leading ILO document is the Tripartite Declaration of Principles Concerning
Multinational Enterprises and Social Policy (MNE Declaration), adopted in 1977. The MNE
Declaration focuses on the responsibility of companies and specifically on their dealings withlabour issues. The revision of 2017 takes into account new labour standards adopted by theInternational Labour Conference, the UN Guiding Principles on Business and Human Rights andthe 2030 Agenda for Sustainable Development, in particular on SDG 8: Decent Work andEconomic Growth.314 The MNE Declaration emphasizes the responsibilities of bothgovernments and companies regarding the following topics:315
General policies
Employment promotion
Social security
Elimination of forced or compulsory labour
Effective abolition of child labour: minimum age and worst forms
Equality of opportunity and treatment
Security of employment
Training
Wages, benefits and conditions of work
Safety and health
Freedom of association and the right to organize
Collective bargaining
Consultation
Access to remedy and examination of grievances
Settlement of industrial disputes

•
•
•
•
•
•
•
•
•
•
•
•
•
•
•

This leads to assessment elements
6

Discrimination in respect of employment and occupation is unacceptable.

8Companies pay a living wage to their employees.

9Companies apply a maximum of working hours.

10

Companies have a comprehensive health and safety policy.

11

Companies ensure equal treatment and working conditions for migrant workers.

12

Companies have a clear management system to monitor and, if needed, correct compliance withnorms on labour law.

Page | 90•Fair recruitment
Aside from fundamental principles and working conditions, recruitment is an area of particularinterest. As the ILO mentions, while private employment agencies may serve an importantfunction in ensuring an efficient and equitable (international) labour market, in the absence of aproper regulatory framework the potential for abuse is significant.316 This is especially the casefor workers seeking jobs outside of their communities or countries. With growing numbers ofinternal and international labour migrants, fostering fair recruitment practices is an area ofincreasing relevance. In the context of the Fair Recruitment Initiative, the ILO published its
General Principles and Operational Guidelines for Fair Recruitment in 2019.317
This leads to assessment element
7•

Companies are committed to fair recruitment practices.

Living wage
The ILO describes a living wage as “the level of wages sufficient to meet the basic living needsof an average-sized family in a particular economy.”318 ILO documents referring to living wage
include the ILO Constitution and its preamble, the 2017 ILO Tripartite Declaration on Principles
concerning Multinational Enterprises and Social Policy (MNE Declaration) and the 2008 ILO
Declaration on Social Justice for a Fair Globalization.
The Universal Declaration of Human Rights (UDHR) states that “everyone who works has theright to just and favourable remuneration ensuring for himself and his family an existence
worthy of human dignity”.319 In addition, the 2011 OECD Guidelines for Multinational
Enterprises recommend paying a wage that “should be at least adequate to satisfy the basic
needs of the workers and their families”.320Standards on workers’ rights and conditions such as those put forth by the organisations
Ethical Trading Initiative and Fair Wear Foundation, Global Living Wage Coalition also mention
that a living wage should provide discretionary income in addition to cover the family’s basic
needs and be earned within a standard working week.
The common ground of the above definitions is that a ‘living wage’ is regarded as a family
income earned within a standard working week, should be sufficient to meet basic needs,
usually conceived of as the ability to obtain adequate food, clean water, shelter, clothes,education, healthcare, transport and energy, and provide some discretionary income.321
Workers in many producing countries are not paid enough to support themselves and theirfamilies. While some of these countries do have a legal minimum wage, it is often much lower
than a living wage.
The Platform Living Wage Financials is a coalition of financial institutions committed toencourage and monitor investee companies to “address the non-payment of living wage inglobal supply chains”.322 The coalition is particularly focused on sectors that rely on manual
labour, such as the garment and footwear industries, food retail, and companies in the foodand agricultural supply chain. As of January 2020, the coalition counted 13 members,
representing around EUR 2.6 trillion in assets under management (AUM).
This leads to assessment element
8

Companies pay a living wage to their employees.

Page | 91•Children’s rights
The United Nations Convention on the Rights of the Child supports the appeal for the effective
abolition of child labour.
This leads to assessment element
5•Child labour is unacceptable.

Women’s rights
The UN Convention on the Elimination of All Forms of Discrimination Against Women endorses
the right of women not to be discriminated against regarding education, labour relations andeconomic and social activities.
See for more information on this topic the theme Gender equality (section 2.4) and the theme
Human rights (section 2.6).
This leads to assessment element
6•

Discrimination in respect of employment and occupation is unacceptable.

Migrant workers
The United Nations Convention on the Protection of the Rights of All Migrant Workers andTheir Families adopted in 1990 emphasises the connection between migration and humanrights and aims to protect migrant workers and their families. The Convention does not bring
any new rights for migrants into existence, but intends to guarantee equal treatment andworking conditions for migrants and nationals.
This leads to assessment element
11•

Companies ensure equal treatment and working conditions for migrant workers.

Occupational Health and safety
The ISO 45001:2018 Occupational health and safety provides globally applicable guidelines for
management systems regarding occupational health and safety. It applies to all kinds oforganisations and it serves to guarantee the health and safety of both employees and external
stakeholders, such as contractors’ staff and visitors. The IFC has included occupational healthand safety requirements in both its Performance Standards and its Environmental Health and
Safety Guidelines. The ILO has asserted the right to a safe and healthy work environment first in
its 1981 Occupational Safety and Health Convention and most recently in the 2017 Tripartite
Declaration of Principles Concerning Multinational Enterprises and Social Policy (MNE
Declaration).
For more information on this topic, see the theme Health (section 2.5).
This leads to assessment element
10•

Companies have a comprehensive health and safety policy.

Other guidelines for companies
Various guidelines for companies endorse the four fundamental ILO principles and rights atwork, as well as the MNE Declaration:

Page | 92

•

•
•
•
•

•

•

According to the United Nations Guiding Principles on Business and Human Rights(UNGPs), the responsibility of companies includes the fundamental principles of the ILO,
together with the International Bill of Human Rights;
The UN Global Compact has added the four fundamental ILO principles and rights at work
to the ten principles of responsible business;
The IFC Performance Standards are used in decision-making on financing by theInternational Finance Corporation;
After the revision in 2011, the OECD Guidelines for Multinational Enterprises are entirelyaligned with the UNGPs and also contain principles for supply chain responsibility;
The ISO 26000:2010 Guidance on social responsibility recognise the importance of labour
rights and good working conditions by the so-called core issue on labour practice andmake various actions and expectations on a variety of related topics.323
International companies can conclude an International Framework Agreement (IFA) with aninternational umbrella trade union. In an IFA, set agreements can be established on labour
conditions, working conditions, and labour rights for all employees, and sometimes also
subsidiaries and suppliers of the enterprise. The international employer’s organisation IOE
has written papers about drafting an IFA.

Procurement and supply chains
Companies are often part of long procurement and supply chains. They can monitor one
another and question how they respect local and national legislation and international norms
on labour rights. The requirements that companies set for their suppliers can be included incontractual agreements.
The importance of this has also been recognised in the OECD Guidelines for Multinational
Enterprises since its revision in 2011. The OECD Due Diligence Guidance for Responsible
Business Conduct provides practical support to companies on the implementation of the OECD
Guidelines for Multinational Enterprises by providing plain language explanations of its due
diligence recommendations. Implementing these recommendations can help companies avoid
and address adverse impacts that may be associated with their operations, supply chains andother business relationships.
Furthermore, ISO 26000:2010 Guidance on social responsibility recognises the importance of
supply chain responsibility, because “the impacts of an organization's decisions or activities canbe greatly affected by its relationships with other organizations”.324 A company’s sphere of
influence includes relationships within and beyond an organization’s supply chain. Moreover,ISO 26000:2010 Guidance on social responsibility recommends setting contractual provisions or
incentives as a means of exercising influence.325
In addition, ISO 20400:2017 Sustainable procurement – Guidance provides guidelines fororganizations, independent of their activity or size, on integrating sustainability withinprocurement, as described in ISO 26000:2010 Guidance on social responsibility. It is intended
for stakeholders involved in, or impacted by, procurement decisions and processes.
The United Nations Guiding Principles on Business and Human Rights include a due diligenceprocess in order to identify, prevent, mitigate and account for how companies address theiradverse human rights impacts. The process “should cover adverse human rights impacts thatthe business enterprise may cause or contribute to through its own activities, or which may bedirectly linked to its operations, products or services by its business relationships.”326

Page | 93

Usable standard regarding labour rights and supply chain responsibility are the SA8000:2014,
the FTSE4 Good Supply Chain Labour Standards Criteria and Fair Labour Association’s
Workplace Code of Conduct.
This leads to assessment elements
14

Companies integrate labour rights criteria in their procurement and operational policies.

15

Companies include clauses on the compliance with criteria on labour rights in their contracts with
subcontractors and suppliers.

2.7.3 Assessment elements
Like other companies, financial institutions are expected to respect local, national, and international
labour-related legislation and legal systems, and to endorse the four fundamental ILO principles,labour rights and the MNE Declaration in all their spheres of influence (as employers, in investees
and in their production chains).
The following elements are crucial for a policy regarding the financial institution's internal
operations:
1. The financial institution respects the ILO Declaration on Fundamental Principles and Rights at
Work.
2. The financial institution integrates at least the labour standards of the ILO Declaration on
Fundamental Principles and Rights at Work in its procurement policies.
The following elements are crucial for a policy regarding the companies a financial institution
invests in or finances:
3. Companies uphold the freedom of association and the effective recognition of the right tocollective bargaining.
4. All forms of forced and compulsory labour are unacceptable.
5. Child labour is unacceptable.
6. Discrimination in respect of employment and occupation is unacceptable.
7. Companies are committed to fair recruitment practices.
8. Companies pay a living wage to their employees.
9. Companies apply a maximum of working hours.
10. Companies have a comprehensive health and safety policy.
11. Companies ensure equal treatment and working conditions for migrant workers.
12. Companies have a clear management system to monitor and, if needed, correct compliancewith norms on labour law.
13. Companies establish procedures on how to deal with and process employee complaints andhow to solve violations and conflicts, preferably in consultation with the relevant trade union.
14. Companies integrate labour rights criteria in their procurement policies.
15. Companies include clauses on the compliance with criteria on labour rights in their contracts
with subcontractors and suppliers.

Page | 94

2.8

Nature2.8.1 What is at stake?
The biological diversity of planet earth - its ecosystem diversity, species diversity and genetic
diversity - forms a complex web of life that is of great importance to the economic and social
development of our society, for our culture and for our leisure facilities. The accelerating decline of
the global biodiversity (nature) is one of the most urgent environmental concerns.327 The loss of
biodiversity imposes huge potential costs and risks, such as the destruction of habitats, the loss ofthe functions of ecosystems, the threat of the food supply and the loss of medicinal plants.328 The
care for the natural riches of the world is a moral and ethical responsibility for all mankind.
In 2016, the UNEP released the Global Environmental Outlook (GEO-6): Regional Assessments.
These are six separate reports that offer detailed examinations of the environmental issues
affecting each of the world’s six regions: the Pan-European region, North America, Asia and thePacific, West Asia, Latin America and the Caribbean, and Africa. The reports find that the world
shares a host of common environmental threats that are quickly becoming worse in many parts of
the world. For example, in almost every region, the combination of population growth, rapid
urbanization, rising levels of consumption, desertification, land degradation and climate change
lead to countries suffering from severe water scarcity. These worrying trends are also making it
increasingly hard for the world to feed itself, warn the reports. Despite the negative outlook, thereports conclude that there is still time to change course on several issues.329
According to the Intergovernmental Panel on Climate Change (IPCC) "impacts from recent climaterelated extremes, such as heat waves, droughts, floods, cyclones and wildfires, reveal significant
vulnerability and exposure of some ecosystems and many human systems to current climate
variability".330 IPCC argues that climate change will alter the structure and functioning of mostecosystems, it will reduce biodiversity and therefore compromise the ecosystem services requiredby life on earth: “A large fraction of species faces increased extinction risk due to climate change
during and beyond the 21st century, especially as climate change interacts with other stressors(high confidence). Most plant species cannot naturally shift their geographical ranges sufficiently
fast to keep up with current and high projected rates of climate change in most landscapes; mostsmall mammals and freshwater molluscs will not be able to keep up at the rates projected under
RCP4.5 and above in flat landscapes in this century (high confidence). Future risk is indicated to behigh by the observation that natural global climate change at rates lower than current
anthropogenic climate change caused significant ecosystem shifts and species extinctions during
the past millions of years.”331
Preserving nature is adequately recognized by the Sustainable Development Goals (SDGs) andspecifically by the SDGs 14 and 15, which focus on targets to preserve nature. SDG 14: Life Below
Water includes targets to reduce marine pollution, sustainably manage and protect marine andcoastal ecosystems, minimize and address the impacts of ocean acidification, effectively regulate
harvesting and end overfishing, illegal and destructive fishing practices, and many more.332
Similarly, SDG 15: Life on Land promotes the implementation of sustainable management of all
types of forests, halt deforestation, restore degraded forests and substantially increaseafforestation and reforestation, restore degraded land and soil, reduce the degradation of natural
habitats, halt the loss of biodiversity and many more.333

Page | 95

Furthermore, SDG 2: Zero Hunger focuses on ensuring food security to everyone withoutcompromising on nature.334 SDG 3: Good Health and Well-being targets to substantially reduce thenumber of deaths and illnesses from hazardous chemicals and air, water and soil pollution andcontamination, which indirectly safeguard nature, not only the well-being of people.335 SDG 6:
Clean Water and Sanitation includes a target to improve water quality by reducing pollution,
eliminating dumping and minimizing release of hazardous chemicals and materials, halving the
proportion of untreated wastewater and substantially increasing recycling and safe reuse globally.
This target also contributes in preserving the nature.336
According to the Partnership for European Environmental Research, greening the economy
requires "that natural assets continue to provide the resources and ecosystem services on which
our well-being relies".337 A study of this group of European academics concluded: "transitioning togreen economies is never purely based on win-win solutions, but requires taking into accountpotential trade-offs among multiple goals, across sectors and international leakage. The casestudies indicate the need for far-sighted and multiple-source planning of funding of green
economy initiatives".338 This highlights the need for financial institutions to take into accountnatural assets in their financing policies.
The investment policy of financial institutions should ensure that financial institutions are only
involved in investments in companies and governments that aim to prevent further loss to naturalriches and also put this principle into systematic practice. When developing policies in this respect,financial institutions can make use of the international standards described in section 2.8.2.
2.8.2 International standards and initiatives
The main international standards on nature are summarised per topic, followed by the assessment
elements that are formulated by the FFGI as a result:•Protection of ecosystems and habitats
Various international agreements require the protection of ecosystems and natural habitats:
•

•

•
•

The 1992 UN Convention on Biological Diversity (CBD) demands that each member stateestablishes a system to preserve the biodiversity in protected areas, or ensure theprotection of ecosystems in other ways. Virtually all countries in the world have signed theconvention.339 In April 2002, the signatory countries of the CBD agreed that they will“achieve by 2010 a significant reduction of the current rate of biodiversity loss at the global,
regional and national level as a contribution to poverty alleviation and the benefit of all lifeon Earth”. In November 2010, the CBD achieved a new agreement, in which it was agreed
that 10% of the oceans are marked as natural areas, more stringent laws have to be created
to protect fish and that the amount of protected land will grow from 13% to 17%.
The 1982 UN Convention on the Law of the Sea (UNCLOS) obliges all signatory countries toprotect and preserve the biodiversity in ocean areas. The protection of specific ocean areas
is dealt with in the Regional Seas Conventions, which falls under the UN Environmental
Programme (UNEP). Also, the International Coral Reef Initiative focuses on specific ocean
areas.
The biodiversity in areas that are important on environmental and cultural grounds falls
under the protection of the UNESCO World Heritage Convention.
For wetlands (swamps and bogs), which are rich in biodiversity, the Ramsar Convention on
Wetlands ensures protection and proper management.

Page | 96

The International Union for Conservation of Nature (IUCN) has developed a system thatcategorises natural areas in six categories and indicates in which areas biodiversity has tobe protected (category I to IV). In addition, the IUCN provides guidelines for companies on
how to deal with fields that fall within these Protected Area Management Categories. In
2000, a resolution was adopted on the IUCN World Conservation Congress that calls upon
all states not to allow investments in oil, gas and extractive industry projects in theprotected areas (categories I to IV).
The United Nations Environmental Assembly adopted a resolution on pollution mitigation
by mainstreaming biodiversity into key sectors in 2017: “The resolution aims atstrengthening efforts to integrate conservation and sustainable use of biodiversity invarious sectors such as agriculture, fisheries and aquaculture, tourism, mining and energy,
infrastructure and manufacturing among others. It also points to the need to prevent andreduce pollution from these sectors”.340••

This leads to assessment elements
1•

Companies prevent negative impacts on High Conservation Value (HCV) areas within their business
operations and the areas they manage.

2

Companies prevent negative impacts on protected areas that fall under the categories I-IV of theInternational Union for Conservation of Nature (IUCN) within their business operations and theareas they manage.

3

Companies prevent negative impacts on UNESCO World Heritage sites within their business
operations and the areas they manage.

4

Companies prevent negative impacts on protected areas that fall under the Ramsar Convention on
Wetlands within their business operations and the areas they manage.

Protection of plant and animal species
The most obvious step for the preservation of biodiversity is the protection of endangered
species of flora and fauna. A leading report of endangered species is the IUCN Red List of
Threatened Species. The habitat of these endangered species is protected by the Convention
on the Conservation of Migratory Species of Wild Animals (1979). This treaty also aims to
restrict exploitation of areas where wild and endangered migratory animal species reside. Other
global and regional conventions prohibit or restrict the commercial exploitation of whales,
migratory birds, polar bears, sea turtles and seals.341 Companies should have policies in place to
avoid negative consequences to the habitats of endangered species.
This leads to assessment element
5•

Companies prevent negative impacts for the populations or the number of animal species that areon the IUCN Red List of Threatened Species.

Trade in endangered species
The Convention on International Trade in Endangered Species of Wild Fauna and Flora (CITES)
sets stringent conditions for the international trade in all endangered species with demands fornational legislation from the countries that have ratified the convention. CITES applies threelists with species that are more or less threatened with extinction. Animal and plant species
included in Appendix I may only be traded in exceptional situations, while the trade in species
included in Appendix II is monitored to ensure that they are not endangered. Appendix III
concerns species that are endangered in at least one country and where other countries are
asked for help in monitoring the trade.342

Page | 97

Companies should at least adhere to the conditions of CITES, but preferably refrain from tradein species on all appendices of the CITES list.
Except for the protection of endangered animal species, conservation of nature requires thatanimal species that are not (yet) endangered are not unduly captured. The CBD demands thatcountries “restore habitats and use their resources in a sustainable way to ensure species
diversity”.343 This topic is also dealt with in section 3.4.2 on Food and section 3.5.2 on Forestry.
This leads to assessment elements•

6

Trade in endangered plant and animal species complies with the CITES conditions.

7

Trade in endangered plant and animal species that are on the CITES lists is unacceptable.

Protection of genetic material
The UN Convention on Biological Diversity (CBD) demands that companies that want to haveaccess to genetic material from abroad have to obtain prior permission from the exporting
country and have to make clear agreements for the use of the material.
The Bonn Guidelines are recognized as a useful first step in the implementation of relevant
provisions of the CBD and are meant to assist stakeholders in developing access to genetic
resources and benefit-sharing strategies.
The Cartagena Protocol on Biosafety to the Convention on Biological Diversity (Cartagena
Protocol) speaks about Living Modified Organisms (LMOs) which are in every day usage known
as Genetically Modified Organisms (GMOs). These are defined as any living organism thatpossesses a novel combination of genetic material obtained through the use of modern
biotechnology. The Cartagena Protocol does not prohibit the use of GMOs in itself but hasdeveloped a framework for the safe handling, transport and use of GMOs that may have a
harmful effect on biodiversity and human health and entail trans-boundary risks. The protocol
also requires permission from the importing country before it is permitted to import GMOs.
This leads to assessment elements•

8

Activities in the field of genetic materials and genetic engineering only take place if they meet thepermission and processing requirements as described in the UN Convention on Biological Diversity
and the related Bonn Guidelines or Nagoya Protocol.

9

Production of, or trade in, living genetically modified organisms can only take place if permission
has been obtained from the importing country and all requirements of the Cartagena Protocol
have been met.

Invasive alien species
Nature is also threatened by the intended and unintended introduction of invasive alien
species. When these are outside their natural habitat, they can drive off indigenous species andtake over their habitat. Exotic invaders can be found all over the world, but mainly pose a
problem for the ecosystems of islands. Therefore, the UNCLOS and the CBD both require thatmember states prevent the import and introduction of alien species in order to keep it understrict control.
On 1 January 2015 the EU Regulation 1143/2014 on Invasive Alien Species entered into force.
This Regulation seeks to address the problem of invasive alien species in a comprehensive
manner so as to protect native biodiversity and ecosystem services, as well as to minimize andmitigate the human health or economic impacts that these species can have. Amongst others,

Page | 98

Member States will have to draw up a list of invasive species, perform risk assessment and set
up early detection measures.344
This leads to assessment element
10•

Companies prevent the introduction of invasive alien species in ecosystems.

Water use
Given the growing challenge of water scarcity in many regions of the world, it is vital thatcompanies and financial institutions become aware of their own influence on water related
problems. First of all, companies should engage with stakeholders in order to learn how to
avoid negative impacts and limit their water use wherever possible. However, this alone is not
sufficient, commitments to improve practices are necessary. Companies should be aware of thepossible negative effects their operations could have in a possible location for business
operations.
This should consider effects both in the short term and in the long term, in order to, forexample, prevent competing with communities for water, now and in the foreseeable future.
Companies should measure and calculate their water use. Furthermore, serious efforts to curb
pollution of water resources and negative effects on other water users are also required. Finally,
companies should be able to demonstrate that they are saving water and set goals to improvethis. Various initiatives, guidelines and standards have emerged in recent years, to help
companies address water risk.
Initiatives companies could participate in and learn from are:
The UN Global Compact’s CEO Water Mandate is a public-private initiative designed toassist companies in the development, implementation and disclosure of water sustainability
policies and practices;
The UNEP and CEO Water Mandate Guidance on Corporate Water Accounting;
The European Water Partnership; andThe Water Footprint Network, which also has a standard on assessing a global water
footprint.

•

•
•
•

There are several guidelines and water ‘footprinting’ methods as well as voluntary disclosure
initiatives for calculating water use, water risk, understanding water issues and creating a soundwater strategy, such as:
The CDP’s Water Program, to calculate and publish corporate water use throughout the
supply chain;
The GEMI Water Sustainability Tool;
The WBCSD Global Water Tool;
The AWS International Water Stewardship Standard is supported by a verification process,that defines a set of water stewardship criteria and indicators for how water should be
stewarded at a site and catchment level in an environmentally, socially, and economicallybeneficial manner.

•
•
•
•

This leads to assessment elements
11

Companies conduct water scarcity impact assessments in water scarce regions.

12

Companies have comprehensive mitigation measures in place to address community andecosystem water requirements in areas where environmental impact assessments identify thatsignificant impacts to water resources are likely.

Page | 99

•Other guidelines for companies
The High Conservation Value (HCV) concept was initially conceived within the framework ofcertification of forest management and wood products (High Conservation Value Forests or
HCVF), but can be applied to all ecosystems and natural living environments. The HCV Resource
Network has developed national implementation guidelines, local projects, training andworkshops.
In April 2006, the Voluntary Guidelines on Biodiversity-Inclusive Impact Assessments were
published by the CBD. These guidelines include clear instructions on how nature criteria can be
included in environmental impact assessments.
In Great Britain the EarthWatch Institute and others are working on involving companies in thepreservation of biodiversity. They have drafted a road map specifically for companies, based on
10 principles of engagement, including the preparation of a strategic biodiversity plan, theintegration of biodiversity standards in regular quality measurements and the protection ofnature in the procurement policy. The Wildlife Trust has developed a biodiversity benchmark.
Both initiatives mainly focus on companies that own land or are responsible for land
management.
The IUCN manages a website with approaches and conservation tools for companies:
Conservation tools.
The ISO 26000:2010 Guidance on social responsibility states that organisations behave socially
responsible if they value and protect biodiversity; value, protect and restore ecological services;use land and natural resources in a sustainable way and develop areas in an environmentally
responsible way.345
In recent years, drafting a sustainability report has become commonplace. The best known
guideline for this is the Global Reporting Initiative (GRI) Reporting Framework, of which thelatest edition has been presented in 2016: “The G4 Guidelines have been superseded by the GRI
Sustainability Reporting Standards (GRI Standards). The GRI Standards will be required for allreports or other materials published on or after 1 July 2018 – the G4 Guidelines remain
available until this date”.346 GRI encourages financial institutions to not only describe theirsustainability policy, but to also measure the respective implementation. The GRI Standards
holds specific disclosures on biodiversity, GRI 304: Biodiversity 2016.
The International Finance Corporation’s (IFC) Performance Standard 6 concerning Biodiversity
Conservation and Sustainable Management of Living Natural Resources determines how
companies should operate in order to avoid negative consequences on areas of highbiodiversity value, including impact on natural habitats as well as endangered and endemic
species. The requirements in the standard have been guided by the Convention on Biological
Diversity.
The UNEP FI has introduced the Natural Capital Declaration on the Rio + 20 Earth Summit inJune 2012. Signatories of this initiative will show their commitment to integrate natural capital(natural resources and the ecosystem services the earth produces from them) and criteria into
their financial products.
In 1994, the Global Ecolabelling Network (GEN) was founded. This non-profit association aims
to improve, promote and develop the eco-labelling of products and the creditability of ecolabelling programs worldwide. It associates third-party, environmental performance recognitionand certification and labelling organizations.

Page | 100

A useful methodology to quantify the biodiversity impact of companies and sectors is provided
by the Dutch Benchmark Biodiversity of research agency CE Delft.
In 2017, the ISO developed an environmental management standard to guide the developmentof proper practices in combating land degradation and desertification. The first part of thestandard, ISO 14055-1:2017, elaborates the good practices framework. An accompanying
document (ISO/TR 14055-2), which is currently under development, will be launched to provide
supportive regional case studies on how to apply the framework to a range of land degradation
cases.
Several very large companies, notably traders in the palm oil sector such as Archer Daniels
Midland and Wilmar International (the latter controls roughly 45% of the global market in palmoil), have adopted ‘No Deforestation, No Peat, No Exploitation’ (NDPE) policies in recent years.
These policies set a high benchmark, often allowing no deforestation, no peat development
and no conflicts, in their own operations or in their supply chain. Although in these first cases
directed at the palm oil sector, financial institutions may apply the policies to other sectors
causing deforestation, peat loss and conflicts as well.347
This leads to assessment element
13•

Companies make an environmental impact assessment on the total consequences of a large scale
project on biodiversity, at least according to GRI 304: Biodiversity 2016 or other relevant standards(mentioned in section 2.8.2).

Procurement and supply chains
Companies are often part of long procurement and supply chains. They can monitor one
another and question how they respect local and national legislation and international norms
on labour rights. The requirements that companies set for their suppliers can be included incontractual agreements.
The importance of this has also been recognised in the OECD Guidelines for Multinational
Enterprises since its revision in 2011. The OECD Due Diligence Guidance for Responsible
Business Conduct provides practical support to companies on the implementation of the OECD
Guidelines for Multinational Enterprises by providing plain language explanations of its due
diligence recommendations. Implementing these recommendations can help companies avoid
and address adverse impacts that may be associated with their operations, supply chains andother business relationships.
Furthermore, ISO 26000:2010 Guidance on social responsibility recognises the importance of
supply chain responsibility, because “the impacts of an organization's decisions or activities canbe greatly affected by its relationships with other organizations”.348 A company’s sphere of
influence includes relationships within and beyond an organization’s supply chain. Moreover,ISO 26000:2010 Guidance on social responsibility recommends setting contractual provisions or
incentives as a means of exercising influence.349
In addition, ISO 20400:2017 Sustainable procurement – Guidance provides guidelines fororganizations, independent of their activity or size, on integrating sustainability withinprocurement, as described in ISO 26000:2010 Guidance on social responsibility. It is intended
for stakeholders involved in, or impacted by, procurement decisions and processes.

Page | 101

This leads to assessment elements
14

Companies integrate criteria on nature into their procurement and operational policies.

15

Companies include clauses on the compliance with criteria on nature in their contracts with
subcontractors and suppliers.

2.8.3 Assessment elements
Financial institutions can influence the protection of nature, especially if they invest in or financeindustries with a potentially large influence on nature, such as forestry, the extractive industry, theoil and gas industry, fishery, water supply and infrastructure and industries that make use ofgenetic material, such as agriculture, biotechnology, the medical industry and the cosmetic
industry.
For companies there are various grounds for putting biodiversity high on the agenda. This includes
more stringent rules to protect ecosystems and more stringent supervision, increased costs in
product chains that depend on certain ecosystems, changes in consumption patterns and pressure
from society and social organisations. Moreover, new commercial chances for companies arise insituations where commerce and nature management go hand in hand. Financial institutions cancapitalise on this development.350
In order to address the risks for natural areas and other threats to biodiversity, financial institutions
have to draft an investment policy in line with international conventions and national legislation.
The following elements are crucial for a policy regarding the companies a financial institution
invests in or finances:
1. Companies prevent negative impacts on High Conservation Value (HCV) areas within theirbusiness operations and the areas they manage.
2. Companies prevent negative impacts on protected areas that fall under the categories I-IV of
the International Union for Conservation of Nature (IUCN) within their business operations andthe areas they manage.
3. Companies prevent negative impacts on UNESCO World Heritage sites within their business
operations and the areas they manage.
4. Companies prevent negative impacts on protected areas that fall under the Ramsar Convention
on Wetlands within their business operations and the areas they manage.
5. Companies prevent negative impacts for the populations or the number of animal species thatare on the IUCN Red List of Threatened Species.
6. Trade in endangered plant and animal species complies with the CITES conditions.
7. Trade in endangered plant and animal species that are on the CITES lists is unacceptable.
8. Activities in the field of genetic materials and genetic engineering only take place if they meetthe permission and processing requirements as described in the UN Convention on Biological
Diversity and the related Bonn Guidelines or Nagoya Protocol.
9. Production of, or trade in, living genetically modified organisms can only take place if
permission has been obtained from the importing country and all requirements of the
Cartagena Protocol have been met.
10. Companies prevent the introduction of invasive alien species in ecosystems.
11. Companies conduct water scarcity impact assessments in water scarce regions.
12. Companies have comprehensive mitigation measures in place to address community andecosystem water requirements in areas where environmental impact assessments identify thatsignificant impacts to water resources are likely.

Page | 102

13. Companies make an environmental impact assessment of the total consequences of a large
scale project on biodiversity, at least according to GRI 304: Biodiversity 2016 or other relevant
standards (mentioned in section 2.8.2).
14. Companies integrate criteria on nature into their procurement and operational policies.
15. Companies include clauses on the compliance with criteria on nature in their contracts with
subcontractors and suppliers.

Page | 103

2.9

Tax

2.9.1 What is at stake?
For each democratic society, tax revenues are essential to finance public provisions such as healthcare, education, infrastructure and social security. Research shows that a fair system of taxation
contributes more to the development of a healthy, democratic society than revenues fromdevelopment aid or from the export of raw materials. After all, in order to raise taxes, thedevelopment of a capable and reliable public administration is required, while conversely civiliansthat have to pay tax expect a lot more of, and are more involved with, the public administration.
Following the adage “No taxation without representation”, a development towards moredemocracy is often closely related to the striving for higher tax revenues.351
All companies benefit from the public provisions in the countries where they operate and therefore
have responsibility to pay tax in every country and to be open about it. Yet, a lot of international
operating financial institutions, companies and rich private clients benefit from international
differences in tax percentages and loopholes in national tax legislation to significantly reduce theiroverall tax burden (tax planning). To hide this tax planning behaviour, multinational enterprises(MNEs) often lack transparency on their tax payments to the governments of the different
countries they operate in.352
MNEs, but also smaller companies and rich individuals, often make use of shell companies in tax
havens that are not only known for their low tax rates but also for their lack of financialtransparency. How much tax is ultimately paid, and in which country, quickly eludes everybody. A
lot of international financial institutions have branches in tax havens to help their clients and tolimit their own tax payments. If these type of constructions violate the laws of a certain country
these practices are labelled as tax evasion. But even if this is not the case - when they are labelled
as tax avoidance - this type of behaviour is contrary to Corporate Social Responsibility principles: it
is socially irresponsible to deprive governments of the revenues they need to develop their countrysocially and economically.353
The Tax Justice Network (TJN) estimated in 2012 that the ‘super rich’ have channelled between USD
21 and USD 32 trillion of untaxed capital to tax havens.354 In addition, TJN also estimated that in2012 US multinationals alone shifted between USD 500 and USD 700 billion of revenues, "mostly tocountries where these profits are not taxed, or taxed at very low rates".355
Developing countries annually lose more than USD 100 billion in tax revenues through tax evasion
and avoidance by companies.356 A 2014 report by the IMF explored the "broader macroeconomic
and development impact of corporate tax spill-overs, including wider issues of tax competition
between national governments". The IMF argues that national tax laws and international tax
arrangements should be transformed to prevent base erosion and profit shifting (BEPS). "Ourtechnical assistance work in developing countries frequently encounters large revenue losses
through gaps and weaknesses in the international tax regime", the IMF argues. Relative to all tax
revenues, this can be up to 10-15%.357 The IMF has indicated that developing countries are more
vulnerable to BEPS activities of multinational companies than OECD countries.358
The annual USD 100 billion developing countries' governments lose due to tax avoidance by MNEs,
is more than the amount that developing countries, according to the United Nations Sustainable
Development Goals, need to install a global safety net to eradicate extreme poverty in all
countries.359 It also corresponds with the OECD estimation that developing countries annually lose
more than three times the development aid received to tax revenues in tax havens.360

Page | 104

Tax is not directly addressed in the SDGs, however there are many goals that cannot be achieved
without effective and corruption free tax policies and practices. For example SDG 16: Peace, Justiceand Strong Institutions focuses on reducing corruption and bribery in all forms. This would alsomean transparent and just tax practices for companies.361 SDG 17: Partnerships for the Goals
encourages strengthening of domestic resource mobilization, including through international
support to developing countries to improve domestic capacity for tax and other revenue collection.
Additionally, SDG 1: No Poverty and SDG 10: Reduced Inequalities can not be achieved without the
tax revenues paid by companies as they are essential to finance public provisions.362
One can expect from responsibly operating financial institutions that they do not deliberately assist
clients in avoiding taxes and that they do not avoid taxes themselves. Moreover, financial
institutions have the responsibility to only grant financial services to companies that pay the taxes
owed in the countries where they operate. When developing policies on taxes, financial institutions
can make use of the international standards described below.
2.9.2 International standards and initiatives
The main international standards on tax are summarised per topic, followed by the assessment
elements that are formulated by the FFGI as a result:•Harmful tax practices by governments
Tax havens are often very small countries that almost entirely depend of the revenues from
activities related to tax avoidance and tax evasion.363 The EU published a blacklist of noncooperative tax jurisdictions (tax havens) outside the EU in late 2017. This list is updated several
times per year.364 Most EU member states apply countermeasures to countries on the blacklist.
For this purpose, they use the status of the blacklist at the end of a calendar year and revise thecountries to which countermeasures apply once per year. The OECD’s Forum on Harmful Tax
Practices has a similar assessment system that also covers corporate tax regimes in EU
countries.365 The OECD and EU work closely together and their assessment criteria are largely
the same, but there are some differences in scope and the EU does not always follow theconclusion of the OECD Forum on Harmful Tax Practices.
Countries with harmful preferential tax regimes try to lure corporate investments offering fiscal
advantages to certain groups of companies. These measures stimulate tax avoidance bymultinational corporations and decrease the tax revenues of other states.366 The OECD monitors
countries within the Global Forum on Transparency and Exchange of Information for Tax
Purposes. To this effect, OECD and non-OECD countries cooperate in the implementation of aninternationally accepted standard for taxes.367 However, civil society organisations haveoutlined several weaknesses of the Global Forum process and called for a more inclusive
process under the auspices of the UN.368
In 2018, the Tax Justice Network published its latest Financial Secrecy Index, on which 112
locations or so-called global secrecy jurisdictions have been identified and listed by their levelof transparency. The term ‘secrecy jurisdictions’ can be interchanged with the term tax haven,but emphasizes suspension from disclosure (of information). The Tax Justice Network
furthermore recognizes the large amount of illicit financial flows in poor countries, but at thesame time recalls ‘the other side of the coin’, namely ‘those jurisdictions that encourage andfacilitate illicit financial flows, by providing an environment of secrecy that allows theseoutflows to remain hidden, and largely untaxed. Contrary to OECD, Tax Justice Network has notsuspended its list of secrecy jurisdictions’.369

Page | 105

For the purposes of this methodology, jurisdictions with harmful tax practices refer to the nonEU countries on the EU blacklist that fail the EU's fair tax criterion 2.2, plus any additionalcountries listed in the latest update of the OECD Forum on Harmful Tax Practices as having(potentially) harmful tax practices.
This leads to assessment elements•

1

For at least 75% of the countries in which the financial institution operates and/or 75% of its total
revenue, it reports country-by-country on its revenues, profit, FTEs, subsidies received fromgovernments and tax payments to governments in a way that matches with the consolidated
accounts.

4

The financial institution does not advise clients to set up international structures with the main
purpose to avoid or evade taxes.

7

The financial institution does not have subsidiaries, branches or associates in jurisdictions with noor zero corporate tax or in jurisdictions with harmful corporate tax practices, unless they havesubstance and their profits are generated from local economic activities.

8

The financial institution does not provide financial services to companies in tax havens, unless thecompany has substance and its profits are generated by from local economic activities.

9

Companies publish their full group structure, including indirectly and jointly-owned entities.

10

Companies publish an explanation of the activities, functions and ultimate shareholder of every
subsidiary, branch, joint venture or affiliate located in jurisdictions with no or zero corporate tax
practices or in jurisdictions with harmful corporate tax practices.

Tax disputes
If a company is involved in a adjudication or arbitration case regarding a tax dispute, it should
publish information on this dispute, Christian Aid, Oxfam and ActionAid argue: “Resolving
unsettled disputes between corporate taxpayers and tax authorities increasingly happens
outside court settings, particularly where it involves more than one tax authority and thetaxpayer invokes the growing number of arbitration clauses in tax treaties. While there may be
advantages to arbitration, as with tax settlements, a key challenge it presents is a potential lackof accountability about how both taxpayer and tax authorities have behaved over disputes
often involving millions of dollars of tax revenues (especially in the case of transfer pricing
disputes). A voluntary commitment to publishing the results of arbitration, where it is used as
an alternative to court, would compensate for this potential accountability deficit and help tobuild the reputation of a company among its stakeholders as a transparent and responsible
taxpayer”.370
This leads to assessment elements•

14

Companies make public, to the extent legally and practically possible, the decision of any
adjudication or arbitration to which it, or any of its subsidiaries, is a party, undertaken to resolve atax dispute, whether in a court or in an arbitration setting.

15

Companies have a management system which results in immediate actions if suspicions arise that
employees or suppliers are guilty of facilitating tax evasion.

Tax planning by multinational companies
The OECD Guidelines for Multinational Enterprises expect companies to have a responsible tax
policy. On taxes, the guidelines mention that “It is important that enterprises contribute to the
public finances of host countries by making timely payment of their tax liabilities. In particular,
enterprises should comply with both the letter and spirit of the tax laws and regulations of the
Page | 106

countries in which they operate. Complying with the spirit of the law means discerning andfollowing the intention of the legislature.”371
In 2015 the UN PRI has drafted an Engagement Guidance on Corporate Tax Responsibility,
providing guidance to investors on why and how to engage with investees involved in tax
planning. The UN PRI argues tax planning risks for investors can be severe and cover a large
number of portfolio companies. Aggressive corporate tax planning can:372
create earnings risk and lead to governance problems;
damage reputation and brand value;cause macroeconomic and societal distortions.

•••

Investors can also use the Investor Guide: Integration of tax in responsible investment of VBDO
and PwC to design and implement a responsible tax strategy. The report urges investors toapply their own tax principles to investee companies as well.
In June 2017 the European Commission proposed new transparency rules for intermediaries
that design or sell potentially harmful tax schemes: “Intermediaries will have to report any
cross-border arrangement that contains […] characteristics, which might indicate that thearrangement is set up to avoid paying taxes”.373 The characteristics are listed in the Council
Directive amending Directive 2011/16/EU as regards mandatory automatic exchange of
information in the field of taxation in relation to reportable cross-border arrangements.
A 2018 report by the Financial Accountability and Corporate Transparency Coalition (FACT)
found that disclosure practices and requirements have not kept pace with the growing role ofinternational tax strategies for multinational companies. This increasingly puts investors at risk,
since the lack of proper disclosure hampers their ability to “(1) accurately determine acompany’s value, or (2) appropriately assess risks of, among other things, government
enforcement actions, (…) high-risk strategies employed by company management, or
reputational damage arising from growing societal and political focus on these issues”.374This leads to assessment elements
4

The financial institution does not advise clients to set up international structures with the main
purpose to avoid or evade taxes.

5

The financial institution does not participate in transactions with international structures of which
the main purpose is to avoid or evade taxes.

7

The financial institution does not have subsidiaries, branches or associates in jurisdictions with noor zero corporate tax or in jurisdictions with harmful corporate tax practices, unless they havesubstance and their profits are generated from local economic activities.

8

The financial institution does not provide financial services to companies in tax havens, unless thecompany has substance and its profits are generated by from local economic activities.

9

Companies publish their full group structure, including indirectly and jointly-owned entities.

10

Companies publish an explanation of the activities, functions and ultimate shareholder of every
subsidiary, branch, joint venture or affiliate located in jurisdictions with no or zero corporate tax
practices or in jurisdictions with harmful corporate tax practices.

11

For each country in which companies operate, they report country-by-country on their revenues,
profit, FTEs, subsidies received from governments and payments to governments (e.g. withholding
taxes, payments for concessions and company tax).

Page | 107

12•Companies focus their international enterprise structure and their international transactions in a
way that reflects the economic substance of the activities and transactions undertaken, without any
steps made primarily to secure a tax advantage.

Tax rulings
OECD BEPS Action 5 provides for an international system for exchange of international tax
rulings between tax authorities. A framework to transmit rulings to other jurisdictions is not
sufficient to be transparent. CSOs argue that “in line with the general principle that taxresponsible companies will be able to justify the key determinants of their tax position to public
stakeholders as well as to revenue authorities, a tax-responsible company should be able topublish such rulings”.375
This leads to assessment elements•

6

The financial institution publishes key information of any company-specific tax ruling it has
obtained from tax authorities.

13

Companies publish key information of any company-specific tax ruling it has obtained from tax
authorities.

Country-by-Country reporting
There have been various other steps to improve the Country-by-Country (CbC) reporting ofmultinational companies. CbC reporting makes it possible to determine how much taxes andother payments are made by companies to governments and to which extent companies
relocate revenues to other countries to avoid or evade tax payment.
In the G4 Sustainability Reporting Guidelines of the Global Reporting Initiative (GRI) the
breakdown of tax payments per country is also included. Economic Performance Indicator EC1asks companies to report on the “Direct economic value generated and distributed, including
revenues, operating costs, employee compensation, donations and other community
investments, retained earnings, and payments to capital providers and governments.” In thislast category it is requested to report on: “all company taxes and related penalties paid at theinternational, national, and local levels. (..) Report taxes paid by country for organisations
operating in more than one country.” In the new GRI Sustainability Reporting Standards (GRI
Standards), GRI Disclosure 201-4 requires companies to report on the “total monetary value offinancial assistance received by the organization from any government during the reporting
period”, while GRI Disclosure 201-1 requires companies to report on “payments to government
by country”.376
During the G20 conference in Moscow in July 2013 the OECD presented an Action Plan on Base
Erosion and Profit Shifting (BEPS), resulting in a 2015 report introducing fifteen guidelines formodernising tax systems and to prevent tax avoidance by multinationals.377
In 2015 the OECD published a Country-By-Country Reporting Implementation Package,
containing a model legislation for reporting of country-by-country data on tax, profits, otherkey financials and employment to tax authorities. These data are considered key to assess tax
risks. However, the OECD system involves confidential reporting to a home country tax
authority only, followed by exchange of information between tax authorities.
The EU already adopted the EU Capital Requirements Directive IV (2013/36/EU) in 2013, whichapplies to credit institutions and investment firms with their residence in one or more of the EU
Member States. This obliges financial institutions to provide full Country-by-Country (CbC)

Page | 108

reporting on the following topics:378
name(s), nature of activities and geographical location
turnovernumber of employees on a full time equivalent basis
profit or loss before tax
tax on profit or loss
public subsidies received

•
•
•
•
•
•

Some banks also provide other relevant data per country, such as total assets. Oxfam
International analysis shows that data on assets per country provides useful additional
information. Furthermore, the analysis shows that the country-by-country data are difficult tointerpret if they do not match with the consolidated financial accounts.379
In 2016 the EU Commission “adopted a proposal for a directive which requires multinationalgroups to publish a yearly report on profits and tax paid in each country where they are active(country-by-country reporting). This report will enable citizens to assess multinationals' tax
strategies and to see how much they contribute to welfare in each country”.380 In July 2017 theEuropean Parliament voted in favour of a proposal for public country-by-country reporting,arguing that: “The proposal aims at adding geographical information linking corporate taxes
and actual profits, in line with the principle that enterprises should pay tax where they actually
make profits.
This objective, which can be broadened to the dimensions of corporate social responsibility andfair taxation, is distinct from the reporting obligation aimed at protecting shareholders,investors and other stakeholders. The existing requirement to publish financial statements
meets the latter objective, which is specifically directed at the public at large. Under EU law it
covers limited liability companies established in the EU. However, this publicly available
information does not always make it possible for outsiders to construct a breakdown on acountry-by-country basis, hence the reason for CBC reporting.”381
After the European Parliament adopted a position, the Council needs to take a position andthen trialogue negotiations would need to take place to reconcile these positions for the
directive to be adopted. However, a minority in the Council opposed to public CBC reporting
refuses to start trialogue negotiations, arguing that CBC reporting is not a reporting measure
but a tax measure. Therefore no agreement is reached yet on the proposed directive.
This leads to assessment elements
1

For at least three quarters of the countries in which the financial institution operates, it reports
country-by-country on its revenues, profit, FTEs, subsidies received from governments and tax
payments to governments in a way that matches with the consolidated accounts.

2

For each country in which the financial institution operates, it reports country-by-country on its
revenues, profit, FTEs, subsidies received from governments and tax payments to governments in a
way that matches with the consolidated accounts.

3

For each country in which the financial institution operates, it reports country-by-country on its
total assets in a way that matches with the consolidated accounts.

9Companies publish their full group structure, including indirectly and jointly-owned entities.

10

Companies publish an explanation of the activities, functions and ultimate shareholder of every
subsidiary, branch, joint venture or affiliate located in jurisdictions with no or zero corporate tax
practices or in jurisdictions with harmful corporate tax practices.

Page | 109

11•

For each country in which companies operate, they report country-by-country on their revenues,
profit, FTEs, subsidies received from governments and payments to governments (e.g. withholding
taxes, payments for concessions and company tax).

Procurement and supply chains
Companies are often part of long procurement and supply chains. They can monitor one
another and question how they respect local and national legislation and international norms
on tax. The requirements that companies set for their suppliers can be included in contractual
agreements.
The importance of this also recognised in the OECD Guidelines for Multinational Enterprises
since its revision in 2011. The OECD Due Diligence Guidance for Responsible Business Conduct
provides practical support to companies on the implementation of the OECD Guidelines forMultinational Enterprises by providing plain language explanations of its due diligence
recommendations. Implementing these recommendations can help companies avoid andaddress adverse impacts that may be associated with their operations, supply chains and otherbusiness relationships.
Also ISO 26000:2010 Guidance on social responsibility recognises the importance of supply
chain responsibility, because “the impacts of an organization's decisions or activities can begreatly affected by its relationships with other organizations”.382 A company’s sphere of
influence includes relationships within and beyond an organization’s supply chain. Moreover,ISO 26000:2010 Guidance on social responsibility recommends setting contractual provisions or
incentives as a means of exercising influence.383
In addition, ISO 20400:2017 Sustainable procurement – Guidance provides guidelines fororganizations, independent of their activity or size, on integrating sustainability withinprocurement, as described in ISO 26000:2010 Guidance on social responsibility. It is intended
for stakeholders involved in, or impacted by, procurement decisions and processes.
This leads to assessment elements
16

Companies integrate criteria on tax in their procurement policies and operational policies.

17

Companies include clauses on the compliance with criteria on tax in their contracts with
subcontractors and suppliers.

2.9.3 Assessment elements
For financial institutions, the issue of taxes is relevant in three ways. Primarily, international financial
institutions are multinational corporations themselves and therefore they have to pay the owed
taxes by the letter of the law as well as in the spirit of the countries in which they operate. Financial
institutions can be expected to be transparent in their tax payments.
Secondly, virtually all financial services that financial institutions grant to companies and richprivate clients have a tax component. Because large amounts are involved in business loans,financing projects and investments, tax planning can often result in significant savings for clients.
Thirdly, taxes is an issue on which financial institutions should assess all their investees, even if thefinancial institution does not actively cooperate with tax avoidance of the company.
The following elements are crucial for a policy regarding the financial institution's internal
operations:Page | 110

1. For at least three quarters of the countries in which the financial institution operates and/or
75% of its total revenue, it reports country-by-country on its revenues, profit, FTEs, subsidies
received from governments and tax payments to governments in a way that matches with theconsolidated accounts.
2. For each country in which the financial institution operates, it reports country-by-country on its
revenues, profit, FTEs, subsidies received from governments and tax payments to governments
in a way that matches with the consolidated accounts.
3. For each country in which the financial institution operates, it reports country-by-country on its
total assets in a way that matches with the consolidated accounts.
4. The financial institution does not advise clients to set up international structures with the main
purpose to avoid or evade taxes.
5. The financial institution does not participate in transactions with international structures ofwhich the main purpose is to avoid or evade taxes.
6. The financial institution publishes key information of any company-specific tax ruling it has
obtained from tax authorities.
7. The financial institution does not have subsidiaries, branches or associates in jurisdictions withno or zero corporate tax or in jurisdictions with harmful corporate tax practices, unless they
have substance and their profits are generated from local economic activities.
8. The financial institution does not provide financial services to companies in tax havens, unlessthe company has substance and its profits are generated by from local economic activities.
The following elements are crucial for a policy regarding the companies a financial institution
invests in or finances:
9. Companies publish their full group structure, including indirectly and jointly-owned entities.
10. Companies publish an explanation of the activities, functions and ultimate shareholder of every
subsidiary, branch, joint venture or affiliate located in jurisdictions with no or zero corporate tax
practices or in jurisdictions with harmful corporate tax practices.
11. For each country in which companies operate, they report country-by-country on theirrevenues, profit, FTEs, subsidies received from governments and payments to governments (e.g.
withholding taxes, payments for concessions and company tax).
12. Companies focus their international enterprise structure and their international transactions in a
way that reflects the economic substance of the activities and transactions undertaken, without
any steps made primarily to secure a tax advantage.
13. Companies publish key information of any company-specific tax ruling it has obtained from tax
authorities.
14. Companies make public, to the extent legally and practically possible, the decision of any
adjudication or arbitration to which it, or any of its subsidiaries, is a party, undertaken to resolvea tax dispute, whether in a court or in an arbitration setting.
15. Companies have a management system which results in immediate actions if suspicions arisethat employees or suppliers are guilty of facilitating tax evasion.
16. Companies integrate criteria on tax in their procurement policies and operational policies.
17. Companies include clauses on the compliance with criteria on tax in their contracts with
subcontractors and suppliers.

Page | 111

Chapter 3
3.1

Sector themesArms

3.1.1 What is at stake?
Arms can kill, maim and destroy. Therefore, they are a threat to the most fundamental human right:
the right to life. Arms are deployed in wars and armed conflicts between and within states, bygovernment forces as well as armed groups that do not belong to a state (also known as non-state
actors). Armed conflicts threaten the safety of millions of people around the world. Moreover, smallarms are not only used in armed conflicts but also in conflicts between individuals, within families
and between groups and gangs. Nowadays, there are about 875 million small arms in circulation.384
States have the right - and indeed the obligation - to protect their citizens and individually orcollectively defend security interests. States’ responsibilities towards public security include
regulating, checking and monitoring the manufacture, transfer, possession, stockpiling and use ofarms. Yet, in practice there has been a lack of expediency to governments and multilateral bodies(such as the United Nations Security Council) to monitor the international arms trade. Research
reports show how the arms industry, despite existing regulatory regimes, continues to sell arms tohuman rights abusing regimes and conflict zones.385
In 2018, total global military expenditure had an estimated value of USDUSD 1,822 billion. On
average, military expenditure was about 2.1% of Gross Domestic Product (GDPD). The UnitedStates spent USD 649 billion, accounting for 36% of global military expenditure, and was followed
at a large distance by China (13.7%), Saudi Arabia (3.7%), India (3.6%), France (3.5%) and Russia(3.4%).4.Military expenditure increased in Asia, Europe, North and South America.386
There seems to be a relationship between military expenditure and the socio-economic
development of poor countries. Globally, military expenditure counts for about 9% of total public
spending. In developing countries - where there is a large need for investments in agriculture andfood, education, health care and infrastructure - military expenditure is often a significant barrier toreaching the Sustainable Development Goals (SDGs).387 According to the 2018 figures of the SIPRI
Military Expenditure Database, Myanmar (15.2%), Chad (14.6%) and the DRC (10.4%) are examples
of developing countries that spend a significant amount of their total government budget on the
military.388
The harmful effect of military expenditure on human development is further aggravated by debts
made for purchasing military equipment. An estimated 15 to 20% of global indebtedness is related
to military spending. In many developing countries, interest payments on military debts surpass theexpenditures on health care and education.389
Perhaps more than any other legal trade, international arms trade is also strongly connected tocorruption.390 Despite the fact that arms trade only constitutes for 1% of global trade, studies by
SIPRI suggest that corruption in the arms trade contributes roughly to 40% of all corruption in
global transactions.391 Transparency International estimates that corruption in the arms trade leads
to a loss of USD 20 billion annually.392 A large part of arms exports goes to developing countries
and emerging economies393 and through corruption, public funds are diverted from spending on
economic and social development and may end up fuelling conflict.
While one of the targets of SDG 16: Peace, Justice and Strong Institutions is to reduce illicit
financial and arms flows by 2030, the arms industry also poses a serious threat to other SDG goals,
such as SDG 1: No Poverty, SDG: 2 Zero Hunger, SDG 3: Good Health and Well-being, and SDG 10:

Page | 112

Reduced Inequalities.394 High military spending clearly undermines these goals by attracting
investments that could have been used otherwise and by depriving the affected population ofmany basic needs.
The arms industry needs to ensure, as a minimum, that:••••

No arms are produced which are prohibited by an international treaty or do not distinguishbetween combatants and non-combatants (i.e. which violate International Humanitarian Law);
Arms are not supplied to repressive regimes, fragile states, and non-state actors;
Corruption is strictly forbidden and transparency on arms transfers is improved;
Products and services supplied/sold do not affect the sustainable development of poor
countries.

As long as these structural changes do not occur in the arms industry, investing in this industry
imposes large corporate social responsibility (CSR) risks. Financial institutions could finance orinvest in companies that are involved in corrupt practices or in trade with oppressive regimes.
Hence, it is of great importance that financial institutions implement a policy for this industry thatis based on the international standards described below.
3.1.2 International standards and initiatives
The main international standards on arms are summarised per topic, followed by the assessment
elements that are formulated by the FFGI as a result:•International humanitarian law
International Humanitarian Law (IHL) is a collection of leading international agreements that
constitute the rules concerning armed conflicts. The objective of IHL is to limit civilian sufferingfrom armed conflicts. It protects people who do not participate in hostilities and limits themeans and methods of warfare. An important principle is that distinction has to be madeduring warfare (including with the use of arms) between soldiers and civilians: civilians should
not be a target in warfare.395 Weapon systems which violate this principle are, among others:
landmines, cluster munitions, nuclear weapons, chemical weapons and biological weapons.
This leads to assessment elements
1

Use, production, development, maintenance, testing, stockpiling of and trade in anti-personallandmines, including key components of landmines, is unacceptable.

2

Use, production, development, maintenance, testing, stockpiling of and trade in cluster munitions,
including key components of cluster munitions, is unacceptable.

3

Use, production, development, maintenance, testing, stockpiling of and trade in, including key
components of nuclear weapons, in or to countries that have not ratified the Non-proliferation
Treaty is unacceptable.

4

Use, production, development, maintenance, testing, stockpiling of and trade in nuclear weapons,
including key components of nuclear weapons, is unacceptable.

5Use, production, development, maintenance, testing, stockpiling of and trade in chemical weapons,
including key components of chemical weapons, is unacceptable.

6

Use, production, development, maintenance, testing, stockpiling of and trade in biologicalweapons, including key components of biological weapons, is unacceptable.

Page | 113•Specific weapon systems
There are various international conventions that aim to ban or restrict the use, production,
development, maintenance, testing, trade and/or stockpiling of specific weapon systems:
The 1970 Nuclear Non-proliferation Treaty (NPT) aims to prevent the spread of nuclear
arms and requires their negotiated disarmament.
The 1975 Biological and Toxin Weapons Convention (BWC) prohibits the use of biologicaland toxin weapons.
The 1980 Convention on Certain Conventional Weapons (CCW) aims to prohibit or restrict
the use of weapons that are considered to cause unnecessary or unjustifiable suffering tocombatants or to affect civilians indiscriminately.
The 1997 Chemical Weapons Convention (CWC) prohibits chemical arms.
The 1997 Mine Ban Treaty prohibits anti-personnel landmines.
The 2008 Convention on Cluster Munitions (CCM) prohibits cluster munitions.
The 2017 Treaty on the Prohibition of Nuclear Weapons prohibits nuclear weapons.

•
•
•

•
•
•
•

International conventions and national legislation on arms rarely explicitly include prohibitions
on financial investments. However, civil society organisations and a growing group of statesinterpret investments in cluster munitions as banned under the CCM. Article 1 (1) c of thisconvention reads: “Each State Party undertakes never under any circumstances to assist,encourage or induce, in any way, anyone to engage in any activity prohibited to a State Party
under this Convention”.”396
An increasing group of countries has expressed that article 1.1c, according to theirunderstanding, also includes a ban on financial assistance. Australia, Bosnia and Herzegovina,
Cameroon, Canada, Colombia, Congo DR, the Republic of Congo, Costa Rica, Croatia, the Czech
Republic, France, Ghana, Guatemala, the Holy See, Hungary, Lao PDR, Lebanon, Madagascar,
Malawi, Malta, Mexico, Niger, Norway, Rwanda, Senegal, Slovenia, the United Kingdom andZambia have all said to interpret the article in such a way that investments in companies
involved in the production of cluster munitions are, or can be seen as, prohibited under theconvention. Belgium, Ireland, Italy, Liechtenstein, Luxembourg, the Netherlands, New Zealand,Samoa, Spain and Switzerland have adopted laws to prohibit (different kinds of) investments in
producers of cluster munitions.397
Similarly, The Treaty on the Prohibition of Nuclear Weapons, in article 1(e) also prohibits‘assistance’ to the production of nuclear weapons.398
This leads to assessment elements
1

Use, production, development, maintenance, testing, stockpiling of and trade in anti-personallandmines, including key components of landmines, is unacceptable.

2

Use, production, development, maintenance, testing, stockpiling of and trade in cluster munitions,
including key components of cluster munitions, is unacceptable.

3

Use, production, development, maintenance, testing, stockpiling of and trade in nuclear weapons,
including key components of nuclear weapons, in or to countries that have not ratified the Nonproliferation Treaty is unacceptable.

4

Use, production, development, maintenance, testing, stockpiling of and trade in nuclear weapons,
including key components of nuclear weapons, is unacceptable.

5Use, production, development, maintenance, testing, stockpiling of and trade in chemical weapons,
including key components of chemical weapons, is unacceptable.

Page | 114

6•Use, production, development, maintenance, testing, stockpiling of and trade in biologicalweapons, including key components of biological weapons, is unacceptable.

Lethal Autonomous Weapon Systems
The United Nations’ Convention on Certain Conventional Weapons (CCW) also prohibits nondetectable fragments, boobytraps and blindable laser weapons. In addition, the CCW is
considering how to address concerns related to lethal autonomous weapon systems (LAWS). As
of October 2019, 30 countries support a prohibition on LAWS. The Campaign to Stop Killer
Robots, a coalition of civil society organizations, defines LAWS as fully autonomous weapons,that can select and engage targets without meaningful human control over individual attacks.
There are various legal, ethical and security concerns regarding LAWS.399 A legal concern is that
LAWS are unlikely to be able to adhere to International Humanitarian Law and Human Rights
Law. They would also create an accountability vacuum regarding who is responsible for an
unlawful act. A security concern is that the deployment of LAWS could lower the threshold forthe use of force and reduce the incentive to find political solutions to end conflicts. LAWS could
lead to a new international arms race, which would have destabilising effects and threateninternational peace and security. The proliferation of LAWS could enable dictators, non-statearmed actors or terrorists to acquire these weapons. A fundamental ethical concern is that amachine should never be allowed to make the decision over life and death. This decision
cannot be reduced to an algorithm.
Due to these concerns the Campaign to Stop Killer Robots calls on states to install a legallybinding instrument that pre-emptively prohibits the development, production and deployment
of LAWS.400 Likewise, over 3,000 artificial intelligence and robotics experts and 116 industry
leaders call for regulation of LAWS, but also religious leaders, Nobel peace Laureates and theEuropean Parliament are in favour of a ban. In the financial sector, the Norwegian Government
Pension Fund Global gives the example of how to develop expertise and understanding of thisupcoming issue.
This leads to assessment element
7•

Use, production, development, maintenance, testing, stockpiling of and trade in lethal autonomous
weapons systems (LAWS), including key components of LAWS, is unacceptable.

International arms trade
The international trade arms can create and exacerbate serious human rights issues, especiallywhen to countries where people lack basic freedoms or where armed conflicts rage, isundesirable. Likewise, in countries most receptive to corruption, in fragile states, or where arelatively high share of public spending is for the military, there is a serious risk that deliveringarms enhances violations of human rights and/or contribute to creating more poverty.401
There are various initiatives to regulate arms trade in order to, for instance, prevent arms frombeing delivered to repressive regimes or countries in conflict.
Organisations such as the United Nations Security Council and other multilateral organisations
have the (international) authority to establish arms embargoes against certain countries or nonstate actors. Most embargoes are established following conflicts involving serious violations ofhuman rights.

Page | 115

Some arms embargoes are partial in nature. For example, the EU embargo against China isunderstood to ban the export of “lethal” goods402, whereas the only politically binding EU
embargo against Egypt relates to goods that might be used for internal repression.403 This
research does not make such distinctions, because in most cases, transferring arms to countries
under a partial embargo means supporting repressive regimes or the continuation of armed
conflicts.
Other embargoes only apply to so-called non-government forces (NGF’s). In this research, thecountries’ territories, within which the NGF’s under an embargo operate, are also considered
controversial with regard to arms trade. These countries should by definition be considered as
weak or fragile states, as the government does not have a monopoly on the use of violence
within its own territory. Consequently, it is not uncommon that arms supplied to government
forces of fragile states end up with NGF’s.404
The Arms Trade Treaty (ATT) is a multilateral treaty that regulates the international trade inconventional arms. It was adopted on 2 April 2013 by the General Assembly of the United
Nations with a large majority of votes. After obtaining the required 50 ratifications, the treaty
entered into force on 24 December 2014.405 The ATT describes how it regulates theconventional weapons trade: "At the heart of the ATT is the obligation on countries that havejoined it to make an assessment of how the weapons they want to transfer will be used. They
must determine if the arms would commit or facilitate genocide, crimes against humanity, war
crimes and serious human rights violations. Each state must assess if there is an overriding riskthat a proposed arms export to another country will be used for or contribute to serious humanrights abuses. If so, those arms must not be sent. [...] The Treaty [also] sets out guidelines forstates that are importing weapons, and requires importers and exporters to cooperate insharing information necessary to make the above assessment. It also includes obligations forcountries that have weapons transiting through their borders and for brokering activities. [...]The Treaty covers conventional weapons (meaning not nuclear, chemical or biological). The
arms specifically mentioned in the Treaty are battle tanks, armoured combat vehicles, largecalibre artillery systems, combat aircraft, attack helicopters, warships, missiles and missile
launchers and small arms and light weapons. Ammunition, as well as the parts and componentsthat make up weapons systems, also fall under its regulation".406 The treaty is open to
additional regulations on future military technologies.407
Taken into account that the humanitarian principles that form the basis of the ATT, the Control
Arms Campaign interprets the term overriding risk in the ATT to mean that states are notallowed to export in case of a ‘substantial or clear’ risk of the arms being used for violations ofhuman rights or humanitarian law.408

Page | 116

This leads to assessment elements•

9

Supply of arms and weapon systems, military transport systems, and other military goods tocountries that are under a United Nations or relevant multilateral arms embargo, is unacceptable.

10

Supply of arms and weapon systems, military transport systems, and other military goods is
unacceptable if there is an overriding risk that the arms will be used for serious violations ofinternational human rights and humanitarian law.

11

Supply of arms and weapon systems, military transport systems, and other military goods tocountries that severely violate human rights, is unacceptable.

Trade in dual-use products
The European Union (EU) has also recognized the need for a system to control arms transfers.
Its 2008 Common Position “defining common rules governing control of exports of militarytechnology and equipment” contains eight criteria, aimed at, among others, preventing military
exports likely to be used in the country of final destination for internal repression, in internal orinternational conflicts. The EU arms export policy also contains measures to facilitate
implementation by the member states and improve cooperation between the member states.
The EU criteria are summarized below:409
Respect for international commitments of Member States, in particular sanctions decreedby the UN Security Council and the EU, as well as agreements on non-proliferation andother international obligations;
The respect of human rights and international humanitarian law in the country ofdestination;
The internal situation in the country of final destination, as a function of the existence oftensions or armed conflicts;
Preservation of regional peace, security and stability;
The national security of the Member States and of territories whose external relations are
the responsibility of a Member State, as well as that of friendly and allied countries;
The behaviour of the buyer country with regard to the international community, as regards
in particular its attitude to terrorism, the nature of its alliances and respect for internationallaw;
The risk that equipment will be diverted within the buyer country or re-exported under
undesirable conditions;
The compatibility of the arms exports with the technical and economic capacity of therecipient country, taking into account the desirability that states should achieve theirlegitimate needs of security and defence with the least diversion for armaments of humanand economic resources, e.g. through considering the recipient country’s relative levels of
military and social spending.

•

•
•
•
•
•

•
•

The EU Common Military List should be used to define if a product should be considered as
military equipment. Equipment that can be used for both civilian and military applications,should be considered as military equipment when they have a non-civilian purpose.
This leads to assessment element
8

Goods that are essential for military purposes, but can also be used for civilian products (‘dual-use’goods), are considered as military goods when they have a non-civilian purpose.

Page | 117

•High-risk countries
Several lists and initiatives can serve to illustrate which countries are high-risk as recipients ofarms trade, based on the criteria mentioned in earlier sections:
Most of the countries where people lack freedom can be looked up in the index of theFreedom House. This is an independent American non-profit organisation that ever since1941 has stood up for democracy and freedom all over the world. The Freedom Houseannually publishes Freedom in the World. This publication assesses 195 countries and 14
related and disputed territories with regard to Political Rights and Civil Rights.
In addition, the Economist’s Democracy Index provides a snapshot of the state of
democracy worldwide. The report covers almost the entire population of the world and thevast majority of the world’s states (micro states are excluded). The Democracy Index isbased on five categories:410

•

•

•
•
•
•
•

electoral process and pluralism;
civil liberties;
the functioning of government;
political participation; andpolitical culture.

Countries are placed within one of four types of regimes: full democracies, flawed
democracies, hybrid regimes, and authoritarian regimes.
Countries that have been caught up in armed conflicts are ranked in the Uppsala Conflict
Data Program. The Global Peace Index by Vision of Humanity, an Australian research
institute, is a useful tool as well. It assesses the extent to which countries live in peace or arecaught up in conflicts, using 23 indicators.
The Government Defence Anti-Corruption Index Corruption Perception Index ofTransparency International is the first global analysis of corruption risk within military
establishments worldwide. It assesses and compares levels of corruption risk andvulnerability across countries.
The Fragile States Index can be used for identifying fragile states. This Index is published by
the American journal Foreign Policy and the Fund for Peace, an American research institute.
The Fragile States Index assesses 178 states, using 12 social, economic, political and military
indicators toto assess which states are most vulnerable to violent internal conflicts andsocial decline.
In order to indicate which countries spend a large share of their government budget onarms, the publications of the Stockholm International Peace Research Institute (SIPRI) may
be used. SIPRI is an independent Swedish research institute for peace and security. Among
many others things, they publish data on levels of relative military spending.

•

•

•

•

This leads to assessment elements
12

Supply of arms and weapon systems, military transport systems, and other military goods toparties involved in conflict is unacceptable, unless to parties acting in accordance with a UN
Security Council resolution.

13

Supply of arms and weapon systems, military transport systems, and other military goods tocountries that are sensitive to corruption, is unacceptable.

14

Supply of arms and weapon systems, military transport systems, and other military goods tocountries having a failed or fragile state, is unacceptable.

Page | 118

15

Supply of arms and weapon systems, military transport systems, and other military goods tocountries that spend a disproportionate part of their budget on purchases of arms, isunacceptable.

3.1.3 Assessment elements
Even more so than in other sectors, financial institutions should carefully consider their investments
in and financing of arms manufacturers and traders. First of all, because it concerns lethal productswith potentially devastating effects, but also because the industry is hardly transparent and has ahistory of corruption and violations of the law. With outstanding loans and/or investments in thisindustry, financial institutions can get involved in transactions related to very serious violations ofhuman rights, armed conflicts, corruption, and the production of controversial or banned weapons.
The following elements are crucial for a policy regarding the companies a financial institution
invests in or finances:
1. Use, production, development, maintenance, testing, stockpiling of and trade in in antipersonal landmines, including key components of landmines, is unacceptable.
2. Use, production, development, maintenance, testing, stockpiling of and trade in cluster
munitions, including key components of cluster munitions, is unacceptable.
3. Use, production, development, maintenance, testing, stockpiling of and trade in nuclear
weapons, including key components of nuclear weapons, in or to countries that have not
ratified the Non-proliferation Treaty is unacceptable.
4. Use, production, development, maintenance, testing, stockpiling of and trade in nuclear
weapons, including key components of nuclear weapons, is unacceptable.
5. Use, production, development, maintenance, testing, stockpiling of and trade in chemical
weapons, including key components of chemical weapons, is unacceptable.
6. Use, production, development, maintenance, testing, stockpiling of and trade in biologicalweapons, including key components of biological weapons, is unacceptable.
7. Use, production, development, maintenance, testing, stockpiling of and trade in lethal
autonomous weapons systems (LAWS), including key components of LAWS, is unacceptable.
8. Goods that are essential for military purposes, but can also be used for civilian products (‘dualuse’ goods), are considered as military goods when they have a non-civilian purpose.
9. Supply of arms and weapon systems, military transport systems, and other military goods tocountries that are under a United Nations or relevant multilateral arms embargo, is
unacceptable.
10. Supply of arms and weapon systems, military transport systems, and other military goods is
unacceptable if there is an overriding risk that the arms will be used for serious violation ofinternational human rights and humanitarian law.
11. Supply of arms and weapon systems, military transport systems, and other military goods tocountries that severely violate human rights, is unacceptable.
12. Supply of arms and weapon systems, military transport systems, and other military goods toparties involved in conflict is unacceptable, unless to parties acting in accordance with a UN
Security Council resolution.
13. Supply of arms and weapon systems, military transport systems, and other military goods tocountries that are sensitive to corruption, is unacceptable.
14. Supply of arms and weapon systems, military transport systems, and other military goods tocountries having a failed or fragile state, is unacceptable.

Page | 119

15. Supply of arms and weapon systems, military transport systems, and other military goods tocountries that spend a disproportionate part of their budget on purchases of arms, isunacceptable.
Financial institutions that publicly state they exclude the arms industry (both upstream anddownstream companies) from their financing and investment universe because of the sustainability
risks involved, but that do not publish a detailed policy document with all the expectations coveredby the above assessment elements, will receive a score of 10. If this commitment is made for one ormore but not all four FFGI investment categories, a content score and scope score for the relevant
categories will be given for all assessment elements.

Page | 120

3.2

Financial sector

3.2.1 What is at stake?
In an increasingly globalised world, financial institutions play a crucial role in the global distributionof financial means. Most governments and companies depend on financial institutions to invest
and to provide products and services. The investments of financial institutions take place in a
global marketplace where their financing and investment funds can be deployed in all industries
and on all continents in virtually any social activity, including financial institutions that only haveoffices in their own country.
This ubiquity creates both opportunities and risks. Financial institutions are in a unique position toplay a role in the social changes that are necessary to enable a sustainable and socially just future.
They can invest in or finance new products and production processes through which energy issaved and sustainable energy provision is encouraged, through which income and development
opportunities are offered in developing countries or through which millions of people can get
access to healthcare. In order to reach all of the Sustainable Development Goals (SDGs), an activerole for financial institutions is indispensable.411
The 2016 publication of UNEP and the Institute for Human Rights and Business, Human Rights andSustainable Finance, states: "the international human rights framework is an integral part ofdefining the purpose of the financial system in serving society. The framework calls for the financial
system at systemic, client, and consumer levels to avoid harming people’s rights, make financeaccessible to all, and create innovative financial policies, regulations, products, and services to help
build a resilient economy and society".412
However, this important role also has a downside: often investments by financial institutions areused for activities that harm the environment, human rights and development opportunities. Thereare countless examples of financial institutions that, often without sufficiently realising it, enablelarge-scale deforestation with their investments, as well as the construction of polluting mines,
supplying arms to oppressive regimes and factories where labour rights are violated.413 Moreover,the 2008 financial crisis showed that many financial institutions had been led by purely financial
motives, neglecting proper assessment of the risks of their investments – for the financial
institution itself as well as for society.414
The role of financial institutions is also well recognised in relation to the SDGs. While many SDGs
focus on increasing financial inclusion, the overall economic growth and prosperity can’t beachieved without responsible investments and lending decisions by the financial institutions. For
instance, goals such as SDG 1: No Poverty, SDG 2: Zero Hunger, SDG 7: Affordable and Clean
Energy, and SDG 13: Climate Action require responsible investing and financing decisions by thefinancial institutions.415
Existing regulations, such as those about the fiduciary duties of investors, need reinterpretation.
Many governments and banking regulators are currently launching guidelines and initiatives topush banks in their country to invest more responsibly. Specific national initiatives include China’s
Green Credit Guidelines, Indonesia’s Sustainable Finance Roadmap and Brazil’s regulations onenvironmental and social responsibility (CMN Resolution No. 4,327 and CMN Resolution No.
4,557).
On an international scale, the Sustainable Banking Network, created by the International FinanceCorporation (IFC), is a group of banking regulators and associations that are interested insustainable banking policies, guidelines and practices and collective learning by its members.416 UN

Page | 121

Environment and the World Bank published a Roadmap for a sustainable financial system in 2017,
outlining the steps necessary for creating a more sustainable financial system.417 In 2016 UNEP FI,
PRI and the Generation Foundation launched a three-year programme to integrate sustainability
into investors’ fiduciary duties. The goal of the project was "to mobilise investors to uphold the full
remit of fiduciary duty and take full account of material sustainability factors in investment
practices".418 The final report, including recommendations, was published in 2019.419
Another important initiative is the Network of Central Banks and Supervisors for Greening the
Financial System (NGFS), set up in 2017. The NGFS published a report in 2019 recognizing thatclimate change is a source of financial risk and that “It is therefore within the mandates of central
banks and supervisors to ensure the financial system is resilient to these risks”.420 Among therecommendations of the report is the notion that climate-related risks should be integrated into
financial stability monitoring and micro-supervision.
A 2013 OECD-report on environmental and social risk due diligence in the financial sector indicatesthat financial institutions themselves increasingly establish sustainability conditions for thecompanies and governments in which they invest.421 Complementary to this, financial institutions
should also set conditions to the loans they supply to other financial institutions, to prevent that,
via a detour, their capital ends up at the companies and governments in which they do not want toinvest. The investment policy of financial institutions should ensure that financial institutions only
lend money to other financial institutions that also take their social responsibilities seriously. Whendeveloping policies for this industry, financial institutions can make use of the international
standards described below.
3.2.2 International standards and initiatives
The main international standards on the financial sector are summarised per topic, followed by theassessment elements that are formulated by the FFGI as a result:•Business operations
As for other international companies, financial institutions may be expected to comply withgeneral guidelines for responsible business operations in their relations with employees, clients,
governments, and the wider society. The most well-known examples are the UN Global
Compact, which formulates ten principles of responsible business, the OECD Guidelines forMultinational Enterprises, in which a wide range of social and environmental topics are
addressed, and ISO 26000:2010 Guidance on social responsibility, in which the social
responsibility of organisations is described in 7 principles and 7 core issues.
Sustainability reporting is also important. The framework GRI Sustainability ReportingStandards (GRI Standards), and the GRI G4 Financial Services Sector Disclosures, may, amongst
others, be used for such reporting. For small and medium enterprises (SMEs), less elaborate
sustainability reporting is required. SMEs can report on the GRI disclosures that are relevant totheir operations, for example by following the High5! Approach.
This leads to assessment elements
1

Financial institutions report on their tax payments to governments for each country where they
operate.

2

Financial institutions do not participate in transactions nor provide advice for safeguarding tax
advantages as the main objective.

5

Financial institutions endorse the UN Global Compact principles.

Page | 122•6Financial institutions endorse the OECD Guidelines for Multinational Enterprises

13

Financial institutions publish a sustainability report that may contain (a number of) disclosuresfrom the GRI Standards.

14

Financial institutions publish a sustainability report that is set up in accordance with the (Core orComprehensive option of the) GRI Standards.

Management of social and environmental risks
There are various guidelines that stimulate financial institutions to pay more attention to thepossible social and environmental risks of their investments. In 1992 the United Nations
Environment Programme established the UNEP Finance Initiative (UNEP FI). As of 2019, morethan 230 banks, insurance companies and other financial institutions from all over the world
have joined the UNEP FI Statement of Commitment by Financial Institutions of Sustainable
Development, in which they commit to integrate social and environmental criteria in all of theirbusiness activities.
UNEP FI organises meetings and working groups to help the members bring this objective into
practice. The organisation has launched a guidance note to help the financial institutions with
developing their policies and published the Roadmap for a Sustainable Financial System in2017 and launched the Principles for Responsible Banking in 2018.
In order to promote the effective observance of the OECD Guidelines for Multinational
Enterprises, the OECD has developed sectoral guidance for different types of financial
institutions.
In 2017 the OECD published Responsible Business Conduct for Institutional Investors, which“explains the application of the OECD Guidelines for Multinational Enterprises in the context
of institutional investors. The paper highlights key considerations for institutional investors
in carrying out due diligence that will help to identify and respond to environmental andsocial risks.”.422
In 2019, the Due Diligence for Responsible Corporate Lending and Securities Underwriting
was published by the OECD , providing a common global framework for financial
institutions to identify, respond to and publicly communicate on environmental and social
risks associated with their clients.

••

This leads to assessment elements•

6

Financial institutions endorse the OECD Guidelines for Multinational Enterprises

7

Financial institutions endorse the UNEP FI Statement and/or the Principles for Responsible
Banking.

Asset management
Through the UNEP Finance Initiative, in April 2006 an international group of asset managementcompanies, investment funds and pension funds launched the Principles for Responsible
Investment (PRI). The signatories commit to “integrate environmental, social and governanceissues in their investment decisions”.423 The PRI make various suggestions on how to take these
topics into consideration, such as purchasing sustainability analysis and developing active
voting and engagement policies. As of December 2019, the PRI have been signed by 2,477
institutional investors (pension funds, insurance companies and asset management companies)
and service providers. Many of the signatories are subsidiaries and sister companies of large
international banks.424

Page | 123

This leads to assessment element
8•

Financial institutions endorse the Principles for Responsible Investment (PRI).

Money laundering and terrorist financing
The international standard in the field of money laundering is set by the Financial Action Task
Force (FATF), a working group established by the OECD in 1989. The FATF comprises of 37
members, mostly governments of OECD-member states. The FATF aims to promote thesuccessful implementation of legal, regulatory and operational procedures for combating
money laundering, the financing of terrorists and other associated threats to the integrity of theinternational financial system.
The FATF has developed a set of Forty Recommendations that are considered as theinternational standards for the combating of money laundering. These recommendations offer
guidelines and tools to governments and financial institutions to fight money laundering andcriminal earnings at all levels. The recommendations were first published in 1990 and were last
updated in October 2019. The FATF has also published several Interpretative Notes, which
provide guidance on the application of the guidelines in practice.
The Forty Recommendations have been taken over by numerous international institutions, suchas the World Bank and the International Monetary Fund (IMF), as well as by the governments ofmany countries. In February 2013, the European Union processed the latest edition of the Forty
Recommendations in the Fourth AMLD (EU Directive 2015/849).
The Wolfsberg Group, a group of 11 international banks that undertake a lot of activities in thefield of private banking (banking for rich private clients), published a revised edition of theWolfsberg Anti-Money Laundering Principles on Private Banking in May 2012. In theseprinciples, the Forty Recommendations are further elaborated on asset management andprivate banking. In addition, the Wolfsberg Group has also published various other principles in
the field of money laundering, financing of terrorism and corruption.
This leads to assessment elements•

9

Financial institutions comply with the FATF recommendations.

10

Financial institutions comply with the Wolfsberg Principles.

Project financing
In June 2003, a group of leading banks on the project financing market launched the Equator
Principles, together with World Bank subsidiary International Finance Corporation (IFC). The
principles relate to project financing, a specific type of company financing intended for large,
complicated projects. This is one of the ways in which mines, oil and gas plants, chemicalfactories, roads, railways, dams and other types of infrastructure are financed. The Equator
Principles have been signed by 101 financial institutions.425 Jointly, these financial institutions
represent a large part of the global project financing market.
The Equator Principles are intended to recognise, assess and control the social andenvironmental risks of project financing. For this purpose, the IFC’s risk assessment procedures
and its Performance Standards are followed. This means that all financing requests for projects
with a value of over USD10 millionaire divided into three categories based on the potential forsignificant negative environmental or social impacts. Depending on the category, anenvironmental impact assessment and an environment management plan are requested. Socialand environment conditions can be included in financing contracts and regular reporting fromPage | 124clients on these topics is required.426
The principles have been regularly updated since their first publication. The fourth update of
the Equator Principles (EP4) was published in November 2019. The most important changes inrelation to the previous version include:427
The scope of applicability has been widened to include Project-Related Corporate Loans(PRCLs) over USD 50 million, Project-related Refinancing and Project-related Acquisition
Financing. Furthermore, the exception for sovereign borrowers for PRCLs has been removed
for projects in Category A, and for Category B where appropriate;
A clarification as to when financial institutions should evaluate the specific risks and apply
one or more of the IFC Performance Standards in addition to host country laws;
Full alignment with the United Nations Guiding Principles on Business and Human Rights(UNGPs); andAdditional reporting requirements regarding projects with greenhouse gas (GHG) intensive
projects.

•

•
•
•

The Equator Principles 4 will go into effect in June 2020.428
This leads to assessment element11•

For project financing, financial institutions apply the Equator Principles.

Bond issuances
The International Capital Market Association (ICMA) created the Green Bond Principles (GBP) in
2014. The last update stems from June 2018. The principles are voluntary guidelines thatrecommend transparency and disclosure, and promote integrity in the development of the fast
growing Green Bond market by clarifying the approach for issuance of a Green Bond.
According to the GBP, Green Bonds are defined as projects and activities that follow four
principles:429
Use of Proceeds: projects promote progress on activities with clear environmental benefits,
which are assessed and, if possible, quantified by the issuer (Principle 1);
Process for Project Evaluation and Selection: issuers should communicate the sustainability
objectives, eligibility and possible exclusion criteria to investors (Principle 2);
Management of Proceeds: management of Green Bond proceeds should be traceable
within the issuing organization (Principle 3); andReporting: issuers should report at least annually on use of proceeds (Principle 4).

•
•
•
•

For the current market situation, four types of Green Bonds can be defined: Green Use ofProceeds Bonds, Green Use of Proceeds Revenue Bonds, Green Project Bonds and Green
Securitized Bonds.430
This leads to assessment element
12•

For bonds issuances, financial institutions apply the Green Bond Principles.

Sustainable banking
In January 2003, the civil society organizations network BankTrack launched the Collevecchio
Declaration on Financial Institutions and Sustainability. The declaration calls upon financial
institutions to accept six obligations that explain the expectations of society regarding the roleand responsibilities of financial institutions. It concerns the obligation for sustainability, notcausing any harm, responsibility, accountability, transparency and sustainable markets andPage | 125

regulations.431
In November 2006, the Collevechio Declaration was further elaborated in the handbook: The
do’s and don’ts of Sustainable Banking. This handbook provides concrete and practical advice
to banks that want to make their business activities sustainable: where banks have to start, what
they have to pay attention to, which challenges they face and what has to be avoided.
The Global Alliance for Banking on Values (GABV) was founded in 2009 as a network of banks
seeking to “change the banking system so that it is more transparent, supports economic,
social and environmental sustainability, and is composed of a diverse range of banking
institutions serving the real economy”.432 It has developed six Principles of Value-based Banking
and engages in research and advocacy on advancing value-based banking practices. As of 2020
it comprises of 55 financial institutions, with a combined total of USD 197 billion assets undermanagement.
This leads to assessment elements
2

Financial institutions do not participate in transactions nor provide advice for safeguarding tax
advantages as the main objective.

3

Financial institutions are not active in risky trade and investment activities (trade in options, futuresand other derivatives) on their own account, other than covering the financial risks of their credit
provision.

4

Financial institutions have drafted investment policies on sensitive industries and crucial issues,
based on international treaties and conventions.

3.2.3 Assessment elements
To prevent that the monies of a financial institution still end up at companies, governments, andother parties that do not trade according to the principles of the financial institution via detours, it
is important to establish rules for financial relations with other commercial banks and multilateralbanks. This mainly concerns loans to other banks and investments in shares and bonds of otherbanks.
The following elements are crucial for a policy regarding the companies a financial institution
invests in or finances:
1. Financial institutions report on their tax payments to governments for each country where they
operate.
2. Financial institutions do not participate in transactions nor provide advice for safeguarding tax
advantages as the main objective.
3. Financial institutions are not active in risky trade and investment activities (trade in options,futures and other derivatives) on their own account, other than covering the financial risks of
their credit provision.
4. Financial institutions have drafted investment policies on sensitive industries and crucial issues,
based on international treaties and conventions.
5. Financial institutions endorse the UN Global Compact principles.
6. Financial institutions endorse the OECD Guidelines for Multinational Enterprises
7. Financial institutions endorse the UNEP FI Statement and/or the Principles for Responsible
Banking.
8. Financial institutions endorse the Principles for Responsible Investment (PRI).
9. Financial institutions comply with the FATF recommendations.
10. Financial institutions comply with the Wolfsberg Principles.

Page | 126

11. For project financing, financial institutions apply the Equator Principles.
12. For bonds issuances, financial institutions apply the Green Bond Principles.
13. Financial institutions publish a sustainability report that may contain (a number of) disclosuresfrom the GRI Standards.
14. Financial institutions publish a sustainability report that is set up in accordance with the (Coreor Comprehensive option of the) GRI Standards.

Page | 127

3.3

Fisheries

3.3.1 What is at stake?
Over three quarters of the world’s waters have already been fished up to or beyond their biologicallimits.433 The Food and Agriculture Organization (FAO) 2018 State of Fisheries and Aquaculture
report estimates that 33.11% of fish stocks were are overfished, with 59.99% as fully fished and
77% as underfished.434 In 2016, the twenty most productive fish species accounted for 84.22% of
the world’s marine capture.435 Many of these stocks are fully fished and, therefore, do not showmuch potential for increases in production. Some stocks are overfished and need to be restored inorder to show increases in production.436 Besides the potential collapse of fisheries, impacts ofecosystem changes can affect many species. For example, research shows that a shortage of krill
leads to a decrease in the penguin population.437 Fisheries can be located in the sea, in freshwater
bodies or even on land, including many different forms of fishing and aquaculture. The sector has awide variety of issues including land tenure, tax evasion, environmental problems, labour risks,water use and quality, health management, food safety, disease control, animal welfare and genetic
engineering.438
The following problems lead to the depletion of fish stocks:
•

•

•

•

•

•

Various fishing techniques - such as drift nets - have a large impact on the survival of fish
species and other animals that are captured by accident. Examples of these are turtles, seabirds
and marine mammals. Other ways of fishing - such as trawling - destroy the natural sea
environment and change the composition of the seabed, a composition that is desperately
needed to maintain and restore the biodiversity in our oceans.439
Overfishing deprives local fishing communities of their source of food and income.
Communities depending on small-scale fishing are already suffering serious consequences,such as the loss of food sovereignty and security.440
Globally, governments grant between EUR 27 billion and EUR 35 billion in annual subsidies tothe fishing industry.441 These government subsidies lead to undue investments in the fishingfleet, stimulating overfishing. In the long term, such subsidy policies also lead to major
economic damage for the fishing industry itself. A 2013 report by the New Economics
Foundation (NEF) estimated that EUR 3.2 billion is lost annually in the EU due to overfishing.442
The main reason for this is that the reduced fish stock will impact the fishing companies’
turnover and leads to job loss in the industry.443 Another NEF report estimated that if fish werecaught in a sustainable way in Europe, this would provide 100,000 jobs annually.444
Bycatch occurs where fish (or other animal species) are captured inadvertently during fishing
and are afterwards mostly thrown back into the ocean. On average, at least 7.3 million tons ofmarine life are caught incidentally, in some industries the percentage of bycatch is far higher
than that of the target catch.445
Fishing gear lost or left behind at sea (so-called ghost fishing) can cause unintended catch andentanglement of fish and other marine animals and is environmentally polluting, with the fish
catch getting wasted as well.446
A significant problem for the sustainable management of fisheries is the illegal, unregulated
and unregistered (IUU) fishing that violates international and national protective measures forfishing. It often concerns boats that use so-called flags of convenience: the boats are registeredin countries that do not monitor their fishing industry, or do so ineffectively.447 Many
communities that rely on fishing as a source of income and food also suffer from IUU. It isestimated that losses from illegal catch alone cost West-Africa as much as USD 1.3 billion
annually. In Senegal, for instance, IUU loss was estimated at around USD 272 million in 2015.448

Page | 128

Recent increases in fish production are mainly due to the development of aquaculture or fish
farming.449 Aquaculture is often praised because it could be of importance for the diversification ofrevenues and the diet of poor coastal communities. Yet, aquaculture can also have negativeenvironmental effects, for example on mangroves and coastal wetlands, on water quality and on
genetic variation of local fish species. Furthermore, aquaculture is associated with a number ofsocio-economic problems, such as conflicts around land rights, loss of employment and revenue
sources, and poor working conditions.450 The FAO developed a code of conduct in 1995 to ensurethat the harmful consequences of fish farms on the environment are quantified and minimised.451
The fishery sector has a large role to play in the Sustainable Development Goals (SDGs). Some of
the issues related to fisheries are targeted in the SDG 14: Life Below Water. This goal aims toregulate harvesting and end overfishing, illegal, unreported and unregulated fishing anddestructive fishing practices and implement science-based management plans, in order to restore
fish stocks in the shortest time feasible by 2020. The other targets aims to cut fisheries subsidies
that contribute to overcapacity and overfishing, illegal, unreported and unregulated fishing by
2020. SDG 14: Life Below Water also targets increasing the economic benefits to small island
developing states and least developed countries from the sustainable use of marine resources,
including through sustainable management of fisheries, aquaculture and tourism.452 Besides, SDG
14: Life Below Water, there are other SDGs that are directly linked to sustainable fishing practices
such as SDG 1: No Poverty, SDG 2: Food Security, SDG 3: Good Health and Well-being, SDG 12:
Responsible Consumption and Production and SDG 13: Climate Action.453
In order to make the fishing industry sustainable, the following changes are necessary:••••

Abrogation of harmful fishing techniques such as drift nets and trawls;
Fishing more selectively, making use of equipment that prevents the catch of other species such as other fish, birds and mammals;
A strong reduction in the fish quota for many fish species; andRespecting the rights of population groups that depend on small-scale fisheries.

Although the latter two changes have to be driven by national and international legislation, theinvestment policy of financial institutions can offer support to the first two changes. The policy of
the financial institution has to ensure that financial institutions only invest in or finance fishingcompanies that do not use harmful fishing techniques or have untargeted bycatch. Investments infish processing companies can only take place if it is ensured that no harmful fishing techniques
are being used or untargeted bycatch takes place in the supply chain. When developing policies forthis industry, financial institutions can make use of the international standards described in thefollowing section.454
3.3.2 International standards and initiatives
International conventions and codes of conduct agreed to under the supervision of the Food andAgriculture Organisation of the United Nations (FAO), show clear agreement with respect to the
management of fish stocks. The 1982 UN Convention on the Law of the Sea (UNCLOS), the 1995
UN Straddling Stocks Agreement and the 1995 FAO Code of Conduct for Responsible Fisheries,
contain clear objectives to safeguard international fishing waters. The FAO Code of Conduct wasestablished as a framework for international efforts to encourage fishing activity that is sustainable
and in harmony with the environment. It provides principles and standards for the conservation,
management and development of fisheries around the world. In July 2009, the World Conservation
Union published a report in which the UNCLOS has been evaluated and in which case studies andrecommendations for a sustainable fishing policy and its respective implementation are presented.

Page | 129

In March 2018, WWF, the EU Commission, the International Sustainability Unit (ISU) and theEuropean Investment Bank (EIB) published the Sustainable Blue Economy Finance Principles, whichemphasize the role of financial institutions in maintaining the oceans’ natural capital and the“shared social, ecological and economic functions that are dependent upon it”.
Within the agreements and initiatives mentioned above there is broad agreement on the principles
and measures necessary to realise sustainable use and management of international fishing waters.
The main international standards on fisheries are summarised per topic, followed by theassessment elements that are formulated by the FFGI as a result:•Endangered fish species
The FAO Code of Conduct for Responsible Fisheries recognises the importance of protecting
endangered fish species. Therefore, trade in several fish species, also of some importantcommercial species, is presently prohibited or is under the strict supervision of the Convention
on International Trade in Endangered Species of Wild Fauna and Flora (CITES).
This leads to assessment elements•

1

Fishing for and trade in endangered animal species complies with the CITES conditions.

2

Fishing for and trade in endangered animal species that are on CITES lists, is unacceptable.

Protected areas
The critical importance of protected marine areas is acknowledged - the so-called Marine
Protected Areas (MPAs)- for the maintenance and recovery of the biodiversity of fish and othermarine life. In some MPAs, fishing is entirely prohibited (so-called no-take zones), in order toallow the ecosystem to restore itself and over time be able to serve as a reservoir for the rest of
the ocean. These MPAs are part of the classification, amongst others. However, the IUCN itself
has no jurisdiction regarding the implementation of MPAs or no-take zones. Governments,
fishery authorities and communities do have this jurisdiction. Furthermore, a local governmentof a fishing community may, independent of the IUCN advice, decide to identify a no-take zone
or an MPA for the protection of marine ecosystems, bottom of the sea fauna, breeding areas
for fish and fish populations. No-take zones, for example, are a normal method for managing
the fish stock (of commercial types of fish) in the fisheries industry.
This leads to assessment element
3•

Fishers respect Marine Protected Areas and especially no-take zones.

Harmful fishing and processing techniques
The FAO Code of Conduct for Responsible Fisheries sets a clear priority for the use of selective
and environmentally friendly fishing gear and techniques.455 The Code proposes to prohibit theuse of irresponsible fishing techniques456 and in addition requires that the effects of new fishingtechniques on living environments are assessed before they are marketed. Also, international
standards are drafted that restrict or prohibit the use of certain methods and materials, such as
the use of explosives and cyanide,457 the use of drift nets,458 the use of trawls in deep seas andso-called shark-finning, where shark fins are cut off and the sharks are thrown back into theocean.459
This leads to assessment element
4

Harmful fishing techniques (such as trawls, drift nets and shark-finning) are unacceptable.

Page | 130

•Minimising bycatch
The FAO Code of Conduct for Responsible Fisheries establishes that “waste, non-target species,
both fish and non-fish species, and impacts on associated or dependent species areminimized.” Action plans are drafted that reduce the by catch of certain species, mainly
seabirds and sharks.
This leads to assessment element
5•

Fishers minimise their bycatch.

Banning overfishing and restoring fish stocks
Under the UN Straddling Stocks Agreement countries are obliged “to prevent or prohibit
overfishing”. Governments and other fisheries management organizations have to do theirutmost to restore endangered habitats.460 Decisions on these fisheries have to be based onrecent scientific evidence and have to be aimed at maintaining and restoring the fish stocks.461
Also, governments have agreed with the FAO to take action to, amongst others, “review thecapacity of fishing fleets in relation to sustainable yields of fishery resources and where
necessary reduce these fleets”.462
This leads to assessment element
6•

Fishers prevent overfishing.

Ghost fishing
The MARPOL 73/78 Agreement (1973) first regulated the problem of ghost fishing byprohibiting lowering or sinking fishing gear into the sea. In 1991, the FAO published a series ofrecommendations for the so-called Marking of Fishing Gear.463 Under 2011 EU regulations forcompliance with the Common Fisheries Policy, fishing boats are obliged to mark passive fishinggear with the registration number of the boat.
In 2016, FAO published a Report of the Expert consultation on the Marking of Fishing Gear. In
the same year, the Best Practice Framework for the Management of Fishing Gear was publishedby the Global Ghost Gear Initiative, a cross-sectoral alliance of NGOs and businesses.
This leads to assessment element
7•

Fishers do not engage in ghost fishing or they comply with MARPOL or EU regulations.

Illegal, unregulated and unreported fishing (IUU)The FAO IUU Plan of Action seeks to prohibit illegal, unregulated and unreported fishingpractices by convincing countries not to do business with companies that are guilty of IUU
fishing. This includes regulations with regard to sailing under ‘flags of convenience’ (FOCs).
FOCs enable IUU fishing and also present major labour rights problems. So-called ‘FOC
countries’ allow fishing vessels to fly their country’s flag for no charge, without taxation, and do
not address any violations of international fisheries laws.464
FOC fleets are especially active in fishing for commercially valuable species and are also
involved in poaching fish in waters of developing coastal countries, which do not have themeans to patrol their waters, resulting in negative impacts on local fish stocks, employment andfood security.465 In terms of labour issues, FOC fleets typically have very low wages and very
bad labour and safety conditions on board. Furthermore, FOC registries make it much moredifficult for unions, industry stakeholders and the public to hold ship owners to account.466

Page | 131

This leads to assessment elements•

8

Fishers do not operate under flags of convenience.

9

Fishers carefully document their catch so the origin of the total catch can be checked.

Fishery management based on ecosystems
While the former international standards on fishing were developed based on the fish stocks ofcertain species, the current rules are more often based on entire ecosystems. For example, theUN Straddling Stocks Agreement not only requires that the fish stocks of the targeted species
are maintained, but also that the fish stocks of other fish species that live in the same
ecosystem are monitored and protected.
The FAO Code of Conduct for Responsible Fisheries obliges fishermen to preserve marine
ecosystems so that not only the species being fished, but all fish species that depend on thisspecies or are part of the same ecosystem are protected. This is further elaborated in FAOs
Ecosystem-Based Management (EBM) framework for fisheries, developed by the World Wildlife
Fund (WWF). With respect to small-scale fishing in poor countries, the FAO Code of Conduct
for Responsible Fisheries contains guidelines to protect the food security and the livelihoods offish-dependent communities in the poorest countries of the world.
In order to identify sustainable fisheries and fish farms, financial institutions can make use of
the Greenpeace ‘Red-Grade’ Criteria for Unsustainable Fisheries and the Greenpeace ‘RedGrade’ Criteria for Unsustainable Aquaculture. In these fact sheets, a number of questions areincluded, enabling one toto establish whether a given company in the fishing industry issustainable. The indicators are based on the FAO Code of Conduct for Responsible Fisheries.
This leads to assessment element
10•

Fishers comply with all elements of the FAO Code of Conduct for Responsible Fisheries.

Certification of sustainable fisheries
The leading organisation on certifying sustainable fisheries is the Marine Stewardship Council(MSC). The MSC certification standards are based on the FAO Code of Conduct for Responsible
Fisheries and are the only global standards that are consistent with the 2009 FAO Guidelines for
the Ecolabelling of Fish and Fishery Products from Marine Capture Fisheries.
The MSC principles and criteria were established in 1999 in an international multi-stakeholder
process. At the end of 2016, 296 fisheries in 35 countries were certified as sustainable to the
MSC Fisheries Standard. Combined, the MSC certified fisheries account for 12% of the global
marine catch.467 As MSC does not provide certification for all types of fisheries, MSC
certification for those fisheries cannot be required. Besides standards to certify fisheries, theMSC has also developed a traceability system, the MSC Chain of Custody Standard, throughwhich the origin of certified fish products can be traced throughout the entire production
chain.
This leads to assessment elements
11

Fishers are certified according to the Marine Stewardship Council (MSC) criteria or comparable
standards for at least one fishery in which they operate.

12

Fishers are certified according to the Marine Stewardship Council (MSC) criteria or comparable
standards for all fisheries in which they operate.

Page | 132

This leads to assessment elements
13•

Fish traders and other companies in the production chains for fish and shellfish are certified
according to the MSC Chain of Custody standard.

Sustainable aquaculture
In August 2006, the International Principles for Responsible Shrimp Farming were launched.
After a process of five years, in which various organisations - such as the Network for
Aquaculture Centres for the Asia-Pacific, the WWF, the World Bank and the United Nations
Environment Programme (UNEP) - were involved, an international framework was establishedthat seeks to guarantee sustainability within the shrimp industry.468
The Global Aquaculture Alliance (GAA), an initiative of a number of American companies, hasdeveloped the Best Aquaculture Practices (BAP) facility certification standards, monitored andcontrolled by ISO 65-accredited certification bodies. BAP certification defines the mostimportant elements of responsible aquaculture and provides quantitative guidelines by whichto evaluate adherence to those practices for processing plants, farms, hatcheries and feed mills.
The BAP includes standards for shrimp, tilapia and Channel catfish cultivation, as well as for thefish processing industries. In this system animal welfare criteria have been incorporated,
applying mainly to pain and anxiety. BAP is mainly active in the Americas, South East Asia,
Australia and New Zealand; within Europe only in Iceland, Norway and the United Kingdom.
In 2010, WWF and IDH (Dutch Sustainable Trade Initiative) founded the Aquaculture
Stewardship Council (ASC). The ASC aims to be the world's leading certification and labelling
programme for responsibly farmed seafood, by managing the global standards for responsible
aquaculture, which were developed by the WWF Aquaculture Dialogues.
ASC collaborates with aquaculture producers, seafood processors, retail and foodservice
companies, scientists, conservation groups and consumers in order to: 469
Recognise and reward responsible aquaculture through the ASC aquaculture certification
programme and seafood label;
Promote best environmental and social choice when buying seafood; andContribute to transforming seafood markets towards sustainability.

•••

This leads to assessment elements•

14

Shrimp farms comply with the International Principles for Responsible Shrimp Farming.

15

Fish farms are certified according to the Aquaculture Stewardship Council (ASC) criteria.

Sustainability reporting
The Global Reporting Initiative (GRI) has drafted guidelines for reporting on sustainability
issues. Aside from the general G4 Sustainability Reporting Guidelines it also provides sectoral
guidance for a number of industrial sectors. In the G4 Food Processing Sector Disclosures(FSSD),recommended by GRI to use with its new GRI Sustainability Reporting Standards (GRI
Standards), includes guidelines regarding reporting on animal welfare, fair trade, health and thewellbeing of consumers, impact on natural resources and the use of packaging. The guideline
has been specifically developed for companies involved in processing food and drinks.
For small and medium enterprises (SMEs), less elaborate sustainability reporting is required.
SMEs can report on the GRI indicators that are relevant to their operations, for example byfollowing the High5! Approach.

Page | 133

This leads to assessment elements•

16

Companies publish a sustainability report that may contain (a number of) disclosures from the GRI
Standards.

17

Large enterprises and multinational enterprises publish a sustainability report that is set up inaccordance with the (Core or Comprehensive option of the) GRI Standards.

Procurement and supply chains
Companies are often part of long procurement and supply chains. They can monitor one
another and question how they respect local and national legislation and international norms
regarding social, economic and environmental issues. The requirements that companies set for
their suppliers can be included in contractual agreements. The importance of this is also
recognised in the OECD Guidelines for Multinational Enterprises since its revision in 2011.
ISO 26000:2010 Guidance on social responsibility recognises the importance of supply chain
responsibility, because “the impacts of an organization's decisions or activities can be greatly
affected by its relationships with other organizations”.470 A company’s sphere of influence
includes relationships within and beyond an organization’s supply chain. Moreover, ISO
26000:2010 Guidance on social responsibility recommends setting contractual provisions or
incentives as a means of exercising influence.471
In addition, ISO 20400:2017 Sustainable procurement – Guidance provides guidelines fororganizations, independent of their activity or size, on integrating sustainability withinprocurement, as described in ISO 26000:2010 Guidance on social responsibility. It is intended
for stakeholders involved in, or impacted by, procurement decisions and processes.
The United Nations Guiding Principles on Business and Human Rights include a due diligenceprocess in order to identify, prevent, mitigate and account for how companies address theiradverse human rights impacts. The process “should cover adverse human rights impacts thatthe business enterprise may cause or contribute to through its own activities, or which may bedirectly linked to its operations, products or services by its business relationships”..472
This leads to assessment elements
18

Companies integrate environmental, social and governance criteria in their procurement andoperational policies.

19

Companies include clauses on the compliance with environmental, social and governance criteria
in their contracts with subcontractors and suppliers.

3.3.3 Assessment elements
Financial institutions that invest in or finance the fishing industry should ensure that theirinvestments contribute to the internationally accepted objectives for the sustainable managementof fisheries. It is important that the investment policy of financial institutions include the entire
production chain of fish and shellfish. Sustainable investments in this industry are important on alllevels of the chain, from the catch to the processing and the sale.
The following elements are crucial for a policy regarding the companies a financial institution
invests in or finances:
1. Fishing for and trade in endangered animal species complies with the CITES conditions.
2. Fishing for and trade in endangered animal species that are on CITES lists, is unacceptable.
3. Fishers respect Marine Protected Areas and especially no-take zones.

Page | 134

4. Harmful fishing techniques (such as trawls, drift nets and shark-finning) are unacceptable.
5. Fishers minimise their bycatch.
6. Fishers prevent overfishing.
7. Fishers do not engage in ghost fishing or they comply with MARPOL or EU regulations.
8. Fishers do not operate under flags of convenience.
9. Fishers carefully document their catch so the origin of the total catch can be checked.
10. Fishers comply with all elements of the FAO Code of Conduct for Responsible Fisheries.
11. Fishers are certified according to the Marine Stewardship Council (MSC) criteria or comparable
standards for at least one fishery in which they operate.
12. Fishers are certified according to the Marine Stewardship Council (MSC) criteria or comparable
standards for all fisheries in which they operate.
13. Fish traders and other companies in the production chains for fish and shellfish are certified
according to the MSC Chain of Custody standard.
14. Shrimp farms comply with the International Principles for Responsible Shrimp Farming.
15. Fish farms are certified according to the Aquaculture Stewardship Council (ASC) criteria.
16. Companies publish a sustainability report that may contain (a number of) disclosures from the
GRI Standards.
17. Large enterprises and multinational enterprises publish a sustainability report that is set up inaccordance with the (Core or Comprehensive option of the) GRI Standards.
18. Companies integrate environmental, social and governance criteria in their procurement andoperational policies.
19. Companies include clauses on the compliance with environmental, social and governancecriteria in their contracts with subcontractors and suppliers.

Page | 135

3.4

Food

3.4.1 What is at stake?
The right to food is one of the most basic human rights and is enshrined in the Universal
Declaration of Human Rights (UDHR).473 According to the Food and Agriculture Organisation of theUnited Nations (FAO), food security exists when “all people, at all times, have physical andeconomic access to sufficient, safe and nutritious food to meet their dietary needs and foodpreferences for an active and healthy life”.474 The food sector has an obvious and major role to playin safeguarding this right. The right to adequate food is also a key factor in achieving the second of
the Sustainable Development Goals (SDGs): to end hunger, achieve food security and improved
nutrition and promote sustainable agriculture.475
The food sector consists of agricultural companies, including small-scale family producers, foodprocessing companies and retail companies. This diverse group of companies forms the foodsupply chain. The food processing sector “[i]ncludes all companies that are engaged in processing
food, as well as food commodity trading related to food processing and fish processing, andbeverage companies. [T]he food processing industry includes a diverse group of companies
involved in the processing of products like fish, meat, milk, crops and water. It includes millions of
Small and Medium Enterprises (SMEs) worldwide and also some of the largest companies in theworld. Many of these companies deliver products directly to consumers, while others specialise in
Business-to-Business activities (ingredients, commodity markets). Some companies directly
participate in all areas of food production, from farming activities through to final production andretail. Others are concentrated more at the top end of the production chain or buy throughcommodity markets”.476
The demand for agricultural products is growing more rapidly than the world population.
Consumption patterns in emerging markets (such as the BRICS-countries: Brazil, Russia, India,
China and South Africa) increasingly resemble those in industrialised countries, with an increase inmeat and dairy consumption globally. These changing consumption patterns drive up demand for
raw agricultural materials used in livestock feed. Another cause of the growing demand for
agricultural raw materials is the development of biofuel production. Biofuel is produced using palmoil, corn and sugar cane as well as other food and feed crops.477
The sharp increase in the global demand for agricultural products is related to a host of significant
economic, social and environmental problems, which means that companies operating in foodsupply chains are facing major sustainability challenges.
One significant issue is that many agricultural companies do not comply with internationallyrecognised labour rights. For instance, according to estimates by the International Labour
Organisation (ILO), around 60% of all child labourers work in agriculture.478 Aside from child labour,
there are countless examples in agriculture of forced labour, low wages and insufficient protectionof the health and safety of employees.479
Land rights conflicts and forced evictions are another significant issue concerning food production
and food security. Land grabbing occurs when foreign companies, countries, or investors buy orrent land for large-scale industrial and/or commercial agriculture production oriented on theexport market at the expense of land rights of the local communities concerned. The lack ofconsultation and transparency for the allocation of land is a serious problem in developing
countries. Evictions and conflicts over land are often paired with a violation of basic human rights
and principles. As a result, people are not only deprived of their property and the right to use theirland, but also of their familiar habitat, cultural riches and sources of food and income.480 The

Page | 136

reduced availability of land for local actors also shifts local economies away from traditionallysustainable modes of peasant agriculture towards a dependence on commercial agriculture for
global markets in feed, food and biofuels.481
The growing demand for agricultural products is also a significant cause of biodiversity loss andthe destruction of natural ecosystems worldwide.482 Through the conversion of forests and othernatural environments to commercial agricultural land, areas of high biodiversity that provide key
ecosystem services and natural habitat for a wide array of species, are under increasing stress.483 To
make way for agricultural activities, forests are cut on a large scale, after which the remaining
vegetation is burnt. This system is commonly known as slash-and-burn. It is mostly conducted by
farmers, however these activities are sometimes connected to large industry players.484 Major
drivers include the livestock industry – with around 80% of global agricultural land dedicated tograzing land or cropland for animal feed485 – and the growing market for biofuels.
The development of infrastructure such as roads, railways and waterways that goes hand in handwith the development of an export-oriented agriculture industry and can have very negative effects
on ecosystems and local societies. The construction of roads in forest areas facilitates, for example,
access for poachers and illegal loggers. The construction of infrastructure can also lead to land
rights conflicts and rising land prices for the original inhabitants.486
There are several concerns about potential unintended health and environmental impacts ofgenetically modified organisms (GMOs). Examples include negative impacts on beneficial insects,
weed tolerance, new allergens and toxins. Furthermore, concerns also exist about the spreading ofharmful traits to weeds and non-GM crops.487 While there is an active debate about the safety ofGMOs, it is the position of the Fair Finance Guide International methodology that at this time
GMOs should be avoided, as risks of contamination of other cultivated or wild varieties, as well as
side-effects from the crossing of genes from entities that do not belong to the same natural
category, cannot be excluded given the current state of scientific knowledge.
The intensive livestock industry is responsible for a large share of animal suffering worldwide. The
welfare of animals in intensive farming systems is under pressure because the animals are kept incircumstances that are not suitable for the species and are not worthy of the animal's dignity.
Intensively farmed animals, including pigs, poultry, beef and dairy cattle, rabbits, goats and fish
farmed in intensive aquaculture, are kept in high concentrations, often undergo un-anaesthetised
surgery (cutting tails, clipping beaks, teeth filing, dehorning) and tend to lack the opportunity to
behave naturally (grazing, free ranging, grubbing). Intensive large-scale husbandry also increases
the risk of spreading diseases.488
Other animal welfare aspects in the livestock sector deserving urgent attention are the conditions
during the transport of animals over long distances and the conditions prior to, and during, theslaughter of animals. During transportation animals may have to deal with bad ventilation, too little
space, shortage of food and water, bad treatment during the loading and unloading procedures,
bad health conditions of the animals prior to the transport and exposure to germs. Animaltransport may therefore result in exhaustion, dehydration, anxiety, injury, diseases and may evenlead to the death of the animals involved.489 Slaughter methods in many countries pose severe
concerns. Problematic slaughter methods include CO2 stunning for pigs, electrical stunning forpoultry via the water bath method and unstunned slaughter.490
Ignoring animal welfare and animal health also leads to increasing health risks for humans. Bacteria
in humans, food and animals continue to show resistance to the most widely used antimicrobials. A
2017 report from the European Food Safety Authority, the European Medicines Agency and theEuropean Centre for Disease Prevention confirms the link between antibiotic consumption andPage | 137

antibiotic resistance in both humans and food-producing animals. Reducing the unnecessary use ofantibiotics will have an impact on the occurrence of resistance.491 Because the routine use ofantibiotics is instrumental for livestock being reared in densely packed and often unhygienic
conditions, a change in animal housing and husbandry practices is necessary to effectively
eliminate or reduce the use of antibiotics.492
According to the Intergovernmental Panel on Climate Change (IPCC), agriculture and deforestation(which is in turn largely driven by the expansion of agricultural land) are responsible for around aquarter of global greenhouse gas (GHG) emissions.493 A 2012 joint study by two of the world’s
leading research groups estimated that deforestation alone contributes around 3.0 billion tons ofcarbon dioxide a year, accounting for 10% of global emissions.494
Peatlands are frequently drained and burned to make room for plantations, often for the
production of palm oil. This generates substantial greenhouse gas emissions and serious healthrisks for local and regional populations.495 Emissions from peatland fires are equivalent to over athird of the mean annual global carbon emissions from fossil fuels.496 Deforestation plays a crucialrole in the discussion about biofuels. Biofuel production is responsible for deforestation, not only
directly but also through the process of indirect land use change (ILUC), where biofuel crops are
typically grown on land normally used for food production, displacing primary food production topreviously unused areas.497 Several studies have indicated that when ILUC is taken into account,
there is no positive climate impact from first-generation biofuels. Especially those pushing therangeland frontier into the Amazonian forests, could offset the carbon savings from biofuels.498
The livestock sector is another important source of agriculture-related direct and indirect GHG
emissions. The rising demand for animal protein is a significant driver of emissions from land usechange, as forests are converted to cropland for feed production or grazing. The animals
themselves, especially cattle, emit methane (CH4) as they digest their food. The FAO calculated in2013 that a significant reduction of greenhouse gas emissions is possible if farmers adopt so-called
best practices.499 Other sources of agricultural GHG emissions include nitrous oxides (N2O) from theapplication of manure and nitrogen fertilizers and CH4 from rice paddies.
Particularly through the impacts of their supply chains on deforestation and land use change, theworld's ten largest food companies are responsible for the annual emissions of hundreds ofmillions of tons GHGs. The implementation of best practices by these companies in theirprocurement policies, and the promotion of best practices to their suppliers, therefore hassignificant climate change mitigation potential.500
The widespread use of pesticides presents a series of environmental and health risks, such aspollution of water sources and ecosystems by agricultural runoff, the development of pesticideresistance, and potential health risks for agricultural workers. One particularly significant problem isthe impact of broad-spectrum pesticides on beneficial insects and pollinator species. Along withother factors such as loss of biodiversity, habitat change and the varroa mite, pesticide use forms aserious threat to the honeybee. In the last few years, the number of bee colonies has decreased by
up to a third and a further decrease could lead to a shortage in pollination with large
consequences for agriculture harvest. About ninety agricultural products, accounting for a third of
the global food production, depend on animal pollination. Honeybees are the main animal
pollinator and are responsible for the majority of this pollination.501 Research shows that some
insecticides can cause a decrease in the production of the number of queen bees and otherinsecticides negatively influence the number of bees that find their way to their beehive.502

Page | 138

Agriculture is also the largest user of freshwater resources, using up to 90% of available freshwaterin developing countries. The production of animal-based foods alone accounts for almost half ofglobal freshwater withdrawals.503 At the same time, the contribution of the livestock industry towater pollution through antibiotics, hormones, sediments, fertilisers, pesticides and other chemicals
is very high. Research has shown that some meat and poultry producers are responsible for ahigher rate of water pollution than large companies in the fossil fuel industry.504 Population growthis also expected to drive up water demand, while availability is decreasing.505
The macroeconomic effects of the international trade in agriculture and livestock products areoften detrimental for developing countries due to the often unfavourable terms of trade for thesecountries, the agriculture subsidies in richer countries and the dumping of subsidised agricultural
products in developing countries. This leads to an unfair balance of power in the entire production,
distribution and consumption chain. Due to a strong increase in food prices in recent years, more
and more people in developing countries are living below the poverty line.506 To counter thispractice, in 2015 the member states of the World Trade Organization agreed the Nairobi Ministerial
Declaration on export competition, which commits them “to exercise utmost restraint with regard
to any recourse to all forms of export subsidies and all export measures with equivalent effect”.507
Developing country members “shall eliminate their export subsidy entitlements by the end of2018”.508
While the number of people suffering from hunger significantly decreased over the period from1990-2015, in recent years this trend has seen a reversal. FAO figures indicate that in 2019, over
820 million people were undernourished.509 Population growth and climate change are expected toput significant additional stress on global food security. By 2050, the agricultural sector will have to
produce 60% more food globally and 100% more in developing countries. Substantial changes inpolicy and management throughout the entire agricultural production chain are required to ensurethat the available water resources are used in the best way possible, to meet growing demands forfood and other agricultural products.
To offer a sufficient and nutritious diet to global populations and to enable socio-economic
development of poorer countries, unfavourable terms of trade in agricultural products fordeveloping countries have to be addressed and distorting subsidies and dumping practices have tobe prohibited.510 In addition, the use of agricultural fields for the production of biofuels and animal
feed has to be discouraged, as it displaces food production for the local population and poses athreat to their right to food security.511
The topic of food is central to SDG 2: Zero Hunger. The goal targets to ensuring everyone hasaccess to nutritious and sufficient food. It further targets to double the agricultural yield andincome of small scale food producers by providing access to productive resources and inputs,
knowledge, financial services, markets and opportunities for value addition and non-farm
employment. Another target is to ensure sustainable food production systems that help maintainecosystems and strengthen capacity for adaptation to climate change, extreme weather, drought,
flooding and other disasters and that progressively improve land and soil quality.512 SDG 3: Good
Health and Well-being is also related to good quality, nutritious food for everyone. Further, as
mentioned in earlier paragraphs, agriculture as a part of food sector has many issues that directly
impact SDG 1: No Poverty, SDG 10: Reduced Inequalities, SDG 12: Ensure Sustainable Consumption
and Production Patterns, SDG 13: Climate Action, SDG 14: Life Below Water, and SDG 15: Life on
Land.513

Page | 139

Feeding a growing world population - reaching 9-10 billion people in 2050 - in a sustainable way is
one of the major challenges the world is facing. Food security is not only based on global
production volumes, but also on access, equality and absence of conflict.514 All parts of the chain
within the food industry - from farmers, middlemen, transporters and processing companies tosupermarkets - will have to make an effort in this. Financial institutions that invest in or financecompanies at all stages of food chains will have to develop policies that take all above mentioned
problems into account. When developing an investment policy for this sector, financial institutions
can make use of the international standards described in the following section.
3.4.2 International standards and initiatives
In recent years, various initiatives have been set up to develop standards for the agriculture andlivestock sectors and the food (processing) industry. Some initiatives focus on general, sector-wideagreements, while others focus on specific crops. The main international standards on food andagriculture are summarised per topic, followed by the assessment elements that are formulated by
the FFGI as a result:•

Right to adequate foodAccording to Article 25 of the Universal Declaration of Human Rights “everyone has the right toa standard of living adequate for the health and well-being of himself and of his family,
including food, clothing, housing and medical care and necessary social services, and the rightto security in the event of unemployment, sickness, disability, widowhood, old age or other lackof livelihood in circumstances beyond his control”.515
These rights have also been protected by The International Covenant on Economic, Social andCultural Rights. Article 11 of this Covenant guarantees the right to an adequate standard ofliving including adequate food, clothing, housing and continuous improvement of living
conditions.
The UN Special Rapporteur on the Right to Food stated that achieving the right to food could
be pursued much more effectively if host-states, financiers and investors could agree on certain
conditions for investments.516 The FAO could provide guidance in this respect, as they further
show how non-state actors could work on this issue.
The FAO Voluntary Guidelines to Support the Progressive Realization of the Right to Adequate
Food in the Context of National Food Security further specify the right to adequate food andlink that right to the concept of food security. While the Voluntary Guidelines are written forstates, it presents an overview of all the factors affecting the realization of the right to food andcan therefore be valuable for non-state actors as well.
The influence of food producers on the food patterns of consumers is large. Companies can
support the right to adequate food by improving the nutritional value of the food they
produce, process and/or distribute. Obesity, malnutrition and chronic diseases related todietary patterns are influencing the health of one third of the world’s population. This also
leads to high healthcare costs. Malnutrition and obesity are related to the quantity and qualityof food.517 The Access to Nutrition Index (ATNI) is a benchmark of the world’s largest foodcompanies that encourages companies to provide consumers access to affordable food andbeverages with high nutritional value. The ATNI also encourages companies to “responsibly
exercise their influence on consumers’ choices and behaviour by improving marketing, labelling
and the use of claims that promote healthy diets and active lifestyles”.518

Page | 140

Companies can also support he right to adequate food by improving smallholders’ access toseeds. The Access to Seeds Index, launched in 2016, is a useful tool for investors. It benchmarks
the policies and activities of companies in the seed industry with regard to the availability ofseeds to smallholder farms in developing countries. Smallholder farms are crucial in fulfillingthe increasing demand for food in developing countries. Currently, only a small percentage ofthe seed used by smallholders in sub-Saharan Africa comes from seed companies.519 The Index
encourages seed companies to provide smallholders access to high quality seeds, so as toincrease yields, improve nutritional quality and cope with climate change.520
This leads to assessment element
1•Companies respect the right to adequate food.

Labour rights
The circumstances for health and safety in the agriculture and food industry are often below
standard due to the use of huge amounts of pesticides that are used. Wages are generally low
and negotiating rights are often not respected. It is therefore of great importance that
agriculture and food companies adhere to the main ILO conventions, summarized in section
2.7.2, such as the 1998 ILO Declaration on Fundamental Principles and Rights at Work and the
Tripartite Declaration of Principles Concerning Multinational Enterprises and Social Policy (MNE
Declaration).
For more information and relevant international standards and initiatives see the theme Labour
rights (section 2.7.2).
This leads to assessment element
2•

Companies respect the ILO Declaration on Fundamental Principles and Rights at Work.

Land rights conflicts and forced evictions
Human rights, particularly economic, social and cultural (ESC) rights, play a central role in landrelated issues. However, there is no explicit recognition of a ‘human right to land’ withininternational human rights instruments. Those who face threats to their land rely on otherrights, such as the right to food, the right to water, the right to housing and the right to work.
These rights are included in the 1976 International Covenant on Economic, Social and Cultural
Rights (ICESCR).521 Other standards related to land rights conflicts and forced evictions are:••••

The 1997 Basic Principles and Guidelines on Development-based Evictions;
The 2009 Core Principles and Measures on Large-scale land acquisitions and leases of theUnited Nations Special Rapporteur on the right to food;
The FAO’s 2012 Voluntary Guidelines on the Responsible Governance of Tenure of Land,
Fisheries and Forests in the Context of National Food Security (VGGT); andThe 2011 Tirana Declaration of the International Land Coalition.

For more information and relevant international standards and initiatives see the theme Humanrights (section 2.6.2).

Page | 141

This leads to assessment elements•

3

Companies prevent conflicts over land rights and acquire natural resources only by engaging inmeaningful consultation with local communities and obtaining free, prior and informed consent(FPIC) when it concerns indigenous peoples.

4

Companies prevent conflict over land rights and acquire natural resources only with free, prior andinformed consent (FPIC) of peoples with customary tenure rights.

Areas of high biodiversity and protected areas
Agricultural activities may not take place in areas listed in the categories I to IV of theInternational Union for Conservation of Nature (IUCN), in the UNESCO World Heritage
Convention, or in the Ramsar Convention on Wetlands. Furthermore, developing new
agricultural activities in areas that are identified by one of the following classifications is to be
avoided:•••Forests identified with the High Carbon Stock Approach;Marine Protected Areas; andHigh Conservation Value areas.

How to deal with these different biodiversity standards is described in International FinanceCorporation’s (IFC) Performance Standard 6 concerning Biodiversity Conservation andSustainable Management of Living Natural Resources. Performance Standard 6 determines how
companies should operate in order to avoid negative consequences on areas of highbiodiversity value, including negative impacts on natural habitats as well as on endangered andendemic species. The requirements in Performance Standard 6 have been guided by theConvention on Biological Diversity.
The United Nations Environmental Assembly adopted a resolution on pollution mitigation bymainstreaming biodiversity into key sectors in 2017, aiming at “strengthening efforts tointegrate conservation and sustainable use of biodiversity in various sectors such as agriculture,
fisheries and aquaculture, tourism, mining and energy, infrastructure and manufacturing among
others. It also points to the need to prevent and reduce pollution from these sectors”.522
The 2014 United Nations Climate Summit New York Declaration on Forests (NYDF) is a nonlegally binding political declaration, which aims to cut natural forest loss with 50% by 2020 andto ultimately end deforestation by 2030. Furthermore, it also promotes the restoration offorests and croplands of an area larger than India. The Declaration has been endorsed bydozens of governments, 50 of the world’s largest companies and over 50 influential civil society
and indigenous organisations. The associated voluntary Action Agenda serves as a guide forgovernments, companies, and organisations regarding the diverse set of actions that canachieve these transformational goals.523 The five-year assessment of the Declaration was
published in 2019 and stressed that “there is little evidence that these goals are on track, andachieving the 2020 NYDF targets is likely impossible”.524 The report further emphasizes theneed for larger scale action both on halting deforestation and on restoring forest ecosystems.

Page | 142

This leads to assessment elements•

5Companies prevent negative impacts on protected areas that fall under the categories I-IV of theInternational Union for Conservation of Nature (IUCN) within their business operations and theareas they manage.

6

Companies prevent negative impacts on UNESCO World Heritage sites within their business
operations and the areas they manage.

7

Companies prevent negative impacts on protected areas that fall under the Ramsar Convention on
Wetlands within their business operations and the areas they manage.

Protection of genetic material
The FAO’s Commission on Genetic Resources for Food and Agriculture has observed that the
management of genetic resources, the primary biological capital for livestock development andvital to food security and sustainable rural development, has been neglected. This has resulted
in a substantial erosion of genetic diversity. The FAO’s Second Report on the State of theWorld’s Animal Genetic Resources for Food and Agriculture provides a “comprehensive
assessment of the state of livestock biodiversity and its management”.525 The key findings ofthe report include:“Livestock diversity facilitates the adaptation of production systems to future challenges
and is a source of resilience in the face of greater climatic variability; […]The roles and values of animal genetic resources remain diverse, particularly in the
livelihoods of poor people; and […]Emerging technologies are creating new opportunities and challenges in animal genetic
resources management”.526•••

The UN Convention on Biological Diversity (CBD) demands that companies that want to haveaccess to genetic material from abroad have to obtain prior permission from the exporting
country and have to make clear agreements for the use of the material.
The Bonn Guidelines are recognized as a useful first step in the implementation of relevant
provisions of the CBD and are meant to assist stakeholders in developing access to genetic
resources and benefit-sharing strategies.
The Cartagena Protocol on Biosafety to the Convention on Biological Diversity (Cartagena
Protocol) defines Living Modified Organisms (LMOs, in every day usage also called Genetically
Modified Organisms, GMOs) as any living organism that possesses a novel combination ofgenetic material obtained through the use of modern biotechnology. The Cartagena Protocol
does not prohibit the use of LMOs in itself but has developed a framework for the safe
handling, transport and use of LMOs that may have a harmful effect on biodiversity and humanhealth and entail trans-boundary risks. The protocol also requires permission from theimporting country before it is permitted to import LMOs.
This leads to assessment elements
8

Activities in the field of genetic materials and genetic engineering only take place if they meet thepermission and processing requirements described in the UN Convention on Biological Diversity
and the related Bonn Guidelines or Nagoya Protocol.

9

Production of, or trade in, living genetically modified organisms can only take place if permissionof the importing country has been obtained and all requirements of the Cartagena Protocol havebeen met.

Page | 143

•Animal welfare
The concept of the Five Freedoms are often taken as a starting point for preparing standards
on animal welfare. This concept arose from the Brambell Report published in Great Britain in
1965 and the following request of the UK Minister of Agriculture to the Farm Animal Welfare
Council (FAWC) to revise the Welfare Codes for cattle, pigs, domestic fowl and turkeys. This has
led to the following list of five freedoms that are relevant for all animals.
An animal has to live free from:
•
•
•
•
•

Hunger, thirst and malnutrition (direct access to fresh water and solid food to stay healthyand strong);
Any thermal or physical discomfort (having suitable, comfortable housing that offers
tranquillity);
Pain, injury and diseases (by means of prevention or diagnosing and treating quickly).
Fear and chronic stress (by circumstances that avoid suffering and stress); andThe denial of natural (species-specific) behaviour (by supplying sufficient space, sufficientand proper provisions and company from animals of the same species).

In the European Union, Council Directive 98/58/EC concerning the protection of animals applies
to all farm animals and lays out several general animal welfare requirements with respect to,amongst others, freedom of movement, accommodation, feed and breeding practices.
Furthermore, directives from the Council have been adopted on animal transport (EC No
1/2005), as well as on the keeping of specific species of animals (broilers, laying hens, pigs,
calves). Regulations on slaughter (EU Regulation 2018/723) have also been issued by theEuropean Commission. In recent years, out of discontent with the inability of EU standards tosafeguard animal welfare, private standards and initiatives have emerged.
The International Finance Corporation (IFC) states in its Good Practice Note that businesses"that address or enhance animal welfare are likely to win or retain a competitive advantage in
the global marketplace”.527 and presents some best practices and recommendation for farmers
and meat producing companies.
Coller Capital also initiated the Farm Animal Investment Risk and Return (FAIRR) initiative,
which aims to improve investor’s understanding of risks related to factory farming. FAIRR statesthat “animal factory farming is exposed to at least twenty-eight environmental, social andgovernance issues that could significantly damage financial value over the short or long-term.
Many of these risks are currently hidden from investors”.528
The Farm Animal Responsible Minimum Standards (FARMS) were developed in 2019 by acoalition of animal welfare organizations, and emphasize the role of financial institutions inadvancing animal welfare in farm animals. Based on the Five Freedoms, the OIE Terrestrial
Health Code, existing EU legislation and the IFC’s Good Practice Note, the FARMS initiative
identifies a number of ‘welfare risks’ and mitigation strategies that apply to all farm animals,
covering a range of topics including:
•
•
•
•
•
•
•

Space;
Stocking density;
Living environment;
Diet;
Breeding practices;
Painful procedures;Transport;

Page | 144

Slaughter.

•

Additionally, the FARMS initiative defines a host of minimum standards specific to five of themost commonly farmed animals (dairy cows, beef cattle, broiler chickens, laying hens andpigs).529 By combining previous governmental regulations and private initiatives, theResponsible Minimum Standards (RMS) provide a comprehensive set of principles for
improving welfare in farm animals.
For more information and relevant international standards and initiatives see the theme Animal
Welfare (section 2.1.2).
This leads to assessment elements•

10Companies respect the Five Freedoms of animals.

11

Very restricted housing methods for calves (in crates), hens (in battery cages) and sows (in feeding
cubicles) are unacceptable.

12

Companies reduce the time limit of animal transport to a maximum of 8 hours.

Antimicrobial resistanceAccording to the World Health Organisation (WHO), antimicrobial resistance (AMR) is one of
the biggest threats to global health, food security, and development today. As antibiotics
become less effective a growing list of infections are becoming difficult and sometimes
impossible to treat.
For more information and relevant international standards and initiatives see the theme Animal
welfare and the theme Health (sections 2.1.2 and 2.5.2).
This leads to assessment element
13•

Companies apply a prudent use of antimicrobial medicines (antibiotics) in food-producing animals
in order to minimize antimicrobial resistance.

Emissions reduction
Agriculture strongly contributes to the emission of greenhouse gases (GHGs), in particularthrough conversion of peatland and high-carbon stock (HCS) areas, as well as indirect land usechange (ILUC). Other sources of GHG emissions are CH4 produced by animals and rice paddies,and N2O emissions from animal manure and fertilizers.
Globally, the Greenhouse Gas Protocol (GHG Protocol) is the most widely used standard tomeasure and manage greenhouse gas emissions. Among others, the GHG Protocol has
developed a standard for the emissions of specific products and the corporate value chain(scope 3).
For more information and relevant international standards and initiatives see the theme Climatechange and the theme Health (sections 2.2.2 and 2.5.2.).

Page | 145

This leads to assessment elements•

14

Companies reduce their direct and indirect greenhouse gas emissions.

15

Companies reduce their direct and indirect emissions of harmful substances, such as particulatematter, nitrogen oxide and ammonia.

16

Conversion of peatland and high-carbon stocks for agricultural development is unacceptable.

17

Companies contribute to an ambitious, time-bound shift from animal protein to plant andalternative proteins in order to decrease animal protein consumption.

Pesticides
With respect to the use of pesticides, the FAO released an International Code of Conduct on
the Distribution and Use of Pesticides in 2003. This code of conduct includes voluntary,internationally accepted norms for the treatment, storage, use and the disposal of pesticides.
This leads to assessment element
18•

Companies minimise use of pesticides.

Water use
Given the immense amounts of freshwater being used to produce food globally, amidst
growing shortages, it is important that this is done as efficiently as possible. It is vital thatcompanies and financial institutions become aware of their own influences on water related
problems. Various initiatives, guidelines and standards have emerged in recent years, to help
companies address water risk.
Initiatives companies could participate in and learn from are:
•

•
•
•

The UN Global Compact’s CEO Water Mandate is a public-private initiative designed toassist companies in the development, implementation and disclosure of water sustainability
policies and practices;;
UNEP and CEO Water Mandate Guidance on Corporate Water Accounting;
The European Water Partnership; andThe Water Footprint Network, which also has a standard on assessing a global water
footprint.

There are several guidelines and water ‘footprinting’ methods as well as voluntary disclosure
initiatives for calculating water use, water risk, understanding water issues and creating a soundwater strategy, such as:••••

The CDP’s Water Program, to calculate and publish corporate water use throughout the
supply chain;
The GEMI Water Sustainability Tool;
The WBCSD Global Water Tool; andThe AWS International Water Stewardship Standard is supported by a verification process,that defines a set of water stewardship criteria and indicators for how water should be
stewarded at a site and catchment level in an environmentally, socially, and economicallybeneficial manner.

Page | 146

This leads to assessment elements•

19

Companies minimise use of water.

20

Companies prevent water pollution.

21

Companies conduct water scarcity impact assessments in water scarce regions.

22

Companies have comprehensive mitigation measures in place to address community andecosystem water requirements in areas where environmental impact assessments identify thatsignificant impacts to water resources are likely.

Certification and eco-labels
While demand for sustainable agricultural products is growing, there has not yet been generalagreement on the definition of what counts as sustainable agriculture. However, eco-labelling istaking place on a large scale: granting voluntary and binding sustainability labels to agricultural
products. A lot of labels are issue specific (for example organic or fair trade or GMO-free) andtherefore make use of different standards. As a result, the market for sustainable agricultural
products is somewhat opaque.
In February 2008, the Sustainable Agriculture Network (SAN) published the Sustainable
Agriculture Standards. The norms are based on the United Nations guidelines, the European
Union and the International Labour organisation and are endorsed by the Rainforest Alliance.
The standards contain fourteen criteria for sustainable agriculture (on waste management,
working conditions, health and safety, the use of chemical and biological additives andgenetically manipulated seeds). For certification purposes SAN has developed the Farm
Certification and Chain-of-Custody certification. Both are used in the certification process ofsustainable agricultural companies. The SAN also works on an additional sustainable standard
for keeping cattle, in which specific topics are dealt with and previous SAN standards for water
and waste management are applied to livestock farms.
With respect to organic farming, the International Federation of Organic Agricultural
Movements (IFOAM) has developed the Norms for Organic Production and Processing. The
IFOAM norms consist of the IFOAM Standard and the corresponding Accreditation Criteria. All
producers worldwide that adhere to the IFOAM norms are included in the Organic Guarantee
System.
With respect to fair trade, the Fair trade Labelling Organizations International (FLO) is industry
leading. FLO is a cooperation of twenty certification initiatives that market the Fair trade label in
their own country. Goods that carry the Fair trade label meet the Fair trade Production andTrade Standards, which include both general norms (on investments in local economies andreducing waste) as well as product specific norms (minimum prices and quality standards).
Through The 2050 criteria, WWF provides an overview of the investment criteria for several
agricultural resources. By referring to the best practices in the different sectors, WWF provides
guidance in the search for certification schemes and trends and developments in theenvironmental and social field.
This leads to assessment element
23

Companies work with relevant standards and initiatives for raw materials (mentioned in section
3.4.2).

Page | 147

•Standards for specific crops
Recently, guidelines have been developed for sustainable production and trade for a number ofimportant agricultural products. These guidelines, with the objective to reduce social andenvironmental problems, are preferably drafted by so-called multi-stakeholder initiatives androundtables, in which researchers, companies from industries involved, financial institutions,social organisations, and other stakeholders participate. In recent years, the roundtables havedefined more and clear standards for the sustainable production of specific crops. Until now
multi-stakeholder initiatives for some agricultural products are still lacking, but norms are being
drafted by the industry itself. Until these norms have been developed further in consultation
with all stakeholders, they are not to be considered as real sustainability norms; but they dooffer some guidance in the assessment of companies that produce these agricultural products.
The main examples of norms for specific agriculture crops are:•Soy: If not managed adequately, large scale soy farming causes huge social andenvironmental damage, particularly in Latin America. Clear norms and guidelines aredescribed in the 2004 Basel Criteria for Responsible Soy Production, developed by the WWF
and Coop Switzerland. The Basel Criteria require certified, non-GMO soy to be farmed andtraded separately, so as long as the largest part of the market does not comply with theserequirements. The Basel Criteria are also followed in the globally used ProTerra Standard.
In 2006, private companies and stakeholders came together to sign the Amazon Soy
Moratorium, a voluntary agreement to ensure that Brazilian soy is only grown on existing
agricultural land and does not drive further deforestation in the Amazon. The agreement
has been credited with drastically reducing deforestation due to soy production in the
Amazon, and was renewed indefinitely in 2016.530 A similar approach was called for in the2017 Cerrado Manifesto, which brought together many CSOs and several large companies
in advocating measures to prevent destruction of the Brazilian Cerrado region due to soy
production.
The Roundtable on Responsible Soy Association (RTRS), established by organisations andcompanies in the soy industry, aims to stimulate ‘more responsible’ production of soy but
has less strict requirements. The first RTRS Standard came into force in June 2010 andrecognises the environmental and social problems in the soy chain. The third version of the
RTRS Standard dates from 2017.
Other standards include the Sustainable Agriculture Network Standard, Fairtrade
Production and Trade Standards, standards for organic farming and the Social
Responsibility Criteria for Companies that Purchase Soy and Soy Products –– developed in
2004 by the Brazilian Soy Platform. The latter document also places a clear responsibility on
financial institutions and other lenders that are involved in financing soy producers. Civil
society organizations (CSOs) united in the Dutch Soy Coalition believe that sustainable soy
production cannot be achieved without a significant reduction in meat and dairy
consumption in Europe, as well as a shift towards European farmed crops as cattle feed
instead of imported soy.

Page | 148•Palm oil: The Roundtable on Sustainable Palm Oil (RSPO) - a multi-stakeholder initiativewith more than one hundred members that represent more than one third of the global
palm oil trade - adopted the first version of its Principles and Criteria for Sustainable Palm
Oil Production (P&C) in October 2007. The P&C is comprised of clear norms on
environmental aspects (use of soil, water, chemicals) and social environment (land rights,
working conditions, etc.). The norms are based on United Nations, the FAO and the ILO
guidelines.
In 2013, the Palm Oil Innovators Group (POIG) was established. Within POIG a couple of
CSOs (amongst whom WWF and Greenpeace) work together with palm oil companies inorder to improve the RSPO standards. In 2016, RSPO introduced additional criteria under
the name RSPO NEXT. The latest version of the RSPO Principles and Criteria was adopted in2018 and includes new criteria aimed at halting deforestation, planting on peat, andenhancing human rights protection.531
In recent years, several large companies, notably traders in the palm oil sector such as
Archer Daniels Midland (ADM) and Wilmar International (the latter controls roughly 45% of
the global market in palm oil), have adopted ‘no deforestation’ policies. These policies set ahigh benchmark, often allowing no deforestation, no peat development and no conflicts, intheir own operations or in their supply chain. Financial institution may apply the policies tothe palm oil sector, as well as to other sectors related to deforestation, peat loss andconflicts.532
The 2015 Free and Fair Labor in Palm Oil Production: Principles and Implementation
Guidance urges companies to ensure the rights of palm oil workers. It is not intended as a
new code of conduct but as a resource that provides companies with detailed
implementation guidance. The publication expects companies to adhere to the following
seven principles throughout their supply chain:
•
•
•
•
•
•
•

•

The International Labour Organization (ILO) Core Conventions are upheld;
Ethical hiring and responsible employment are practiced;
Reasonable production targets, working hours, and leave entitlements are established;
A living wage is paid;
Worker health and safety and the welfare of workers and their families are prioritized;
Access to remedy is guaranteed; andCommit to meaningful due diligence, transparency, and disclosure of human rights
policies, procedures, and data, with a focus on labour and employment.

Sugar cane: Beside its use in the food industry, sugar cane is increasingly being used as araw material for biofuel ethanol. Besides huge areas of agricultural land, the sugar industry
also uses large quantities of water. The multi-stakeholder group Bonsucro unites a numberof large companies and other stakeholders in the industry. Bonsucro’s objective is todevelop international guidelines for sustainable production of sugar cane that can be usedby companies and investors worldwide, as well as a certification system. The latest updateof the Bonsucro Production Standard dates from 2016. The standard is comprised of social,environmental and economic norms, focusing on labour rights, the production process andthe environment. Fairtrade International also has a Product Standard for Cane Sugar, which
certifies small-scale producer organizations.

Page | 149

•Biofuels: Palm oil, soy and sugar cane are increasingly often being used as a raw material
for biofuels. The Roundtable on Sustainable Biofuels (RSB) is a multi-stakeholder initiative inwhich companies, scientists and social organisations cooperate. In November 2010, the RSB
published the first Global Principles and Criteria for Sustainable Biofuels Production basedon the international guidelines of the UN and ILO. The RSB offers Global Standards (lastupdated in 2016) that apply to any type of bio-based feedstock worldwide, as well as EURED Standards (last updated in 2018) that apply to feedstock entering the EU market andcomply with the EU Renewable Energy Directive (RED) regarding land-use and GHG
criteria.533 The Sustainable Food Laboratory also works on the development of acomprehensible assessment of the most sustainable raw materials for biofuels that enables
a useful comparison between the different agriculture raw materials.

•

Cocoa: In 2001, the Harkin Engel Protocol was drafted to prevent the worst types of childlabour on cocoa plantations. Yet, in recent years various examples of child labour on Africancocoa plantations have come to light. The chain also suffers from unequal power relations,which leads to small cocoa farmers not receiving reasonable prices. In October 2007 thefirst meeting of the Roundtable on a Sustainable World Cocoa Economy was held in which
farmers, traders, processing companies, governments and social organisations talked about
the development of sustainability norms for the cocoa industry. Other initiatives are theWorld Cocoa Foundation (WCF), which supports programmes for sustainable cocoa
farming, and the Sustainable Tree Crops Programme for the development of the sustainable
harvest of cocoa, coffee and cashews in Africa. Some certification labels for sustainablecocoa are: Fairtrade International’s Product Standard for Cocoa, the IFOAM OrganicStandard, Utz and Sustainable Agriculture Network’s (SAN) Additional Criteria andIndicators for cocoa. Rainforest Alliance and Utz announced a merger in 2017 and are due
to publish a joint certification scheme in 2020.534•

Coffee: Organizations like Fairtrade International and Utz Certified have been involved in
the certification of coffee for many years. Fairtrade International particularly focuses on
small coffee producers and establishes minimum prices for these farmers. The Global Coffee
Platform (GCO), a group of over 150 stakeholders in the coffee supply chain, drafted theCommon Code for the Coffee Community (4C) in 2014. The 4C code provides an extensive
framework in which both environmental aspects as well as social problems within the coffeeindustry are covered. For 50 years, the International Coffee Organisation (ICO) has
developed standards for responsible coffee. The last ICO agreement was the International
Coffee Agreement 2007. There is also a Rainforest Alliance certification for coffee. Fairtrade
International has a Product Standard for Coffee, aimed at small coffee producers. Rainforest
Alliance and Utz announced a merger in 2017 and are due to publish a joint certification
scheme in 2020.535•

Tea: Tea production is labour intensive and the industry creates jobs in very remote rural
areas. Globally, millions of people depend on the production of tea for their income. The
price of tea on the world market has fallen dramatically in the past twenty years and, partly
due to this, large social problems have arisen in the production of tea. Since 1997 theEthical Tea Partnership, a joint industry initiative of traders and packers, monitors working
conditions on large plantations. Other certification systems are Fairtrade, Rainforest Allianceand Utz Certified (the latter two have merged and will publish a joint certification programin 2020).).

Page | 150

Other norms: Fairtrade International has Product Standards for other products, including
vanilla, fresh fruit and cereals. The Sustainable Agriculture Initiative Platform, founded bymultinationals in the agricultural industry, develops tools and guidance to support global
and sustainable sourcing and agricultural practices. The certification mark Fair Produce is ainitiative of Dutch mushroom producers and trading companies toto improve thecompetitive situation in the mushroom industry.

•

The Soft Commodities Compact initiative of the Banking Environment Initiative (BEI) and theConsumer Goods Forum (CGF) aims “to lead the banking industry in aligning with the CGF’s
resolution to help achieve zero net deforestation by 2020”.536 The commitments of thebanks include: “Alongside their own due diligence processes, by 2020 Compact banks will
confirm that these customers’ operations have achieved the same internationallyrecognised means of verification that the CGF is prioritising. For each commodity, thestarting point is: 537••

Roundtable on Sustainable Palm Oil (RSPO) certification for palm oil;Round Table on Responsible Soy (RTRS) certification for soy.

The list described above is not an exhaustive overview of all the certification schemes andagricultural crops. The initiatives are in various stages of development and have gained
different levels of support. In most industries, effective verification and control systems still
have to be developed so that progress can be measured. Some initiatives already offer reliablenorms on which a policy of financial institutions can be based and others provide starting
points.
This leads to assessment elements•

23

Companies work with relevant standards and initiatives for raw materials (mentioned in section
3.4.2).

24

Companies are certified according to the criteria of the certification schemes for raw
materials(mentioned in section 3.4.2).

Sustainability reporting
The Global Reporting Initiative has drafted guidelines on how to write sustainability reports.
Besides the general G4 Sustainability Reporting Guidelines it also provides sector guidance fora number of industrial sectors. In the G4 Food Processing Sector Disclosures (FSSD), not yet
updated but still recommended by GRI to use with its new GRI Sustainability ReportingStandards (GRI Standards), includes guidelines regarding animal welfare, fair trade, health andthe wellbeing of consumers, impact on natural resources and the use of packaging. The
guideline has been specifically developed for companies involved in processing food anddrinks. Parts of the guideline are also suitable for companies involved on the side, such as
suppliers of pesticides, and take all links in the production chain into account.
For small and medium enterprises (SMEs), less elaborate sustainability reporting is required.
SMEs can report on the GRI indicators that are relevant to their operations, for example byfollowing the High5! Approach.

Page | 151

This leads to assessment element•

25

Companies publish a sustainability report that may contain (a number of) disclosures from the GRI
Standards.

26

Large enterprises and multinational enterprises publish a sustainability report that is set up inaccordance with the (Core or Comprehensive option of the) GRI Standards.

Procurement and supply chains
Companies are often part of long procurement and supply chains. They can monitor one
another and question how they respect local and national legislation and international norms
regarding social, economic and environmental issues. The requirements that companies set for
their suppliers can be included in contractual agreements. The importance of this also
recognised in the OECD Guidelines for Multinational Enterprises since its revision in 2011, andmore specifically in the OECD Due Diligence Guidance for Responsible Agricultural Supply
Chains. It establishes a common understanding of due diligence in the sector to help
companies meet the due diligence expectations laid out in the OECD Guidelines forMultinational Enterprises. It includes a model enterprise policy outlining the company
standards, a framework for risk-based due diligence, a description of the major risks faced byenterprises and guidance for engaging with indigenous peoples.
The ISO 26000:2010 Guidance on social responsibility recognises the importance of supply
chain responsibility, because “the impacts of an organization's decisions or activities can begreatly affected by its relationships with other organizations”.538 A company’s sphere of
influence includes relationships within and beyond an organization’s supply chain. Moreover,the ISO 26000:2010 Guidance on social responsibility recommends setting contractual
provisions or incentives as a means of exercising influence.539
In addition, ISO 20400:2017 Sustainable procurement – Guidance provides guidelines fororganizations, independent of their activity or size, on integrating sustainability withinprocurement, as described in ISO 26000:2010 Guidance on social responsibility. It is intended
for stakeholders involved in, or impacted by, procurement decisions and processes.
The United Nations Guiding Principles on Business and Human Rights include a due diligenceprocess in order to identify, prevent, mitigate and account for how companies address theiradverse human rights impacts. The process “should cover adverse human rights impacts thatthe business enterprise may cause or contribute to through its own activities, or which may bedirectly linked to its operations, products or services by its business relationships.”540
A useful tool for companies is the FAO-OECD Guidance for Responsible Agricultural Supply
Chains. The Guidance “has been developed to help enterprises observe existing standards forresponsible business conduct along agricultural supply chains. These standards include theOECD Guidelines for Multinational Enterprises, the Principles for Responsible Investment inAgriculture and Food Systems, and the Voluntary Guidelines on the Responsible Governance ofTenure of Land, Fisheries and Forests in the Context of National Food Security. Observing thesestandards helps enterprises mitigate their adverse impacts and contribute to sustainable
development”.541 Furthermore, the Guidance contains a step-by-step model for implementing
supply chain due diligence in the agricultural sector.

Page | 152

This leads to assessment elements
27

Companies integrate environmental, social and governance criteria in their procurement andoperational policies.

28

Companies include clauses on the compliance with environmental, social and governance criteria
in their contracts with subcontractors and suppliers.

3.4.3 Assessment elements
A reform of the global food and agriculture sector is badly needed in order to improve its
contribution to sustainable development and to meeting its responsibility to respect peoples’ rightto food. Only through sustainable practices the massive deforestation that presently takes place asa result of the growth of agricultural activities can be reduced. This would protect biodiversity andecosystems, climate change and fight desertification as well as preventing social problems withrespect to the land rights of the local populations. Financial institutions play an important role in
the food and agriculture sector as they finance producers, processors and traders of agricultural
products. On these grounds, financial institutions carry a shared responsibility for improving thesustainability of this sector.
The following elements are crucial for a policy regarding the companies a financial institution
invests in or finances:
1. Companies respect the right to adequate food.
2. Companies respect the ILO Declaration on Fundamental Principles and Rights at Work.
3. Companies prevent conflicts over land rights and acquire natural resources only by engaging inmeaningful consultation with local communities and obtaining free, prior and informed consent(FPIC) when it concerns indigenous peoples.
4. Companies prevent conflict over land rights and acquire natural resources only with free, priorand informed consent (FPIC) of peoples with customary tenure rights.
5. Companies prevent negative impacts on protected areas that fall under the categories I-IV of
the International Union for Conservation of Nature (IUCN) within their business operations andthe areas they manage.
6. Companies prevent negative impacts on UNESCO World Heritage sites within their business
operations and the areas they manage.
7. Companies prevent negative impacts on protected areas that fall under the Ramsar Convention
on Wetlands within their business operations and the areas they manage.
8. Activities in the field of genetic materials and genetic engineering only take place if they meetthe permission and processing requirements described in the UN Convention on Biological
Diversity and the related Bonn Guidelines or Nagoya Protocol.
9. Production of, or trade in, living genetically modified organisms can only take place if
permission of the importing country has been obtained and all requirements of the Cartagena
Protocol have been met.
10. Companies respect the Five Freedoms of animals.
11. Very restricted housing methods for calves (in crates), hens (in battery cages) and sows (infeeding cubicles) are unacceptable.
12. Companies reduce the time limit of animal transport to a maximum of 8 hours.
13. Companies apply a prudent use of antimicrobial medicines (antibiotics) in food-producing
animals in order to minimize antimicrobial resistance.
14. Companies reduce their direct and indirect greenhouse gas emissions.

Page | 153

15. Companies reduce their direct and indirect emissions of harmful substances, such as particulatematter, nitrogen oxide and ammonia.
16. Conversion of peatland and high-carbon stocks for agricultural development is unacceptable.
17. Companies contribute to an ambitious, time-bound shift from animal protein to plant andalternative proteins in order to decrease animal protein consumption.
18. Companies minimise use of pesticides.
19. Companies minimise use of water.
20. Companies prevent water pollution.
21. Companies conduct water scarcity impact assessments in water scarce regions.
22. Companies have comprehensive mitigation measures in place to address community andecosystem water requirements in areas where environmental impact assessments identify thatsignificant impacts to water resources are likely.
23. Companies work with relevant standards and initiatives for raw materials (mentioned in section
3.4.2).
24. Companies are certified according to the criteria of the certification schemes for raw
materials(mentioned in section 3.4.2).
25. Companies publish a sustainability report that may contain (a number of) disclosures from the
GRI Standards.
26. Large enterprises and multinational enterprises publish a sustainability report that is set up inaccordance with the (Core or Comprehensive option of the) GRI Standards.
27. Companies integrate environmental, social and governance criteria in their procurement andoperational policies.
28. Companies include clauses on the compliance with environmental, social and governancecriteria in their contracts with subcontractors and suppliers.

Page | 154

3.5

Forestry

3.5.1 What is at stake?
About 30% of the Earth’s land surface - almost 4 billion hectares - is covered with forests.542 Of this,about 271 million hectares are timber plantations, which have an entirely different function.543 The
term ‘forest’ includes, but is not limited to, natural forests and forest plantations as described by
the Convention on Biological Diversity (CBD).
The forestry sector consists of all companies that manage forests and the companies that processtimber (lumber, pulp, paper, and other wood products). The forestry industry is also comprised of
all companies that are involved in trade and the further processing of these products, such as
furniture and paper, and therefore includes long supply chains with many different companies.
Forests and plantations play an important role in the Earth system and provide people with avariety of goods and services:
•

•
•

•

•

•

Hundreds of millions of people consider the forest to be their home: their social, cultural, andeconomic wellbeing is inextricably connected with the forest and the products they findthere.544 While it is difficult to estimate exactly how many people depend on forests for theirlivelihoods, some estimates place this number at over 1.5 billion people.545 Importantdifferences exist between those who live inside forests, those who live near forests and those
who are engaged in commercial activities that rely on forests. These categories also overlap
and vary along with the definition of ‘forest’.546
Forest ecosystems are the most biodiverse ecosystems on earth, offering shelter to more than
two thirds of all animals and plants living on land.547
Since trees grow by extracting CO2 from the atmosphere, untouched forests serve as carbon
storage and are therefore invaluable with regard to climate protection.548 A 2012 joint study by
two of the world’s leading research groups estimated that deforestation provides 3.0 billion
tons of carbon dioxide a year, accounting for 10% of global emissions.549 The IPCC in 2014
estimated the net CO2 emissions produced by agriculture, forestry and other land use (AFOLU)
at 12% of global emissions between 2000 and 2009.550
Forests provide important ecosystem services by enhancing the fertility of the soil, protecting
reservoirs and reducing the risk of natural disasters such as floods and avalanches because theyhold water resources and prevent soil erosion. These properties have a positive effect on global
agricultural productivity and human health.551
Forests provide valuable products for the world economy, as it provides timber and otherproducts, such as edible nuts and fruit, medicinal plants, fibres and rubber.552 The economic
importance of the informal, local trade in timber and other forest products is likely to be muchhigher. Hence, the loss of forests implies significant costs for the world economy, with someestimates putting the cost of deforestation and forest deterioration in the trillions of US dollars
for the world economy.553
Small scale and informal forestry and agroforestry are usually an important source of
employment. However, there is a great deal of variation between types of forestry work, withindifferent kinds of forestry work and also between regions.554

Despite their importance for human beings and nature, forests are still being destroyed at
unprecedented speed. Experts estimate that during the 1990s, about sixteen million hectares ofnatural forest was lost annually.555 Besides outright deforestation, the overexploitation of forests
also drives forest degradation, whereby forests lose their richness in biodiversity and parts of theirsocial and ecological functions.

Page | 155

Deforestation and forest degradation deprive local communities of their territory and livelihood,lead to loss of biodiversity, soil erosion and a decrease in the surface and groundwater table. In
addition, deforestation activities sometimes cause horrible forest fires. Due to air pollution causedby these fires, people can suffer from respiratory problems - such as asthma, bronchitis andpneumonia - as well as other consequences of the fires, such as eye and skin problems. Most forest
fires are caused by the destruction of forests for the purpose of expansion of the large-scale pulp
industry and palm oil plantations.556
Important causes of deforestation and forest degradation are:•Non-sustainable and illegal logging. Non-sustainable logging occurs when forests are cut
down so fast that recovery is impossible. Not all unsustainable logging is illegal, because
forestry regulations in many countries fail to take sustainability into account. At the same time,
not all types of illegal logging are non-sustainable, such as the small-scale logging by
population groups that live in the forest and depend on small-scale agricultural activities(shifting cultivation).
Illegal logging and forest crime has an estimated annual cost of billions of USD. It is estimatedthat 50 to 90 % of timber in some tropical countries has been logged illegally or originatesfrom illegal sources.557 Governments would have been able to use this money for the
improvement of health provisions, education, and other public services or for the improvementof sustainable forest management systems.
Non-sustainable logging often causes great damage to the environment. Due to the conversionof forests and other bio-diverse areas into timber plantations and secondary (degenerating)forests, biodiversity is lessened.558 In addition, legal (but non-sustainable) logging exposes theforest to illegal logging and poaching when infrastructure is created.
Non-sustainable logging has negative consequences for the livelihood of population groups
that depend on forests. Many of these groups are among the poorest and most oppressed
communities in the world. In some forest-rich countries, the forestry industry is very corrupt.
Private allocations of licenses and payment for these services by large scale logging companies
have increased to such an extent that national legislation is being undermined. As a result,democratic governance and attention to human rights have come under pressure. In somecases the illegal exploitation of forests has been directly linked to large-scale violent conflicts(such as in the Democratic Republic of Congo).559
The sale of illegal wood within the EU remains a serious problem. A 2016 report by theEuropean Commission stresses that private sector companies had “not consistently
implemented the [due diligence] requirements”, that compliance remains “uneven andinsufficient” and much more needs to be done to combat the trade in illegal timber.560•

Conversion of natural forests into timber and pulp plantations. One of the main causes of
non-sustainable logging is the establishment of large-scale pulp, paper and veneer factories.
These companies generally fail to make sure their timber supply comes from sustainably
managed sources. Often, large areas of natural forests are cut down to make room for timber
plantations that use fast-growing types of tree. Although timber plantations are sometimes
classified as forests - for example in the annual FAO report on the state of the world’s forests they do not offer the same social and ecological functions as natural forests.

Page | 156

A large share of global logging is destined for industrial paper use and pulp factories are
becoming increasingly controversial. The huge monoculture plantations needed to supply
modern pulp factories with raw material have serious consequences for biodiversity, water
quality, land rights and income provision. Moreover, the factories themselves are very polluting.
Stimulated by financial institutions, the industry constructs larger factories than needed, as it iseasier to obtain financing for a large factory than for a small one. Financial institutions cantherefore exert significant influence in determining which projects ultimately go ahead.561•

Conversion of forests for agriculture. Agricultural activities in livestock farming and the
production of palm oil, soy and corn (for food, feed and biofuel) increasingly use larger andlarger land areas. To make way for agricultural activities, forests are cut on a large scale, after
which the remaining vegetation is burnt. This system is commonly known as slash-and-burn. It
is mostly conducted by farmers, however these activities are sometimes connected to large
industry players.562•

Conversion of mangroves for fish farming. Mangrove forests in tropical coastal regions areoften destroyed to enable large-scale fish and shellfish growing.563•

Development of large-scale industrial and infrastructure projects. Forests are destroyed forthe development of industry and infrastructure such as roads, railways, channels, dams, mines,
oil and gas plants and pipelines.564

The United Nations Collaborative Programme on Reducing Emissions from Deforestation andForest Degradation in Developing Countries (UN-REDD) is an initiative financially stimulating
developing countries to reduce the emission of greenhouse gases due to deforestation and toinvest more in sustainable development. During the 15th United Nations Climate Change
Conference (COP15) in Copenhagen in December 2009, the Copenhagen Accord agreement wasachieved on the need to stop deforestation and forest degradation.
The issues related to forestry are central to SDG 15: Life on Land. It aims to implement sustainable
forest management practices, stop all kinds of deforestation and promote reforestation by 2020. It
also aims to reduce the degradation of natural habitats, halt the loss of biodiversity and, by 2020,
protect and prevent the extinction of threatened species. SDG 15: Life on Land also encourages
mobilising resources to finance sustainable forest management practices in developing
countries.565 Forestry as an industrial sector is also a hurdle in achieving SDG 13: Climate Action.
Indirectly, land issues can be a threat to SDG 1: No Poverty and SDG 10: Reduced Inequalities.566
Given the socio-economic and ecosystem value of the world’s forests and the outsized influence ofthe forestry sector on it, financial institutions should have an investment policy specifically
dedicated to forestry in addition to investment policies for other industries related to deforestationand forest degradation (such as agriculture, fishing and mining). Financial institutions should
develop a stringent investment policy to ensure that they only invest in or finance companies andgovernments that manage their forests in a way that is not only ecologically sound but also
beneficial to local societies. When developing a policy for this industry, financial institutions canmake use of the international standards described below.
3.5.2 International standards and initiatives
The main international standards on the forestry industry are summarised per topic, followed by
the assessment elements that are formulated by the FFGI as a result:

Page | 157

•Protected areas and High Conservation Value Forests
Forestry activities in all protected areas that fall within the categories I-IV of the World
Conservation Union, the UNESCO World Heritage Convention and the Ramsar Convention on
Wetlands require special attention and protection. These areas are dealt with extensively in thechapter on nature (see section 2.8.2). Policies of financial institutions have to be aimed at
avoiding investments in forestry activities in these areas.
Many of these areas are also included in the analyses for investments by International FinanceCorporation’s (IFC) Performance Standard 6 concerning Biodiversity Conservation andSustainable Management of Living Natural Resources. It determines how companies should
operate in order to avoid negative consequences on areas of high biodiversity value, including
impact on natural habitats as well as endangered and endemic species. The requirements in thestandard have been guided by the Convention on Biological Diversity.
In addition, the Forest Stewardship Council (FSC) has developed the High Conservation Value
Forests (HCVFs) concept. HCVFs are forest areas with biological, ecological, social or cultural
attributes that make them particularly valuable for biodiversity and/or local people.567 The
objective of assigning an HCVF-label to certain forest areas is to be able to better identify
valuable forests, developing suitable protection so important ecological and social economic blremain preserved.568 The Global HCVF Toolkit, developed by IKEA and ProForest, provides
starting points for applying the concept and implementation on a national scale. Organisations
supporting the HCV Resource Network HCV Charter can register.
This leads to assessment element
1•Companies prevent negative impacts on High Conservation Value (HCV) areas within their business
operations and the forests they manage.

High Carbon Stock
Different forests have different degrees of carbon storage. The High Carbon Stock (HCS)
Approach is a methodology to identify areas of land suitable for plantation development andforest areas that can be protected in the long term. The methodology distinguishes naturalforest areas from degraded lands (former forest) that now contain only small trees, shrubs or
grasses. HCS forests store carbon that would be released if they were converted intoplantations, as well as having rich biodiversity values. The methodology was originallydeveloped by Greenpeace, The Forest Trust (TFT) and Golden Agri-Resources (GAR), and is now
governed and will be further refined by a multi-stakeholder body called the High Carbon StockApproach Steering Group. The HCS Approach is now used by plantation companies that havemade a commitment to exclude deforestation from their supply chains.
This leads to assessment element
2•

Companies prevent negative impacts on High Carbon Stock (HCS) areas within their business
operations and the forests they manage.

Illegal logging and deforestation
Since 2002, governments of wood producing and consuming countries have organised anumber of conferences together with the World Bank. These Ministerial Conferences on Forest
Law Enforcement and Governance (FLEG) processes are aimed at reducing illegal logging,trading and corruption in the forestry industry. In order to reach these objectives producers,
consumers and donor governments are held accountable to international commitments toPage | 158

increase their efforts. Up to now, FLEG-meetings have taken place in South-East Asia andAustralia, Africa, Europe and in North Asia.
In 2004 the EU adopted the Forest Law Enforcement, Governance and Trade (FLEGT) Action
Plan, which established a new and innovative approach to prevent illegal logging. Legalagreements within the EU concerning trade and exploitation of raw materials are linked to thegovernance of the developing countries where these raw materials come from. The action plan
describes a series of measures - such as supporting the private industry by keeping illegal
timber out of the chain - and it supports measures to prevent investments in illegal logging.
In 2008, the United States were the first to ban the import, sale and trade of illegal timber andother related products. According to the 2008 amendment to the Lacey Act, importers have toindicate the wood species and the country of origin of most wood species, with heavy fines onimporting wood products from illegal sources, regardless of whether this is done intentionallyor unintentionally.
Following EU regulation 995/2010, the EU Timber Regulation (EUTR) came into force in 2013:“Placing illegally harvested timber and products derived from such timber on the EU market for
the first time, is prohibited. EU operators – those who place timber products on the EU market
for the first time – are required to exercise ‘due diligence’. Traders – those who buy or selltimber and timber products already on the market – are required to keep information about
their suppliers and customers to make timber easily traceable”.569 Companies can develop theirown Due Diligence System or make use of the services of monitoring organisations across theEU.
The 2014 United Nations Climate Summit New York Declaration on Forests (NYDF) is a nonlegally binding political declaration, which aims to cut natural forest loss with 50% by 2020 andto ultimately end deforestation by 2030. Furthermore, it also promotes the restoration offorests and croplands of an area larger than India. The Declaration has been endorsed bydozens of governments, 50 of the world’s largest companies and over 50 influential civil society
and indigenous organisations. The associated voluntary Action Agenda serves as a guide forgovernments, companies, and organisations regarding the diverse set of actions that canachieve these transformational goals.570 The five-year assessment of the Declaration was
published in 2019 and stressed that “there is little evidence that these goals are on track, andachieving the 2020 NYDF targets is likely impossible”.571 The report further emphasizes theneed for larger scale action both on halting deforestation and on restoring forest ecosystems.
The Soft Commodities Compact initiative of the Banking Environment Initiative (BEI) and theConsumer Goods Forum (CGF) aims “to lead the banking industry in aligning with the CGF’s
resolution to help achieve zero net deforestation by 2020”.572 The commitments of the banks
include: “Alongside their own due diligence processes, by 2020 Compact banks will confirm
that these customers’ operations have achieved the same internationally-recognised means ofverification that the CGF is prioritising. For each commodity, the starting point is (…) Forest
Stewardship Council (FSC) verification or that of a national scheme endorsed against the 2010
Programme for the Endorsement of Forest Certification (PEFC) meta standard for timber
products”.573
This leads to assessment element
3

Companies throughout the wood supply chain prevent the use of illegally cut and traded timber.

Page | 159

•Pulp and paper production
In 2014 the Environmental Paper Network (EPN), a group of over 120 non-profit organizations
endorsed a new Global Paper Vision, to improve sustainability in the paper supply chain. The
Global Paper Vision encompasses seven principles, addressing the entire paper life-cycle:574
reduce global paper consumption and promote fair access to paper;maximise recycled fibre content;
ensure social responsibility;source fibre responsibly;
reduce greenhouse gas emissions;ensure clean production; andensure transparency and integrity.

•
•
•
•
•
•
•

The Global Paper Vision emphasises the importance of responsible sourcing “from forest
managers that have credible, independent, third-party certification for employing the mostenvironmentally and socially responsible forest management and restoration practices”.575
This leads to assessment element
4•

Pulp and paper factories restrict the use of chemicals and the pollution of soil, water and air bymaking use of the best available techniques.

Fair and equal use of forests
In article 8(j), the Convention on Biological Diversity (CBD) considers the fair and equal use andthe advantages of biological diversity and requires that traditional knowledge of indigenous
and local communities can only be used with their permission. The Akwé: Kon Guidelines
require the conduct of cultural, environmental and social impact assessments regarding
developments proposed to take place or which are likely to impact on sacred sites and on lands
and waters traditionally occupied or used by indigenous and local communities.
This leads to assessment element
5•

Companies respect the rights of local and indigenous communities on the fair and equal use offorests.

Land rights, conflicts and forced evictions
Human rights, particularly economic, social and cultural (ESC) rights, play a central role in landrelated issues. However, there is no explicit recognition of a ‘human right to land’ withininternational human rights instruments. Those who face threats to their land rely on otherrights, such as the right to food, the right to water, the right to housing and the right to work.
These rights are included in the International Covenant on Economic, Social and Cultural Rights(ICESCR).576 Other standards related to land rights conflicts and forced evictions are:•••

The 1997 Basic Principles and Guidelines on Development-based Evictions;
The 2009 Core Principles and Measures on Large-scale land acquisitions and leases of theUnited Nations Special Rapporteur on the right to food; andThe 2011 Tirana Declaration of the International Land Coalition (ILC).

For more information and relevant international standards and initiatives see the theme Humanrights (section 2.6.2).

Page | 160

This leads to assessment elements•

6

Companies prevent conflicts over land rights and acquire natural resources only by engaging inserious consultation with local communities and obtaining free, prior and informed consent (FPIC)
when it concerns indigenous peoples.

7

Companies prevent conflict over land rights and acquire natural resources only with free, prior andinformed consent (FPIC) of peoples with customary tenure rights.

Certification of forest management and the wood product chain
The Forest Stewardship Council (FSC) is an international multi-stakeholder organizationcommitted to developing certification standards for sustainably managed forests. The FSC wasestablished in 1993 and includes forest owners, forest construction companies, labour unions,social and environmental organisations. The latest version of the FSC Principles and Criteria(P&C) for Forest Stewardship dates from 2015 and outlines ten principles with respect toenvironmental and social aspects of sustainable forest management. These principles include
requirements on labour rights, FPIC and other rights of indigenous peoples, the preservation of
ecosystem services and protection of HCV areas.577 The P&C form the basis of all FSC standards
for forest and plantation management. In addition, thousands of wood products carry the FSC
Chain of Custody-certificate, which guarantees that the entire production chain complies with
FSC conditions.
The Programme for the Endorsement of Forest Certification (PEFC) is an international alliance ofnational forest certification schemes and is traditionally more dominated by large forestry
companies than FSC. PEFC has developed an international benchmark for forest managementthat national certification schemes need to apply in order to receive PEFC endorsement. The
latest version of the Sustainable Forest Management Standard dates from 2018 and includes
requirements on compliance with fundamental ILO conventions, FPIC and other rights ofindigenous peoples, as well as maintenance and enhancement of forest ecosystems undermanagement.578 PEFC has also developed Chain of Custody Certification to guarantee that
forest-based materials in a product originate from sustainably managed forests. PEFC
certificates are mainly issued in Europe. Most PEFC-certified wood comes from North America,
followed by Europe.579
A 2019 report on labour rights and human rights in forest certification standards found thathuman rights risks were addressed properly in both the FSC and PEFC standard. Both standards
also address environmental and labour rights risks, although room for improvement remains.
The Chain of Custody standards for both systems do not adhere fully to key international
standards (such as the OECD Guidelines for Multinational Enterprises or ILO Fundamental
Conventions), and significant differences remain between national standards, especially in the
PEFC system.580
Over the years, PEFC has been subject to significant criticism from civil society organizations(CSOs). As PEFC certification takes place on the basis of national standards, it is difficult toderive clear criteria from a PEFC certificate. WWF’s Forest Certification Assessment Tool (CAT)pointed out in 2015 that while the international PEFC-benchmark “performs well in areas suchas water and soil management, it scores less on several important criteria, such as biodiversity,and workers’ rights”, and “the credibility of the PEFC system would benefit from more active
and formally balanced participation from a wide range of stakeholders in its governancesystem, and greater transparency”.581 In 2009 Friends of the Earth Netherlands foundunsustainable forestry practices in the United States, Australia and Slovakia in PEFC-certified

Page | 161forests.582 In addition there are, according to WWF and Greenpeace, among others, thefollowing weaknesses of PEFC compared to FSC:583
Woodlands can be converted to monoculture plantations;
No need to protect endangered plant and animal species; andThe organization is dominated by the timber industry and there is too little involvement ofother stakeholders.

•••

Criticisms on social or environmental grounds have also been delivered about the Malaysian
Timber Certification Scheme (MTCS) and the Sustainable Forestry Initiative (SFI), both PEFCendorsed national or regional certification systems.584
In conclusion, there is consensus among CSOs that PEFC standards do not ensure sustainable
forestry, especially outside Europe. The Global Paper Vision, likewise, considers FSC the onlyinternational certification programme meeting their requirements of a good certification
programme.585
The Fair Finance Guide International methodology considers PEFC certification and othercertification schemes not a sufficient requirement from companies. As these certification
schemes do not meet the standards to ensure production of sustainable wood, FSC certificationis the only acceptable certification system.
This leads to assessment elements•

8

Production forests and timber plantations are certified according to the Forest Stewardship Council(FSC) forest management certification.

9

Supply chains of timber traders and companies in the wood product chain (including pulp, paper,
veneer, furniture) are certified according to the FSC chain of custody certification.

Sustainability reporting
In September 2003 the World Wildlife Fund (WWF) published Guidelines for Investment in
Operations that Impact Forests. These guidelines help financial institutions to identify criticalproblems in the forestry industry and to develop a forestry policy.
The Carbon Disclosure Project (CDP) Forest Program tries to help investors in identifying links
between tropical deforestation and the activities and chains of the companies in which they
invest. Questionnaires are sent on behalf of institutional investors. The results - which indicate
whether a company has developed ‘best in class’ in innovative risk control strategies, or did not
respond to the request to make its forest footprint public - are collected in an annual report.586
The best known guideline for sustainability reporting in general is the Global Reporting
Initiative (GRI) Reporting Framework, of which the GRI Sustainability Reporting Standards (GRI
Standards) have been in effect since July 2018.
For small and medium enterprises (SMEs), less elaborate sustainability reporting is required.
SMEs can report on the GRI indicators that are relevant to their operations, for example byfollowing the High5! Approach.

Page | 162

This leads to assessment elements•

10Companies in industries with a large impact on forests (including in any case the forestry andpaper industry), report their forest related information to the Carbon Disclosure Project (CDP)
Forest Program.

11

Companies publish a sustainability report that may contain (a number of) disclosures from the GRI
Standards.

12

Large enterprises and multinational enterprises publish a sustainability report that is set up inaccordance with the (Core or Comprehensive option of the) GRI Standards.

Procurement and supply chains
Companies are often part of long procurement and supply chains. They can monitor one
another and question how they respect local and national legislation and international norms
regarding social, economic and environmental issues. The requirements that companies set for
their suppliers can be included in contractual agreements.
The importance of this is also recognised in the OECD Guidelines for Multinational Enterprises
since its revision in 2011, and more specifically in the OECD Due Diligence Guidance for
Responsible Supply Chains in the Garment and Footwear Sector. It establishes a common
understanding of due diligence in the sector to help companies meet the due diligence
expectations laid out in the OECD Guidelines for Multinational Enterprises.
ISO 26000:2010 Guidance on social responsibility recognises the importance of supply chain
responsibility, because “the impacts of an organization's decisions or activities can be greatly
affected by its relationships with other organizations”.587 A company’s sphere of influence
includes relationships within and beyond an organization’s supply chain. Moreover, ISO
26000:2010 Guidance on social responsibility recommends setting contractual provisions or
incentives as a means of exercising influence.588
In addition, ISO 20400:2017 Sustainable procurement – Guidance provides guidelines fororganizations, independent of their activity or size, on integrating sustainability withinprocurement, as described in ISO 26000:2010 Guidance on social responsibility. It is intended
for stakeholders involved in, or impacted by, procurement decisions and processes.
The United Nations Guiding Principles on Business and Human Rights (UNGP) include a due
diligence process in order to identify, prevent, mitigate and account for how companies
address their adverse human rights impacts. The process “should cover adverse human rights
impacts that the business enterprise may cause or contribute to through its own activities, or
which may be directly linked to its operations, products or services by its business
relationships.”589
This leads to assessment elements
13

Companies integrate environmental, social and governance criteria in their procurement andoperational policies.

14

Companies include clauses on the compliance with environmental, social and governance criteria
in their contracts with subcontractors and suppliers.

Page | 163

3.5.3 Assessment elements
Financial institutions can use their influence to prevent deforestation and forest degradation, by
establishing a strict policy for investments in the forestry sector. This policy applies to the entire
forestry sector, being forestry, logging, pulp, paper and furniture production as well as other woodprocessing and trade companies.
The following elements are crucial for a policy regarding the companies a financial institution
invests in or finances:
1. Companies prevent negative impacts on High Conservation Value (HCV) areas within theirbusiness operations and the forests they manage.
2. Companies prevent negative impacts on High Carbon Stock (HCS) areas within their business
operations and the forests they manage.
3. Companies throughout the wood supply chain prevent the use of illegally cut and tradedtimber.
4. Pulp and paper factories restrict the use of chemicals and the pollution of soil, water and air bymaking use of the best available techniques.
5. Companies respect the rights of local and indigenous communities on the fair and equal use offorests.
6. Companies prevent conflicts over land rights and acquire natural resources only by engaging inserious consultation with local communities and obtaining free, prior and informed consent(FPIC) when it concerns indigenous peoples.
7. Companies prevent conflict over land rights and acquire natural resources only with free, priorand informed consent (FPIC) of peoples with customary tenure rights.
8. Production forests and timber plantations are certified according to the Forest StewardshipCouncil (FSC) forest management certification.
9. Supply chains of timber traders and companies in the wood product chain (including pulp,
paper, veneer, furniture) are certified according to the FSC chain of custody certification.
10. Companies in industries with a large impact on forests (including in any case the forestry andpaper industry), report their forest related information to the Carbon Disclosure Project (CDP)
Forest Program.
11. Companies publish a sustainability report that may contain (a number of) disclosures from the
GRI Standards.
12. Large enterprises and multinational enterprises publish a sustainability report that is set up inaccordance with the (Core or Comprehensive option of the) GRI Standards.
13. Companies integrate environmental, social and governance criteria in their procurement andoperational policies.
14. Companies include clauses on the compliance with environmental, social and governancecriteria in their contracts with subcontractors and suppliers.

Page | 164

3.6

Housing and real estate

3.6.1 What is at stake?
The United Nations estimates that 230 billion m3 of new buildings will be constructed over the next
40 years, and that 6 out of 10 people will reside in urban areas by 2030.590 Cities face many
demographic, environmental, economic, social and spatial challenges and without effective urban
planning, the consequences of the expected urbanization in the next decades will be dramatic. The
built environment has direct and indirect, positive and negative impacts on social wellbeing andthe livelihoods and prosperity of local communities and individuals. It provides homes, jobs,
education and recreational facilities for communities, but lack of proper housing and inadequate
and out-dated infrastructure can also lead to escalating poverty and unemployment, safety andcrime problems, pollution and health issues.591
With respect to the environmental impact of real estate, the United Nations Environment
Programme (UNEP) estimates that, throughout their life-cycle, buildings account for roughly 40%
of global energy consumption as well as 25% of all water resource withdrawals. Buildings are also
responsible for 30% of worldwide and 36% of European Union greenhouse gas emissions.592 The
UNEP Global Status Report 2018 on buildings and construction reconfirms the significance of thebuildings and construction sector in global energy consumption and related emissions. It further
states that while efforts to decarbonise the sector are progressing, accelerated energy-efficiency
and a shift away from fossil fuels is needed to achieve net-zero emissions in the buildings sector
before 2060. This will require a major shift in financing and investments.593 As a consequence, thereal estate sector has the potential to play a significant role in mitigating climate change throughreduction of GHG emissions in the built environment.594
For real estate investors, improving sustainability can be very profitable. The operating costs ofbuildings are exposed to fluctuations in energy prices and possible tax effects, due to future
regulations regarding energy use and the emission of greenhouse gases. If buildings areconstructed or adapted to be energy efficient, this can reduce the operating costs by 14%. This also
helps respond to market developments. The market for sustainable building and real estate is
growing worldwide. In addition, energy efficient buildings tend to have a higher economic value.595
In terms of environmental sustainability and resource efficiency, it is important to consider theentire life-cycle of a building, from siting, design, construction, operation and renovation to
demolition.596 The housing and real estate sector can have an important impact in working towards
a circular economy. Not only by using sustainable construction materials, but also by re-using,
repairing, refurbishing and recycling construction materials and waste in the most sustainable andresponsible way possible. The impact of construction projects on ecosystems should be minimised
and where possible damage to nature should be restored.597 As the built environment can last for
decades, real estate needs to be designed for multiple and flexible use in order to avoid vacancy.
Financial institutions can also contribute to transformation of vacant buildings.598
The housing and real estate sector is intertwined with several human rights issues and labour
practices. Human rights violations can occur through the (in)voluntary displacement andresettlement of people living on - or nearby - land that is to be developed for buildings. Potential
impacts may include loss of productive land, loss of employment and income, loss of housing, lossof access to common resources and public services, and social fragmentation. During theconstruction stage, issues include health and safety considerations, fair wages, reasonable working
hours, indentured or forced labour and other workers’ rights violations for construction workers.599

Page | 165

The right to adequate housing, initially recognized as part of the right to an adequate standard ofliving in the 1948 Universal Declaration on Human Rights (UNDHR)600, requires that health andsafety standards are respected in design, construction, maintenance, renovation and demolition ofbuildings, in order to protect the occupants and users of buildings. When planning new buildings
and living areas, companies should not only consider how to make sustainable buildings but also
how urban areas can be designed in such a way that shops are within walking distance, that there
is sufficient green space and that there is enough space for vehicles, bicycles and pedestrians.
The right to adequate housing is recognized in Sustainable Development Goal (SDG) 11:
Sustainable Cities and Communities. One of the targets is to ensure access to adequate, safe andaffordable housing for all. Another target is to support least developed countries through financial
and technical assistance in building sustainable and resilient buildings.601 SDG 9: Industry,Innovation and Infrastructure is relevant as it targets amongst others developing quality, reliable,
sustainable and resilient infrastructure to support economic development and human well-being,
including in urban areas. Other SDGs such as SDG 1: No Poverty, SDG 8: Decent Work andEconomic Growth, and SDG 13: Climate Action are also impacted by the housing and real estate
sector.602
In 2016, the UN Conference on Housing and Sustainable Urban Development (Habitat III), adopted
the New Urban Agenda.603 This blueprint for UN Habitat and partners supports the 2030 Agenda
on Sustainable Development, especially SDG 1: Sustainable Cities and Communities, to make cities
inclusive, safe, resilient and sustainable and can serve as a starting point for investing and financing
in real estate and housing.
3.6.2 International standards and initiatives
The main international standards on housing and real estate are summarised per topic, followed by
the assessment elements that are formulated by the FFGI as a result:•

Circular economy in real estate
Companies active in the housing and real estate sector are expected to take into account theconcept of circular economy into their business activities. In collaboration with the World
Economic Forum (WEF), the Ellen MacArthur Foundation was amongst the first to define theprinciples of the circular model:604•••

Design out waste and pollution;
Keep products and materials in use; andRegenerate natural systems.

According to the cooperative Circle Economy, the concept of a circular economy is based on
the following principles:605
•
•

•
•

Prioritise Regenerative Resources: Ensure renewable, reusable, non-toxic resources are
utilised as materials and energy in an efficient way;
Preserve and Extend What’s Already Made: While resources are in-use, maintain, repair andupgrade them to maximise their lifetime and give them a second life through take backstrategies when applicable;
Use Waste as a Resource: Utilise waste streams as a source of secondary resources andrecover waste for reuse and recycling;
Rethink the Business Mode: Consider opportunities to create greater value and alignincentives through business models that build on the interaction between products andservices;

Page | 166

Design for the Future: Account for the systems perspective during the design process, touse the right materials, to design for appropriate lifetime and to design for extended futureuse;Incorporate Digital Technology: Track and optimise resource use and strengthen
connections between supply chain actors through digital, online platforms andtechnologies that provide insights; andCollaborate to Create Joint Value: Work together throughout the supply chain, internallywithin organisations and with the public sector to increase transparency and create joint
value.

•••

This leads to assessment elements•

4Construction companies use recycled and recyclable materials and recycle materials in case ofdemolition.

9

New buildings are designed as such that they are suitable for multiple tenants, or can be easily
adapted to suit multiple tenants.

10

Owners of real estate have a policy on transformation of vacant buildings in their portfolio.

Sustainable wood
In the construction industry a lot of wood is used. The use of certified responsible andsustainable wood guarantees that the wood is produced in a sustainable way, with preservationof biodiversity and good social criteria. Also, the role of forests for carbon sequestration isprotected. It is therefore important that construction companies are certified according to theForest Stewardship Council (FSC) criteria.
For more information see also the sector theme Forestry in section 3.5.2.
This leads to assessment element
3•

Construction companies only use wood certified according to the Forest Stewardship Council (FSC)
forest management certification.

Sustainable cement
Cement is an important component of concrete and is used extensively in the constructionindustry. Cement and concrete production has a large environmental footprint, accounting forroughly 8% of global CO2 emissions.606 Concrete and cement production companies cancooperate with the Global Cement and Concrete Association (GCCA) through its Cement
Sustainability Charter. Member companies measure and report emissions following the GCCA
Sustainability Guidelines for the monitoring and reporting of emissions from cement
manufacturing.
Companies can also choose to buy cement from producers who have obtained an
Environmental Product Declaration (EPD) for unreinforced concrete. An EPD is a voluntarydeclaration that provides quantitative information about the environmental impact of a
product, using life-cycle assessment (LCA) methodology and verified by an independent third
party.
This leads to assessment element
5Construction companies implement the Cement Action Plan of the Cement Sustainability Initiative.

Page | 167

•Energy efficiency
Energy saving in housing and real estate contributes to mitigating climate change. Energy
saving measures also reduce energy costs and improves the comfort of houses and other realestate. According to UNEP’s Emissions Gap Report 2017, buildings account for annual energyrelated greenhouse gas emissions of 12.6 Gt CO2 in 2030, of which 29% is direct (heating an hot
water production) and 71% is indirect (electric appliances and lighting). The report alsopresents estimates for avoiding emissions in 2030 by constructing near-zero energy buildings
and retrofitting existing buildings. The Emissions Gap Report 2019, moreover, points out thatsignificant emissions reductions can be attained both by increasing the efficiency of energy use
in buildings and by enhancing the efficiency of material use in construction and housing.
In February 2016, UN Principles for Responsible Investment (PRI) and the United Nations
Environment Programme Finance Initiative (UNEP FI), together with stakeholders from the realestate sector and real estate investment community, launched the Sustainable Real Estate
Investment Action Framework Implementing The Paris Climate Agreement. It requires realestate investment managers, property owners, asset owners and investors in real estate to set
quantitative and material targets to reduce energy, to use clean energy, to improve energy
efficiency and monitor results.607
In the EU, the 2010 Energy Performance of Buildings Directive (EPBD) and the 2012 Energy
Efficiency Directive (EED) are the most important forms of legislation regarding energy
consumption of buildings. In December 2017, an agreement was made to update the EPBD
aimed at accelerating the renovation of buildings and to introduce smart technologies. The
2010 EPBD directive already requires all new buildings to be nearly zero-energy by December
2020. The EU EPBD requires member states to develop legislation regarding the following: 608
Energy performance certificates are to be included in all advertisements for the sale orrental of buildings;
EU countries must establish inspection schemes for heating and air conditioning systems or
put in place measures with equivalent effect;
EU countries must set minimum energy performance requirements for new buildings, forthe major renovation of buildings and for the replacement or retrofit of building elements(heating and cooling systems, roofs, walls, etc.); andEU countries have to draw up lists of national financial measures to improve the energy
efficiency of buildings.

•
•
•

•

The EU EED is aimed at increasing energy efficiency and decreasing energy use in nationalbuildings in member states: 609
EU countries make energy efficient renovations to at least 3% of buildings owned andoccupied by central government;
EU governments should only purchase buildings which are highly energy efficient; andEU countries must draw-up long-term national building renovation strategies which can be
included in their National Energy Efficiency Action Plans.

•••This leads to assessment elements
11

New buildings are designed according to the highest energy efficiency standards, in line with the
EU Energy Performance Directive.

12

Energy reduction measures and greenhouse reduction targets are part of the multi-year
maintenance plans with regard to the real estate property portfolios of the financial institution.

Page | 168•13Each year, the energy performance of at least 10% of the total real estate portfolio is enhanced,
using the best available and viable technologies regarding energy reduction measures andavoidance of greenhouse gas emissions.

22

The financial institution reports on the energy efficiency of the houses and buildings financed withmortgages.

23

The financial institution implements a policy to improve the energy efficiency of the houses andbuildings financed with mortgages.

27

Financial institutions that issue mortgage-backed securities are transparent about the sustainability
aspects of the building stock (e.g. energy efficiency).

28

The financial institution only invests in mortgage-backed securities if there is sufficienttransparency concerning the sustainability aspects of the building stock (e.g. energy efficiency).

Sustainable reconstruction after disasters
The UNEP Sustainable Buildings and Climate Initiative (SBCI)’s Sustainable Reconstruction in
Disaster-Affected Countries Practical Guidelines main objective is to help improve the designand construction of houses in disaster-affected countries and minimise the negative impacts ofpoorly constructed houses on the environment. The mitigation of natural disaster risks is key,
but it takes into account the emissions of greenhouse gases and energy efficiency as well. It
also points out the social and economic dimensions of sustainable reconstruction. This involves,
amongst others, jobs for the local populations and the affordability of houses.
This leads to assessment element
7•

Construction companies act responsibly when reconstructing homes by following the guidelines of
UNEP SBCI’s guidelines on Sustainable Reconstruction in Disaster-Affected Countries.

Sustainable neighbourhoods
Real estate and housing projects should be geared towards creating sustainable and liveable
neighbourhoods. This means that in developing real estate and housing projects, attention ispaid to green zones and connection to public transport and facilities, such as stores, libraries
and hospitals.
In the initial phase of a real estate project, developers and housing corporations are expected
to take into account the UN Habitat’s Five Principles of sustainable neighbourhood planning.
They are meant to encourage sustainable urban development by creating liveable and efficientneighbourhoods. The Five Principles are: 610
•
•
•
•

•

Adequate space for streets and an efficient street network: The street network should
occupy at least 30 per cent of the land and at least 18 km of street length per km²;
High density: At least 15,000 people per km², that is 150 people/ha;
Mixed land-use: At least 40 per cent of floor space should be allocated for economic use in
any neighbourhood;
Social mix: The availability of houses in different price ranges and tenures in any givenneighbourhood to accommodate different incomes; 20 to 50 per cent of the residential
floor area should be for low cost housing; and each tenure type should be no more than 50
percent of the total. Furthermore, the availability of suitable houses for elderly and disabled
peoples should be part of the social mix; andLimited land-use specialisation: this is to limit single function blocks or neighbourhoods;
single function blocks should cover less than 10 per cent of any neighbourhood.

Page | 169

The objectives of these five principles are to:611
Promote high density urban growth, alleviate urban sprawl and maximise land efficiency;
Promote sustainable, diversified, socially equal and thriving communities in economically
viable ways;
Encourage walkable neighbourhoods and reduce car dependency;
Optimise use of land and provide an interconnected network of streets which facilitate safe,
efficient and pleasant walking, cycling and driving;
Foster local employment, local production and local consumption; andProvide a variety of lot sizes and housing types to cater for the diverse housing needs of thecommunity, at densities which can ultimately support the provision of local services.

•
•
•
•
•
•

This leads to assessment element
8•

Construction companies, project developers and housing corporations are expected to take into
account the Five Principles of sustainable neighbourhood planning.

Certification of sustainability performance
To measure performance regarding sustainability, the real estate industry increasingly uses
certifications schemes. The following list is far from exhaustive and presents some of the mostused schemes:
•

•

•

•
•

Building Research Establishment Environmental Assessment Method (BREEAM) is amethodology for assessing the sustainability achievement of buildings and fields. In thiscertification process not only the energy consumption of premises is considered, but also
land use, ecology, the construction process, water use, waste, pollution, transport, materials,
health and comfort. Within BREEAM, country-specific certification schemes are available insome European countries. There are schemes for existing buildings (refurbishment and fitout), in-use buildings, new buildings and for communities.612
Leadership in Energy & Environmental Design (LEED) is an initiative from the United States
promoting environmentally sound construction. The non-profit organisation U.S. Green
Building Council applies this certification system globally: "LEED provides a framework tocreate healthy, highly efficient and cost-saving green buildings. LEED certification is a
globally recognized symbol of sustainability achievement".613 The rating systems address
construction and renovation of (among others) schools, retail buildings, healthcarebuildings, commercial interiors, homes and neighbourhood development. Projects can earnpoints in the ranking system by satisfying green building requirements: sustainable building
sites, water efficiency, energy performance, using sustainable material and waste reduction.
The DGBN Certification System, designed by the German Sustainable Building Council(DGBN), provides an objective description and assessment of the sustainability of buildings
and urban districts. Quality is assessed over the entire life cycle of the building. The DGNB
Certification System can be applied internationally.
The Global Real Estate Sustainability Benchmark (GRESB) is made for assessing real estate
portfolios, infrastructure assets and funds.
The Urban Land Institute (ULI) Greenprint Center regularly presents the Greenprint
Performance Report with the largest global collection of transparent, verifiable, andcomprehensive property data that provides aggregate benchmarks and performance trends
for the real estate industry. Investors can measure their progress and portfolio’s
performance against the Greenprint Performance Report.

Page | 170

GPR software delivers various certifications and assessment for the Dutch real estate sector.
GPR Gebouw (GPR Building) can be used to design or assess the sustainability of buildingsor the built environment. GPR Urban Planning measure sustainability of urban
developments. GPR Maintenance measures the quality of maintenance scenarios.
Assessment are built on five themes: Energy, Environment, Health, Quality of use and Future
Value.

•

This leads to assessment elements•

11

New buildings are designed according to the highest energy efficiency standards, in line with the
EU Energy Performance Directive.

12

Energy reduction measures and greenhouse reduction targets are part of the multi-year
maintenance plans with regard to the real estate property portfolios of the financial institution.

13

Each year, the energy performance of at least 10% of the total real estate portfolio is enhanced,
using the best available and viable technologies regarding energy reduction measures andavoidance of greenhouse gas emissions.

14

New real estate score within the top 50% of sustainability certification systems.

15

Redeveloped real estate and renovated houses score within the top 50% of sustainability
certification systems.

16

Real estate funds score at least 50 points in the Global Real Estate Sustainability Benchmark.

Labour rights
Observing fundamental labour rights is a big challenge in the construction industry. The mostimportant standard in this field is the ILO Declaration on Fundamental Principles and Rights at
Work from 1998, in which the ILO stated four fundamental principles and rights at work:••••

Freedom of association and the right to collective bargaining;614
Banning of all types of forced labour;615
Banning child labour;616 andBanning discrimination (based on ethnicity, gender, and social background) with respect tooffering work or specific positions.617

Another leading ILO document is the Tripartite Declaration of Principles Concerning
Multinational Enterprises and Social Policy (MNE Declaration), adopted in 1977. The MNE
Declaration focuses on the responsibility of companies and specifically on their dealings withlabour issues. The revision of 2017 takes into account new labour standards adopted by theInternational Labour Conference, the UN Guiding Principles on Business and Human Rights(UNGPs) and the 2030 Agenda for Sustainable Development, in particular on SDG 8: Decent
Work and Economic Growth.618
For the housing and real estate sector, of special importance are ILO conventions concerning
excessive working hours and health and safety risks for labourers in the building sector:•••

The 1919 Hours of Work (Industry) Convention (No. 1);
The 1981 Occupational Safety and Health Convention (No. 155); andThe 1988 Safety and Health in Construction Convention (No. 167).

Within the European Union, the Health and Safety at Work Directives are the framework fornational legislation on occupational health and safety.

Page | 171

This leads to assessment elements•

1

Companies respect the ILO Declaration on Fundamental Principles and Rights at Work.

2

Companies work towards the systematic improvement of safety and health of employees anddevelop a preventative culture in the field of health and safety.

Land rights conflicts and forced evictions
Human rights, particularly economic, social and cultural (ESC) rights, play a central role in landrelated issues. However, there is no explicit recognition of a ‘human right to land’ withininternational human rights instruments. Those who face threats to their land rely on otherrights, such as the right to food, the right to water, the right to housing and the right to work.
These rights are included in the International Covenant on Economic, Social and Cultural Rights(ICESCR). The right to adequate housing encompasses the right to live in security, peace anddignity. To realize this right, governments have an obligation to guarantee security of tenure,which essentially means a set of arrangements in the context of housing and land that willprotect the occupants from forced evictions and other threats and harassment.619
The protection measures that should be applied to all evictions have been clearly articulated in
the Basic Principles and Guidelines on Development-based Evictions (2007) developed by theformer UN Special Rapporteur on Adequate Housing, Miloon Kothari. The principles reflect
existing standards and jurisprudence on this issue and include detailed guidance on steps thatshould be taken prior to, during and following evictions in order to ensure compliance with
relevant principles of international human rights law.
Construction companies and real estate corporations should take into account the relocation ofpeople who lose their homes as a result of new building activities. It is important that not only
companies that are involved in real estate construction live up to these standards but also
companies that are involved in the demolition of houses. Construction companies that
demolish existing homes or that build on places where homes were torn down, must also
comply with the UN standard.
This leads to assessment element
17•

Real estate developers respect the rights of local communities living in project areas before project
development and do not evict and relocate them without free, prior and informed consent.

Landlord-tenant relationship
Financial institutions and real estate companies involved in rental housing can be expected tocomply with basic notions of good landlordship and sound rental arrangements. UN Habitat
considers security of tenure, adequate basic infrastructure, such as water supply, sanitation andwaste-management facilities, as well as adequate security (all of which should be available at anaffordable cost), to be a part of the human right to adequate housing.
From the perspective of considering rental housing as an option to improve housing in African
cities, UN Habitat’s Quick Guide 7: Rental Housing gives suggestions for policymakers onamongst others on how to improve landlord-tenants relationships.
The Tenants Charter of the International Unit of Tenants (IUT) calls for participation in decisionmaking for tenants and this way have an influence on the quality of the building, collective
services and the neighbourhood.

Page | 172

This leads to assessment elements•

18

Real estate developers respect the rights of tenants living in their real estate projects and do notevict and relocate them without free, prior and informed consent.

19

Real estate owners and managers respect the rights of tenants to participate in decisions regarding
renovation and maintenance.

Sustainability reporting
The Global Reporting Initiative (GRI) has drafted guidelines on how to write sustainability
reports. Besides the general G4 Sustainability Reporting Guidelines it also provides sector
guidance for a number of industrial sectors. In the G4 Construction and Real Estate Sector
Disclosures (CRESD), not yet updated but still recommended by GRI to use with its new GRI
Sustainability Reporting Standards (GRI Standards), includes recommendations for reporting on
CO2 emissions, the management and the remediation of polluted soil and the outsourcing ofwork.
This leads to assessment element
6•

Large enterprises and multinational enterprises publish a sustainability report that is set up inaccordance with the (Core or Comprehensive option of the) GRI Standards.

Procurement and supply chains
Companies are often part of long production chains. They can monitor one another andquestion how they respect local and national legislation and international norms regarding
social, economic and environmental issues. The requirements that companies set for their
suppliers can be included in contractual agreements. The importance of this has also beenrecognised in the OECD Guidelines for Multinational Enterprises since its revision in 2011.
Furthermore, ISO 26000:2010 Guidance on social responsibility recognises the importance of
supply chain responsibility, because “the impacts of an organization's decisions or activities canbe greatly affected by its relationships with other organizations.” ISO 26000:2010 recognizes
that a companies’ sphere of influence includes relationships within and beyond anorganization’s supply chain.620
In addition, ISO 20400:2017 Sustainable procurement – Guidance provides guidelines fororganizations, independent of their activity or size, on integrating sustainability withinprocurement, as described in ISO 26000:2010 Guidance on social responsibility. It is intended
for stakeholders involved in, or impacted by, procurement decisions and processes.
This leads to assessment elements•

20

Companies integrate environmental, social, and governance criteria in their procurement andoperational policies.

21

Companies include clauses on the compliance with environmental, social, and governance criteria
in their contracts with subcontractors and suppliers.

Mortgage loans and securities
Many financial institutions provide mortgage loans to households and small businesses. The
subprime mortgage crisis in the United States in 2008 showed how the consequences of overindebtedness are shared among all stakeholders of financial institutions. Directive 2014/17/EU(Mortgage Credit Directive) of the European Union on credit agreements for consumers
relating to residential immovables aims to create a Union-wide mortgage credit market with aPage | 173

high level of consumer protection.621 It applies to both secured credit and home loans. Member
States will have to transpose its provisions into their national laws by March 2016. In the
Netherlands, the Code of Conduct for Mortgage Loans (Gedragscode Hypothecaire
Financieringen) provides requirements on the responsibilities of financial institutions towards
consumers when issuing mortgage loans.
Financial institutions can also contribute to mitigating climate change by improving the energy
efficiency of their mortgage portfolio. They can offer attractive loans for the financing ofenergy-saving measures (isolation, high-efficient glass, etc.) and renewable energy installations.
According to the World Green Building Council, under a green mortgage a bank or mortgage
lender offers a house buyer preferential terms if they can demonstrate that the property forwhich they are borrowing meets certain environmental standards. The Energy efficient
Mortgages Action Plan (EeMAP) Initiative aims to create a standardised energy efficientmortgage. In order to decrease emissions in Europe’s building stock, the European Commission
is considering to lower capital requirements for banks in order to help reward consumers
investing in energy efficient buildings.622
Financial institutions can also offer investment opportunities by issuance of mortgage-backed
securities and other financial institutions can then invest in these securities. In both cases, allparties should have sufficient policies for the issuance of, or investments in securities, in termsof transparency and sustainability. This also includes other avenues of participating in the realestate portfolios of other financial institutions.
This leads to assessment elements
22

The financial institution reports on the energy efficiency of the houses and buildings financed withmortgages.

23

The financial institution implements a policy to improve the energy efficiency of the houses andbuildings financed with mortgages.

24

The financial institution has an ambitious time bound target to improve their mortgage portfolio.

25

The financial institution actively offers mortgage loans and services to clients to enable them tomake their property more sustainable.

26

The financial institution applies the Code of Conduct for Mortgage Loans based on the EU
Mortgage Credit Directive.

27

Financial institutions that issue mortgage-backed securities are transparent about the sustainability
aspects of the building stock (e.g. energy efficiency).

28

The financial institution only invests in mortgage-backed securities if there is sufficienttransparency concerning the sustainability aspects of the building stock (e.g. energy efficiency).

3.6.3 Types of financing and asset classes
Financial institutions can be involved in various ways in financing the housing and real estate
sector. They can:••Provide general corporate loans to, and invest in the shares and bonds of, construction
companies, contractors and their suppliers, project developers and housing corporations. Suchcompanies generally fall under the NACE industry classification sections F: Construction and L:
Real Estate Activities.623
Finance specific home construction and real estate projects.

Page | 174

•

•
•
•
•

Manage real estate investment funds for external investors. These funds usually make direct
investments in rental properties and office and commercial space for institutional investors, butalso invest in publicly traded equities of real estate investment funds and in mortgage-backed
securities.
Invest in real estate investment funds managed by other asset managers.
Provide mortgage loans to private clients and small entrepreneurs.
Resell packages of mortgage loans via securitisations or otherwise.
Invest in securitisations of mortgage loans that are provided by other financiers.

For financial institutions operating in the housing and real estate sector, a solid policy on housing,construction and real estate is of great importance. In Table 1 the types of financing listed above
are related to the various asset classes that financial institutions have on their balance sheet, or
have under management for external investors.
Table 1

Asset classes of financial institutions

Asset class

Investment objects

Corporate credits

Loans to construction companies
Loans to housing corporations
Loans to project developers

Project finance

Loans to real estate projects

Investments own
account

Real estate objects, e.g. rental properties and office and commercial space
Shares and bonds of construction companies, housing corporations and project
developers
Real estate funds

Asset management Shares and bonds of construction companies, housing corporations and project
developers
Real estate objects, e.g. rental properties and office and commercial space
Real estate funds managed by other asset managers
Mortgage-backed securities
Mortgages

Mortgage loans to private clients and small businesses
Issuance of mortgage-backed securities

3.6.4 Assessment elements
The Fair Finance Guide International methodology has defined a number of elements to assess thepolicies of financial institutions investing in or lending to real estate. The assessment elements arelisted in Table 2. FFGI expects financial institutions to apply these elements to all investments in,and loans to, the real estate sector. The assessment elements do not apply to office buildings
owned by the financial institutions for their own operations.
Not all assessment elements are applicable for all asset classes, as specified in Table 1. In Table 2
the relevance of each asset class for every assessment element is therefore also specified. When an
assessment is deemed not relevant, this is indicated with not applicable (n.a.). This means that the
FFGI does not expect the financial institution to apply this element when investing in this specificasset class.

Page | 175

In case reference is made to “new real estate”, this refers to buildings in development, inconstruction or recently completed. The term “new buildings” should not be confused with newly
acquired real estate by financial institutions, as this real estate could have been developed sometime ago.
In case a financial institution’s real estate portfolio is limited to countries within the European
Union, assessment elements 01, 2, 7, 11, 017 and 18 are considered not applicable, as theseelements are part of legislation or not relevant in a EU context.
Table 2

Assessment elements for Housing and Real estate

Asset management for theaccount of clients

Mortgages

Companies respect the ILO Declaration on Fundamental
Principles and Rights at Work

yes

yes

yes

yes

n.a.

2

Companies work towards the systematic improvement ofsafety and health of employees and develop a preventative
culture in the field of health and safety

yes

yes

yes

yes

n.a.

3

Construction companies only use wood certified according
to the Forest Stewardship Council (FSC) forest management
certification.

yes

yes

yes

yes

n.a.

4

Construction companies use recycled and recyclable
materials and recycle materials in case of demolition.

yes

yes

yes

yes

n.a.

5

Construction companies implement the Cement Action Planof the Cement Sustainability Initiative.

yes

yes

yes

yes

n.a.

6

Large enterprises and multinational enterprises publish asustainability report that is set up in accordance with the(Core or Comprehensive option of the) GRI Standards.

yes

yes

yes

yes

n.a.

7

Construction companies act responsibly whenreconstructing homes by following the guidelines of UNEPSBCI’s guidelines on Sustainable Reconstruction in DisasterAffected Countries.

yes

yes

yes

yes

n.a.

Project finance1

Corporate credits

Asset management for own
account

Assessment element

Page | 176

Asset management for theaccount of clients

Mortgages

Construction companies, project developers and housing
corporations are expected to take into account the Five
Principles of sustainable neighbourhood planning.

yes

yes

yes

yes

n.a.

9

New buildings are designed such that they are suitable formultiple tenants, or can be easily adapted to suit multiple
tenants.

yes

yes

yes

yes

n.a.

10 Owners of real estate have a policy on transformation ofvacant buildings in their portfolio.

yes

n.a.

yes

yes

n.a.

11 New buildings are designed according to the highest
energy efficiency standards, in line with the EU Energy
Performance Directive.

yes

yes

yes

yes

n.a.

12 Energy reduction measures and greenhouse reduction
targets are part of the multi-year maintenance plans withregard to the real estate property portfolios of the financial
institution.

yes

n.a.

yes

yes

n.a.

13 Each year, the energy performance of at least 10% of thetotal real estate portfolio is enhanced, using the best
available and viable technologies regarding energy
reduction measures and avoidance of greenhouse gas
emissions.

yes

n.a.

yes

yes

n.a.

14 New real estate score within the top 50% of sustainability
certification systems.

yes

yes

yes

yes

n.a.

15 Redeveloped real estate and renovated houses score within
the top 50% of sustainability certification systems.

yes

n.a.

yes

yes

n.a.

16 Real estate funds score at least 50 points in the Global Real
Estate Sustainability Benchmark.

n.a.

n.a.

yes

yes

n.a.

Project finance8

Corporate credits

Asset management for own
account

Assessment element

Page | 177

Asset management for theaccount of clients

Mortgages

yes

n.a.

yes

yes

n.a.

18 Real estate developers respect the rights of tenants living intheir real estate projects and do not evict and relocate themwithout free, prior and informed consent.

yes

n.a.

yes

yes

n.a.

19 Real estate owners and managers respect the rights oftenants to participate in decisions regarding renovation andmaintenance.

yes

n.a.

yes

yes

n.a.

20 Companies integrate environmental, social, and governancecriteria in their procurement and operational policies.

yes

yes

yes

yes

n.a.

21 Companies include clauses on the compliance withenvironmental, social, and governance criteria in theircontracts with subcontractors and suppliers.

yes

yes

yes

yes

n.a.

22 The financial institution reports on the energy efficiency ofthe houses and buildings financed with mortgages.

n.a.

n.a.

n.a.

n.a.

yes

23 The financial institution implements a policy to improve theenergy efficiency of the houses and buildings financed withmortgages.

n.a.

n.a.

n.a.

n.a.

yes

24 The financial institution has an ambitious time bound target
to improve their mortgage portfolio.

n.a.

n.a.

n.a.

n.a.

yes

25 The financial institution actively offers mortgage loans andservices to clients to enable them to make their property
more sustainable.

n.a.

n.a.

n.a.

n.a.

yes

Project finance

17 Real estate developers respect the rights of local
communities living in project areas before project
development and do not evict and relocate them without
free, prior and informed consent.

Corporate credits

Asset management for own
account

Assessment element

Page | 178

Asset management for theaccount of clients

Mortgages

n.a.

n.a.

n.a.

n.a.

yes

27 Financial institutions that issue mortgage-backed securities
are transparent about the sustainability aspects of thebuilding stock (e.g. energy efficiency).

n.a.

n.a.

n.a.

n.a.

yes

28 The financial institution only invests in mortgage-backed
securities if there is sufficient transparency concerning thesustainability aspects of the building stock (e.g. energy
efficiency).

n.a.

n.a.

yes

yes

n.a.

Project finance

26 The financial institution applies the Code of Conduct for
Mortgage Loans based on the EU Mortgage Credit
Directive.

Corporate credits

Asset management for own
account

Assessment element

Page | 179

3.7

Manufacturing industry

3.7.1 What is at stake?
The manufacturing industry includes all industries that process materials into new products.
Therefore, the manufacturing industry is comprised of various industries, such as the automotive
industry, the chemical industry, the plastics industry, the clothing industry, shipbuilding, theelectronics industry, the metallurgical industry, the graphic industry and many others. The
differences between these industrial activities are often large. The chemical industry, for example, ischaracterised by a higher capital and knowledge intensity while other industries are characterised
by low capital and knowledge intensity.624 What these industries generally have in common iscomplex chains in which a multitude of suppliers of raw materials, components and semi-finishedproducts play a role.
A large part of the global workforce is employed in the manufacturing industry, either for the
manufacturers of finished products or for their suppliers. In 2018 about 14% of the global
workforce worked in the manufacturing industry.625 Therefore, the development of the
manufacturing industry in a country or region also plays an important role in creating employment
and economic growth.
At the same time, the manufacturing industry can have considerable negative social andenvironmental impacts. Globalisation and increased international competition ensure that labour
conditions and labour rights are under continuous pressure: to be able to compete and ensure
employment, employees have little power to resist. This applies to both wealthier, industrialised
countries and less developed countries.626
Some governments create special economic zones (SEZs) where the existing labour legislation does
not apply, in order to attract manufacturing industry companies. In these zones, companies often
pay very little tax. In these cases, the added value for the local economy, besides creating poor
employment, is virtually nil. Parts are imported; they are assembled and then exported again.
Although these zones hardly produce significant added economic value, many governments still
participate in this process under pressure from international companies that threaten to relocate toanother location. There is effectively a race to the bottom where countries try to outdo each otherby offering the lowest tax rates but also the worst labour rights.627
In some branches of the manufacturing industry characterized by low skilled labour, such as thegarment and footwear industries, child labour, extremely long working days, poor health and safety
conditions, poor remuneration and the denial of union rights are commonplace.628 Also, somemanufacturing industry branches are highly polluting due to the use of toxic substances in
products or production processes. These substances usually end up in the environment sooner
rather than later, where pollution of the soil, water and air threatens flora and fauna as well as
human health. Examples are the chlorine that is used in the production of the well-known plastic
PVC and the many heavy metals that are used in the production of electronics.629
Plastic is a product of the oil and gas industry and currently consumes an estimated 8% of global
oil production. Plastic waste in the environment accumulates and fragments into smaller pieces
rather than decomposes. The growing global use of plastic, especially single use packaging plastic,
contaminates both oceans and land. With an estimated 100 million tonnes of plastic waste now
found in the oceans, plastic pollution has been widely recognized as a new global environmental
issue with many negative impacts.630 Plastic pollution might trigger tipping points, risking
irreversible consequences for human health and ecosystems. Plastic waste is found everywhere andhas been suggested as a geological indicator of the Anthropocene era.631

Page | 180

Current investments of billions of dollars by major integrated oil companies are compromisinginternational agreements on the reduction of plastic. The natural gas boom, especially in the
United States, has made plastic feedstocks cheap and abundant. Ethane, originating from shale gas
sources, has become the new cheap feedstock for the petrochemical ethylene which is used tomake a variety of plastic products, including the most common ones; polyethylene (PE),polyvinylchloride (PVC), polystyrene (PS) and polyethylene terephthalate (PET). This development
has led to a significant drop in the costs of production of new virgin plastic, an increase in the
production and use of plastic and, consequently, more plastic waste.
As large, well-known manufacturers of finished products are becoming increasingly focused on
product development and marketing, the rest of the production process is frequently outsourced.
As a result, social and environmental problems in the manufacturing sector often do not occur
directly within these companies themselves, since the problems have been moved to earlier steps
in the supply chain.632
It is possible to distinguish between suppliers of semi-finished products and suppliers of raw
materials. The factories of direct suppliers of semi-finished products and components are often
located in export zones or in countries with less strict social and environmental regulations and aless strongly developed supervision and enforcement system. Issues occurring at these types ofsuppliers include labour issues and problems with air, soil and water pollution around the factory.
Suppliers of raw materials include metals and minerals manufacturers, suppliers of oil and gas (forthe chemical and plastics industry), timber companies, cotton producers and producers of otheragricultural products. In addition to labour issues these industries are characterized by local
environmental pollution, deforestation and deterioration of biodiversity as well as land rights
conflicts with local populations. The manufacturing industry is also a major water user, withexpected global increases in demand for water of 400% between 2000 and 2050, leading all othersectors.633
Throughout the entire chain there are negative consequences of flexible labour relations.
Employees are increasingly hired by means of agents, labour brokers, temporary employment
agencies and subcontractors. As a result of this, employees generally have fewer rights, worse
working conditions, less security and worse labour conditions.634
As the issues related to the manufacturing sector can be broad depending upon what is being
produced, the varied scope of the industry also impacts nearly all of the Sustainable Development
Goals (SDGs). Questionable labour conditions are directly linked with SDG 8: Decent Work andEconomic Growth. One of the target of this goal is to achieve employment and decent work for all
women and men, including for young people and persons with disabilities, and equal pay for workof equal value by 2030. It further targets to eradicate all forms of forced labour, modern slavery
and human trafficking, and child labour.635 Other issues such as environmental pollution,
deforestation, deterioration of biodiversity and land conflicts related to the manufacturing ofvarious products pose threats to other SDGs such as SDG 1: No Poverty, SDG 6: Clean Water andSanitation, SDG 13: Climate Action, SDG 14: Life Below Water and SDG 15: Life on Land.636
The investment policy of financial institutions has to ensure that financial institutions are only
involved in investments in companies in the manufacturing industry that take the responsibility toprevent social and environmental problems in their own branches, but also in the branches of their
suppliers.637 When developing policies for this industry, financial institutions can make use of theinternational standards described below.

Page | 181

3.7.2 International standards and initiatives
The main international standards on the manufacturing industry are summarised per topic,
followed by the assessment elements that are formulated by the FFGI as a result:•Harmful substances
The EU Regulation on Registration, Evaluation, Authorisation and Restriction of Chemicals(REACH) protects people’s health and protects the environment against the risks of chemicals.
In order to comply with the regulation companies must identify and control the risks connectedto the chemicals they produce in Europe or which they launch in the European market. They
must show how the chemical may be safely used and they must report measures which reducerisks to the users. If the risks cannot be prevented, the authorities may reduce the use ofchemicals. Under REACH all companies in the supply chain of chemicals (producers, importers,
users and buyers) are responsible.
REACH is based on the precautionary principle, which entails that companies need to be
responsible and proactive in avoiding certain potential risks. In relation to chemicals, when therisks involved with the use of a substance cannot be satisfactorily quantified and removed, even
if a cause and effect relationship has not been fully proven scientifically, then this substanceshould not be used. The burden of proof for the safety of a chemical should lie with thecompany and not with the public. A lack of scientific consensus on the possible harmfulness ofa chemical is not a sufficient reason to avoid precaution. This is also the case when a substanceis not restricted or regulated by the government. Furthermore, the principle also entails
considering alternatives and considering the full impacts of a substance over time.638
ISO 45001:2018 Occupational health and safety is an international standard that provides
guidelines for a management system with regard to health and safety risks in the workplace. It
applies to every type of organisation and serves to safeguard the health and safety of
employees and stakeholders outside the organisation, such as contractors’ staff and visitors.
ISO 45001:2018 Occupational health and safety means that risks are structurally surveyed andevaluated.
This leads to assessment elements•

1

Companies reduce their direct and indirect greenhouse gas emissions.

2

Companies reduce their direct and indirect emissions of harmful substances, such as sulphur
dioxide and ammonia.

3

Companies restrict the use of chemicals of which it is suspected in scientific literature that they areharmful to human health and, if necessary, only in a responsible way (precautionary principle).

Plastics
In July 2017, the United Nations met on the implementation of Sustainable Development Goal
14: Preserve and make sustainable use of oceans, seas and marine resources, and adopted theresolution Our ocean, Our future: call for action. All countries agreed to “implement long term
and robust strategies to reduce the use of plastics and microplastics, in particular plastic bags
and single use plastics, including by partnering with stakeholders at relevant levels to address
their production, marketing and use”.639 In 2018, the EU Commission proposed a Directive on
the reduction of the impact of certain plastic products on the environment, which included aban on many types of single-use plastics, consumption reduction and collection targets, andlabelling requirements. In May 2019, the Basel Convention. was amended to include plastic
waste “in a legally-binding framework which will make global trade more transparent andPage | 182better regulated, whilst also ensuring that its management is safer for human health and theenvironment”.640
This leads to assessment elements•

4

Enlarging plastics production capacity is unacceptable.

5Companies commit to reduce their plastic footprint and publicly report their plastic footprint
disclosure, which includes the amount in units of plastic used and what kinds of plastic are used forwhat purpose.

Water use
Given the growing challenge of water scarcity in many regions of the world, it is vital thatcompanies and financial institutions become aware of their own influences on water-related
problems. Various initiatives, guidelines and standards have emerged in recent years, to help
companies address water risk.
Initiatives companies could participate in and learn from are:
The UN Global Compact’s CEO Water Mandate is a public-private initiative designed toassist companies in the development, implementation and disclosure of water sustainability
policies and practices.
The guidance by the UNEP and CEO Water Mandate on Corporate Water Accounting: An
Analysis of Methods and Tools for Measuring Water Use and Its Impacts.
The European Water Partnership; andThe Water Footprint Network, which also has a standard on assessing a global water
footprint.

•

•
•
•

There are several guidelines and water ‘footprinting’ methods as well as voluntary disclosure
initiatives for calculating water use, water risk, understanding water issues and creating a soundwater strategy, such as:
The CDP’s Water Program, to calculate and publish corporate water use throughout the
supply chain;
The GEMI Water Sustainability Tool;
The WBCSD Global Water Tool;
The AWS International Water Stewardship Standard is supported by a verification process,that defines a set of water stewardship criteria and indicators for how water should be
stewarded at a site and catchment level in an environmentally, socially, and economicallybeneficial manner.

•
•
•
•

This leads to assessment elements
6

Companies use as little water as possible.

7

Companies prevent water pollution.

8

Companies conduct water scarcity impact assessments in water scarce regions.

9Companies have comprehensive mitigation measures in place to address community andecosystem water requirements in areas where environmental impact assessments identify thatsignificant impacts to water resources are likely.

Page | 183

•Risk management
The ISO 14000 Family - Environmental Management helps companies reduce negative impactsof their production processes on the environment and structure their business process in sucha way that these comply with existing environmental regulations. ISO 14001:2015
Environmental Management and its supporting standards provide guidance and criteria forestablishing an effective management system. Certification will be done by an independent
third party.
The ISO 14000 Family is an integrated part of the EU’s Eco-Management and Audit Scheme(EMAS). However, EMAS makes heavier demands on improving performance, reporting andcompliance with the law.
This leads to assessment element
10•

Companies apply an Environment and Social Risk Management System.

Labour rights
Complying with fundamental labour rights is a large challenge for a lot of branches of the
manufacturing industry. The main standard in this field is the 1998 ILO Declaration on
Fundamental Principles and Rights at Work, in which the ILO established four fundamental
principles and rights at work:
Freedom of association and the right to collective bargaining;641
Banning of all types of forced labour;642
Banning child labour;643 andBanning discrimination (based on ethnicity, gender, and social background) with respect tooffering work or specific positions.644

•
•
•
•

Another leading ILO document is the Tripartite Declaration of Principles Concerning
Multinational Enterprises and Social Policy (MNE Declaration). The MNE Declaration focuses on
the responsibility of companies and specifically on their dealings with labour issues. Besides thereaffirmation of the rights on freedom of association and collective bargaining and the ban on
discrimination and forced labour, the agreement calls upon companies to improve working
conditions, develop opportunities to improve equal chances and treatment to provide the best
possible wages and fringe benefits for employees.
The Platform Living Wage Financials is a coalition of financial institutions committed toencourage and monitor investee companies to “address the non-payment of living wage inglobal supply chains”.645 The coalition is particularly focused on sectors that rely on manual
labour, such as the garment and footwear industries, food retail, and companies in the foodand agricultural supply chain. As of January 2020, the coalition counted 13 members,
representing around EUR 2.6 trillion in assets under management (AUM).
For more information and relevant international standards and initiatives see the theme Labour
rights (section 2.7.2).
This leads to assessment elements
11

Companies respect the ILO Declaration on Fundamental Principles and Rights at Work.

12

Companies pay a living wage to their employees.

13Companies work towards the systematic improvement of safety and health of employees anddevelop a preventative culture in the field of health and safety.

Page | 184•Standards and initiatives for specific products
In recent years, a number of initiatives and standards have been developed to promotesustainable supply chains for specific manufacturing products:•

Clothing: The Clean Clothes Campaign (CCC) is a coalition of social organisations in 16
European countries that strives for improvement of the working conditions in the global
clothing and sports shoes industry. The campaign has developed the CCC Model Code,which companies in this industry can use. The CCC also has published a road map forcompanies that want to improve the working conditions in their supply chain: preparing acode of conduct for suppliers, implementing the code, organising a credible participation of
stakeholders in the initiative, freedom of association and respect of the right to collective
bargaining. Following a fire in a clothing factory in Bangladesh, the CCC concluded anagreement with a number of large multinational clothing producers in November 2012. Its
Bangladesh Fire and Building Safety Agreement calls on all the companies to invest in (fire)
safety in their factories.
Fair Wear Foundation is a multi-stakeholder initiative made up of companies, trade unions
and NGOs. The participants are bound to a code of conduct that is based on the ILO
Principles and the Universal Declaration of Human Rights. The code of conduct states thatthe participants are responsible for the working conditions in the factories with which they
cooperate. Each participant therefore regularly checks the working conditions in the chain
and, if needed, introduces improvement plans. The Fair Wear Foundation ensures
independent monitoring of the implementation of the code of conduct by participatingcompanies.
The Better Cotton Initiative (BCI) is a global multi-stakeholder network of stakeholders fromthe entire cotton and textile chain. In July 2009, the second edition of the BCI Global
Principles, Criteria and Enabling Mechanisms was published, which provides guidelines forthe sustainable and fair production of cotton.

•

Toys: The global production of toys mainly takes place in East Asia in companies that areforced by their clients to produce as cheaply as possible. This leads to poor working
conditions, low wages, no recognition of labour unions and other violations of labour rights.
The International Council of Toy Industries (ICTI) uses labour guidelines in the toy industry.

•

Chemical industry: In February 2006, organisations of chemical companies from all over
the world jointly presented the Responsible Care Global Charter. In this document, thechemical industry formulates objectives with respect to health, safety, the environment andcommunication with all stakeholders in their products and processes.

•

Electronics: The Responsible Business Alliance (RBA), a group of companies from theelectronics industry, drafted the RBA Code of Conduct in 2015 and the latest update was in2018. This code of conduct sets norms with respect to the environment, labour, health andsafety, management systems and business ethics and is aimed at companies in theelectronics industry or companies for which electronics is an important part of theirbusiness.

Page | 185

This leads to assessment elements•

14

Companies in the manufacturing industry work with relevant standards and initiatives for certain
products (mentioned in section 3.7.2).

15

Companies in the manufacturing industry are certified according to the criteria of the certification
schemes for certain products (mentioned in section 3.7.2).

Sustainability reporting
The best known guideline for sustainability reporting in general is the Global Reporting
Initiative (GRI) Reporting Framework, of which the GRI Sustainability Reporting Standards (GRI
Standards) have been in effect since July 2018.
For small and medium enterprises (SMEs), less elaborate sustainability reporting is required.
SMEs can report on the GRI indicators that are relevant to their operations, for example byfollowing the High5! Approach.
This leads to assessment elements•

16

Companies publish a sustainability report that may contain (a number of) disclosures from the GRI
Standards.

17

Large enterprises and multinational enterprises publish a sustainability report that is set up inaccordance with the (Core or Comprehensive option of the) GRI Standards.

Procurement and supply chains
Companies are often part of long procurement and supply chains. They can monitor one
another and question how they respect local and national legislation and international norms
regarding social, economic and environmental issues. The requirements that companies set for
their suppliers can be included in contractual agreements.
The importance of this also recognised in the OECD Guidelines for Multinational Enterprises
since its revision in 2011, and more specifically in the OECD Due Diligence Guidance for
Responsible Supply Chains in the Garment and Footwear Sector. It establishes a common
understanding of due diligence in the sector to help companies meet the due diligence
expectations laid out in the OECD Guidelines for Multinational Enterprises.
ISO 26000:2010 Guidance on social responsibility recognises the importance of supply chain
responsibility, because “the impacts of an organization's decisions or activities can be greatly
affected by its relationships with other organizations”.646 A company’s sphere of influence
includes relationships within and beyond an organization’s supply chain. Moreover, ISO
26000:2010 Guidance on social responsibility recommends setting contractual provisions or
incentives as a means of exercising influence.647
In addition, ISO 20400:2017 Sustainable procurement – Guidance provides guidelines fororganizations, independent of their activity or size, on integrating sustainability withinprocurement, as described in ISO 26000:2010 Guidance on social responsibility. It is intended
for stakeholders involved in, or impacted by, procurement decisions and processes.
The United Nations Guiding Principles on Business and Human Rights include a due diligenceprocess in order to identify, prevent, mitigate and account for how companies address theiradverse human rights impacts. The process “should cover adverse human rights impacts thatthe business enterprise may cause or contribute to through its own activities, or which may bedirectly linked to its operations, products or services by its business relationships.”648

Page | 186

This leads to assessment elements
18

Companies integrate environmental, social and governance criteria in their procurement andoperational policies.

19

Companies include clauses on the compliance with environmental, social and governance criteria
in their contracts with subcontractors and suppliers.

3.7.3 Assessment elements
Before a financial institution invests in or finances a company in the manufacturing industry, afinancial institution has to ensure whether the company, as well as its suppliers, act in accordancewith the relevant international guidelines and agreements on social and environmental issues. Thismeans that in the responsible investment and credit policy of financial institutions on the
manufacturing industry, clear norms have to be drafted.
The following elements are crucial for a policy regarding the companies a financial institution
invests in or finances:
1. Companies reduce their direct and indirect greenhouse gas emissions.
2. Companies reduce their direct and indirect emissions of harmful substances, such as sulphur
dioxide and ammonia.
3. Companies restrict the use of chemicals of which it is suspected in scientific literature that they
are harmful to human health and, if necessary, only in a responsible way (precautionary
principle).
4. Enlarging plastics production capacity is unacceptable.
5. Companies commit to reduce their plastic footprint and publicly report their plastic footprint
disclosure, which includes the amount in units of plastic used and what kinds of plastic are used
for what purpose.
6. Companies use as little water as possible.
7. Companies prevent water pollution.
8. Companies conduct water scarcity impact assessments in water scarce regions.
9. Companies have comprehensive mitigation measures in place to address community andecosystem water requirements in areas where environmental impact assessments identify thatsignificant impacts to water resources are likely.
10. Companies apply an Environment and Social Risk Management System.
11. Companies respect the ILO Declaration on Fundamental Principles and Rights at Work.
12. Companies pay a living wage to their employees.
13. Companies work towards the systematic improvement of safety and health of employees anddevelop a preventative culture in the field of health and safety.
14. Companies in the manufacturing industry work with relevant standards and initiatives forcertain products (mentioned in section 3.7.2).
15. Companies in the manufacturing industry are certified according to the criteria of thecertification schemes for certain products (mentioned in section 3.7.2).
16. Companies publish a sustainability report that may contain (a number of) disclosures from the
GRI Standards.
17. Large enterprises and multinational enterprises publish a sustainability report that is set up inaccordance with the (Core or Comprehensive option of the) GRI Standards.
18. Companies integrate environmental, social and governance criteria in their procurement andoperational policies.

Page | 187

19. Companies include clauses on the compliance with environmental, social and governancecriteria in their contracts with subcontractors and suppliers.

Page | 188

3.8

Mining3.8.1 What is at stake?
Mining and ore refining are highly polluting activities that affect soil, air and water quality. Many ofextractive industry activities take place in open quarries, which contributes to the destruction oflarge areas of natural habitat of plants and animals. In addition, mining companies use hugeamounts of water to separate the minerals in excavated mud or to dump acidic, toxic and evenradioactive waste. Rivers that supply people, animals and forests with water are severely polluted,
as are the seas into which these rivers flow. In addition, pollution of waterways leads to erosion. A
lot of mines are located in hilly or mountainous areas and when forest vegetation disappears mainly after rainfall - the soil can start to slide, ending up in local waterways. Erosion can even leadto landslides and fatal floods.649
The consequences of the extractive industry have an effect long after industrial activities have been
finished. Repair work is generally insufficient to restore nature in the extractive industry areas.
Long-term problems - such as the leaking of acid from the mines - can pollute the waterways inthe vicinity for decades or even centuries.650 Furthermore, mining ore and also ore refining - evenwith the use of modern technologies - causes air pollution over a large area.651
Both the near environment and the economic, social and cultural rights of local communities areaffected by mining. A common problem in the extractive industry is that mining companies do notrespect the land rights of indigenous communities and other local inhabitants. The companies
deprive these communities of large areas of land and forest on which they depend for their foodand livelihood.652 Traditional livelihoods can be destroyed through land acquisition (land grabs),
land contamination and water pollution.653 The pollution of the mines can lead to an accumulationof heavy metals in the soil, the water and the air in the vicinity. These metals cause serious healthproblems if the drinking water supplies of local communities are polluted or destroyed, or if the air
is inhaled. Also, the heavy metals harm the health of the local population indirectly, because thecrops and animals they need to survive have absorbed the heavy metals.654
Work in the mining industry is often is very dangerous, with poor labour conditions, many
accidents and poor safety conditions. Moreover, fundamental labour rights are often not respected
and child labour also occurs frequently.655
Finally, the extractive industry disturbs the macro-economic development in many resource-richdeveloping countries. This is also referred to as the resource curse.656 In developing countries withno stable political or legal system, the exploitation of metals and minerals from the soil often leads
to corruption, irreducible revenues, bad management of the supplies and the unequal division of
the revenues within the local communities. The costs related to protecting the environment and toensuring social cohesion will be borne by the population, or in other words: by those that havegained little or nothing from the exploitation. As a result, the extractive industry leaves a lot ofcountries even poorer than prior to the development of the industry. The African Development
Bank has calculated that African countries miss out on USD 50-60 billion due to the resource curse.
Moreover, the industry regularly leaves countries with conflicts between local population groups,
the mining companies and the government.657

Page | 189

Some mining companies operate in developing countries yet the related subsidiaries are located in
tax havens in order to pay as little tax as possible. After the US state Delaware, the Netherlands isthe favourite hosting country for mining companies.658 The ten largest oil companies and mining
companies globally that own natural resources in developing countries have hundreds ofsubsidiaries in the Netherlands. However, under Dutch legislation it is impossible to investigate thefiscal and financial data of these subsidiaries. Therefore, it has proven very difficult to determine
how much revenue companies make from the activities in these countries and how much tax local
governments lose.659
Some minerals extracted by the mining industry are sourced from areas in which conflict is taking
place and the mining and trade of these minerals is involved in the fuelling and financing of thisconflict, leading to serious human rights abuses. Important areas to consider are the Democratic
Republic of Congo (DRC), Afghanistan, Colombia and Zimbabwe.660
Besides industrial mining by large mining companies, artisanal and small-scale mining (ASM) is acommon practice in many developing countries. With rising mineral prices, ASM has seen explosive
growth over the last decade and as of 2017, an estimated 40,5 million people were directly
engaged in ASM.661 People engaged in ASM often belong to the most vulnerable populationgroups. Since ASM often takes place in fragile ecosystems with large degrees of cultural andbiological diversity, small-scale extractive industry activities can cause environmental problems,enhance material poverty and harm human health.662
In these scenarios, economic, social and cultural rights at stake are for example the right to food,work, housing, health and a healthy environment. Moreover, the impact can be particularly severe
for certain specific groups, such as indigenous peoples, because their way of life and their identity
is often closely related to their land. Far too often, companies operating across borders are
involved in severe abuses, such as child labour, forced labour or forced evictions. In addition,affected communities are frequently denied access to information about the impact of company
operations. This means that they are excluded from participating in decisions that affect their lives.
And, often when communities attempt to get justice, they are thwarted by ineffective legal systems,
corruption or powerful state-corporate alliances. Worryingly, when the poor cannot secure justice,companies learn that they can exploit poverty without consequences.663
Sustainable Development Goal (SDG) 3: Good Health and Wellbeing is impacted by dangerous
working conditions in the mines. Further, the health and well-being of local communities can becompromised when the waste from the mining activities is not properly treated and disposed in
the environment. While energy from coal can be affordable and help developing nations to fulfil
their energy requirements, it is not a clean form of energy and adversely impacts SDG 7: Affordable
and Clean Energy and SDG 13: Climate Action. The labour conditions in the mining sector affect
SDG 8: Decent Work and Economic Growth, water pollution impacts SDG 6: Clean Water andSanitation, and unequal distribution of wealth threatens achieving SDG 10: Reduced Inequalities.664
The extractive industry consists of companies that extract, transport, purify and store minerals. The
products are then processed and used in several other industries on a large scale, such as theelectronics industry, the construction industry and the automotive industry. These industries
strongly depend on the extractive industry and hence are, to a certain extent, involved in thenegative effects of the mines and refineries on the environment and local communities.

Page | 190

In order to contribute to a more sustainable and socially just world, the extractive industry will haveto change course drastically. The policy of financial institutions has to be aimed at only engaging in
financial relations with mining companies that are willing to do so. When developing policies forthis industry, financial institutions can make use of the international standards described in thefollowing section.
3.8.2 International standards and initiatives
Various international initiatives are involved in the risks that extractive industry pose for humanbeings and the environment; globally there is increasing interest for applying standards to thisindustry. In addition, there are some international conventions and multi-stakeholder processes
that set standards for specific extractive industry activities. The main international standards on themining industry are summarised per topic, followed by the assessment elements that areformulated by the FFGI as a result:•

Areas of high biodiversity and protected areas
Extractive industry activities may not take place in areas listed in the categories I to IV of theInternational Union for Conservation of Nature (IUCN), or included in the UNESCO World
Heritage Convention or in the Ramsar Convention on Wetlands. Furthermore, extractive
industry projects in areas that fall under the following conventions and initiatives are to be
expressly avoided: forests identified with the High Carbon Stock Approach, Marine Protected
Areas, High Conservation Value areas and IUCN protected areas.
Many of these areas are also included in the analyses for investments by International FinanceCorporation’s (IFC) Performance Standard 6 concerning Biodiversity Conservation andSustainable Management of Living Natural Resources. It determines how companies should
operate in order to avoid negative consequences on areas of high biodiversity value, including
impact on natural habitats as well as endangered and endemic species. The requirements in thestandard have been guided by the Convention on Biological Diversity.
The United Nations Environmental Assembly adopted a resolution on pollution mitigation bymainstreaming biodiversity into key sectors in 2017, aiming at “strengthening efforts tointegrate conservation and sustainable use of biodiversity in various sectors such as agriculture,
fisheries and aquaculture, tourism, mining and energy, infrastructure and manufacturing among
others. It also points to the need to prevent and reduce pollution from these sectors”.665
This leads to assessment elements
1

Companies prevent negative impacts on protected areas that fall under the categories I-IV of theInternational Union for Conservation of Nature (IUCN) within their business operations and theareas they manage.

2

Companies prevent negative impacts on UNESCO World Heritage sites within their business
operations and the areas they manage.

3

Companies prevent negative impacts on protected areas that fall under the Ramsar Convention on
Wetlands within their business operations and the areas they manage.

Page | 191

•Crisis response and crisis prevention
The International Council on Mining and Metals (ICMM) Principle 4 requires companies to"develop, maintain and test effective emergency response procedures in collaboration withpotentially affected parties." International Finance Corporation’s (IFC) Performance Standard 1
also requires companies to have a solid roadmap for crisis situations and develop a
contingency plan.
The FFGI expects companies to refrain from operating in locations where the consequences ofan accident for the environment are unmanageable.
This leads to assessment elements•

4Companies mitigate the chance of accidents by making use of the best available techniques andhave a solid road map for crisis situations (a ‘contingency plan’).

5Companies do not operate in locations where the consequences of an accident for theenvironment are unmanageable.

Waste management
Many environmental problems in the extractive industry concern the way extractive waste isdealt with. In this respect, the management of tailings storage systems is especially relevant.
According to the Responsible Mining Foundation, the increasing number of failures in tailings
storage facilities in recent years highlights that mining companies still insufficiently monitor
and address the risks associated with tailings dams.666 The existing standards and guidelines
with regard to waste management are:
•

•

•

•
•

The Convention on the Prevention of Marine Pollution by Dumping of Wastes and other
Matter (1972), of the United Nations International Maritime Organization (IMO). The
convention prohibits the direct dumping of mercury and mercury compounds into the sea
and makes special permits a requirement to dump cyanide and other heavy metals.
The World Bank Extractives Industries Review (EIR) advises companies to avoid waste
dumping in the sea and in rivers and to look for safer alternatives to the use of cyanide andmercury. The most recent update for this advice is from 2016.
The 2006 EU Commission Directive on the Management of waste from the extractive
industries requests European Union member states to ensure that extractive waste is
managed without endangering human health or the environment, especially water, air, soil,
flora and fauna. The member states also need to take the necessary precautions to prohibit
the uncontrolled abandonment, dumping and disposal of extractive waste. In 2017, anassessment of Member States’ performance regarding the implementation of the Directive
was published.
GRID-Arendal, a Norwegian support organisation of UN Environment, publishedrecommendations for a responsible approach to Mine Tailings Storage in 2017.
The Global Tailings Review is an initiative by the ICMM, UNEP and PRI, convened to develop
an international standard to prevent catastrophic damage from failures at tailings storage
facilities. The standard is to become an ICMM company member commitment. A draft
version of the Global Tailings Standard was published in November 2019, with the final
version expected in 2020.

Page | 192

This leads to assessment elements•

6

Companies reduce extractive waste and manage and process this in a responsible way byadequately tracking, reviewing and acting to improve their tailings risk management and byadopting a zero-failure objective to tailings storage facilities.

7

Riverine tailings disposal and sub-marine tailings disposal is unacceptable.

Water use
Given the growing challenge of water scarcity, it is vital that companies and financial
institutions become aware of their own influences on water related problems. Various
initiatives, guidelines and standards have emerged in recent years, to help companies address
water risk. See for more information the theme Nature (section 0).
Initiatives companies could participate in and learn from are:
The UN Global Compact’s CEO Water Mandate is a public-private initiative designed toassist companies in the development, implementation and disclosure of water sustainability
policies and practices.
The guidance by the UNEP and CEO Water Mandate on Corporate Water Accounting: An
Analysis of Methods and Tools for Measuring Water Use and Its Impacts.
The European Water Partnership; andThe Water Footprint Network, which also has a standard on assessing a global water
footprint.

•

•
•
•

There are several guidelines and water ‘footprinting’ methods as well as voluntary disclosure
initiatives for calculating water use, water risk, understanding water issues and creating a soundwater strategy, such as:
The CDP’s Water Program, to calculate and publish corporate water use throughout the
supply chain;
The GEMI Water Sustainability Tool;
The WBCSD Global Water Tool;
The AWS International Water Stewardship Standard is supported by a verification process,that defines a set of water stewardship criteria and indicators for how water should be
stewarded at a site and catchment level in an environmentally, socially, and economicallybeneficial manner.

•
•
•
•

This leads to assessment elements•

8Companies conduct water scarcity impact assessments in water scarce regions.

9Companies have comprehensive mitigation measures in place to address community andecosystem water requirements in areas where environmental impact assessments identify thatsignificant impacts to water resources are likely.

Closing depleted mines
The condition in which exhausted mines are left behind has large consequences for the
populations and ecosystems in the vicinity. Negative environmental and health effects can havean impact for years - perhaps even centuries. The Mining, Minerals and Sustainable
Development (MMSD) project asks companies to take the environment and health effects after
closing mines into consideration in the plans for the development of the mine and in theassessment of the effects on local communities. This means the future destination of the mine,the provisions to be made and the responsibilities of the mining company need to be taken

Page | 193

into account.
This leads to assessment elements•

10Companies include the environmental and health effects of a mine after its closure in plans for thedevelopment of new mines.

11

Companies ensure the recovery of ecosystems after commercial activities have been completed,
for all extractive industry projects (i.e. this is included as an activity in the planning and the budgetof the project).

Small scale and artisanal extractive industry
Small-scale and artisanal extractive industry projects - provided they are well managed - canenhance sustainable economic and social development on a local level. The Alliance for
Responsible Mining (ARM) is an independent multi-stakeholder initiative that aims to enhancesocial justice and wellbeing in the small scale extractive industry by improving social,environmental and working conditions, solid management of the mines and conducting repair
work for the ecosystem. In November 2013 the ARM started cooperation with the Swiss
Institute for Market Ecology in order to develop an independent certification and auditing
system for the Fairmined Standard. In 2014 the Fairmined Standard for Gold and AssociatedPrecious Metals was launched.
While investment in mining activities may not include direct investment in artisanal or smallscale mining, investment in industrial mining operations does still have consequences for smallscale and artisanal mining. As International Council on Mining and Metals (ICMM) Principle 9
states, companies should contribute to the social, economic and institutional development of
the communities in which they operate. This includes the communities of artisanal and smallscale miners, which often live and work around or near large-scale mines. Large-scale mining
operations already engage with artisanal miners and their dependents through community
development programs, but certain issues, such as security and human rights, still require
attention. In 2010 the ICMM published the report Working together: How large-scale mining
can engage with artisanal and small-scale miners, discussing a sound engagement approachwith small-scale miners, as key stakeholders for large-scale mining companies.
This leads to assessment element
12•

Companies respect small scale and artisanal mining and improve sustainable economic and social
development on a local level.

Labour rights
Besides respecting human rights, it is of great importance that mining companies adhere to theUnited Nations International Labour Organisation’s (ILO) main codes of conduct. These are the1998 ILO Declaration on Fundamental Principles and Rights at Work and the Tripartite
Declaration of Principles Concerning Multinational Enterprises and Social Policy (MNE
Declaration). In addition, specifically for the extractive industry, the Convention concerning
Safety and Health in Mines (No. 176) should be taken into account. The rights of women in theextractive industry are recognised in the 2013 Iroco Declaration.
For more information and relevant international standards and initiatives see the theme Labour
rights (section 2.7.2).

Page | 194

This leads to assessment element
13•

Companies respect the ILO Declaration on Fundamental Principles and Rights at Work.

Land rights conflicts and forced evictions
Human rights, particularly economic, social and cultural (ESC) rights, play a central role in landrelated issues. However, there is no explicit recognition of a ‘human right to land’ withininternational human rights instruments. Those who face threats to their land rely on otherrights, such as the right to food, the right to water, the right to housing and the right to work.
These rights are included in the International Covenant on Economic, Social and Cultural Rights(ICESCR).667 Other standards related to land rights conflicts and forced evictions are:
The 1997 Basic Principles and Guidelines on Development-based Evictions;
The 2009 Core Principles and Measures on Large-scale land acquisitions and leases of theUnited Nations Special Rapporteur on the right to food; andThe 2011 Tirana Declaration of the International Land Coalition.

•••

For more information and relevant international standards and initiatives see the theme Humanrights (section 2.6.2).
In 2013 the International Council on Mining and Metals (ICMM) issued guidelines for its
member companies. The Indigenous Peoples and Mining Position Statement deals with the
obligations of extractive companies with regard to the indigenous peoples and emphasizes thatcompanies are expected to commit to work to obtain the free, prior and informed consent(FPIC) of indigenous peoples for new projects located on lands traditionally owned by or undercustomary use of indigenous peoples.
This leads to assessment elements•

14

Companies prevent conflicts over land rights and acquire natural resources only by engaging inserious consultation with local communities and obtaining free, prior and informed consent (FPIC)
when it concerns indigenous peoples.

15

Companies prevent conflicts over land rights and acquire natural resources only with free, priorand informed consent (FPIC) of peoples with customary tenure rights.

Security and law enforcement
Companies can get involved in violations of human rights when (private or public) company
security officers use violence against nearby residents of the company. This issue is dealt with in
the UN Code of Conduct for Law Enforcement Officials and the UN Basic Principles on the Useof Force and Firearms by Law Enforcement Officials. Based on this code of conduct andprinciples, in a multi-stakeholder process the Voluntary Principles on Security and Human
Rights have been developed that set guidelines for companies for their security methods.
This leads to assessment element
16•

Companies follow the Voluntary Principles on Security and Human Rights for the security of theiremployees and company premises.

Access to remedy
Companies should respect the rights of local communities affected by mining. The
responsibility to respect requires that companies avoid causing or contributing to adverse
human rights impacts through their own activities and seek to prevent or mitigate impacts thatare directly linked to their operations by their business relationships. According to the United
Page | 195

Nations Guiding Principles on Business and Human Rights (UNGPs), if a company identifies arisk or is contributing to an adverse impact, it should cease or prevent its contribution and to
mitigate any remaining impacts to the greatest extent possible. Finally, the enterprise should
provide for or cooperate in their remediation through legitimate processes. According to
Guiding Principle 29 of the UNGP’s, companies should establish or participate in effective
operational-level grievance mechanisms for individuals and communities who may be adversely
impacted.668 Guiding Principle 31 details the criteria to ensure the effectiveness of grievancemechanisms. It also includes the expectation that mechanisms must be:669
Legitimate;
Accessible;
Predictable;
Equitable;
Transparent;
Rights-compatible;
A source of continuous learning, andBased on engagement and dialogue.

•
•
•
•
•
•
•
•

This leads to assessment element
17•

Companies have processes to enable the remediation of any adverse human rights impact which
they cause or to which they contribute.

Transparency of financial flows
In the Extractive Industries Transparency Initiative (EITI) a coalition of governments, companies,
social organisations and investors have drafted criteria for governments of countries whereextractive industry activities take place. The governments are expected to fully publish allrevenues they receive from these activities.
The Publish What You Pay (PWYP) coalition, in which more than over 300 CSOs collaborate,
advocates that mining companies make their payments to governments publicly known. Thismeans that companies have to report on their tax payments, royalties and payments forconcessions in the countries where they operate. In addition, PWYP insists that important
contracts and agreements between governments and mining companies and all bank loans
related to the exploitation of raw materials should be made public.
The best known guideline for sustainability reporting in general is the Global Reporting
Initiative (GRI) Reporting Framework, of which the GRI Sustainability Reporting Standards (GRI
Standards) have been in effect since July 2018. These guidelines state that organisations shouldreport on the payments they make to governments country-by-country (EC1). GRI Disclosure201-4 requires companies to report on the “total monetary value of financial assistancereceived by the organization from any government during the reporting period”, while GRI
Disclosure 201-1 requires companies to report on “payments to government by country”.670
According to GRI G4 Mining and Metals Sector Disclosures (MMSD), mining companies have toreport countries of operation that are candidate to or compliant with the EITI and the payments
to local communities as part of land use agreements (not purchases).
In the United States, the Dodd-Frank Act (Dodd-Frank Wall Street Reform and Consumer
Protection Act) came into force in 2010 (see also section on conflict minerals). Section 1504
concerns reporting requirements payments to government institutions in relation to the miningof oil, gas and minerals.671

Page | 196

The EU Commission adopted Directive 2013/34/EU in 2013, which obliges big European
companies - both listed and non-listed companies - active in the extractive industries and in
the logging of primary forests to publicly report on their payments to governments, broken
down per country.
This leads to assessment elements•

18

Companies pay the taxes owed in each country where they operate.

19

For each country in which companies operate, they report country-by-country on their revenues,
profit, FTEs, subsidies received from governments and payments to governments (e.g. withholding
taxes, payments for concessions and company tax).

20

Offering, promising, giving and requiring, either directly nor indirectly, bribes or other undue
advantages in order to acquire or to maintain assignments or other undue advantages, isunacceptable.

Good governanceIn order to minimise the negative consequences of the resource curse, it is important that thedevelopment of the extractive industry is combined with the development of capable andreliable governance. The World Bank Extractive Industries Review (EIR) advises against
stimulating private investments in the extractive industry in countries where governance isineffective. It also states that the quality of governance has to meet explicit conditions before
an extractive industry project can be financed by the World Bank.
The United Nations General Principles on Business and Human Rights (UNGP) points toheightened risks of involvement in gross human rights abuses in conflict-affected areas. A
company should manage its own impact in order to prevent involvement in human rights
violations.
The OECD Risk Awareness Tool for Multinational Enterprises in Weak Governance Zones could
be helpful in detecting areas were strong governance is needed to avoid human rights abuses
or to refrain from doing business.
The Natural Resource Charter of the Natural Resource Governance Institute is a set of“principles to guide governments' and societies' use of natural resources so these economic
opportunities result in maximum and sustained returns for a country's citizens. It outlines tools
and policy options designed to avoid the mismanagement of diminishing natural riches, andensure their ongoing benefits”.672 Although the Charter is primarily aimed at governments andsocieties, the document also describes responsibilities of state-owned extractive companies andprivate companies.
This leads to assessment element
21•

Companies only operate in weak governance zone or conflict-affected areas if they are able todemonstrate that they are not causing or contributing to human rights abuses.

Conflict minerals and diamonds
The problem of proceeds from mineral mining fuelling conflict and civil war has been welldocumented for many years, particularly in the Democratic Republic of Congo (DRC) but also inparts of Afghanistan, Colombia, Zimbabwe and elsewhere. Minerals which risk fuelling conflict
include gold, coltan (or tantalum), tin (or cassiterite) and wolframite (or tungsten). These
resources can enter global supply chains and end up in mobile phones, laptops, jewellery andother products. It is important to note that this includes blood diamonds or conflict diamonds

Page | 197

and other minerals sourced from conflict zones outside the DRC.
Significant legislation includes the Section 1502 of the 2010 Dodd Frank Act in the UnitedStates, which requires US-listed companies to carry out due diligence on tantalum, tin, gold ortungsten sourced from DRC and neighbouring countries. It also concerns reporting
requirements on the use of conflict raw materials from the Democratic Republic of Congo(DRC) and neighbouring countries. Companies that are listed on the New York Stock Exchange
and use minerals from this region have to provide insight into the financial flows and researchof whether they contribute to the financing of armed groups.673
EU Regulation 2017/821 was passed in 2017 and is intended to stop:674“conflict minerals and metals from being exported to the EU;
global and EU smelters and refiners from using conflict minerals; andmine workers from being abused."•••In order to support the development of local communities, the regulation also requires EU
companies to ensure they import these minerals and metals only from responsible sources.675
The EU regulation applies to tin, tantalum, tungsten and gold and enters into force on 1
January 2021. Importers in the EU will be required to report annually on supply chain due
diligence to comply with the law.
To prepare for the 2021 EU regulation, the multi-stakeholder (governments, companies andcivil society actors) European Partnership for Responsible Minerals (EPRM) “provides a crucial
opportunity for coordinating existing schemes and initiatives for responsible production of 3TG.
[…] EPRM will take the lead in activities that make mineral production and trade responsible,
increase stability and promote development in vulnerable areas”.676
This leads to assessment element
22•

Mining and trading in conflict minerals is unacceptable.

Unacceptable mining practices
As almost all mined uranium is used for electricity production in nuclear power stations(discussed in section3.10), this can be considered a strategic service to the nuclear power
sector. The World Nuclear Association claims that in most respects the environmental impactsof an uranium mine are the same as those of other metal mines, although civil society
organizations such as Greenpeace have identified levels of radioactive materials in the air, waterand soil above internationally accepted limits around some uranium mines677.
Asbestos is a group of fibrous materials that has historically been used in a variety of settings,
including as insulation in building, in roofing shingles, and fire blankets. Asbestos is widely
known to be highly carcinogenic, causing cancer of the lung, larynx and cervix, as well as a hostof other diseases, and is responsible for about half of the deaths from occupational cancer.678
As of 2019, 55 countries have put in place either full or partial bans on the production and useof asbestos.679 The WHO emphasizes that “the most efficient way to eliminate asbestos-relateddiseases is to stop the use of all types of asbestos” and works together with the ILO and civilsociety organizations towards this goal. Given the carcinogenic quality of all types of asbestos
at all levels of exposure, the mining of asbestos can be considered an unacceptable practice.

Page | 198

The goal of the 2015 Paris Agreement is to “strengthen the global response to the threat ofclimate change by keeping a global temperature rise this century well below 2 degrees Celsius
above pre-industrial levels and to pursue efforts to limit the temperature increase even further
to 1.5 degrees Celsius”.680 The 2016 report The Sky’s Limit by Oil Change International argues
that:681••

The potential carbon emissions from the currently operating oil, gas, and coal fields andmines would take us beyond 2°C of warming; andThe reserves in currently operating oil and gas fields alone, even with no coal, would takethe world beyond 1.5°C.

This means that:682••

No new fossil fuel extraction or transportation infrastructure should be built, andgovernments should grant no new permits for them; andSome fields and mines – primarily in rich countries – should be closed before fully
exploiting their resources, and financial support should be provided for non-carbon
development in poorer countries.

Fossil fuel-fired power generation and especially regarding coal power, causes high carbon
emissions. According to the Institute for New Economic Thinking of Oxford School the carbon
reduction goal of the Paris Agreement can only be met by complete decarbonisation of theelectricity sector: “even under the very optimistic assumption that other sectors reduce
emissions in line with a 2°C target, no new emitting electricity infrastructure can be built after
2017 for this target to be met, unless other electricity infrastructure is retired early or retrofittedwith CCS [carbon capture and storage]”.683
The UN Environment Programme Emissions Gap Report 2019 emphasizes that the world is on
the brink of missing the opportunity to limit global warming to 1.5°C, and that meeting thattarget would require global emissions cuts of 7.6% per year on average.684 A rapid transition of
the global energy sector is considered key to meeting these targets and requires at least:685
•
•
•
•
•

“Expanding Renewable Energy for electrification;
Phasing out coal for rapid decarbonization of the energy system;
Decarbonizing transport with a focus on electric mobility;
Decarbonizing energy-intensive industry; andAvoiding future emissions while improving energy access.”

This is in line with earlier iterations of the Emissions Gap Report, which in 2017 had asserted
that "between 80 and 90% of coal reserves worldwide will need to remain in the ground, if
climate targets are to be reached. This compares with approximately 35% for oil reserves and
50% for gas reserves”.686
Besides the need to move away from fossil fuel extraction in general, there are certain mining
extraction techniques that are considered both by private actors and civil society organisations
to be particularly damaging in terms of their impacts on the environment and local
populations. For example, mountaintop removal mining (MTR) is considered an unacceptable
practice by several financial institutions. MTR mining is associated with extreme environmental
and health risks, that cannot be fully mitigated.687 For this reason it is often listed on financial
institutions’ exclusion lists.688

Page | 199

In 2017, Urgewald and partners published the Coal Exit List, which “provides key statistics onover 770 companies whose activities range from coal exploration and mining, coal trading andtransport, to coal power generation and the manufacturing of coal plants”,689 because“investments in new coal power capacity are incompatible with the Paris climate goals as eachnew coal plant locks-in high CO2 emissions for decades to come”.690
Taking into account the huge impact of coal mining on the environment and local
communities, especially extreme mining, and its contribution to climate change once the coal isburned, these activities are considered unacceptable by the Fair Finance Guide International
methodology.691
This leads to assessment elements•

23

Uranium mining is unacceptable.

24

Asbestos mining is unacceptable.

25

Mountaintop removal mining is unacceptable.

26

Establishing new coal mines is unacceptable.

27

Thermal coal mining is unacceptable.

Standards for a sustainable extractive industry
The Framework for Responsible Mining, drafted by the WWF, provides a clear analysis ofenvironmental, social and governance problems that should be included in a sector policy forthe extractive industry.
The Sustainable Development Framework: ICMM Principles of the International Council on
Minerals & Metals (ICMM) is based on the Mining, Minerals and Sustainable Development(MMSD) project. The Framework comprises of 10 principles for sustainable development in theextractive industry, it obliges the participants of ICMM to report according to GRI Standards,
including the GRI G4 Mining and Metals Sector Disclosure, and it requires external verificationof this reporting. Also, a grievance mechanism has been set up for dealing with grievances of
ICMM participants.692
In 2015, ICMM released a best practice guidance on water management: “member companies
have come to understand that even the most water-efficient operations that stringently
manage water discharges can still be subject to significant water risks manifesting outside theoperational fence line at the catchment level”. The guidance calls for wide stakeholder
engagement and expects companies to consider risks outside its own operations. In March2017 the ICMM also published a Practical guide to consistent water reporting. The guidance
accompanies ICMM’s 2014 Water stewardship framework.
The OECD has written recommendations on respecting human rights and avoiding involvement
in conflicts in extractive industry areas in its OECD Due Diligence Guidance for Responsible
Supply Chains of Minerals from Conflict-Affected and High-Risk Areas. In 2016 the OECDlaunched a project to “develop and pilot test an assessment methodology for evaluating theextent to which industry programmes align with the detailed recommendations of this OECD
Guidance”.693 The 2018 Alignment Assessment Report presents the findings of the pilot project.

Page | 200

Although the OECD Due Diligence Guidance for Responsible Mineral Supply Chains identifies
the worst forms of child labour as a serious human rights abuse, there is little detail available
on how companies can conduct due diligence of child labour-related risks. Therefore, thePractical actions for companies to identify and address the worst forms of child labour inmineral supply chains, released in 2017, helps companies to identify, mitigate and account for
the risks of child labour in their mineral supply chains.
In 2017, OECD released the OECD Due Diligence Guidance for Meaningful Stakeholder
Engagement in the Extractive Sector. It intends to provide guidance to mining, oil and gas
enterprises in addressing the challenges related to stakeholder engagement and is part of aseries of sectoral guidance for the application of the recommendation found in the OECD
Guidelines for Multinational Enterprises.
For some minerals there are specific standards, or they are being developed, including:
•

•

•

•

The OECD Due Diligence Guidance for Responsible Supply Chains of Minerals from ConflictAffected and High-Risk Areas also contains specific guidelines for tin, tantalum, andtungsten.
The involvement of the diamond industry in armed conflicts has led to the Kimberley
Process Certification Scheme. The system forces governments to certify diamonds that are
not being used for financing conflict groups. The certification process has proven to be auseful first step to make conflict diamonds recognisable, but it still lacks an independent
supervisor.
The Council for Responsible Jewellery Practices (CRJP) is also working on a certification
scheme similar to the Kimberley Process. The council consists of more than 450 companies
operating in the product chains of gold, diamonds, jewellery and watches. In November
2013, the CRJP published the third edition of Principles and Code of Practice, together withcertification manuals and assessment guidelines. All participating companies are expected
to produce a human rights report and they must (in relevant cases) take into account theFree and Prior Informed Consent and the extraction of raw materials in conflict areas.
The gold industry has developed various initiatives:
•

•

•

•
•

•

the International Management Code for the use of Cyanide, a voluntary agreement on
reducing the use of cyanide, on improving safety in transport and on taking measuresthat guarantee the miners health and safety. The code also contains plans for crisis
management, but lacks guidelines for waste processing;
The World Gold Council has developed the Conflict-Free Gold standard. Voluntary
participation involves submitting to an audit, of which the results are made public, toassess whether gold has been responsibly extracted;
Fairtrade Gold and Precious Metals is a certification scheme for responsibly sourced
gold and precious metals from artisanal and small-scale sources that comply with social,environmental, labour and traceability requirements;
Another option is Fairmined Gold, a third party assurance scheme developed by the
ARM;
The Initiative for Responsible Mining Assurance (IRMA) Standard for Responsible
Mining, which outlines requirements based on business integrity and social andenvironmental criteria;
The International Conference on the Great Lakes Region (ICGLR) Regional Certification
Mechanism has set standards for traceability and certification of minerals in the conflictprone Great Lakes area;

Page | 201

••The London Bullion Market Association (LBMA) Responsible Gold Guidance ismandatory for all LBMA accredited refiners and ensures that all gold feed stock and allgold produced by refiners is conflict-free. The guidance was last updated in September
2017; andThe Responsible Mining Foundation (RMF) has created the Responsible Mining Index,
an assessment of mining companies’ policies and practices on key economic,
environmental, social, and governance (EESG) indicators. By assessing and comparing
mining companies’ efforts and policies it seeks to promote adoption of best practices
and a ‘race to the top’.694

Many of these initiatives are still under development and haven’t yet developed specificcertification schemes that financial institutions can take over literally in their investment policy.
Financial institutions have been advised to closely follow the developments of these initiatives
and/or actively participate in them.
This leads to assessment elements•

28

Companies work with relevant standards and initiatives for certain minerals (mentioned in section
3.8.2).

29

Companies are certified according to the criteria of certification schemes for certain minerals(mentioned in section 3.8.2).

Sustainability reporting
The best known guideline for sustainability reporting in general is the Global Reporting
Initiative (GRI) Reporting Framework, of which the GRI Sustainability Reporting Standards (GRI
Standards) have been in effect since July 2018. The G4 Mining and Metals Sector Disclosures(MMSD) includes guidelines on companies active in exploration, mining and primary metal
processing (including smelting, recycling and basic fabrication).
For small and medium enterprises (SMEs), less elaborate sustainability reporting is required.
SMEs can report on the GRI indicators that are relevant to their operations, for example byfollowing the High5! Approach.
This leads to assessment elements•

30

Companies publish a sustainability report that may contain (a number of) disclosures from the GRI
Standards.

31

Large enterprises and multinational enterprises publish a sustainability report that is set up inaccordance with the (Core or Comprehensive option of the) GRI Standards.

Procurement and supply chains
Companies are often part of long procurement and supply chains. They can monitor one
another and question how they respect local and national legislation and international norms
regarding social, economic and environmental issues. The requirements that companies set for
their suppliers can be included in contractual agreements.
The importance of this also recognised in the OECD Guidelines for Multinational Enterprises
since its revision in 2011. The OECD Due Diligence Guidance for Responsible Business Conduct
provides practical support to companies on the implementation of the OECD Guidelines forMultinational Enterprises by providing plain language explanations of its due diligence
recommendations. Implementing these recommendations can help companies avoid andaddress adverse impacts that may be associated with their operations, supply chains and other

Page | 202

business relationships.
ISO 26000:2010 Guidance on social responsibility recognises the importance of supply chain
responsibility, because “the impacts of an organization's decisions or activities can be greatly
affected by its relationships with other organizations”.695 A company’s sphere of influence
includes relationships within and beyond an organization’s supply chain. Moreover, ISO
26000:2010 Guidance on social responsibility recommends setting contractual provisions or
incentives as a means of exercising influence.696
In addition, ISO 20400:2017 Sustainable procurement – Guidance provides guidelines fororganizations, independent of their activity or size, on integrating sustainability withinprocurement, as described in ISO 26000:2010 Guidance on social responsibility. It is intended
for stakeholders involved in, or impacted by, procurement decisions and processes.
The UNGPs include a due diligence process in order to identify, prevent, mitigate and accountfor how companies address their adverse human rights impacts. The process “should cover
adverse human rights impacts that the business enterprise may cause or contribute to throughits own activities, or which may be directly linked to its operations, products or services by its
business relationships.”697
This leads to assessment elements
32

Companies integrate environmental, social and governance criteria in their procurement andoperational policies.

33

Companies include clauses on the compliance with environmental, social and governance criteria
in their contracts with subcontractors and suppliers.

3.8.3 Assessment elements
When financial institutions invest in or finance mining companies, they have to be aware ofwhether the company complies with the relevant international guidelines and agreements on thesocial and environment fields. This means that in the investment policy of financial institutions,clear norms need to be drafted.
The following elements are crucial for a policy regarding the companies a financial institution
invests in or finances:
1. Companies prevent negative impacts on protected areas that fall under the categories I-IV of
the International Union for Conservation of Nature (IUCN) within their business operations andthe areas they manage.
2. Companies prevent negative impacts on UNESCO World Heritage sites within their business
operations and the areas they manage.
3. Companies prevent negative impacts on protected areas that fall under the Ramsar Convention
on Wetlands within their business operations and the areas they manage.
4. Companies mitigate the chance of accidents by making use of the best available techniquesand have a solid road map for crisis situations (a ‘contingency plan’).
5. Companies do not operate in locations where the consequences of an accident for theenvironment are unmanageable.
6. Companies reduce extractive waste and manage and process this in a responsible way byadequately tracking, reviewing and acting to improve their tailings risk management and byadopting a zero-failure objective to tailings storage facilities.
7. Riverine tailings disposal and sub-marine tailings disposal is unacceptable.
8. Companies conduct water scarcity impact assessments in water scarce regions.
Page | 203

9. Companies have comprehensive mitigation measures in place to address community andecosystem water requirements in areas where environmental impact assessments identify thatsignificant impacts to water resources are likely.
10. Companies include the environmental and health effects of a mine after its closure in plans forthe development of new mines.
11. Companies ensure the recovery of ecosystems after commercial activities have been
completed, for all extractive industry projects (i.e. this is included as an activity in the planningand the budget of the project).
12. Companies respect small scale and artisanal mining and improve sustainable economic andsocial development on a local level.
13. Companies respect the ILO Declaration on Fundamental Principles and Rights at work.
14. Companies prevent conflicts over land rights and acquire natural resources only by engaging inserious consultation with local communities and obtaining free, prior and informed consent(FPIC) when it concerns indigenous peoples.
15. Companies prevent conflicts over land rights and acquire natural resources only with free, priorand informed consent (FPIC) of peoples with customary tenure rights.
16. Companies follow the Voluntary Principles on Security and Human Rights for the security of
their employees and company premises.
17. Companies have processes to enable the remediation of any adverse human rights impact
which they cause or to which they contribute.
18. Companies pay the taxes owed in each country where they operate.
19. For each country in which companies operate, they report country-by-country on theirrevenues, profit, FTEs, subsidies received from governments and payments to governments (e.g.
withholding taxes, payments for concessions and company tax).
20. Offering, promising, giving and requiring, either directly nor indirectly, bribes or other undue
advantages in order to acquire or to maintain assignments or other undue advantages, isunacceptable.
21. Companies only operate in weak governance zone or conflict-affected areas if they are able todemonstrate that they are not causing or contributing to human rights abuses.
22. Mining and trading in conflict minerals is unacceptable.
23. Uranium mining is unacceptable.
24. Asbestos mining is unacceptable.
25. Mountaintop removal mining is unacceptable.
26. Establishing new coal mines is unacceptable.
27. Thermal coal mining is unacceptable.
28. Companies work with relevant standards and initiatives for certain minerals (mentioned in
section 3.8.2).
29. Companies are certified according to the criteria of certification schemes for certain minerals(mentioned in section 3.8.2).
30. Companies publish a sustainability report that may contain (a number of) disclosures from the
GRI Standards.
31. Large enterprises and multinational enterprises publish a sustainability report that is set up inaccordance with the (Core or Comprehensive option of the) GRI Standards.
32. Companies integrate environmental, social and governance criteria in their procurement andoperational policies.
33. Companies include clauses on the compliance with environmental, social and governancecriteria in their contracts with subcontractors and suppliers.

Page | 204

3.9

Oil and gas

3.9.1 What is at stake?
Several processes within the oil and gas industry may harm the environment. Drilling platforms, oiland gas production facilities, flaring plants, and refineries pollute the land, air and water. The urge
to fill reserves, leads to oil companies penetrating deeper and deeper into ecologically vulnerable
regions, from the Amazon to the Polar Regions. Cracks in pipelines caused by earthquakes, othernatural causes and sabotage can lead to soil and water pollution and even to fatal explosions andfires. Moreover, oil spilled from tankers that were involved in accidents has polluted many marine
areas and coastlines.698
The social consequences of the oil and gas industry can be extremely detrimental, affecting the
economic, social and cultural rights of local communities. Pollution and contagious diseases cause
harm to the health, food safety and the culture of indigenous (sometimes isolated) populationgroups. Often, oil and gas companies take the land of local communities and expropriate themfrom their source of food or revenues. Due to pollution, nearby residents can lose their source ofincome and food supply to the activities of oil and gas companies. Moreover, the mining andtransport of oil and gas have regularly contributed to the emergence of armed conflicts, thecoming to power of, and remaining in power of, oppressive regimes and the violation of humanrights. Especially in situations where companies cooperated with the army or local militias for the
security of their operations, great humanitarian harm has occurred.699
The oil and gas industry often disturbs the macro-economic development of countries. The term
resource curse is used for the development of corruption, irreducible revenues, bad managementof oil supplies and an unequal division of the revenue to the population, in countries that are richin natural raw materials.700 Mainly in developing countries where there is no stable political or legal
system, the resource curse is a well-known phenomenon. In these countries conflicts regularly arise
between the local population, the oil companies and the government.701
According to the United Nations Environment Programme (UNEP), “at least 40 per cent of allinternal armed conflicts over the past 65 years have had an important natural resource dimension.
Since 1989, more than 35 major armed conflicts have been financed by revenues from conflict
resources, and there are fears that in the coming years, extreme climate stresses could double therisk of violent conflict”.702 In such countries, companies ignore both the local legislation as well asinternationally accepted highest standards for safe business operations, while operating to theletter of the law in industrialised countries where the highest standards are laid down by law. This
double standard was clearly shown in a 2010 Friends of the Earth report about the business
operations of Shell in Nigeria.703
Some oil and gas companies operate in developing countries but the related subsidiaries arelocated in tax havens to pay as little tax as possible. According to Publish What You Pay Norway,
after the US state Delaware, the Netherlands is the favourite hosting country for oil companies.704
The ten largest oil companies and mining companies globally that own natural resources indeveloping countries have 365 subsidiaries in the Netherlands. However, under Dutch legislation it
is impossible to investigate the fiscal and financial data of these subsidiaries. Therefore, it has
proven to be very difficult to determine how much revenue companies make from the activities inthese countries and how much tax the governments lose.705
A relatively new form of extracting gas is drilling for shale gas. This is a controversial way of gas
extraction and there is a heavy debate on the pros and cons. The risks for people and environment
include: 706

Page | 205

•
•
•
•
•
•
•

Pollution of water sources with methane and chemicals;
Enormous clean water use;
Infringement on landscape and nature;
Higher chances of accidents with drilling pits and transport;
Risk of earthquakes caused by hydraulic fracturing (fracking);
Climate impacts due to greenhouse gas (GHG) emissions of shale gas and coal gas;
Relatively small economic effects of shale gas and coal gas.

Vewin, the association for drinking water companies in the Netherlands, has expressed concern
about the risks of shale gas extraction: (test) drilling can pollute the groundwater. According to
Vewin, Dutch regulations are not sufficient to exclude the risks of groundwater pollution.707 In
December 2014 the Dutch parliament voted against shale gas extraction and arctic drilling.708 Other
countries, such as Scotland, South Africa, France and Wales, as well as several states and cities in
Canada and the United States have also chosen to ban shale gas fracking.709 The United States
instated a ban on oil and gas drilling in large parts of the Arctic Ocean in 2016, which remains inplace despite several attempts at reversing the ban since 2017.710
The oil and gas industry plays an important role in climate change. Climate change is largely
caused by the combustion of fossil fuels, many of which are supplied by companies in the oil andgas industry. In a world where sustainable energy sources are becoming more important, there isless and less room for the oil and gas industry. Therefore, the largest challenge for this industry is
to use its knowledge of energy markets and technologies to develop a supply of clean energy. In
preparation for this, oil and gas companies have to minimise the risks of oil and gas production,transport and processing throughout the entire chain in the fields of environment, safety, healthand biodiversity.
All of the issues mentioned above directly or indirectly relate to the Sustainable Development
Goals (SDGs.) The oil and gas industries’ long-term climate impacts strongly affect SDG 13: Climate
Action and SDG 7: Affordable and Clean Energy. At the same time, the immediate environmental
impacts of drilling activities affect SDG 6: Clean Water and Sanitation, SDG 14: Life Below Water,and SDG 15: Life on Land.711
The investment policy of financial institutions has to ensure that financial institutions are only
involved with investments in companies in the oil and gas industry that meets these objectives.
When developing policies for this industry, financial institutions can make use of the international
standards described below.
3.9.2 International standards and initiatives
The main international standards on the oil and gas industry are summarised per topic, followed by
the assessment elements that are formulated by the FFGI as a result:•

Areas of high biodiversity and protected areas
Oil and gas activities are not permitted in areas that are listed in the categories I to IV of theInternational Union for Conservation of Nature (IUCN), or listed in the UNESCO World Heritage
Convention or in the Ramsar Convention on Wetlands.
These areas are also included in the analyses for investments by the International FinanceCorporation’s (IFC) Performance Standard 6 concerning Biodiversity Conservation andSustainable Management of Living Natural Resources. It determines how companies should
operate in order to avoid negative consequences on areas of high biodiversity value, including
impact on natural habitats as well as endangered and endemic species. The requirements in the

Page | 206standard have been guided by the Convention on Biological Diversity.
Furthermore, forests identified according to the High Carbon Stock Approach, Marine
Protected Areas and High Conservation Value areas should be recognised and protected.
The United Nations Environmental Assembly adopted a resolution on pollution mitigation bymainstreaming biodiversity into key sectors in 2017, aiming at “strengthening efforts tointegrate conservation and sustainable use of biodiversity in various sectors such as agriculture,
fisheries and aquaculture, tourism, mining and energy, infrastructure and manufacturing among
others. It also points to the need to prevent and reduce pollution from these sectors”.712
This leads to assessment elements•

1

Companies prevent negative impacts on protected areas that fall under the categories I-IV of theInternational Union for Conservation of Nature (IUCN) within their business operations and theareas they manage.

2

Companies prevent negative impacts on UNESCO World Heritage sites within their business
operations and the areas they manage.

3

Companies prevent negative impacts on protected areas that fall under the Ramsar Convention on
Wetlands within their business operations and the areas they manage.

Crisis management
After the disastrous Exxon Valdez oil spill in 1989, where more than 40 million litres of oilcovered the coastal areas of Alaska, the United Nations International Maritime Organization(IMO) adapted the requirements for oil transport. The 2003 amendment to the MARPOL
Convention demands that new oil tankers need to have a double hull and all large tankers witha single hull have been taken out of circulation between 2005 and 2010.
The Protocol on Preparedness, Response and Co-operation in pollution Incidents by Hazardous
and Noxious Substances (OPRC-HNS Protocol, 2000), drafted by IMO, aims to establish a global
framework for international cooperation in order to prevent large scale incidents and the threatof maritime pollution. Parties that have ratified the HNS Protocol are expected to establish
measures for polluting incidents or cooperate on a national level with other countries. Ships are
obliged to have an emergency plan on board for specific incidents with Hazardous and Noxious
Substances.
Globally, the development of norms and regulations concerning the management of oilpipelines follows the standards originating from the United States. US regulation on Integrity
Management (IM) is used all over the world as a ‘best practice’. In Alaska there is the additional
requirement that the ‘Best Available Technology’ (BAT) has to be applied to all oil and gas
activities. An important part of such standards is that a company also has to be able toadequately respond to incidents. Globally recognised standards are:713•••

API 1160 (American Petroleum Institute) for the implementation of Integrity Management(IM) programmes for High Consequence Areas;
ASME B31.4 (American Society of Mechanical Engineers) standard for the design andconstruction of oil pipelines; andAPI RP 1130 standard to detect leakages (Leak Detection Systems).

Page | 207

The ‘Oil Spill Working Group’ of the International Petroleum Industry Environmental
Conservation Association (IPIECA) has written guidelines for crisis planning and response incase of oil disasters at sea (Oil Spill Contingency Planning and Response). These guidelines aremeant for the industry and for government organisations and is based on Industry Best
Practices and on the expertise of IPIECA members the International Maritime Organisation(IMO) and the International Tanker Owners Pollution Federation (ITOPF).
In the European Union, directive 2013/30/EU on safety of offshore oil and gas operations wasintroduced in 2013 to improve safety on oil rigs. The directive should prevent pollution of waterand coastal areas by means of strong demands regarding safety. Moreover, companies are
expected to use adequate response mechanisms in order to reduce the consequences ofaccidents.
This leads to assessment elements•

4Companies mitigate the chance of accidents (oil spills, leakages) by making use of the best
available techniques and have a solid road map for crisis situations (a so called ‘contingency plan’).

5Companies do not operate in locations where the consequences of an accident for theenvironment are unmanageable.

Waste management
The Convention for the protection of the Marine Environment of the North-East Atlantic(OSPAR) regulates the disposal and processing of waste from offshore oil and gas extraction
and mining and serves as a basis for national legislation in the countries that have signed the
OSPAR. Norway has drafted an even more stringent national standard for waste processing
from offshore-oil production, the so-called Zero environmentally hazardous discharges
standard. This standard requires that a large part of the drilled mud is purified so it can beinjected back into the oil field.
A special type of waste is natural gas that in some cases surfaces when oil is extracted. This gas
is often vented, or it is burnt (flaring). Both venting and flaring result in huge losses of energy
and emit large amounts of GHGs. The Global Gas Flaring Reduction Public-Private Partnership(GGFR), established by the World Bank, has drafted guidelines to minimise the flaring andventing of natural gas. In cooperation with GGFR and GHG Emissions Task Force, IPIECA
developed a guideline in 2011 for governments and companies that wish to try and reduce gas
flaring.
The 2006 EU Guideline with respect to the management of waste of mining industries requests
that EU member states ensure extractive waste is managed without endangering human healthor the environment. The member states also need to take the necessary precautions to prohibit
the uncontrolled abandonment, dumping and disposal of extractive waste.
Standards for the disposal of offshore drilling platforms are drafted by the OSPAR Conventionin OSPAR Decision 98/3 on the Disposal of Disused Offshore Installations. This decision statesthat oil companies have to choose the method of dismantling that causes the least harm to theenvironment. In addition, companies have to make adequate provisions to overcome any
environmental problems involved in dismantling. They have to take responsibility for thedismantling of their production capacity and the waste they produce and can no longer leavethis to governments.

Page | 208

This leads to assessment elements•

6

Companies reduce waste from oil and gas extraction and mining, especially the flaring of naturalgas, and manage and process this in a responsible way.

7

Companies include the environmental and health effects of the dismantling of production facilities,
especially of offshore drilling platforms, in plans for the development of new projects.

Water use
Given the growing challenge of water scarcity in many regions of the world, it is vital thatcompanies and financial institutions become aware of their own influences on water related
problems. Various initiatives, guidelines and standards have emerged in recent years, to help
companies address water risk. See for more information the theme Nature (section2.8).
Initiatives companies could participate in and learn from are:
The UN Global Compact’s CEO Water Mandate is a public-private initiative designed toassist companies in the development, implementation and disclosure of water sustainability
policies and practices.
The guidance by the UNEP and CEO Water Mandate on Corporate Water Accounting: An
Analysis of Methods and Tools for Measuring Water Use and Its Impacts.
The European Water Partnership; andThe Water Footprint Network, which also has a standard on assessing a global water
footprint.

•

•
•
•

There are several guidelines and water ‘footprinting’ methods as well as voluntary disclosure
initiatives for calculating water use, water risk, understanding water issues and creating a soundwater strategy, such as:
The CDP’s Water Program, to calculate and publish corporate water use throughout the
supply chain;
The GEMI Water Sustainability Tool;
The WBCSD Global Water Tool;
The AWS International Water Stewardship Standard is supported by a verification process,that defines a set of water stewardship criteria and indicators for how water should be
stewarded at a site and catchment level in an environmentally, socially, and economicallybeneficial manner.

•
•
•
•

This leads to assessment elements•

8Companies conduct water scarcity impact assessments in water scarce regions.

9Companies have comprehensive mitigation measures in place to address community andecosystem water requirements in areas where environmental impact assessments identify thatsignificant impacts to water resources are likely.

Effects on marine life
In the offshore oil and gas industry, seismological research causes harm to whales and othermarine mammals. To curb these effects, the Joint Nature Conservation Committee of the UK
government (JNCC) published guidelines for minimising the risk of injury to marine life bygeophysical surveys in August 2017. These comprise of a number of minimum requirementsthat reduce harm to marine life off the coast of the United Kingdom.

Page | 209

The 2015 IFC Environmental, Health, and Safety Guidelines for Offshore Oil and Gas
Development also include guidelines on reducing noise from seismic operations.
This leads to assessment element
10•

Companies reduce the effects of seismological research on whales and other marine mammals.

Labour rights
As part of respecting human rights, it is of great importance that oil and gas companies adhere
to the United Nations International Labour organisation’s (ILO) main codes of conduct. These
are the 1998 ILO Declaration on Fundamental Principles and Rights at Work and the Tripartite
Declaration of Principles Concerning Multinational Enterprises and Social Policy (MNE
Declaration). In addition, specifically for the extractive industry, the Convention concerning
Safety and Health in Mines (No. 176) should be taken into account. The rights of women in theextractive industry are recognised in the 2013 Iroco Declaration.
For more information and relevant international standards and initiatives see the theme Labour
rights (section 2.7.2).
This leads to assessment elements
11•

Companies respect the ILO Declaration on Fundamental Principles and Rights at Work.

Land rights conflicts and forced evictions
Human rights, particularly economic, social and cultural (ESC) rights, play a central role in landrelated issues. However, there is no explicit recognition of a ‘human right to land’ withininternational human rights instruments. Those who face threats to their land rely on otherrights, such as the right to food, the right to water, the right to housing and the right to work.
These rights are included in the International Covenant on Economic, Social and Cultural Rights(ICESCR).714 Other standards related to land rights conflicts and forced evictions are:•••

The 1997 Basic Principles and Guidelines on Development-based Evictions;
The 2009 Core Principles and Measures on Large-scale land acquisitions and leases of theUnited Nations Special Rapporteur on the right to food; andThe 2011 Tirana Declaration of the International Land Coalition.

For more information and relevant international standards and initiatives see the theme Humanrights (section 2.6.2).
According to GRI’s G4 Oil and Gas Sector Disclosures (OGSD), not yet updated but still
recommended by GRI to use with its new GRI Sustainability Reporting Standards (GRI
Standards), oil and gas companies have to produce a sustainability report that addresses therights of indigenous peoples:715•••

the locations where indigenous peoples live or are influenced by business activities andwhere an engagement has been made (OG9);
the number of conflicts and a respective description with local communities and indigenous
peoples (OG10); andbusiness activities where forced relocation of people has occurred and the number ofhouseholds involved in this (OG12).

In 2017, OECD released the OECD Due Diligence Guidance for Meaningful Stakeholder
Engagement in the Extractive Sector. It intends to provide guidance to mining, oil and gas
enterprises in addressing the challenges related to stakeholder engagement and is part of aPage | 210

series of sectoral guidance for the application of the recommendations found in the OECD
Guidelines for Multinational Enterprises.
This leads to assessment elements•

12

Companies prevent conflicts over land rights and acquire natural resources only by engaging inmeaningful consultation with local communities and obtaining free, prior and informed consent(FPIC) when it concerns indigenous peoples.

13

Companies prevent conflicts over land rights and acquire natural resources only with free, priorand informed consent (FPIC) of peoples with customary tenure rights.

Security and law enforcement
Companies can get involved in violations of human rights when (private or public) company
security officers use violence against nearby residents of the company. This issue is dealt with in
the UN Code of Conduct for Law Enforcement Officials and the UN Basic Principles on the Useof Force and Firearms by Law Enforcement Officials. Based on this code of conduct andprinciples, in a multi-stakeholder process the Voluntary Principles on Security and Human
Rights have been developed that set guidelines for companies for their security methods.
This leads to assessment element
14•

Companies follow the Voluntary Principles on Security and Human Rights for the protection of
their employees and de company sites.

Access to remedy
Companies need to respect the rights of local communities affected by their operations. The
responsibility to respect requires that companies avoid causing or contributing to adverse
human rights impacts through their own activities and seek to prevent or mitigate impacts thatare directly linked to their operations by their business relationships. According to the United
Nations Guiding Principles on Business and Human Rights (UNGPs), if a company identifies arisk or is contributing to an adverse impact, it should cease or prevent its contribution and to
mitigate any remaining impacts to the greatest extent possible. Finally, the enterprise should
provide for or cooperate in their remediation through legitimate processes. According to
Guiding Principle 29 of the UNGP’s, companies should establish or participate in effective
operational-level grievance mechanisms for individuals and communities who may be adversely
impacted.716 Guiding Principle 31 details the criteria to ensure the effectiveness of grievancemechanisms. It also includes the expectation that mechanisms must be:717
Legitimate;
Accessible;
Predictable;
Equitable;
Transparent;
Rights-compatible;
A source of continuous learning, andBased on engagement and dialogue.

•
•
•
•
•
•
•
•

This leads to assessment element
15

Companies have processes to enable the remediation of any adverse human rights impact which
they cause or to which they contribute.

Page | 211

•Transparency of financial flows
In the Extractive Industries Transparency Initiative (EITI), a coalition of governments, companies,
CSOs and investors has drafted criteria for governments of countries where oil and gas
extraction and mining take place. Governments are expected to publish all revenues theyreceive from these activities.
The Publish What You Pay coalition, in which over 300 social organisations cooperate,
advocates that the oil companies also make their payments to governments publicly known.
This means that companies have to report their tax payments in the countries where they
operate, but also on royalties, payments for concessions and such. Also, the important
contracts and agreements between governments and oil companies and all bank loans related
to oil and gas extraction and mining should be made public.
The best known guideline for sustainability reporting in general is the Global Reporting
Initiative (GRI) Reporting Framework, of which the GRI Sustainability Reporting Standards (GRI
Standards) have been in effect since July 2018. These guidelines state that organisations shouldreport on the payments they make to governments country-by-country (EC1). GRI Disclosure201-4 requires companies to report on the “total monetary value of financial assistancereceived by the organization from any government during the reporting period”, while GRI
Disclosure 201-1 requires companies to report on “payments to government by country”.718 In
disclosure G4-EC1 of the GRI Oil and Gas Sector Disclosures (OGSD) it has been added that oilcompanies have to report the payments to governments for every country where they operate,
including host government’s production entitlements, national state-owned company
production entitlement, profits taxes, royalties, dividends, bonuses, license fees, rental fees,
entry fees and other considerations for licenses and/or concessions and other significant
benefits to host governments.719
This leads to assessment elements•

16

Companies pay the taxes owed in each country where they operate.

17

For each country in which companies operate, they report country-by-country on their revenues,
profit, FTEs, subsidies received from governments and payments to governments (e.g. withholding
taxes, payments for concessions and company tax).

18

Offering, promising, giving, or requiring, either directly nor indirectly, bribes or other undue
advantages in order to acquire or to maintain assignments or other undue advantages, isunacceptable.

Good governanceIn order to minimise the negative consequences of the resource curse, it is important that thedevelopment of the oil and gas extraction and mining is combined with the development ofcapable and reliable governance. The World Bank Extractives Industries Review (EIR) advisesthat private investments in oil and gas extraction and mining are not encouraged in countries
where governance is weak. It also establishes that the quality of the governance has to meet
explicit conditions before any oil and gas project can be financed by the World Bank.
The UNGPs point to heightened risks of involvement in gross human rights abuses in conflictaffected areas. A company should manage its own impact in order to prevent involvement in
human rights violations.

Page | 212

The OECD Risk Awareness Tool for Multinational Enterprises in Weak Governance Zones could
be helpful detecting areas were strong governance is needed to avoid human rights abuses or
to refrain from doing business.
This leads to assessment element
19•

Companies only operate in weak governance zone or conflict-affected areas if they are able todemonstrate that they are not causing or contributing to human rights abuses.

Unconventional oil and gas sources
Due to the continuing increase in demand for fossil fuels, unconventional oil sources - such as
the Canadian tar sand fields, oil shale in the United States and the extraction of shale gas orcoal gas – have become economically attractive, although extracting these unconventional oil
supplies is highly polluting, CO2-intensive and uses vast amounts of water.720
The goal of the 2015 Paris Agreement is to “strengthen the global response to the threat ofclimate change by keeping a global temperature rise this century well below 2 degrees Celsius
above pre-industrial levels and to pursue efforts to limit the temperature increase even further
to 1.5 degrees Celsius”.721 The 2016 report The Sky’s Limit by Oil Change International argues
that:722••

The potential carbon emissions from the currently operating oil, gas, and coal fields andmines would take us beyond 2°C of warming; andThe reserves in currently operating oil and gas fields alone, even with no coal, would takethe world beyond 1.5°C.

This means that:••No new fossil fuel extraction or transportation infrastructure should be built, andgovernments should grant no new permits for them; andSome fields and mines – primarily in rich countries – should be closed before fully
exploiting their resources, and financial support should be provided for non-carbon
development in poorer countries.

WWF reports that “new Arctic Ocean oil and gas leases would pave the way for the release of
millions of tons of CO2 into the atmosphere”. In addition, “major oil spills are a near certainty
for Arctic drilling”, while “there is no proven technology to contain or clean up oil spilled in the
Arctic marine environment”.723 WWF also published an Asset Owner Guide to Oil & Gas
Producers in 2019, outlining the growing financial risks of continued investment in the oil andgas industries, as well as providing recommendations for asset owners seeking to align theirportfolio with the Paris agreement.
The UN Environment Programme Emissions Gap Report 2019 emphasizes that the world is on
the brink of missing the opportunity to limit global warming to 1.5°C, and that meeting thattarget would require global emissions cuts of 7.6% per year on average.724 A rapid transition of
the global energy sector is considered key to meeting these targets and requires at least:725
•
•
•
•
•

“Expanding Renewable Energy for electrification;
Phasing out coal for rapid decarbonization of the energy system;
Decarbonizing transport with a focus on electric mobility;
Decarbonizing energy-intensive industry; andAvoiding future emissions while improving energy access.”

Page | 213

This is in line with earlier iterations of the Emissions Gap Report, which in 2017 had asserted
that "between 80 and 90% of coal reserves worldwide will need to remain in the ground, if
climate targets are to be reached. This compares with approximately 35% for oil reserves and
50% for gas reserves”.726
The World Energy Outlook 2017 by the International Energy Agency (IEA) considers natural gas
to be a transition fuel, but only if the industry is “stepping up action to tackle methane leaks
along the oil and gas value chain”, because “securing clear climate benefits from gas use
depends on credible action to minimise leaks of methane –a potent greenhouse gas – to theatmosphere”.727
Oil Change International and a coalition of CSOs argued in 2016 that “the reserves in currently
operating oil and gas fields alone, even with no coal, would take the world beyond 1.5°C”. The
organisations therefore recommend that:728“No new fossil fuel extraction or transportation infrastructure should be built, andgovernments should grant no new permits for them.
Some fields and mines – primarily in rich countries – should be closed before fully
exploiting their resources, and financial support should be provided for non-carbon
development in poorer countries.
This does not mean stopping using all fossil fuels overnight. Governments and companies
should conduct a managed decline of the fossil fuel industry and ensure a just transition for
the workers and communities that depend on it”.

•••

The transition towards a low-carbon economy requires in practice a move away from highemission activities to low emission activities. Extracting fossil fuels, particularly fromunconventional sources, for power generation is considered unacceptable (even with
operational carbon capture and storage technology). The Fair Finance Guide network therefore
considers the extraction of oil from tar sand fields, from oil shale, from liquefied coal as well as
extraction of shale gas and arctic drilling for oil and gas to be unacceptable activities.
This leads to assessment elements•

20

Extracting oil from tar sands is unacceptable.

21

Extracting oil from oil shale is unacceptable.

22

Extracting fuel from liquefied coal is unacceptable.

23

Extracting shale gas is unacceptable.

24

Arctic drilling for oil and gas is unacceptable.

Sustainability reporting
The best known guideline for sustainability reporting in general is the Global Reporting
Initiative (GRI) Reporting Framework, of which the GRI Sustainability Reporting Standards (GRI
Standards) have been in effect since July 2018. The G4 Oil and Gas Sector Disclosures (OGSD)
includes guidelines on companies active in exploration, extraction, production, refining, andtransport and sale of oil, gas and petrochemicals.
For small and medium enterprises (SMEs), less elaborate sustainability reporting is required.
SMEs can report on the GRI indicators that are relevant to their operations, for example byfollowing the High5! Approach.

Page | 214

This leads to assessment elements•

25

Companies publish a sustainability report that may contain (a number of) disclosures from the GRI
Standards.

26

Large enterprises and multinational enterprises publish a sustainability report that is set up inaccordance with the (Core or Comprehensive option of the) GRI Standards.

Procurement and supply chains
Companies are often part of long procurement and supply chains. They can monitor one
another and question how they respect local and national legislation and international norms
regarding social, economic and environmental issues. The requirements that companies set for
their suppliers can be included in contractual agreements. The importance of this also
recognised in the OECD Guidelines for Multinational Enterprises since its revision in 2011.
ISO 26000:2010 Guidance on social responsibility recognises the importance of supply chain
responsibility, because “the impacts of an organization's decisions or activities can be greatly
affected by its relationships with other organizations”.729 A company’s sphere of influence
includes relationships within and beyond an organization’s supply chain. Moreover, ISO
26000:2010 Guidance on social responsibility recommends setting contractual provisions or
incentives as a means of exercising influence.730
In addition, ISO 20400:2017 Sustainable procurement – Guidance provides guidelines fororganizations, independent of their activity or size, on integrating sustainability withinprocurement, as described in ISO 26000:2010 Guidance on social responsibility. It is intended
for stakeholders involved in, or impacted by, procurement decisions and processes.
The UNGPs include a due diligence process in order to identify, prevent, mitigate and accountfor how companies address their adverse human rights impacts. The process “should cover
adverse human rights impacts that the business enterprise may cause or contribute to throughits own activities, or which may be directly linked to its operations, products or services by its
business relationships.”731
This leads to assessment elements
27

Companies integrate environmental, social and governance criteria in their procurement andoperational policies.

28

Companies include clauses on the compliance with environmental, social and governance criteria
in their contracts with subcontractors and suppliers.

3.9.3 Assessment elements
The investment policy of financial institutions on the oil and gas sector has to emphasise that themain challenge for the oil and gas sector is the further development of sustainable energy
provisions. In addition, the policies of financial institutions have to include social andenvironmental norms for the oil and gas sector.
The following elements are crucial for a policy regarding the companies a financial institution
invests in or finances:
1. Companies prevent negative impacts on protected areas that fall under the categories I-IV of
the International Union for Conservation of Nature (IUCN) within their business operations andthe areas they manage.

Page | 215

2. Companies prevent negative impacts on UNESCO World Heritage sites within their business
operations and the areas they manage.
3. Companies prevent negative impacts on protected areas that fall under the Ramsar Convention
on Wetlands within their business operations and the areas they manage.
4. Companies mitigate the chance of accidents (oil spills, leakages) by making use of the best
available techniques and have a solid road map for crisis situations (a so called ‘contingency
plan’).
5. Companies do not operate in locations where the consequences of an accident for theenvironment are unmanageable.
6. Companies reduce waste from oil and gas extraction and mining, especially the flaring of
natural gas, and manage and process this in a responsible way.
7. Companies include the environmental and health effects of the dismantling of production
facilities, especially of offshore drilling platforms, in plans for the development of new projects.
8. Companies conduct water scarcity impact assessments in water scarce regions.
9. Companies have comprehensive mitigation measures in place to address community andecosystem water requirements in areas where environmental impact assessments identify thatsignificant impacts to water resources are likely.
10. Companies reduce the effects of seismological research on whales and other marine mammals.
11. Companies respect the ILO Declaration on Fundamental Principles and Rights at Work.
12. Companies prevent conflicts over land rights and acquire natural resources only by engaging inmeaningful consultation with local communities and obtaining free, prior and informed consent(FPIC) when it concerns indigenous peoples.
13. Companies prevent conflicts over land rights and acquire natural resources only with free, priorand informed consent (FPIC) of peoples with customary tenure rights.
14. Companies follow the Voluntary Principles on Security and Human Rights for the protection of
their employees and de company sites.
15. Companies have processes to enable the remediation of any adverse human rights impact
which they cause or to which they contribute.
16. Companies pay the taxes owed in each country where they operate.
17. For each country in which companies operate, they report country-by-country on theirrevenues, profit, FTEs, subsidies received from governments and payments to governments (e.g.
withholding taxes, payments for concessions and company tax).
18. Offering, promising, giving, or requiring, either directly nor indirectly, bribes or other undue
advantages in order to acquire or to maintain assignments or other undue advantages, isunacceptable.
19. Companies only operate in weak governance zone or conflict-affected areas if they are able todemonstrate that they are not causing or contributing to human rights abuses.
20. Extracting oil from tar sands is unacceptable.
21. Extracting oil from oil shale is unacceptable.
22. Extracting fuel from liquefied coal is unacceptable.
23. Extracting shale gas is unacceptable.
24. Arctic drilling for oil and gas is unacceptable.
25. Companies publish a sustainability report that may contain (a number of) disclosures from the
GRI Standards.
26. Large enterprises and multinational enterprises publish a sustainability report that is set up inaccordance with the (Core or Comprehensive option of the) GRI Standards.
27. Companies integrate environmental, social and governance criteria in their procurement andoperational policies.

Page | 216

28. Companies include clauses on the compliance with environmental, social and governancecriteria in their contracts with subcontractors and suppliers.
Financial institutions that publicly state they exclude the oil and gas industry (both upstream anddownstream companies) from their finance and investment universe because of the sustainability
risks involved, but that do not publish a detailed policy document with all the expectations coveredby the above assessment elements, will receive a score of 10. If this commitment is made for one ormore but not all four FFGI investment categories, a content score and scope score for the relevant
categories will be given for all assessment elements.

Page | 217

3.10 Power generation
3.10.1 What is at stake?
Power generation is essential to meet society’s demands for energy and is central to efforts toachieve sustainable development and poverty reduction. There are many pressures on energy
suppliers to generate power in a manner that offers security of supply, is affordable for consumers,
and has a minimal level of negative environmental impacts.
A crucial concern regarding power generation is its impact on climate change. Electricity and heatproduction is the largest source of anthropogenic greenhouse gas emissions, accounting forroughly 25% of all global emissions.732 Research has indicated that up to eighty per cent of theworld’s coal reserves, thirty per cent of known oil reserves and fifty per cent of gas reserves are notburnable if the world is to stay below the goal of a maximum of 2°C of climate warming, which
does not even address the goal of limiting warming to 1.5°C.733
According to the Intergovernmental Panel on Climate Change (IPCC), most scenarios in which
dangerous climate change is avoided require low carbon sources of power to reach around 80% of
global power generation by 2050. In such a scenario, power generation from fossil fuels such as oil,coal and gas would have to be phased out almost entirely by 2100, unless accompanied by carbon
capture and storage (CCS). Despite many years of research, CCS is not yet available at a commercial
scale. The IPCC also notes that such mitigation scenarios would lead to devaluation of fossil fuelassets and reduced revenues for the coal and oil trade, providing a financial incentive for financial
institutions to decrease their exposure to fossil fuels.734
Climate change is not the only environmental or social issue arising from power generation fromfossil fuels. Coal-fired power plants have particularly egregious impacts. As well as releasing carbon
dioxide, burning coal emits pollutants including sulphur dioxide, nitrogen oxides, and mercury
compounds. Fine particles from coal-fired power plants cause an estimated 22,900 deaths eachyear in the European Union alone, according to CAN Europe, HEAL, WWF European Policy Office
and Sandbag.735 Coal plants also use large quantities of water, which becomes polluted with heavy
metals such as lead and arsenic during use. Soil at coal-fired power plant sites can becomecontaminated with various pollutants and take a long time to recover, even after the power plantcloses down.736 Gas plants are also associated with emissions of air pollutants including carbon
dioxide and nitrous oxides, although these are lower than for coal.737
Nuclear power is considered a low carbon power source by the IPCC, but its use remains highly
controversial. The dangers of nuclear power were illustrated by accidents including those at
Chernobyl, Ukraine in 1986, at Tokaimura, Japan, in 1999, and at Fukushima, Japan in 2011. Nuclear
power also produces a legacy of radioactive nuclear waste, for which the issue of long-term safe
storage remains unsolved. For these reasons, as well as for economic reasons (in particular the costof decommissioning nuclear power stations at the end of their useful life), major environmentalgroups including Greenpeace and WWF continue to oppose nuclear power.738
Among power generation technologies considered “renewable”, large dams are the mostcontroversial. According to the final report of the World Commission on Dams (WCD), published in
November 2000, the construction of large dams had driven between 40 and 80 million people
away from their homes worldwide.739 Besides these direct impacts of displacement, communities’
livelihoods can be impacted by flooding (upstream), disturbing of water streams and fishery(downstream), violations of indigenous land rights and disruption of local food production.740 In
addition, dams (including dams for water management) have interrupted or reclaimed 60% of theworld’s rivers, with often huge and irreversible effects on the natural environment and ecosystems.

Page | 218

Research also shows that hydropower plants may produce large volumes of methane gas, a very
potent greenhouse gas that arises from the decay of vegetation on the bottom of the reservoir.
The methane gas is released when the water is led through the turbines. In some cases,
hydropower plants produce more greenhouse gas than a power plant of comparable scoperunning on fossil fuel.741
Given the serious, irreversible ecological impacts of dams, civil society organizations such as
International Rivers say that dam-based hydropower cannot be considered a renewable source ofpower. However, this does not mean that all hydropower is problematic: many smaller (‘micro’ and‘pico’) hydropower projects operate without damming rivers, and these projects can offer lowemissions energy without substantial negative impacts.742
The importance of power generation is addressed in Sustainable Development Goal (SDG) 7:
Affordable and Clean Energy. It aims to improve access to affordable, reliable and modern energy
services and to increase the share of renewable energy in the global energy mix by 2030. Anothertarget is to double the rate of energy efficiency by 2030. Further, the SDG 7 aims to enhanceinternational cooperation to facilitate access to clean energy research and technology, including
renewable energy, energy efficiency and advanced and cleaner fossil-fuel technology, and promote
investment in energy infrastructure and clean energy technology.743 Clean energy is also important
for achieving many other SDGs such as SDG 1: No Poverty, SDG 8: Decent Work and Economic
Growth, SDG 9: Industry, Innovation and Infrastructure, SDG 10: Reduced Inequalities and SDG 11:
Sustainable Cities and Communities. At the same time, power generation, if not done responsibly,
can hinder SDG 13: Climate Action, SDG 14: Life Below Water and SDG 15: Life on Land.744
In general, power generation using other forms of renewable energy, including wind power, solar
power, geothermal power, smaller scale hydroelectric power as well as tidal marine power, areresponsible for much lower emissions of greenhouse gasses than fossil fuels (although due to theemissions from the construction, maintenance and decommissioning of technologies like solar
panels and wind farms, these technologies are not completely free of harmful emissions). It is
generally agreed by environmental groups and climate scientists that a substantial increase ininvestments in renewable energy is needed, alongside investment in energy efficiency, todecarbonize the energy sector and meet emissions reduction targets.745
Financial institutions financing power generation from renewable energy must also be mindful of
its potential impacts on land use, wildlife and local communities. When developing policies for the
power generation sector, financial institutions can make use of the international standards
described below.
3.10.2 International standards and initiatives
The main international standards on power generation are summarised per topic, followed by theassessment elements that are formulated by the FFGI as a result:•

Transition to low carbon economy
The third working group that contributed to the IPCC’s Fifth Assessment Report, published in2014, focused on mitigating climate change, and showed that the world must significantly
reduce its reliance on fossil fuels in the coming decades, thus transitioning to a low-carbon
economy. The IPCC projected that over the next two decades (2010 to 2029), annual investment
in conventional fossil fuel technologies for electricity supply sector would decline, with a
median projected rate of decline being around 20%. At the same time, annual investment in
low-carbon electricity supply (including renewable energy, nuclear power and electricity

Page | 219

generation with carbon capture and storage) is projected to rise by 100% compared to 2010 on
the same median basis.746
There are various initiatives within the corporate world and the financial industry to makeagreements and to exchange experiences on stimulating the transition to a low-carbon
economy:•••

The Ceres Investor Network on Climate Risk (INCR);
the Institutional Investors Group on Climate Change (IIGCC); andthe Global Business Leadership Platform on Climate Change.

Fossil fuel-fired power generation and especially coal-fired power generation, causes highcarbon emissions. According to the Institute for New Economic Thinking of Oxford School the
carbon reduction goal of the Paris Agreement can only be met by complete decarbonisation of
the electricity sector: “even under the very optimistic assumption that other sectors reduce
emissions in line with a 2°C target, no new emitting electricity infrastructure can be built after
2017 for this target to be met, unless other electricity infrastructure is retired early or retrofittedwith CCS”.747
Similarly, in its 2018 Special Report the IPCC emphasizes that even though limiting global
warming to 1.5°C is technically feasible, all of the modelled emission pathways consistent withsuch a target require rapid decarbonisation of the global energy infrastructure.748
The UN Environment Programme Emissions Gap Report 2019 emphasizes that the world is on
the brink of missing the opportunity to limit global warming to 1.5°C, and that meeting thattarget would require global emissions cuts of 7.6% per year on average.749 A rapid transition of
the global energy sector is considered key to meeting these targets and requires at least:750
•
•
•
•
•

“Expanding Renewable Energy for electrification;
Phasing out coal for rapid decarbonization of the energy system;
Decarbonizing transport with a focus on electric mobility;
Decarbonizing energy-intensive industry; andAvoiding future emissions while improving energy access.”

This is in line with earlier iterations of the Emissions Gap Report, which in 2017 had asserted
that "between 80 and 90% of coal reserves worldwide will need to remain in the ground, if
climate targets are to be reached. This compares with approximately 35% for oil reserves and
50% for gas reserves”.751
The World Energy Outlook 2019 of the International Energy Agency charts a possible scenario
which would be in line with the target of keeping global temperature increases well below 2°C.
While the scenario would be fully aligned with the goals outlined in the Paris Agreement, thereport stresses that it requires “rapid and widespread changes across all parts of the energy
system”, and that “the breadth of the world’s energy needs means that there are no simple orsingle solutions. Sharp cuts are achieved across the board thanks to multiple fuels andtechnologies providing efficient and cost-effective energy services for all”.752
In 2017, Urgewald and partners published the Coal Exit Database, which “provides key statistics
on over 770 companies whose activities range from coal exploration and mining, coal trading
and transport, to coal power generation and the manufacturing of coal plants”,753 because“investments in new coal power capacity are incompatible with the Paris climate goals as eachnew coal plant locks-in high CO2 emissions for decades to come”.754

Page | 220

WWF published an Asset Owner Guide to Oil & Gas Producers in 2019, outlining the growing
financial risks of continued investment in the oil and gas industries, as well as providing
recommendations for asset owners seeking to align their portfolio with the Paris agreement.
The transition towards a low-carbon economy requires in practice a move away from highemission activities to low emission activities. Extracting fossil fuels for power generation is
irreconcilable with long term climate goals (even with operational carbon capture and storage
technology).
Nuclear energy is not a sustainable alternative to fossil fuel-fired power generation. Aside fromthe risk of catastrophic meltdowns (as in the 2011 Fukushima case), Greenpeace argues “there
is still no safe, reliable solution for dealing with the radioactive waste produced by nuclear
plants”.755
Large-scale hydroelectric dams, while officially considered a renewable source of energy, areassociated with considerable negative social and environmental impacts. Construction of newdams can displace local populations or deprive them of sources of water and income. Largehydroelectric dams can have disastrous consequences for local ecosystems, biodiversity, andunder certain conditions emit significant amounts of greenhouse gases.756
This leads to assessment elements•

1

The financial institution finances companies involved in renewable energy generation (wind, solar,
small and medium scale hydro power, geothermal power, tidal power, etc.).

2

The financial institution has a measurable target to increase its finance for renewable energy
generation.

3

The financial institution has a measurable target to reduce either its total amount of finance forfossil fuel-fired power generation, or to reduce finance for fossil fuel-fired power generation,
relative to its finance for renewable energy generation.

4

Unabated coal-fired power generation (i.e. without operational carbon capture and storage) is
unacceptable

5

Coal-fired power generation is unacceptable.

6

Fossil fuel-fired power generation is unacceptable.

7

Nuclear energy is unacceptable.

8Large scale hydropower generation is unacceptable.

Areas of high biodiversity and protected areas
Various international agreements require the protection of ecosystems and natural habitats:•••

The biodiversity in areas that are important on environmental and cultural grounds falls
under the protection of the UNESCO World Heritage Convention.
For wetlands (swamps and bogs), which are rich in biodiversity, there is the Ramsar
Convention on Wetlands that ensures protection and proper management of these areas.
The International Union for Conservation of Nature (IUCN) has developed a system thatcategorises natural areas in six categories and indicates in which areas biodiversity has tobe protected (category I to IV). In addition, the IUCN provides guidelines for companies on
how to deal with fields that fall within these Protected Area Management Categories. In
2000, a resolution was adopted on the IUCN World Conservation Congress that calls upon
all states not to allow investments in oil, gas and extractive industry projects in theprotected areas (categories I to IV).

Page | 221

The United Nations Environmental Assembly adopted a resolution on pollution mitigation
by mainstreaming biodiversity into key sectors in 2017, aiming at “strengthening efforts tointegrate conservation and sustainable use of biodiversity in various sectors such as
agriculture, fisheries and aquaculture, tourism, mining and energy, infrastructure andmanufacturing among others. It also points to the need to prevent and reduce pollution
from these sectors”.757•

These areas are also included in the analyses for investments by International FinanceCorporation’s (IFC) Performance Standard 6 concerning Biodiversity Conservation andSustainable Management of Living Natural Resources. It determines how companies should
operate in order to avoid negative consequences on areas of high biodiversity value, including
impact on natural habitats as well as endangered and endemic species. The requirements in thestandard have been guided by the Convention on Biological Diversity.
This leads to assessment elements•

9Companies prevent negative impacts on protected areas that fall under the categories I-IV of theInternational Union for Conservation of Nature (IUCN) within their business operations and theareas they manage.

10

Companies prevent negative impacts on UNESCO World Heritage sites within their business
operations and the areas they manage.

11

Companies prevent negative impacts on protected areas that fall under the Ramsar Convention on
Wetlands within their business operations and the areas they manage.

Land rights conflicts and forced evictions
Human rights, particularly economic, social and cultural (ESC) rights, play a central role in landrelated issues. However, there is no explicit recognition of a ‘human right to land’ withininternational human rights instruments. Those who face threats to their land rely on otherrights, such as the right to food, the right to water, the right to housing and the right to work.
These rights are included in the International Covenant on Economic, Social and Cultural Rights(ICESCR).758 Other standards related to land rights conflicts and forced evictions are:
The 1997 Basic Principles and Guidelines on Development-based Evictions;
The 2009 Core Principles and Measures on Large-scale land acquisitions and leases of theUnited Nations Special Rapporteur on the right to food;The 2011 Tirana Declaration of the International Land Coalition.

•••

For more information and relevant international standards and initiatives see the theme Humanrights (section 2.6.2).
This leads to assessment elements
12

Companies prevent conflicts over land rights and acquire natural resources only by engaging inserious consultation with local communities and obtaining free, prior and informed consent (FPIC)
when it concerns indigenous peoples.

13

Companies prevent conflicts over land rights and acquire natural resources only with free, priorand informed consent (FPIC) of peoples with customary tenure rights.

Page | 222

•Access to remedy
Companies need to respect and guarantee the rights of local communities affected by theconstruction and activities of power generation operations. Companies may not directly,
indirectly, or implicitly cooperate in violating human rights. According to the United Nations
Guiding Principles on Business and Human Rights (UNGPs), if a company identifies a risk or iscontributing to an adverse impact, it should cease or prevent its contribution and mitigate any
remaining impacts to the greatest extent possible. Finally, the enterprise should provide orcontribute to a remedy. According to Guiding Principle 29 of the UNGP’s, companies should
establish or participate in effective operational-level grievance mechanisms for individuals andcommunities who may be adversely impacted.759 Guiding Principle 31 details the criteria toensure the effectiveness of grievance mechanisms. It also includes the expectation thatmechanisms must be:760
Legitimate;
Accessible;
Predictable;
Equitable;
Transparent;
Rights-compatible;
A source of continuous learning, andBased on engagement and dialogue.

•
•
•
•
•
•
•
•

This leads to assessment element
14•

Companies have processes to enable the remediation of any adverse human rights impact towhich they cause or to which they contribute.

Standards for dams and hydropower
The most authoritative international guidelines for dam projects were drafted in November
2000 by the World Commission on Dams (WCD). The WCD was established by the World Bankand the International Union for Conservation of Nature and has raised many environmental andsocial issues associated with large dam construction. In its final report, the committee provided
a series of recommendations on which future dam projects can base their environmental andsocial plans. Financial institutions can use these guidelines as a base for their investment
policies.761
The recommendations are centred around the issue of who carries the rights and who is
responsible for the risks in dam projects. The recommendations themselves comprise of sevenstrategic priorities and supported principles:762
•
•
•
•
•
•
•

obtaining public consent;
solid assessment of alternatives;
standard for existing dams;
the preservation of rivers as a source of livelihood;respect of rights and sharing revenues;
focus on compliance; andsharing rivers for peace, development and safety.

Page | 223

Any problems that occur during the construction of dams also occur in similar water
infrastructure projects, such as navigation work, pumping water between reservoirs and large
irrigation projects. Therefore, the above described principles should also apply to thedevelopment of these types of projects.
In 2008, the International Hydropower Association (IHA) launched the Hydropower
Sustainability Assessment Forum, a multi-stakeholder forum that has developed three key tools
to assess the sustainability of hydropower projects:763
The Hydropower Sustainability Guidelines on Good International Industry Practice (HGIIP
Guidelines) provide general guidance on good practice and expected performance inpromoting hydropower sustainability;
The Hydropower Sustainability Assessment Protocol (HSAP) provides a benchmarking tool
to assess sustainability performance against the HGIIP Guidelines through comparison withbasic good practice and proven best practice; andThe Hydropower Sustainability ESG Gap Analysis (HESG) is used to identify gaps compared
to good practice on environmental, social and governance (ESG) performance, and provides
guidance on gap management in hydropower sustainability.

•

•

•

This leads to assessment elements•

8

Large scale hydropower generation is unacceptable.

15

The construction of dams complies with the 7 principles of the World Commission on Dams.

16

The construction of all water infrastructure projects complies with the 7 principles of the World
Commission on Dams.

Standards for biofuels
Whether biofuels could be helpful in reducing greenhouse gas reduction emissions ultimately
depends on the conditions under which the biomass used for biofuel production is grown. As
such, biomass crops are typically grown on agricultural land that was already used for growing
food or feed. Agricultural production is consequently displaced to other areas, leading toconversion of forests or natural grasslands to agricultural lands elsewhere.
This process is called Indirect Land Use Change (ILUC). ILUC is crucially important for assessing
the sustainability impacts of the expansion of growing crops for biofuels. ILUC especiallyconcerns first generation biofuels, as second- or third generation biofuels can also be madefrom waste of feedstock used for food or feed, and hence do not directly require cropland.
Because of the ILUC problem, no real positive climate impact can be achieved through firstgeneration biofuels.764
The Roundtable on Sustainable Biomaterials (RSB) offers Global Standards that apply to any
type of bio-based feedstock worldwide and EU-RED Standards that apply to feedstock entering
the EU market and comply with the EU Renewable Energy Directive (RED) regarding land-use
and GHG criteria.765 The global RSB Principles are: 766
1. Biofuel operations shall follow all applicable laws and regulations.
2. Sustainable biofuel operations shall be planned, implemented, and continuously improved
through an open, transparent, and consultative impact assessment and management
process and an economic viability analysis.
3. Biofuels shall contribute to climate change mitigation by significantly reducing lifecycle
GHG emissions as compared to fossil fuels.

Page | 224

4. Biofuel operations shall not violate human rights or labour rights, and shall promote decent
work and the well-being of workers.
5. In regions of poverty, biofuel operations shall contribute to the social and economic
development of local, rural and indigenous people and communities.
6. Biofuel operations shall ensure the human right to adequate food and improve foodsecurity in food insecure regions.
7. Biofuel operations shall avoid negative impacts on biodiversity, ecosystems, andconservation values.
8. Biofuel operations shall implement practices that seek to reverse soil degradation and/or
maintain soil health.
9. Biofuel operations shall maintain or enhance the quality and quantity of surface and groundwater resources, and respect prior formal or customary water rights.
10. Air pollution from biofuel operations shall be minimized along the supply chain.
11. The use of technologies in biofuel operations shall seek to maximize production efficiency
and social and environmental performance, and minimize the risk of damages to theenvironment and people.
12. Biofuel operations shall respect land rights and land use rights.
The RSB standards are accompanied by a set of guidelines such as the RSB-Impact Assessment
Guidelines and the RSB-Screening Tool.767
The European Parliament intends to reduce the CO2 emissions of the cultivation for biofuels.
For instance, by 2020 the EU aims to have 10% of the transport fuel of every EU country comingfrom renewable sources such as biofuels. Fuel suppliers are also required to reduce thegreenhouse gas intensity of the EU fuel mix by 6% by 2020 in comparison to 2010.768 Moreover,Directive EU 2015/1513 and the revised 2018 Renewable Energy Directive (RED) haveintroduced measures to reduce the risk of ILUC, including phasing out the use of unsustainablepalm oil as a basis for biofuels.
This leads to assessment element
17•

The production of biofuels complies with the 12 principles of the Roundtable on Sustainable
Biomaterials.

Sustainability reporting
The best known guideline for sustainability reporting in general is the Global Reporting
Initiative (GRI) Reporting Framework, of which the GRI Sustainability Reporting Standards (GRI
Standards) have been in effect since July 2018. The G4 Electric Utilities Sector Disclosures(EUSD) includes guidelines on the construction of the infrastructure of power generationcompanies.
For small and medium enterprises (SMEs), less elaborate sustainability reporting is required.
SMEs can report on the GRI indicators that are relevant to their operations, for example byfollowing the High5! Approach.
This leads to assessment elements
18

Companies publish a sustainability report that may contain (a number of) disclosures from the GRI
Standards.

19

Large enterprises and multinational enterprises publish a sustainability report that is set up inaccordance with the (Core or Comprehensive option of the) GRI Standards.

Page | 225

•Procurement and supply chains
Companies are often part of long procurement and supply chains. They can monitor one
another and question how they respect local and national legislation and international norms
regarding social, economic and environmental issues. The requirements that companies set for
their suppliers can be included in contractual agreements. The importance of this also
recognised in the OECD Guidelines for Multinational Enterprises since its revision in 2011.
ISO 26000:2010 Guidance on social responsibility recognises the importance of supply chain
responsibility, because “the impacts of an organization's decisions or activities can be greatly
affected by its relationships with other organizations”.769 A company’s sphere of influence
includes relationships within and beyond an organization’s supply chain. Moreover, ISO
26000:2010 Guidance on social responsibility recommends setting contractual provisions or
incentives as a means of exercising influence.770
In addition, ISO 20400:2017 Sustainable procurement – Guidance provides guidelines fororganizations, independent of their activity or size, on integrating sustainability withinprocurement, as described in ISO 26000:2010 Guidance on social responsibility. It is intended
for stakeholders involved in, or impacted by, procurement decisions and processes.
The UNGPs include a due diligence process in order to identify, prevent, mitigate and accountfor how companies address their adverse human rights impacts. The process “should cover
adverse human rights impacts that the business enterprise may cause or contribute to throughits own activities, or which may be directly linked to its operations, products or services by its
business relationships.”771
This leads to assessment elements
20

Companies integrate environmental, social and governance criteria in their procurement andoperational policies.

21

Companies include clauses on the compliance with environmental, social and governance criteria
in their contracts with subcontractors and suppliers.

3.10.3 Assessment elements
Financial institutions investing in, or financing companies in the energy sector should carefully
consider how they can orient their investments to support the transition to a low-carbon economy,
in line with the pathways suggested by the IPCC. This may be through choosing to support
exclusively renewable energy generation, or by setting out a clear pathway to reduce finance forfossil fuels and other controversial energy sources and replace this with low-carbon finance.
Financial institutions investing in, or financing companies in the construction of dam projects
should develop sector policies for these investments in which the recommendations of the World
Commission on Dams (WCD) are included.772 This policy should at least be applicable to all large
dam projects, but ideally includes all important water infrastructure projects.
The following elements are crucial for a policy regarding the financial institution’s internal
operations:
1. The financial institution finances companies involved in renewable energy generation (wind,solar, small and medium scale hydro power, geothermal power, tidal power, etc.).
2. The financial institution has a measurable target to increase its finance for renewable energy
generation.

Page | 226

3. The financial institution has a measurable target to reduce either its total amount of finance forfossil fuel-fired power generation, or to reduce finance for fossil fuel-fired power generation,
relative to its finance for renewable energy generation.
The following elements are crucial for a policy regarding the companies a financial institution
invests in or finances:
4. Unabated coal-fired power generation (i.e. without operational carbon capture and storage) is
unacceptable
5. Coal-fired power generation is unacceptable.
6. Fossil fuel-fired power generation is unacceptable.
7. Nuclear energy is unacceptable.
8. Large scale hydropower generation is unacceptable.
9. Companies prevent negative impacts on protected areas that fall under the categories I-IV of
the International Union for Conservation of Nature (IUCN) within their business operations andthe areas they manage.
10. Companies prevent negative impacts on UNESCO World Heritage sites within their business
operations and the areas they manage.
11. Companies prevent negative impacts on protected areas that fall under the Ramsar Convention
on Wetlands within their business operations and the areas they manage.
12. Companies prevent conflicts over land rights and acquire natural resources only by engaging inserious consultation with local communities and obtaining free, prior and informed consent(FPIC) when it concerns indigenous peoples.
13. Companies prevent conflicts over land rights and acquire natural resources only with free, priorand informed consent (FPIC) of peoples with customary tenure rights.
14. Companies have processes to enable the remediation of any adverse human rights impact towhich they cause or to which they contribute.
15. The construction of dams complies with the 7 principles of the World Commission on Dams.
16. The construction of all water infrastructure projects complies with the 7 principles of the World
Commission on Dams.
17. The production of biofuels complies with the 12 principles of the Roundtable on Sustainable
Biomaterials.
18. Companies publish a sustainability report that may contain (a number of) disclosures from the
GRI Standards.
19. Large enterprises and multinational enterprises publish a sustainability report that is set up inaccordance with the (Core or Comprehensive option of the) GRI Standards.
20. Companies integrate environmental, social and governance criteria in their procurement andoperational policies.
21. Companies include clauses on the compliance with environmental, social and governancecriteria in their contracts with subcontractors and suppliers.

Page | 227

Chapter 4
4.1

Operational themes

Consumer protection

4.1.1 What is at stake?
Consumers are essential actors in the financial market, and as such, their problems require
attention. A major part of financial services and products are addressed to consumers: current andsaving accounts, personal loans, debit and credit cards, mortgage loans, insurance, pensions andannuities and investment products. In general, these kind of transactions are the domain of retailbanks and insurance companies.
The characteristics of these services and their impact on consumers’ lives reinforce the need forfinancial institutions to be responsible in their relationship with consumers. With this objective in
mind, financial institutions must take into account the importance of consumer rights ondevelopment, governance and commercialization of financial services.
Both the trend towards financial inclusion and the increasing sophistication of financial markets
have important implications for financial institutions. These factors drive changes in the behaviourof consumers and banks and can affect the stability of the system. The international financial crisisof 2008 motivated a serious reflection on the behaviour of financial market agents. The effects ofthe crisis have shown that weak consumer protection resulted in a high risk to the entire financial
system. As underlined by the European Commission, the crisis led to a lack of confidence among all
actors, in particular consumers.773 Abusive loan products and practices reduced the reliability andthe safety of the system and consumers lost confidence in the financial services.
The world economic crisis that followed the collapse of Lehman Brothers in September 2008 also
revealed the risks involved in mixing global financial markets with the real economy. Basic needs
like housing and retail bank products like mortgage loans were fixed into complex and risky
financial products, leading to the subprime mortgage crisis, foreclosures and the devaluation of
housing-related securities.774
The Global Financial Inclusion (Global Findex) database, launched by the World Bank, estimatesthat between 2014 and 2017 515 million adults became accountholders with some type of financial
institution. As of 2017, 69% of adults worldwide had a bank account, many in countries with lowlevels of consumer protection.775 However, according to Consumers International (CI), “weakfinancial consumer protection is a problem shared by consumers in countries with well-establishedfinancial services as well as consumers in countries where the sector is relatively new”.776 The highnumber of complaints reported by CI members in all regions is a strong indicator that the violationof consumer rights is a concern not only in the countries where financial services have a low levelof maturity. 777
According to CI, consumer education is a necessary but rather insufficient response to the problem.
Protecting the interests of consumers in the financial sector creates a great responsibility not only
for the national regulatory agencies but also for the financial sector, in particular for national andinternational banks.778
Moreover, financial services have become a basic need to individuals in modern society, since they
enable consumers to solve current and unexpected necessities by providing payment services,
access to loans, money transfers, investment solutions and insurance against risk. Financial services
must be considered ‘credence goods’: even though they are repeatedly purchased, their utility isdifficult for the consumer to define, and their features are not easily assessed. Indeed, the financial

Page | 228

sector is characterised by a number of critical factors, which, according to CI, include:779
•
•
•
•
•

the complexity of the products, and of product information;
the high risks associated with many products;
the fast changing nature of many of the products;
their ‘virtual’ non-tangible nature, andthe long-term nature of many transactions which means that consumers do not make regularpurchases, and therefore do not develop an expertise in the market.

The lack of consumer protection in the financial sector can have severe social and economic
consequences, including the risk of financial crisis due to the lack of transparency of banks inrelation to the market and the growth of debt and over-indebtedness of customers. Because of the
impact on the lives of individual people and society as a whole, consumers must be aware of andunderstand the risks and particular conditions of each financial product.
Consumers International has therefore defined the responsibility of financial service providers toprovide “clear, sufficient, reliable, comparable and timely information, suitable in these respects forthe consumer to compare and contrast and to make an informed decision”.780
In order to provide sufficient information, financial institutions should firstly be transparent whenadvertising their products. Contractual terms and conditions must be clear during the purchase
phase. Consumers then need to be aware of risks and implications throughout the lifetime of
products. Regarding some products such as pensions and mortgages, consumers requirecontinuous monitoring, since they must control their disbursements and identify eventual requiredchanges (e.g. early repayment or debt renegotiation).781
Below, we identify the most recurrent practices committed by financial institutions that violate
consumers’ rights:782•

Complaint mechanisms•••

Quality and transparency of services
•
•

•
•

•

Financial institutions show a lack of transparency by not informing how many consumer
complaints they receive;
Financial institutions do not commit on a policy to reduce consumer complaints;

Large commercial banks do not offer efficient customer services at bank branches;
Financial institutions usually try to push services onto consumers that they don’t need orthat are inappropriate for their financial risk profile. It is very common to observe tie-in
sales (for example: a person wants to open an account but is obliged to also buy insurance);
Consumers are often not properly informed about changes of fees values or additionalcharges for bank services;
Financial institutions do not provide accessibility for customers with disabilities and special
needs at all physical agencies, electronic services and electronic devices such as mobile
apps, or for internet banking;Protection against fraud•

Banks do not assume their responsibilities regarding clients’ safety in case of robbery, theft
and fraud involving customers in bank branches, ATM or internet and authorized agents’malpractices;

Page | 229

••Banks delegate the operation of some bank services to third parties, like drugstores,
supermarkets or lottery stores (so-called banks correspondents). Banks do not assume their
responsibilities regarding customers’ safety on financial operations taken place at thecorrespondents and authorized agents;

Protection against over-indebtedness••

Financial institutions do not have a policy to avoid over-indebtedness and to promote
conscious credit. Many of them have a lack of transparency on granting credit conditions,and products requirements, guarantees and criteria of contracting. This results in overindebted customers, a very dramatic issue in developing countries;
There is a lack of transparency by financial institutions about their policies/procedures
regarding debt collection. These procedures must be clear and avoid practices of coercion
and embarrassment.

Consumer protection in the financial sector is not directly mentioned in the Sustainable
Development Goals (SDGs). SDG 12: Responsible Consumption and Production focuses on thehealth of consumers and the sustainable management and efficient use of natural resources andon waste management, rather than protection of bank customers. However, consumer protection isaddressed indirectly through SDG 10: Reduced Inequalities and SDG 16: Peace, Justice and Strong
Institutions. Without ensuring consumer protection, inequalities cannot be reduced. Moreover,consumer protection is key to social justice.783
The aim of the Fair Finance Guide is to compare the policies of financial service providers, addressinternationally recognized standards as a framework for the development of policies and codes ofconduct, and as such contribute to improving consumer protection measures and procedures. In
order to ensure the financial stability and fair practices of financial institutions, they should
integrate financial consumer protection with financial inclusion policies. The theme Financial
Inclusion therefore should preferably be researched in combination with the theme Consumer
protection, as this theme also includes some aspects that must be taken into account when we
assess financial inclusion policies.
4.1.2 International standards and initiatives
Consumers have some basic and internationally recognized rights, such as the right to information,
to prior knowledge of contracts, to choose services with freedom and proper information, tosecurity, privacy and data protection, the right to financial education, to over-indebtedness
prevention mechanisms and to have free and effective conflict resolution solutions.
The main international standards on consumer rights and protection in the financial sector are
summarised per topic, followed by the assessment elements that are formulated by the FFGI as aresult:•Transparency on services, risks and fees
According to the OECD, the complexity of financial services is growing rapidly. “The availabilityof information has grown both in quantity and complexity and the pace of change, in terms of
new product developments, product innovations, and technological advances, has increased
dramatically. Building and maintaining consumer confidence and trust in financial markets
promotes efficiency and stability and helps to create positive outcomes for both financial
institutions and their customers”.784

Page | 230

The OECD, the Financial Stability Board (FSB) and other relevant international organisations
have worked together to develop common principles on consumer protection in the field offinancial services, as a response to the G20 Finance Ministers and Central Bank Governors call in
February 2011. As result, the organizations launched the G20 High-Level Principles on Financial
Consumer Protection, designed to assist the efforts to enhance financial consumer
protection.785
Regarding Principle 4 on Disclosure and Transparency, the updated report on theimplementation of the principles describes that consumers should be provided with key
information about the product or service: “Financial services providers and authorised agentsshould provide consumers with key information that informs the consumer of the fundamental
benefits, risks and terms of the product. They should also provide information on conflicts ofinterest associated with the authorised agent through whom the product is sold. In particular,
information should be provided on material aspects of the financial product. Appropriate
information should be provided at all stages of the relationship with the customer.
Standardised pre-contractual disclosure practices (e.g. forms) should be adopted whereapplicable and possible to allow comparisons between products and services of the same
nature. (...)All financial promotional material should be accurate, honest, understandable andnot misleading”.786
The importance of transparency was also recognised in the OECD Guidelines for Multinational
Enterprises on consumer interests. The guidelines identify two points that enterprises shouldtake into account to give more transparency for products and services and which to someextent also apply to financial services. They should:787
•

•
•
•

“Provide accurate, verifiable and clear information that is sufficient to enable consumers tomake informed decisions, including information on the prices and, where appropriate,
content, safe use, environmental attributes, maintenance, storage and disposal of goods
and services;
Where feasible this information should be provided in a manner that facilitates consumers’ability to compare products;
Not make representations or omissions, nor engage in any other practices, that are
deceptive, misleading, fraudulent or unfair;
Support efforts to promote consumer education in areas that relate to their businessactivities, with the aim of, inter alia, improving the ability of consumers to:•••make informed decisions involving complex goods, services and markets;
better understand the economic, environmental and social impact of their decisions andsupport sustainable consumption.”

The general objective of the UN Guidelines for Consumer Protection is “taking into account theinterests and needs of consumers in all countries, particularly those in developing countries;
recognizing that consumers often face imbalances in economic terms, educational levels andbargaining power; and bearing in mind that consumers should have the right of access to nonhazardous products, as well as the right to promote just, equitable and sustainable economic
and social development and environmental protection”.
In order to achieve such objectives, two principles that frame the guidelines are directly related
to transparency on the relationship with consumers:788•

The promotion and protection of the economic interests of consumers; andPage | 231

Access by consumers to adequate information to enable them to make informed choices
according to individual wishes and needs.

•

The UN Guidelines for Consumer Protection establish that Member States should work towards
establishing, among other requirements:789
A regulatory framework that promotes cost efficiency and transparency for remittances,such that consumers are provided with clear information on the price and delivery of thefunds to be transferred, exchange rates, all fees and any other costs associated with themoney transfers offered, as well as remedies if transfers fail;
Fair treatment and proper disclosure, ensuring that financial institutions are also
responsible and accountable for the actions of their authorized agents. Financial services
providers should have a written policy on conflict of interest to help detect potential
conflicts of interest. When the possibility of a conflict of interest arises between theprovider and a third party, that should be disclosed to the consumer to ensure that
potential consumer detriment generated by conflict of interest be avoided; andImproved financial education strategies that promote financial literacy.

•

•

•

The European Union has developed several directives in order to promote legislation or
voluntary codes of conducts on responsible money lending. The so-called "Consumer Credit
Directive" (Directive 2008/48/EC on credit agreements for consumers) was adopted on 23 April
2008 and aims to foster the integration of the consumer credit market in the EU and ensure ahigh level of consumer protection by focusing on transparency and consumer rights. It
stipulates that a comprehensible set of information should be given to consumers at a propertime, before the contract is concluded and also as part of the credit agreement.790
In order to allow consumers to compare the various offers and to better understand theinformation provided, creditors have to provide pre-contractual information in a standardised
form (Standard European Consumer Credit Information, 2001/193/EC, annex 2).791 Moreover,they have to inform consumers on the Annual Percentage Rate of Charge (“APR”), which is asingle figure, harmonised at EU level, representing the total cost of the credit. Directive
2011/90/EU has amended the assumptions for its calculation.792
This leads to assessment elements•

1

The financial institution has a policy to disclose client’s rights and the risks of products andservices.

9

The financial institution has developed and implemented risk profiles with regard to investment
products.

14

The financial institution has procedures and policies to avoid tie-in sales or inappropriate sales
practices.

15

The financial institution provides consumers with key information that informs the consumer of thefundamental benefits, risks and terms of the product and changes in fees.

Quality of consumer service
Financial institutions have to ensure that the quality of their consumer services are provided inaccordance with consumer rights and protection policies and practices.793 G20 High-Level
Principles on Financial Consumer Protection Principle 6: Responsible Business Conduct ofFinancial Services Providers and their Authorised Agents presents guidelines on this aspect:794

Page | 232

Best Interest: Financial services providers and authorised agents should have as an
objective to work in the best interest of their customers and be responsible for upholding
financial consumer protection.
Assessing Consumer Needs: Depending on the nature of the transaction and based on
information primarily provided by customers, financial services providers should assess therelated financial capabilities, situation and needs of their customers before agreeing toprovide them with a product, advice or service.
Staff Training: Staff of financial services providers and authorised agents (especially those
who interact directly with customers) should be properly trained and qualified.
Remuneration Structure: The (internal) remuneration structure for staff of both financial
services providers and authorised agents should be designed to encourage responsible
business conduct, fair treatment of consumers and to avoid conflicts of interest. The
remuneration structure should be disclosed to customers where appropriate, such as whenpotential conflicts of interest cannot be managed or avoided.
Responsibility for authorised agents: Financial services providers should also be
responsible and accountable for the actions of their authorised agents.

•

•

•
•

•

Consumers International (CI) includes in its 2013 report on responsible lending a principle to
avoid conflicts of interest caused by remuneration structure for staff: “Lenders’ businesspractices should incentivise customer service not sales”.795
This leads to assessment elements•

17

The financial institution remuneration structure for staff of both financial services providers andauthorized agents is designed to encourage responsible business conduct, fair treatment ofconsumers and to avoid conflicts of interest.

18

The financial institution has a program to properly train and qualify employees and authorized
agents on consumer rights and protection policies and practices.

19

The financial institution has a program to properly train and qualify employees and authorized
agents on products and services to consumers.

Non-discriminatory treatment
In the context of their responsibility to respect human rights, financial institutions have toprovide access to their services and products fairly and without discrimination.
The commitment to provide accessibility for customers with disabilities and special needs isincluded in the guidelines defined by the 2006 UN Convention on the Rights of Persons with
Disabilities. The guidelines define a general obligation for states to “ensure and promote thefull realization of all human rights and fundamental freedoms for all persons with disabilities
without discrimination of any kind on the basis of disability” and include the following
particular goals:796
•
•

•
•

“To take all appropriate measures to eliminate discrimination on the basis of disability by
any person, organization or private enterprise;
To promote the training of professionals and staff working with persons with disabilities in
the rights recognized in the present Convention so as to better provide the assistance andservices guaranteed by those rights;
To recognize that all persons are equal before and under the law and are entitled without
any discrimination to the equal protection and equal benefit of the law;
To prohibit all discrimination on the basis of disability and guarantee to persons withdisabilities equal and effective legal protection against discrimination on all grounds;

Page | 233

To take appropriate measures in order to ensure that private entities offer facilities andservices take into account all aspects of accessibility for persons with disabilities (e.g.
required training for staff, live assistance and intermediaries to facilitate accessibility andtechnologies and systems accessible).”•This leads to assessment elements
2

The financial institution has a policy that regulates staff ethics in serving clients in nondiscriminatory way.

21

The financial institution has a policy committed to provide accessibility for customers withdisabilities and special needs at all physical branches and electronic services, as at online platforms.

Financial institutions increasingly use Information and Communication Technology (ICT)
services as an essential part of their financial products and services. However, some customers
do not have the digital literacy or financial means to use the technology that is required forusing these financial services. Digital literacy refers to the skills and knowledge required for acomplete participation in a society based on technology. For certain groups, such as the elderlyor those with limited financial means, a lack of digital literacy and/or access to digital banking
services can form a barrier to access new financial services. Obligating customers to use adigital service to fully access their financial services is abusive and can discriminate against
customers based on income level, age and geography.797
In 2008, the European Commission already highlighted the risks for particularly those over 55
years of age, to participate fully in digital financial services. More recently, a 2017 G20/OECD
INFE report highlighted the risks for certain groups, such as the elderly, women and Micro,
Small and Medium Enterprises (MSME) or first time users of financial technology, as a result of
increasing digitalisation.
This leads to assessment element
20•

The financial institution ensures that there are no access restrictions for customers because ofInformation and Communication Technology (ICT) based financial services.

Management of consumer complaints
In order to reduce consumer complaints, some international standards introduce guidelinesthat could be followed by financial institutions. One of the objectives of UN Guidelines for
Consumer Protection is to promote the availability of effective consumer redress. In the scopeof measures enabling consumers to obtain redress, three guidelines are defined:798•••“Governments should establish or maintain legal and/or administrative measures to enableconsumers or, as appropriate, relevant organizations to obtain redress through formal orinformal procedures that are expeditious, fair, inexpensive and accessible.
Governments should encourage all enterprises to resolve consumer disputes in a fair,
expeditious and informal manner, and to establish voluntary mechanisms, including
advisory services and informal complaints procedures, which can provide assistance toconsumers.
Information on available redress and other dispute-resolving procedures should be madeavailable to consumers.”

In December 2015, the UN General Assembly Resolution on the revised UN Guidelines for
Consumer Protection outlined that businesses should “make available complaints-handlingmechanisms that provide consumers with expeditious, fair, transparent, inexpensive, accessible,

Page | 234

speedy and effective dispute resolution without unnecessary cost or burden. Businesses should
consider subscribing to domestic and international standards pertaining to internal complaints
handling, alternative dispute resolution services and customer satisfaction codes”.799
Chapter VIII on consumer interests in the OECD Guidelines for Multinational Enterprises points
out that enterprises should provide consumers with access to fair, easy to use, timely andeffective non-judicial dispute resolution and redress mechanisms, without unnecessary cost or
burden.800
In 2012, the OECD also recognised the importance of complaints handling and redress in its
G20 High-Level Principles. Principle 9 presents guidelines and effective approaches tocomplaints handling and redress such as:801
Complaint Handling and Redress Mechanisms: Jurisdictions should ensure that
consumers have access to adequate complaints handling and redress mechanisms that areaccessible, affordable, independent, fair, accountable, timely and efficient. Such mechanisms
should not impose unreasonable cost, delays or burdens on consumers.
Internal Complaints Handling: In accordance with the above, financial services providers
and authorised agents should have in place internal mechanisms for complaint handlingand redress.
Alternative Dispute Resolution (ADR) Mechanisms: Recourse to an independent redress
process should be available to address complaints that are not efficiently resolved via thefinancial services providers and authorised agents’ internal dispute resolution mechanisms.

•

•

•

On responsible lending, Consumers International (CI) states that, in order to ensure anaccessible dispute resolution, companies should provide consumers’ access to effective
complaint mechanisms and dispute resolution.802
This leads to assessment elements•

3

The financial institution ensures that consumers have access to adequate complaints handling andredress that have a due diligence process in place.

4

The financial institution discloses the results of complaints monitoring such as number ofcomplaints, main issues, in which institutions/body for consumers defence the complaints whereregistered (direct or indirect ones), and from which channels they were received (call centre,
website, e-mail, phone, bank branch).

5

The financial institution has public commitments to reduce consumer complaints, fixing goals toachieve and making this information accessible to any stakeholder.

6

The financial institution has Alternative Dispute Resolution (ADR) Mechanisms,- an independent
redress process available to address complaints that are not efficiently resolved via the financial
services providers and authorized agents’ internal dispute resolution mechanisms such as
Ombudsman.

Avoidance of over-indebtedness
The United States subprime mortgage crisis in 2008 showed how the consequences of overindebtedness are shared among all stakeholders of financial institutions. The European Union
Mortgage Credit Directive 2014/17/EU aims to create an EU-wide mortgage credit market witha high level of consumer protection. It applies both to secured credit and home loans. Member
States have had to transpose its provisions into their national law as of March 2016. The main
provisions include consumer information requirements, principle based rules and standards forthe performance of services (e.g. conduct of business obligations, competence and knowledge

Page | 235

requirements for staff), a consumer creditworthiness assessment obligation, provisions on early
repayment, provisions on foreign currency loans, provisions on tying practices, some high-level
principles (e.g. those covering financial education, property valuation and arrears andforeclosures) and a passport for credit intermediaries who meet the admission requirements intheir home member state.803
This issue is also mentioned in Consumers International 2013 report on responsible lending:“Information should be provided in a manner to help the consumer make an informed choice”.
Two other principles are directly related to both prevention and management of overindebtedness:804
Principle 3: all lenders should make a proper assessment of a borrower’s ability to repay;
andPrinciple 10: debt resolution should be available for consumers who have become overindebted.

••

The G20 High-Level Principles on Financial Consumer Protection present two points that intend
to prevent over-indebtedness, in line with its Principle 6 (Responsible Business Conduct ofFinancial Services Providers and Authorised Agents):
Best Interest: Financial services providers and authorised agents should have as an
objective, to work in the best interest of their customers and be responsible for upholding
financial consumer protection
Assessing Consumer Needs: Depending on the nature of the transaction and based on
information primarily provided by customers, financial services providers should assess therelated financial capabilities, situation and needs of their customers before agreeing toprovide them with a product, advice or service.

••

This leads to assessment elements•

7

The financial institution has a debt resolution policy available for consumers who have become
over-indebted.

8

The financial institution has clear policies/ a code of conduct in order to protect consumers against
over-indebtedness.

16

The financial institution has clear policies/a code of conduct on pre-contractual information
regarding home loans.

Consumer safety
Customers expect their financial institutions to ensure the safety of their money and theprotection of their personal information. One of the objectives of UN Guidelines for Consumer
Protection is to protect of consumers from hazards to their health and safety.
The OECD Guidelines for Multinational Enterprises on consumer interests highlight theimportance of protecting personal data against consumer privacy violations, including security
breaches. According to the guidelines, enterprises should:••

Ensure that the goods and services they provide meet all agreed or legally required
standards for consumer health and safety, including those pertaining to health warnings
and safety information;
Not make representations or omissions, nor engage in any other practices, that are
deceptive, misleading, fraudulent or unfair; andPage | 236

Respect consumer privacy and take reasonable measures to ensure the security of personal
data that they collect, store, process or disseminate.

•

In Principle 8 of the High-Level Principles on Financial Consumer Protection, the OECD stresses
that “Consumers’ financial and personal information should be protected through appropriate
control and protection mechanisms. These mechanisms should define the purposes for which
the data may be collected, processed, held, used and disclosed (especially to third parties). The
mechanisms should also acknowledge the rights of consumers to be informed about datasharing, to access data and to obtain the prompt correction and/or deletion of inaccurate, or
unlawfully collected or processed data.”805
This leads to assessment elements
10

The financial institution respects client’s private data protection (it does not disclose to otherparties without client’s consent).

11

Consumers’ financial and personal information is protected through appropriate control andprotection mechanisms with defined and published guidelines for which the data may be collected,
processed, held, used and disclosed.

12

The financial institution has a policy and a clear procedure of accountability in case of robbery,
theft and fraud involving customers in bank branches, ATM or internet and by its authorized
agents.

13

The financial institution publishes its policies/procedures of debts collection and companies that
represent them (third parties).

4.1.3 Assessment elements
In order to ensure that consumer rights are respected, financial institutions should establish
policies whose scope is consistent with its diversity of products and services. Therefore, theassessment elements will be scored for the following groups of financial products:
•

•

•

•

•
•

Current and saving accounts: These are the most popular personal banking products that giveto customers the flexibility of deposit and withdrawals. On saving accounts usually a smallinterest is paid;
Credit cards: Credit cards and other forms of overdraft accounts and revolving credits, provide
the consumer with a flexible, instant opportunity to lend money to spend it on different
expenditures. Repayment usually needs to start within a month and high interest rates arecharged;
Personal loans: Loans that are tied to specific forms of expenditure, such as loans for thepayment of educational fees, auto loans and other consumption credits. The borrower isprovided with a fixed amount to be repaid over a given period by a fixed number of
instalments;
Housing loans: These loans are specifically intended to finance the acquisition of a house orother form of private property. The loans are secured by a mortgage on the borrower's
property; andInvestment: This group of products provides individual consumers access to fixed and variable
income investments.
Insurance: These products include services related to pension plans and insurance products.

To conclude, we list the elements that are crucial for a policy regarding the financial institution's
relationship with customers. These aspects should be covered by a financial institution whendeveloping a consumers’ protection policy:

Page | 237

1. The financial institution has a policy to disclose client’s rights and the risks of products andservices.
2. The financial institution has a policy that regulates staff ethics in serving clients in nondiscriminatory way.
3. The financial institution ensures that consumers have access to adequate complaints handlingand redress that have a due diligence process in place.
4. The financial institution discloses the results of complaints monitoring such as number ofcomplaints, main issues, in which institutions/body for consumers defence the complaints
where registered (direct or indirect ones), and from which channels they were received (callcentre, website, e-mail, phone, bank branch).
5. The financial institution has public commitments to reduce consumer complaints, fixing goals
to achieve and making this information accessible to any stakeholder.
6. The financial institution has Alternative Dispute Resolution (ADR) Mechanisms,- an independent
redress process available to address complaints that are not efficiently resolved via the financial
services providers and authorized agents’ internal dispute resolution mechanisms such as
Ombudsman.
7. The financial institution has a debt resolution policy available for consumers who have become
over-indebted.
8. The financial institution has clear policies/ a code of conduct in order to protect consumers
against over-indebtedness.
9. The financial institution has developed and implemented risk profiles with regard to investment
products.
10. The financial institution respects client’s private data protection (it does not disclose to otherparties without client’s consent).
11. Consumers’ financial and personal information is protected through appropriate control andprotection mechanisms with defined and published guidelines for which the data may becollected, processed, held, used and disclosed.
12. The financial institution has a policy and a clear procedure of accountability in case of robbery,
theft and fraud involving customers in bank branches, ATM or internet and by its authorized
agents.
13. The financial institution publishes its policies/procedures of debts collection and companies
that represent them (third parties).
14. The financial institution has procedures and policies to avoid tie-in sales or inappropriate sales
practices.
15. The financial institution provides consumers with key information that informs the consumer ofthe fundamental benefits, risks and terms of the product and changes in fees.
16. The financial institution has clear policies/a code of conduct on pre-contractual information
regarding home loans.
17. The financial institution remuneration structure for staff of both financial services providers andauthorized agents is designed to encourage responsible business conduct, fair treatment ofconsumers and to avoid conflicts of interest.
18. The financial institution has a program to properly train and qualify employees and authorized
agents on consumer rights and protection policies and practices.
19. The financial institution has a program to properly train and qualify employees and authorized
agents on products and services to consumers.
20. The financial institution ensures that there are no access restrictions for customers because ofInformation and Communication Technology (ICT) based financial services.

Page | 238

21. The financial institution has a policy committed to provide accessibility for customers withdisabilities and special needs at all physical branches and electronic services, as at online
platforms.

Page | 239

4.2

Financial inclusion

4.2.1 What is at stake?
Access to finance and credit to individual households provides the means to secure homes, invest
in education and skills, get loans for health or medicine, bridge fluctuations in income generationand expenses, and start and expand businesses. According to the Global Findex Database, in 2017,
1.7 billion people - or 31% of adults in the world - did not have access to basic financial services.
Their ranks include more than half of adults in the poorest 40% of households in developing
countries.806
Financial inclusion has become a burning issue related to the question of how finance cancontribute to sustainable development. Financial inclusion has been suggested as an instrument ofpoverty reduction, as well as a means to tackle increasing worldwide inequalities. There is a
growing awareness that growth with inequality has its own limit and it cannot be sustained,
because aggregate demand will be limited. If inequality is intolerably high, it will result in a numberof social consequences, at worst, social unrest, that will threaten economic growth and social
stability.
The history of financial services and institutions designed to serve low income groups can betraced back to Europe’s credit union movement in the 19th century and more recently to thesuccess of Grameen Bank, which has provided microcredit to the poor of Bangladesh since the1980s. Since then, other Microcredit Financial Institutions (MFIs) have mushroomed, providing
similar credit to low-segment clients in developing countries, mostly driven by social development
purposes.807
International organizations, including the G20 and the World Bank, have formulated strategies topromote financial inclusion. More than 50 countries have set formal targets for financial inclusion.
The World Bank has an ambitious goal to achieve Universal Financial Access (UFA) for working-age
adults by 2020. The UFA 2020 goal envisions that adults worldwide will be able to have access to abank account or electronic banking for savings and loans, sending payments and receiving income
or remittances.808
Over the last years, the number of people with a bank account has been growing fast. Between
2014 and 2017, the number of unbanked people dropped by over half a billion. Innovations intechnology, particularly mobile money, are important drivers of rapidly increasing access tofinancial services in Sub-Saharan Africa. Account ownership varies widely around the world. The
difference in account ownership between high-income OECD economies and developing
economies is significant. Among developing countries, the Middle East ranks the lowest and East
Asia and the Pacific highest. See Figure 1 for an overview of account penetration around the worldin 2017.
Apart from regional differences there is also a gender gap in financial inclusion. In high-incomeOECD economies there is virtually no gender gap in account ownership, but in developing
economies, there is a persistent gender gap of roughly 9%.809

Page | 240

Figure 1 Percentage of adults with a bank account around the world (2017)

Source: Demirgüç-Kunt, A., L. Klapper, D. Singer, S. Ansar and J. Hess (2018), The Global Findex Database 2017: Measuring Financial
Inclusion and the Fintech Revolution, Washington, DC, the United States: World Bank, p. 3.

Among the countries represented in the international Fair Finance Guide coalition, there are large
differences in account penetration. The FFGI coalition countries that are also members of the OECD
have a rate of nearly 100%, while in Indonesia only about half of the population has a bankaccount. See Table 3 for figures on financial inclusion in Fair Finance Guide member countries.
Account penetration in FFG member countries (2017)

Country

Women (%)

Adults inpoorest 40% ofhouseholds

Share with anaccount

All adults (%)

Table 3

Belgium

99

99

99

Brazil70

68

57

France94

91

93Germany

99

99

98

Indonesia

49

51

37

India

80

77

77

Japan

98

98

98

Netherlands

100 100

100

Norway100 100

99

Sweden100 100

100

Page | 241

Country

All adults (%)

Women (%)

Adults inpoorest 40% ofhouseholds

Share with anaccount

Thailand

82

80

78

Source: World Bank (n.d.), “The Global Findex Database 2017”, online: https://globalfindex.worldbank.org/#data_sec_focus, viewed in
December 2019.

Micro, small, and medium enterprises (MSMEs) which have needs to access credit, face big
challenges to access formal financial institutions. According to the International FinanceCorporation’s Enterprise Survey, around 40% of micro-enterprises and 44% of small and medium
enterprises in developing economies are fully or partially financially constrained.810
The terms financial inclusion, microfinance and microcredit are frequently used interchangeably,
but have distinct meanings that should not be confused. To distinguish these terms, the following
are the working definitions (yet still evolving) of financial inclusion, microfinance and microcredit
from recent literature:•••

Financial inclusion (or inclusive finance) is defined as “access to a full suite of financial
services, provided with quality, to everyone who can use financial services, with financial
capability, through a diverse and competitive marketplace.”811 The New MicrofinanceHandbook emphasises financial inclusion as a ‘multidimensional, pro-client concept,
encompassing increased access, better products and services, better-informed and -equipped
consumers, and effective use of products and services’.812
Microfinance is defined as diverse financial services (including credit, savings, insurance,
remittances, money transfers, or leasing) provision for the low-income and poor. These services
are used for income generation, assets building, economic securities provision, and improving
these low-segment clients’ livelihood.813
Microcredit, a sub-category of microfinance, is defined as a small amount of money loaned toa client by a financial institution. The specific characteristics of microcredit are group lending
and the absence of collateral when borrowing.814

At the global level, financial inclusion has gained prominence on the sustainable development
policy agenda. The United Nations World Summit for Social Development (WSSD) in 1995
recognised access to credit and financial services as a tool for poverty alleviation. Poverty
alleviation was one of the three main themes at the summit (together with productive employment
and social integration).815 Leaders of the G8 and G20 recognize the importance of financial
inclusion to their economies. This has been reiterated at their meetings in Pittsburgh (2009) andSeoul (2010), which mandated a Global Partnership for Financial Inclusion (GPFI).816 At the G20
Summit in Toronto, June 2010, G20 countries signed the Toronto Declaration on Principles forInnovative Financial Inclusion.817
Moreover, the Bank of International Settlements, based in Basel, Switzerland, and other standard
setting bodies have addressed the regulatory and standardized aspects of financial inclusion.818
When business leaders, head of states and governments, as well as representatives from academia,
development organizations, non-profits and media gathered for the World Economic Forum in
Davos, Switzerland, January 2014, they also brought up the issue of financial inclusion and inclusive

Page | 242

growth at the centre of the agenda.819
As an international development agenda, there has been subtle shift from the concept of
microfinance to financial inclusion, which, as indicated, covers a broader range of services than theterm microfinance. While financial inclusion keeps the ‘development objective’ to pave the way forthe poor to escape poverty, the ‘inclusion’ aspect of the term aims to cover not just the poor but
also the near poor or even the middle class, in general, to increase the penetration of financial
services to the whole population.
However, a broader definition of financial inclusion also poses some risks. It is because banks,
although they are not the only financial institution actors for financial inclusion, on the one handmight be pressured by their state government to provide microcredit to small enterprises and poor
people, on the other hand, might see this as an opportunity to expand their credit market tobroader groups of population. Such expansion might lead to financial liberalisation and thecommercialisation of credits. Other challenges for banks are the profitability and risks incurred by
the provision of financial services and products to yet excluded clients.820
Broader access to finance might also bring about risks to clients. For instance, banks might use thepreviously excluded clients’ savings or remittances to be invested in something with risks theclients have no information about or the clients might be offered products or services with risks
they have no knowledge about. These risks are due to problems in the financial market:
asymmetrical information, low quality of information, financial sector infrastructure and low levelsof financial literacy and capability. These problems are faced not just by clients in low income
countries but also in middle and high income economies. Lessons learned from the financial crisis cases of predatory lending, subprime mortgages and other financial misconduct involving
consumers - indicate that there is a need for re-emphasizing a top-down and bottom-up ethicalapproach for the financial sector, while improving access to remedy and ensuring protection for
consumers, even in the financial inclusion agenda.821
In recent years, new opportunities and challenges have arisen for financial institutions andconsumers regarding mobile finance. The development of FinTech has transformed the way many
consumers use financial services and it is important to be aware of the consequences of suchchanges. Questions can be raised on topics such as security and privacy, the challenge being tomaximise the benefits while ensuring risks are kept to a minimum.822 The importance of consumer
protection in financial markets and a methodology to assess the policies of financial institutions
regarding consumer protection is further explained in section 4.1.
The topic of financial inclusion is recognized as an instrumental factor in achieving many of the
Sustainable Development goals (SDGs). For example, SDG 1: No Poverty includes a target to ensurethat everyone should have access to financial services, including microfinance, by 2030.823 Similarly,
SDG 5: Gender Equality emphasises on providing equal rights to economic resources and services
to women including financial services.824 Further, SGD 8: Decent Work and Economic Growth has atarget to promote policies that encourage micro-, small- and medium-sized enterprises, including
through access to financial services. It also focuses on strengthening capacity of domestic financial
institutions to encourage and expand access to banking, insurance and financial services for all toenable economic growth.825 One of the targets of the SDG 9: Industry, Innovation andInfrastructure is to increase the access of small-scale industrial and other enterprises, in particularin developing countries, to financial services, including affordable credit, and their integration intovalue chains and markets.826 Financial inclusion is also an important aspect of SDG 10: Reduced
Inequalities.827

Page | 243

While the aspect of governance and regulation is important in financial inclusion, at the same time
it is important to keep financial providers like banks attracted to serve the financially excluded
clients, despite the higher risks and lower profit. According to the New Microfinance Handbook(2013), balancing clients’ interests and providers’ viability, financial inclusion requires effective
policies, legislation, industry and consumer protection standards, and financial capability.828
The inclusion of excluded, unbanked and underserved people and MSMEs will contributesignificantly to global poverty reduction. At the national level, it is the role of the government asregulator and facilitator, especially to develop related policies and an enabling financial
infrastructure.829 Financial institutions can play a vital role in providing access to finance to all
income groups in a society. The next section gives an overview of international standards withregard to financial inclusion, which serve as a basis for policies by individual financial institutions.
4.2.2 International standards and initiatives
Most international principles and standards pertaining to financial inclusion are voluntary, and haveso far been introduced primarily by groups of countries like G8 and G20. Dedicated organisations
such as the Center for Financial Inclusion (CFI) are also involved in setting targets and principles
regarding financial inclusion.830 In this sub-section, we first list the major international initiatives
and standards regarding inclusive finance. As a next step, a set of indicators will be provided toassess the financial inclusion policies of financial institutions.
•

Key Principles of Microfinance
The Consultative Group to Assist the Poor (CGAP), housed at the World Bank, is a global
partnership to advance financial inclusion. According to CGAP, being included in the formal
financial system helps people to:831
•
•
•
•
•
•

Make day-to-day transactions, including sending and receiving money;
safeguard savings, which can help households manage cash flow spikes, smoothconsumption and build working capital;
finance small businesses or microenterprises, helping owners invest in assets and grow theirbusinesses;
plan and pay for recurring expenses, such as school fees;
mitigate shocks and manage expenses related to unexpected events such as medical
emergencies, a death in the family, theft, or natural disasters; andimprove their overall welfare.

CGAP developed 11 Key Principles of Microfinance, which were endorsed by the G8 summit in2004.832•

G20 Financial Inclusion Action Plan
The Global Partnership for Financial Inclusion (GPFI) is a platform for all G20 countries,
interested non-G20 countries and relevant stakeholders to carry forward work on financial
inclusion, including implementation of the G20 Financial Inclusion Action Plan (FIAP), endorsedat the G20 Summit in Seoul in 2010 and updated in 2014 and 2017. Along with the FIAP, GPFI
developed a set of financial inclusion indicators, measuring financial inclusion in three
dimensions:833•••

Access to financial services;
Usage of financial services; andQuality of the products and the service delivery.

Page | 244

•Principles For Investors In Inclusive Finance
The Principles for Investors in Inclusive Finance (PIIF) were launched in 2011 and are alignedwith the UN-backed Principles for Responsible Investment (PRI) and provide investors withspecific guidance on responsible investment in inclusive finance. The PIIF consists of sevenprinciples:834
•
•
•
•
•
•
•

•

Expanding range of services to low income people;
Integrating client protection in investment policies and practices;
Fair treatment of investees with appropriate financing;
Inclusion of environmental, social and governance (ESG) issues in investment policies andreporting;
Promotion of transparency in all aspects;
Striving for a balanced long-term social and financial risk-adjusted return; andCollaboration on setting harmonised investor standards to support further development of
inclusive finance.

Maya Declaration on Financial Inclusion
The Maya Declaration on Financial Inclusion of the Alliance for Financial Inclusion (AFI) covers
four areas, which are aligned with the G20 Principles for Innovative Financial Inclusion:835
•
•
•
•

•

Create an enabling environment to harness new technology that increases access andlowers costs of financial services;
Implement a proportional framework that advances synergies in financial inclusion,
integrity, and stability;
Integrate consumer protection and empowerment as a key pillar of financial inclusion; andUtilize data for informed policymaking and tracking results.

Financial Inclusion 2020: The Roadmap Principles
The Center for Financial Inclusion (CFI) identifies five priority focus areas that are key toachieving financial inclusion. The Financial Inclusion 2020 Roadmap Principles are:
•
•
•
•
•

•

Addressing customer needs;
Technology-enabled business models;Financial capability;
Client protection; andCredit reporting.

UNEP Inquiry on the Design of a Sustainable Financial System
A premise of the 2016 UNEP Inquiry on the Design of a Sustainable Financial System is that abold new vision is needed to put the world on a sustainable path. The financial system is the
lifeblood of the economy at the local, national, and global level. As such, it has an important
positive role to play in supporting poverty alleviation efforts and the realization of humanrights. However, inherent conflicts of interest that can result from profit-seeking financial
institutions running financial inclusion need to be addressed through appropriate safeguards.836

The main international standards on financial inclusion are summarised per topic, followed by theassessment elements that are formulated by the FFGI as a result:

Page | 245

•Access of low-income and other marginal groups to financial services
Access to financial services is the first dimension to measure financial inclusion according to the
G20 Financial Inclusion Indicators developed by the GPFI (Global Partnership for Financial
Inclusion).
The Key Principles of Microfinance state that “access to sustainable financial services enables
the poor to increase incomes, build assets, and reduce their vulnerability to external shocks.
Microfinance allows poor households to move from everyday survival to planning for the
future, investing in better nutrition, improved living conditions, and children’s health andeducation”.837 The principles also mention that ”interest rate ceilings can damage poor people’s
access to financial services” reminding financial institutions to keep their interest rates at bay;otherwise it would potentially damage poor people’s access to financial services.838
The FI2020 Roadmap to Inclusion Principle 2 promotes the use of enabling technology such as
branchless banking and mobile banking to accelerate the access of people who live in the areas
where financial infrastructure is too poor and does not allow them to access financial services
physically. Physical access is usually measured through the broad of coverage of bank branches(outside mainstream big cities) and service points.839
The Principles of Investors in Inclusive Finance encourage retail providers to expand their rangeof financial services available to low-income populations (e.g. savings, loans, insurance,
payment services, remittance facilities and pension plans) and to more remote areas and more
vulnerable populations.
The first focus area in the Maya Declaration on Financial Inclusion is to ‘create an enabling
environment to harness new technology that increases access and lowers costs of financial
services (include promotion of mobile financial services to lower the cost of services)’.
This leads to assessment elements•

1

The financial institution has policies, services and products that specifically target the poor andmarginal groups.

2

The financial institution has branches in rural areas, not only in cities.

3

The financial institution provides branchless, cashless (e-money) and mobile banking services.

4

The financial institution’s share of loans channelled to MSMEs is above 10%.

5

The financial institution does not require collateral for MSMEs to borrow.

Financial capability of clients
Often, poor people and marginal groups that are the target of financial services andmicrofinance have no prior knowledge and insufficient financial literacy to understand the
products and services offered to them, be they loans, credit, insurance or savings.
The G20 Principles for Innovative Financial Inclusion encourage financial institutions to develop
financial literacy, financial capability and adequate redress mechanisms to make sure that theirclients are aware of what they are up to when agreeing to saving schemes, loan schemes, credit
schemes or insurance schemes.
This is more apparent in the case of the developing countries where low levels of literacy, notto mention financial literacy, are still widespread. Lack of financial capability poses a significant
barrier to access and proper use financial services. Therefore, increased financial literacy andcapability will in turn increase demands for more transparent and better service from thePage | 246financial institution.
FI2020 Roadmap to Inclusion focuses on empowering clients to know their rights as consumers,
and have the skills, attitudes, aspirations, and confidence to exercise those rights. Principle 1
broadens the term to financial capability, which is an effort to encourage sound financial
choices and behaviour by customers. Increasing financial capability means financial institutions
must promote measures to enable clients to have knowledge, skills, attitudes and behaviours
needed to make sound financial decision.
This leads to assessment elements•

6

The financial institution has a policy to disclose client’s rights, and risks of product or service(including risk of over indebtedness) offered to low-literate clients and MSMEs.

7

The financial institution’s terms and conditions is available to clients in national/local language.

8

The financial institution has a policy to improve financial literacy of low-income, marginal groups
and MSMEs.

Affordability and quality of products and services
The poor need a variety of financial services, not just loans, but also savings, cash transfers, andinsurance, according to the Key Principles of Microfinance. The principles also underscore theneed for financial institutions to promote product and service diversity and innovation. For
instance, specific services such as assistance to migrant workers to manage remittances is also
expected to be provided by financial institution.
Financial institutions must make the effort to reduce transaction costs and offer products andservices that meet clients’ needs and also provide services that are convenient, flexible, andreasonably priced. The Principles of Investors in Inclusive Finance recommend financial
institutions to provide a broad range of services to low-income clients, and develop innovative
products tailored to their needs.
The G20 Financial Inclusion Indicators describe indicators for cost of usage - average cost of
opening a basic current account, average cost of maintaining a basic bank current account(annual fees), and average cost of credit transfers – and credit barriers - tightness of credit
conditions (requirement for SMEs to provide collateral to get loan), getting credit: distance toservice points. Overall, quality of products and services can be measured through price, cost,time as well as criteria and requirement (e.g. collateral).
The EU Payment Accounts Directive requires member states to provide access to a basic
payment account from 2016. In order to ensure that payment accounts with basic features areavailable to the widest possible range of consumers; they should be offered free of charge orfor a reasonable fee.840
This leads to assessment elements
9

The financial institution does not charge clients to open a basic bank account or for a reasonable
fee.

10

The financial institution does not require a minimum balance for maintaining a basic bank account.

11

The financial institution has a standard and provides information on credit processing time.

12

The financial institution has appropriate, affordable, and convenient financial products to send or
receive domestic remittances through an account.

13

The financial institution provides low-income housing finance.

Page | 247

•Consumer protection
Consumer protection is more apparent in financial inclusion because the subjects of protection
are most likely the poor or illiterate and therefore have no knowledge at all of any kind of
information or grieving mechanism offered (or not) by the financial institution.
The Client Protection Principles for Microfinance, endorsed by providers of financial services,
networks and individuals working in microfinance, describes the minimum protection
microfinance clients should expect from providers. The principles cover:841
•
•
•
•
•
•

Avoidance of over-indebtedness;
Transparent pricing;
Appropriate collection practices;
Ethical staff behaviour;
Mechanism of redress of grievances; andPrivacy of client data.

The Maya Declaration on Financial Inclusion suggests an integration of consumer protectionand empowerment as a key pillar of financial inclusion as one of its four broad areas that ‘hasbeen proven to increase financial inclusion’ and in line with the G20 Principles for Innovative
Financial Inclusion.
The FI2020 Roadmap to Inclusion emphasizes client needs and consumer protection. In its
explanation on client protection , the roadmap outlines that financial inclusion with client
protection will occur when all clients can affirm the following five statements:842
•
•
•
•
•

I have a choice of quality and affordable financial services.
I can get information I need and understand it to make an informed decision.
I have confidence in my provider, am treated with respect and am not discriminatedagainst.
I understand the risks involved in using financial services and believe they are offset by thebenefits I gain.
I know my rights and where to complain when problems arise.

Based on the OECD standard on consumer protection, the G20 countries also endorsed the G20
High-level Principles on Financial Consumer Protection, that encompass the following 10 topics:
1. Legal, Regulatory and Supervisory Framework;
2. Role of Oversight Bodies;
3. Equitable and Fair Treatment of Consumers;
4. Disclosure and Transparency;
5. Financial Education and Awareness;
6. Responsible Business Conduct of Financial Services Providers and Authorised Agents;
7. Protection of Consumer Assets against Fraud and Misuse;
8. Protection of Consumer Data and Privacy;
9. Complaints Handling and redress; and10. Competition.
The UN Principles for Responsible Investment (PRI) has developed the Principles for Investors in
Inclusive Finance (PIIF). These principles recommend financial institutions to integrate client
protection into their investment policies and practices, promoting the principle to their
suppliers and to report the progress to their investor and stakeholders. The principles also
highlight the importance of financial institutions to treat the low-income clients fairly.

Page | 248

The ISO 12812 standards series regarding mobile financial services have been available since2016. Standards in the series include:
•
•
•
•
•

ISO 12812-1:2017 Mobile financial services – General Framework;
ISO/TS 12812-2: Security and data protection for mobile financial services;
ISO/TS 12812-3: Financial application lifecycle management;
ISO/TS 12812-4: Mobile payments-to-persons; andISO/TS 12812-5: Mobile payments to businesses.

In 2017, the Center for Financial Inclusion at Accion and the Institute of International Financepublished a report regarding how FinTech and financial institutions can work together towards
financial inclusion.
The assessment elements of this topic are part of the theme Consumer protection (See section
4.1.3).
4.2.3 Assessment elements
The elements of a good operational policy on financial inclusion covers the responsibilities of thefinancial institution, which is in most cases, a bank, towards its clients, which are individuals and
MSMEs.i In order to ensure that financial inclusion for low-income target groups is guaranteed,financial institutions should establish policies whose scope is consistent with its diversity of
products and services. The scope of the assessment elements will be scored for the same groups offinancial products as in the theme Consumer protection:
•

•

•

•

•
•

Current and saving accounts: These are the most popular personal banking products that giveto customers the flexibility of deposit and withdrawals. On saving accounts usually a smallinterest is paid;
Credit cards: Credit cards and other forms of overdraft accounts and revolving credits, provide
the consumer with a flexible, instant opportunity to lend money to spend it on different
expenditures. Repayment usually needs to start within a month and high interest rates arecharged;
Personal loans: Loans that are tied to specific forms of expenditure, such as loans for thepayment of educational fees, auto loans and other consumption credits. The borrower isprovided with a fixed amount to be repaid over a given period by a fixed number of
instalments;
Housing loans: These loans are specifically intended to finance the acquisition of a house orother form of private property. The loans are secured by a mortgage on the borrower's
property; andInvestment: This group of products provides individual consumers access to fixed and variable
income investments.
Insurance: These products include services related to pension plans and insurance products.

The following elements are crucial for a policy regarding the financial institution's internal
operations:i

For the purpose of the study microenterprises are defined as those with 1 to 4 employees; very small, 5 to 9
employees; small, 10 to 49 employees; and medium, 50 to 250 employees, based on IFC Advisory Services | Access toFinance (2013, August), Access to Credit Among Micro, Small, And Medium Enterprises, International FinanceCorporation World Bank Group, p. 4.

Page | 249

1. The financial institution has policies, services and products that specifically target the poor andmarginal groups.
2. The financial institution has branches in rural areas, not only in cities.
3. The financial institution provides branchless, cashless (e-money) and mobile banking services.
4. The financial institution’s share of loans channelled to MSMEs is above 10%.
5. The financial institution does not require collateral for MSMEs to borrow.
6. The financial institution has a policy to disclose client’s rights, and risks of product or service(including risk of over indebtedness) offered to low-literate clients and MSMEs.
7. The financial institution’s terms and conditions is available to clients in national/local language.
8. The financial institution has a policy to improve financial literacy of low-income, marginal
groups and MSMEs.
9. The financial institution does not charge clients to open a basic bank account or for areasonable fee.
10. The financial institution does not require a minimum balance for maintaining a basic bankaccount.
11. The financial institution has a standard and provides information on credit processing time.
12. The financial institution has appropriate, affordable, and convenient financial products to sendor receive domestic remittances through an account.
13. The financial institution provides low-income housing finance.

Page | 250

4.3

Remuneration

4.3.1 What is at stake?
Remuneration for employees within a company increasingly consists of a fixed part - the basesalary - and a variable part. The height of this variable part can be determined in different ways, forexample by linking the achievements of the employee to the financial result of (a part of) thecompany. In case of good achievements or good financial results, the variable remuneration for theemployee can be relatively high compared to the base salary, but the reverse can also occur. The
variable remuneration part is often referred to in terms of bonus, commission pay, profit sharing,
performance remuneration, etc. In this methodology all these types of variable remuneration are
called ‘bonuses’.
Granting bonuses is often viewed as an ‘honest’ way of repaying exceptional efforts. Some also
regard a bonus system as a way to encourage companies to become more sustainable.843 However,there are negative aspects to consider.
Bonuses are in practice regularly linked to indicators in which the importance of the enterprise as awhole is not reflected and certainly not the wider social importance. In these cases, the indicators
are skewed towards short term objectives, financial results and the achievements of the individual
employee, while achievements coming from long term objectives and the non-financial results ofthe company as a whole would be better indicators. If these are left out of the equation, employees
can be encouraged to take undesired and sometimes irresponsible risks that may be of personal
importance, but may be detrimental to the company and society.
The often very large bonus sums lead to much social indignation when the link between personal
strengths, the financial achievements of the company and the height of the bonus seems lost. Top
managers receiving huge salaries and bonuses while the enterprise they work for suffers financial
difficulty and even has to fire people is incomprehensible to many people. The same applies to top
managers of financial institutions.
Short-term objectives and the excessive sums characterise the bonus culture in the US, UK, andother financial institutions, mainly in investment banking departments. Many people consider thisbonus culture to be one of the main causes of the 2008 financial crisis.844 The prospect of a very
high bonus - based on short-term financial objectives - led to granting mortgages and loans topeople that could not really afford them. The consequences of this risky behaviour have been felt
globally:845
•

•

•
•

Consumers are insufficiently informed about the risks of the products that were sold to them.
Particularly in the United States this has led to many evictions because people could no longer
afford to pay their mortgages and loans;
A part of the receivables that financial institutions had on consumers could therefore not be
resold. This not only caused financial problems for financial institutions themselves, but also forthe rest of the financial system to which outstanding receivables had been sold;
Governments have had to save financial institutions from bankruptcy and partly due to thishave been faced with an economic crisis;
Not only the countries of origin of the financial institutions, but also developing countries areexperiencing the negative consequences of this economic crisis in decreased export revenues,
foreign investments, currency exchange rates and budgets for development aid. Estimates ofseveral organisations on the number of people that have fallen, and will fall, into poverty
through the financial crisis are running into tens of millions.846

Page | 251

Due to these developments, the public and governments have frequently called for the mitigationof bonuses, for linking bonuses to long-term objectives, or for the entire abrogation of bonuses,
particularly in the financial world.847
On average, the number of companies that have included sustainable objectives in their bonus
policy is one third. Such objectives are related to environmental issues (reduction of emissions andenergy efficiency) and social issues (client satisfaction, safety, social involvement, employees).
Research also shows that companies are convinced that including sustainable criteria in theirremuneration policy contributes to sustainable development.848 CEOs of multinational corporations
also consider this an important method for developing a new and sustainable vision of thecorporate world.849
The topic of balanced remuneration is important for achieving Sustainable Development Goal
(SDG) 10: Reduced Inequalities. It can also be indirectly linked to SDG 16: Peace, Justice and Strong
Institutions.850 Due to the increased attention to the height of bonuses and the link withsustainability and corporate social responsibility, all financial institutions should develop solid
bonus policies. To this effect, financial institutions can make use of the international standards andinitiatives described in the following section.
4.3.2 International standards and initiatives
As far as regulation and standards concerning remuneration are concerned, there are currently no
global policies in place.
In the United States, regulators have implemented mechanisms to supervise remuneration paid bybanks to their employees, which are mandated by § 956 of the 2010 Dodd-Frank Wall Street
Reform and Consumer Protection Act. Banking regulators have specifically targeted bank practices
regarding incentive-based compensation. In undertaking this initiative, the banking regulators havejointly implemented a variety of regulatory regimes.
In the United States, three Federal Statutes are relevant in relation to remuneration:851•••

The 2002 Sarbanes-Oxley Act (SOA) §304; 15 U.S.C. §7243(a);The 2008 Emergency Economic Stabilization Act (EESA) §111(b)(3)(B), as added by Section 7001
of the American Recovery and Reinvestment Act of 2009 (ARRA); 12 U.S.C. §5221(b)(3)(B)(applicable only to recipients of assistance under the Troubled Asset Relief Program (TARP) thathave not repaid the Treasury); andThe 2010 Dodd-Frank Wall Street Reform and Consumer Protection Act (DFA) §954, 15 U.S.C.
§78j-4(b).

In the European Union, the European Banking Authority (EBA) has set out requirements in a seriesof Capital Requirements Directives (CRD). There are three main Directives that regulate
remuneration:852•••

The 2013 Fourth Capital Requirements Directive (CRD IV) (EU Directive 2013/36);
The 2011 Alternative Investment Fund Managers Directive (AIFMD) (EU Directive 2011/61); andThe 2009 Undertakings for Collective Investment in Transferable Securities Directive (UCITS)(Directive 2009/65).

Page | 252

Under CRD III, in force since 2011, new rules on remuneration were introduced, which were
elaborated in the EBA’s Guidelines on Remuneration Policies and Practices. A maximum of 30% of
the total bonus can be paid out in cash, for very large bonuses there is a maximum of 20%. The
payment of 40 to 60% of the bonus has to be deferred over a period of at least three years so thebonus can be recovered if the results prove to be disappointing at a later stage. At least 50% of thebonus has to be paid out as subordinated capital: funds on which the bank can first make recourseshould the bank get into trouble.
The CRD IV is the fourth iteration of the EU Capital Requirements Directive and came into force inJanuary 2014. It carried over existing provisions of the CRD III relating to remuneration, with someenhancements in relation to the bonus cap. Among the new rules is a maximum variable
remuneration of 100% of the annual salary, which can be increased to 200% with shareholder
approval.853 The relevant provisions can be found in articles 74, 92 to 95 and 161 (in addition torecitals 62 to 69 and 83) in the CRD IV; and in article 450 on disclosure in the CRR.854
The European Banking Authority (EBA) has also published various Regulatory Technical Standards(RTS) for the definition of material risk takers, and for remuneration purposes set out process andcriteria for the identification of staff who have an impact on the institution’s risk profile, so-called‘Identified Staff’.855
The Financial Stability Board (FSB) – until April 2009 the Financial Stability Forum (FSF) - wasestablished in 1999 by the G7 with the objective of improving international financial stability. In the
FSB central banks, financial supervisors and financial institutions are represented.
In response to the international financial crisis of 2008, the FSF Compensation Workstream Grouppublished the Principles for Sound Compensation Practices in 2009. The emphasis of theseprinciples is on the relation between the degree of risk that an employee takes on behalf of thecompany and the height of the remuneration that is granted. According to the principles,
remuneration should be corrected downwards if more risk has been taken. In practice, this meansthat if two employees realise the same amount of profit, but have taken various levels of risk, theyshould not receive similar compensation.
Other standards, reports and guidelines to consider are the UN Principles for Responsible
Investment (PRI) and Global Compact’s 2012 recommendations on remuneration; the G20’s
recommendations about remuneration at the Pittsburgh Summit in 2009; Consumers
International’s report Responsible Lending (2013); and the 2010 Sustainable Remuneration guide of
the Association of Investors for Sustainable Development (VBDO), the Hay Group, and DHV, which
serves as a manual to link sustainability objectives to the bonus of company managers.
The main international standards on remuneration in the financial sector are summarised per topic,
followed by the assessment elements that are formulated by the FFGI as a result:•

Clawback schemes
In its 2009 report FSF Principles for Sound Compensation Practices, the Financial Stability Board(FSB) states that compensation pay-out must be sensitive to the time horizon of risks. Thismeans that if a bonus is granted that is sensitive to risk outcomes, it should be seen as a multiyear risk horizon. Otherwise employees could have an incentive to expose the firm to risks thatare unlikely to be exposed for some time. To align time horizons a bonus can be subjected to aclawback.

Page | 253

In United States legislation ‘clawback’ means a repayment of previously received compensation
required to be made by an executive to his or her employer. Clawbacks under SOA §304
concern only clawbacks from the CEO and the CFO and apply only to cases in which there is’misconduct’ resulting in “material noncompliance of the issuer with any financial reporting
requirement under the securities laws”.856
The Emergency Economic Stabilization Act (EESA) of 2008 only applies to institutions receiving
aid under the Troubled Asset Relief Program (TARP) and requires that institutions that arereceiving assistance under TARP are obligated to maintain certain standards for executive
compensation and corporate governance.857 Under the Dodd-Frank Act §954 (DFA), publicly
traded firms are obligated to have policies in place that enforce the repayment of specific typesof overpayments made to executives, based on financial results that turn out to be false andrequire a restatement.858 The clawback is to be carried out if the listed company is required tofile a financial restatement under securities laws due to material noncompliance under thoselaws. The clawback applies to “incentive-based compensation (including stock options awarded
as compensation) during the 3-year period preceding the date on which the issuer is required
to prepare an accounting restatement, based on the erroneous data, in excess of what would
have been paid to the executive officer under the accounting restatement”.859
In the European Union, malus or clawback arrangements are explicit ex-post risk adjustment
mechanisms where the institution itself adjusts remuneration of a staff member based on suchmechanisms (e.g. by lowering awarded cash remuneration or by reducing the number or valueof instruments awarded). The CRD IV pertains to banks and other financial institutions and theclawback arrangements dictate that up to 100% of variable pay will be subject to clawback ormalus arrangements. Financial institutions will be required to set specific criteria for sucharrangements.860
This leads to assessment element
1•

The financial institution maintains the right to recover bonuses if, after payment, it appears thatthey were paid unduly (a so-called clawback scheme).

Bonus maximum
In the United States, a maximum for bonuses or variable remuneration is officially regulated
through DFA § 956. However, the language of the Act is not quantified sufficiently. For example,
the banking, securities and federal housing regulators have proposed regulations that statethat financial institutions are prohibited “from having incentive—based compensation
arrangements that may encourage inappropriate risks (a) by providing excessive compensationor (b) that could lead to material financial loss to the covered financial institution”.861 However,no standards have been created to give these ambiguous regulations substance. Nevertheless,the regulators have claimed that such standards will be established.862
In the European Union, under the CRD IV “variable pay” is capped at 100% of total fixed pay or,with shareholder approval, 200% of total fixed pay. This is including performance based
payments or benefits and, in exceptional circumstances, other contractual elements that do not“form part of a routine employment package” (examples in the Directive include healthcare,child care facilities or proportionate regular pension contributions). EU Member States have thediscretion to adopt stricter standards (e.g. lower bonus caps).863

Page | 254

The Netherlands implemented regulation in 2013, which does not allow bonuses in the financial
sector above 20% of fixed remuneration.864 A 2018 review of the regulation by the Dutch
government found evidence that the 20% remuneration cap further decreased risk taking bybankers, when compared with a 100% cap.865
This leads to assessment elements•

2

The bonus is a maximum of 100% of the fixed annual salary.

3

The bonus is a maximum of 20% of the fixed annual salary.

Pay ratios
In the Untied States, the Dodd-Frank Act Section 953 requires proxy disclosure of the salary of
median employees (as calculated under the SEC’s executive compensation disclosure rules)
compared to the pay of the CEO. Similarly, in the United Kingdom regulations were introduced
in 2019 that require large companies to disclose the pay gap between the CEO and the median
employee.866
Respondents of the 2018 World Economic Forum’s Global Risks Perception Survey (GRPS) rated“rising income and wealth disparity [a]s one of the most important trends in determining global
developments over the next 10 years”.867 In line with this study, Oxfam International argued inits 2018 report Reward Work, Not Wealth that "there is growing evidence that the current levelsof extreme inequality far exceed what can be justified by talent, effort and risk-taking".868
Oxfam therefore recommends to “limit returns to shareholders and promote a pay ratio forcompanies’ top executives that is no more than 20 times their median employees’ pay, andpreferably less”.869
This leads to assessment element
4•

The fixed salary of any employee does not exceed twenty times the lowest salary or the maximumof the lowest salary scale within the financial institution.

Long-term objectives
Another criterion to consider for sound remuneration policies is that of long-term objectives forinvestment practices. When granting variable remuneration as a reward for certain
achievements, it is important to consider whether the achievements concern long-term or
short-term objectives, for the company itself and for society at large. This can also be
accomplished through clawback schemes.
The G20 has established that restructuring policy and practice on remunerations and bonuses isrequired to further support financial stability. At the Pittsburgh Summit in September 2009, theG20 agreed that it is necessary that a significant part of variable remunerations has to be linked
to achievements and creating long term value. The G20 encourages companies to implement
their agreements with immediate effect.
In the United States, the Federal Reserve, in cooperation with other banking agencies, issued a
Final Guidance on Sound Incentive Compensation Policies in 2010, in which it is statedthat “incentive compensation arrangements at banking organizations [should] appropriately tie
rewards to longer-term performance”.870
In the European Union, regulation (CRD IV/ RTS) is aimed at stimulating a focus on long-term
objectives, instead of rewarding risky activities that would offer profit in the short term. In the
EBAs Guidelines on Sound Remuneration Policies, it is stated that “To set the appropriate

Page | 255

incentives for long-term-oriented and prudent risk taking, the remuneration policy andpractices need to be transparent for staff regarding the fixed remuneration, the variable
remuneration and the award criteria used. Fixed remuneration should be permanent,
predetermined, nondiscretionary and non-revocable”.871
In cooperation with the UN Global Compact (UNGC), the UN PRI has made recommendations
on taking up environmental, social and governance (ESG) criteria in the variable rewards of theemployees: Integrating ESG issues into executive pay. In order to make senior employees moreaware of ESG issues, this initiative recommends companies to develop mechanisms that ensurethat both the company’s interests as well as the employee’s and society’s interests areconnected to one another. This may be done by setting long-term goals for employees as wellas the company.
The Association of Investors for Sustainable Development (VBDO), Hay Group and DHV callupon all companies to base at least 60% of the bonus on long-term objectives. To achieve this,
it is important to take the activities and the industry in which a company operates into account.
According to the VBDO, Hay Group and DHV, sustainable objectives for banks should compriseof integrity, responsible investment and the level of energy consumption. In the Sustainable
Remuneration guide, sustainability is defined as the total of all ethical, environmental and/or
social issues that influence the interests of the organisation and its stakeholders. Within thisframework, a company that, besides its financial objectives, aims towards client satisfaction isconsidered as a company with a limited sustainable focus. A company that in addition also aims
for employee satisfaction and the reduction of its CO2-emissions is considered to be moresustainable.
This leads to assessment element
5•

At least 60% of the bonus is based on long term objectives (not to be confused with agreements
for deferred payment of the bonus).

Non-financial criteria
The International Labour Organisation (ILO) emphasises in its World of Work Report 2013 that
it is important to increase a focus on better alignment of the activities in the financial sector
with the needs of the real economy, for example through linking performance-based
compensation to social and environmental objectives.
In the 2012 UN Global Compact and UN PRI report Integrating ESG issues into executive pay,companies are recommended to link appropriate ESG metrics to reward systems in such a waythat they form a meaningful component of the overall remuneration framework. They arefurthermore encouraged to develop their own definition of sustainable value creation and use
it to select appropriate ESG metrics, thereby also consulting shareholders and stakeholders inorder to enhance internal and external support.
In the European Union, the CRD Remuneration requirements Articles 74 and 92 to 96 andArticle 450 CRR dictate that remuneration that is linked to performance should in total bebased on both the assessment of the performance of an individual, the business unit concerned
and the overall results of the institution. When assessing the performance of an individual,
financial as well as non-financial criteria are to be taken into account. The total amount of
remuneration is based on a combination of the assessment.

Page | 256

The Sustainable Remuneration guide calls upon all companies to base at least one third of thetotal bonus on sustainable objectives. To achieve this it is important to take the activities andthe industry in which a company operates into account. According to the authors, VBDO, HayGroup and DHV, sustainable objectives for banks should comprise of: integrity, responsible
investment and the level of energy consumption. The Dutch law on the remuneration policies
of financial institutions makes it mandatory to base at least 50% of the variable remuneration
on non-financial criteria.
The 2009 Dutch Banking Code provides that, besides financial achievement criteria, nonfinancial achievement criteria should also be an important part of the assessment of anindividual for variable remuneration. Examples of these non-financial criteria include client
satisfaction, risk management, investor relations, operational objectives, human resources,
integrity, compliance and sustainability.
This leads to assessment elements•

6

At least one third of the bonus is based on non-financial criteria.

7

At least two thirds of the bonus is based on non-financial criteria.

8

The bonus is based on employee satisfaction.

9

The bonus is based on client satisfaction.

10

The bonus is based on improving the social and environmental impact of the financial institution’s
management and operational practices.

11

The bonus is based on improving the social and environmental impact of the financial institution’s
investments and financial services.

Application of remuneration policies
A financial institution may apply its remuneration policy in various ways. One problem in banks’and financial institutions’ bonus policies is the use of exceptions, so that, for instance, only the
Board of Directors is covered, or only particular divisions or subsidiaries.
A solid policy on remuneration is applied to the entire financial institution (including all
subsidiaries). This at least concerns the Board of Directors, the directors (in case of a 2-tierboard structure), senior management and risk takers. Senior management includes the people
that are ultimately responsible for certain divisions, portfolios, internal departments, etc. that
operate directly under the directors and Board of Directors. Risk takers comprise of investmentbankers, stock exchange traders and trading room managers.
This leads to assessment elements
12

The financial institution applies its remuneration policy to the entire group and at least concerns
the Board of Directors, the directors (in case of a 2-tier board structure), the senior management
and risk takers.

4.3.3 Assessment elements
All forms of variable remuneration are considered a bonus. This includes profit sharing programs,
except those that cover all employees and at equal terms. An ideal bonus policy would be very
sober, be partly based on sustainability criteria and would also include the possibility of recovering
the bonus in cases of malpractice. Banks and financial institutions should not make exceptions intheir bonus policies for investment bankers or subsidiaries.

Page | 257

In addition to element 12, which explicitly deals with the scope of financial institutions’
remuneration policies, policies will be assessed on the basis of their scope of application. Allelements (with the exception of elements 1, 4 and 5) will be assessed with the following scope
categories:•••

The whole group;
The Board of Directors; andSenior management.

The FFGI’s expectations on remuneration policies only concern the financial institutions’ employeesthat are not covered by a collective labour agreement. The following elements are crucial for apolicy regarding the financial institution's internal operations:
1. The financial institution maintains the right to recover bonuses if, after payment, it appears thatthey were paid unduly (a so-called clawback scheme).
2. The bonus is a maximum of 100% of the fixed annual salary.
3. The bonus is a maximum of 20% of the fixed annual salary.
4. The fixed salary of any employee does not exceed twenty times the lowest salary or the
maximum of the lowest salary scale within the financial institution.
5. At least 60% of the bonus is based on long term objectives (not to be confused withagreements for deferred payment of the bonus).
6. At least one third of the bonus is based on non-financial criteria.
7. At least two thirds of the bonus is based on non-financial criteria.
8. The bonus is based on employee satisfaction.
9. The bonus is based on client satisfaction.
10. The bonus is based on improving the social and environmental impact of the financial
institution’s management and operational practices.
11. The bonus is based on improving the social and environmental impact of the financial
institution’s investments and financial services.
12. The financial institution applies its remuneration policy to the entire group, including the Boardof Directors, the directors (in case of a 2-tier board structure), the senior management and risktakers.

Page | 258

4.4

Transparency and accountability

4.4.1 What is at stake?
Each individual has the right to know what consequences business activities can have for his or her
life and which risks he or she is exposed to in these activities. People whose lives are influenced byeconomic activities are unable to defend their legitimate interests if they are not fully informed on
the social, economic and environmental advantages, as well as the costs and risks connected tothat activity. Also, they have to be informed on the possible alternatives for the proposed activity.
In order to properly defend their social, cultural and environmental interests, social organisations
also need to have access to all relevant information.
For these reasons, the public right of information - with the objective to participate in a meaningful
way in the decision-making process - is recorded in various international instruments. Examples are
the 1948 Universal Declaration of Human Rights, the 1992 Rio Declaration on Environment andDevelopment, the 1998 Aarhus Convention, the 2011 OECD Guidelines for Multinational
Enterprises and ISO 26000:2010 Guidance on social responsibility.
Although some of these guidelines principally formulate obligations for governments, the generalprinciples are applicable to all important social actors. This includes companies, which are obliged
to be transparent on activities that can have consequences for employees, nearby residents andothers. Moreover, companies have to be prepared to be accountable for it and to listen to the
expectations and concerns of other stakeholders. This means that the company has to establish aformal complaints procedure.872
Transparency creates trust. More and more companies realise that transparency and accountability
is not only their moral duty, but that it can also offer them an advantage. The lack of sufficient
information, as well as the public perception that managers try to keep certain information secret,may cause conflicts and resistance to the activities of companies. Transparency also decreases therisk of corruption. A company that is both transparent and prepared to be accountable in this way
acquires social approval for its activities.873
Transparency and accountability are particularly important for financial institutions (FIs). In contrast
to other companies, which operate in particular sectors, financial institutions play an important rolein virtually every field of economic activity. As capital providers, investors and financiers carry acertain responsibility for the social and environmental consequences of all these economic
activities. To this effect, financial institutions not only have to inform the public of their own
activities, but also have to be as transparent as possible about the companies, projects andgovernments in which they invest.
For financial institutions, transparency also provides a significant advantage in that it allows themto timely recognise and act upon public concerns about activities in which they want to invest,
before actual conflicts arise. Therefore, many multilateral development banks and export credit
insurance companies have transparency policies to ensure data is made public on all consideredtransactions.874
Transparency and accountability form the basis for achieving many of the Sustainable
Development Goals (SDGs). In particular, SDG: 16 Peace, Justice and Strong Institutions promotes
the development of effective, accountable and transparent institutions at all levels.875 Similarly,
SDG: 12 Responsible Production and Consumption highlights the importance for companies toadopt sustainable practices and integrate reporting on sustainable aspects in their reports.876 There
are many other SDGs that cannot be achieved without transparent and accountable institutions, bePage | 259

it a company or a state.
When developing policies in this respect, financial institutions can make use of the international
standards described below.
4.4.2 International standards and initiatives
There are various international standards on transparency (both at the level of the financial
institutions as a whole as well as with respect to individual investments) and accountability. The
main international standards on transparency and accountability of financial institutions are
summarised per topic, followed by the assessment elements that are formulated by the FFGI as aresult:•Finance and investment framework and auditing
In order to verify whether financial institutions meet their sustainability promises, financial
institutions conduct internal audits of their credit and investment policies and framework
regarding certain sectors and environmental, social and governance issues and the system putin place to implement those. This includes the due diligence processes. Based on these audits,they can establish whether their systems can be improved further.
It is even better when financial institutions conduct an external audit of their credit andinvestment policies and framework, including due diligence processes, regarding certain sectors
and environmental, social and governance issues where they can make use of AccountAbility’s
AA1000 Series of Standards, a combination of norms on accountability, auditing and reporting.
Another system for auditing non-financial information is ISAE 3000, published by theInternational Assurance and Accounting Standards Board.877 Preferably, a summary of theresults of these audits is made public, for example in the sustainability report, and discussedwith stakeholders.
This leads to assessment elements•

1

The financial institution describes its finance and investment framework regarding environmental
and social issues and provides insight into how the financial institution ensures that investments
meet the conditions set in its policies.

2

The financial institution's finance and investment performance regarding environmental and social
issues is audited vis-à-vis its relevant policies by a third party and the results are published.

Transparency on specific transactions
It is not sufficient that financial institutions publish positive sounding policy statements. Suchpolicy statements should actually lead to more sustainable investment practices. This can only
be verified publicly if the financial institution provides insight into loans granted and otherinvestments. On the financial institution’s website, stakeholders have to be able to find basic
information on all transactions in which a financial institution is involved. Similarly, financial
institutions should publish the names of governments they invest in, as is standard practice formany financial institutions. And if available, the social and environmental impact assessmentson these transactions also have to be publicly available.
The financial institution should at least specify all regions and industries in a breakdown of its
portfolio. Financial institutions often claim that they are unable to publish such information
about companies as it harms trust with their clients. However, when a financial institution
participates in bank syndicate, it often proudly advertises it in financial magazines. Apparently,
the relation of trust with the client does not play a role in these situations.

Page | 260

When financial institutions grant loans to individual companies, they can inform these clients inadvance that their name could be published. Multilateral development banks such as the World
Bank, the Asian Development bank and many others have been setting a good example in thisrespect for years. Since 1994, the International Finance Corporation (IFC) has a strict Access toInformation Policy (AIP). On its website, IFC provides extensive and comprehensive information
on its activities, including its investment guidelines and its investments. When IFC finances acertain project, information on that project is made available on its website, such asenvironmental impact assessments and environmental action plans.878 Another example is the
Italian Banca Etica, which not only publishes information on its loans (name lender, term of theloan, amount), but also on potential transactions that are pending at an external Ethics
Committee. This is in line with the principles of the Global Alliance for Banking on Values.
Commercial financial institutions should follow these examples by:
Providing an overview in their annual report of the industrial and regional breakdown of thetransactions in which they are involved. Such information is required in the GRI G4 Financial
Services Sector Disclosure (FSSD) (indicator FS6). Stakeholders also quickly gain insight inthe sensitive sectors and fields in which the financial institution is active;
Providing an overview of all companies to which it has granted more than EUR 10 million
credit. The value of this threshold is derived from the Equator Principles, but should not belimited to project finance;
Providing basic information through their website on the companies in which they invest;
andObliging the companies in which they invest (in some situations) to provide information to
involved communities on the social and environmental effects of their activities, such as
those included in the Equator Principles for Category A transactions.

•

•

•
•

This leads to assessment elements
3

The financial institution publishes the names of governments in which it invests.

4

The financial institution publishes the names of companies where it invests in or to which it has
granted credits.

5

The financial institution mentions and describes all companies (on its website) to which it grants
new credits.

6

The financial institution mentions and describes all companies (on its website) to which it has
granted credits.

7

The financial institution discloses the names of all outstanding project finance transactions andproject-related corporate loans, including the information required by the Equator Principles III.

If a financial institution does not wish to publish the names of companies it invests in or
finances, it may provide insight in its investments based on at least the first two digits, butpreferably the first four digits of the European Nomenclature Statistique (NACE). This standard
is similar to the United Nations International Standard Industrial Classification of All Economic
Activities (ISIC).879
Furthermore, banks in Europe can publish the outcome of the European Banking Authority's
annual Transparency Exercise. The Transparency Exercise "provides detailed bank-by-bank dataon capital positions, risk exposure amounts and asset quality".880

Page | 261

This leads to assessment elements•

8

The financial institution publishes a breakdown of its portfolio by region, size and industry (in linewith GRIs FSSD FS6).

9

The financial institution publishes a breakdown of its portfolio in a cross table, combining industry
and region data.

10

The financial institution publishes a sufficiently detailed breakdown of its portfolio, for example
based on the first two digits of NACE and ISIC.

11

The financial institution publishes a sufficiently detailed breakdown of its portfolio, for example
based on the first four digits of NACE and ISIC.

Sustainability reporting
The European Union’s Non-Financial Information Disclosure Directive obliges European
companies with more than 500 employees to publicly report on at least:881
•
•
•
•
•

Environmental matters;
Social and employee aspects;
Respect for human rights;
Anticorruption and bribery issues; andDiversity in their board of directors.

The Directive gives companies significant flexibility in disclosing this information: companies
may rely on guidelines such as the OECD Guidelines on Multinational Enterprises, ISO
26000:2010, the United Nations Global Compact, Global Reporting Initiative Reporting
Framework or the UN Guiding Principles on Business and Human Rights.
ISO 26000:2010 Guidance on social responsibility includes transparency as a principle andstates that an organisation is responsible “for the impacts of its decisions and activities onsociety and the environment, through transparent and ethical behaviour.”882
Likewise, the OECD Guidelines for Multinational Enterprises stress the importance of thedisclosure of information: companies “should ensure that timely and accurate information isdisclosed on all material matters regarding their activities, structure, financial situation,
performance, ownership and governance. This information should be disclosed for theenterprise as a whole, and, where appropriate, along business lines or geographic areas”.883
In addition, the United Nations Guiding Principles on Business and Human Rights (UNGPs) also
expect companies to report publicly: “In order to account for how they address their humanrights impacts, business enterprises should be prepared to communicate this externally,
particularly when concerns are raised by or on behalf of affected stakeholders”.884 Companies
and financial institutions can make use of the UNGP Reporting Framework to report on theirimpact on human rights.
In recent years, publishing annual sustainability reports has become commonplace. The best
known guideline for this is the Global Reporting Initiative (GRI) Reporting Framework, of which
the latest edition is the GRI Sustainability Reporting Standards (GRI Standards). GRI encourages
financial institutions to not only describe their sustainability policy, but to also measure therespective implementation. In the new GRI Standards it is possible to report either inaccordance with the GRI Standards: Core option or in accordance with the GRI Standards:
Comprehensive option.

Page | 262

Besides the General Disclosures there are also Sector Disclosures that elaborate on thetransparency requirements for specific types of companies and industries. In cooperation with
the UNEP Finance Initiative (UNEP FI), GRI published the GRI Financial Services Sector
Disclosure (FSSD), with specific guidelines on product portfolios, active ownership, investing in
local communities and developing accessible and honest sale of financial products.885
GRI recommends financial institutions to continue using the G4 Financial Services Sector
Disclosure together with the GRI Standards, even though they have not been updated yet.886
Financial institutions should also have their sustainability report be verified externally.887
This leads to assessment elements
17

The financial institution publishes a sustainability report that may contain (a number of) disclosuresfrom the GRI Standards.

18

The financial institution publishes a sustainability report that is set up in accordance with the (Coreor Comprehensive option of the) GRI Standards.

19

The financial institution’s sustainability report has been verified externally.

The following requirements on transparency are laid down in the GRI G4 Financial Services
Sector Disclosures (FSSD):
•

•

•

•

Publication of the policy of the financial institution on specific issues and industries (FS1). If
these policy documents are not publicly available, they are of less value. Because financial
institutions cannot be hold accountable when people that experience harm or disadvantage
from the investments of a financial institution cannot verify to what standards theinvestments should comply with.
Providing information on investments, divided according to region, size and sector (FS6:
Percentage of the portfolio for business lines by specific region, size (e.g. micro/SME/large).
This indicator provides contextual information on a financial institution’s portfolio andcustomer base, and serves as a starting point for further engagement processes withstakeholders. It is particularly relevant when combined with information on environmental
and social policies and risk assessment/screening procedures as applied to the different
business lines.
Providing information on how a financial institution deals with investments that do not (orno longer) meet the policy, the norms, or the contract conditions of the financial institution
is now explicitly requested. Financial institutions have to report which action they havetaken in these situations (for example engagement or exclusion), whether these actions
have been successful and what further steps will be taken (FS1, FS2, FS3 and FS10).
"Voting policy(ies) applied to environmental or social issues for shares over which thereporting organization holds the right to vote shares or advises on voting (G4-DMA andFS12)". This includes a "summary of voting practices during the reporting period including
explanation of significant deviations from voting policies".888

The OECD’s paper Responsible business conduct for institutional investors explains theapplication of the OECD Guidelines for Multinational Enterprises in the context of responsible
investment and explains the obligations of investors on identification of business relationships:“An investor should account for how it has addressed adverse impacts throughout its
operations and with its business relationships through (a) tracking and (b) communicating on
results. […] Public reporting may include information on the following:•

investor [Responsible Business Conduct] (RBC) Policy, including due diligence approaches;

Page | 263

how investor RBC Policy and diligence approaches are implemented across different asset
classes;
engagement activities undertaken by the investor;
companies with which the investor has engaged;
results of engagement with specific companies;
decisions regarding divestment;
voting records of investor in investee company shareholder meetings and guidelines forvoting in investee companies;
investor’s future RBC plans and targets.”889

•
•
•
•
•
•
•

The OECD also recognizes the difficulties for financial institutions in balancing transparency andconfidentiality. However, the OECD expects investors to “strive to account for their due
diligence processes to the extent possible while respecting confidentiality concerns. This may
involve:limiting access to sensitive information to those approved by the information provider.
anonymising the source of information.
providing a valid explanation or justification, where possible, for why the information has
not been sharedusing third parties or innovative technologies that allow disclosure of key information while
protecting commercially sensitive data, for example, to disclose certain information inaggregate or without identifying specific investor-investee relationships”.890

•
•
•
•

Therefore, financial institutions should publish their voting record, engagement activities
regarding their investee companies, and exclusion list. This enables stakeholders to assess thesustainable investment practices of a financial institution.
This leads to assessment elements•

12

The financial institution publishes the number of companies with which there has been interaction
on social and environment topics (in line with GRIs G4 FSSD FS10).

13

The financial institution publishes the names of companies with which there has been interaction
on social and environmental topics.

14

The financial institution publishes the results of engagement, including the topics, goals anddeadlines.

15

The financial institution publishes the names of companies that are excluded from investment due
to sustainability issues, including the reasons for this exclusion.

16

The financial institution publishes its voting record.

Consultation
Respecting the interests of the stakeholders is one of the principles in ISO 26000:2010
Guidance on social responsibility: “an organisation should respect, consider and respond to theinterests of its stakeholders.” The document also elaborates on ways to implement an effective
stakeholder dialogue as part of the social responsibility of organisations.891
Through consultation mechanisms, financial institutions can also consult civil society
organisations on their investment policy on certain sectors and issues. In order to make suchconsultations effective, it is important that financial institutions translate their policy documents
into a language and jargon that is comprehensible to the communities and organisations
involved. Such a consultation has to be a dialogue, a two-way process. When financial
institutions do not take the concerns, sensitivities and other stakeholders’ contributions

Page | 264seriously, the process is useless. Serious concerns have to lead to adaptation of the policy of
the financial institution and the procedures followed.892
GRI Standards Disclosure 102-40 requires companies to publish a list of stakeholder groups.
GRI Standards Disclosure 102-44 requires companies to report on key topics and concerns
raised through stakeholder engagement.
This leads to assessment element
20•

The financial institution reports on the consultation with civil society organisations and otherstakeholders.

Grievance mechanisms
In the United Nations Guiding Principles on Business and Human Rights (UNGPs), the lack ofgrievances procedures is mentioned as a weak point of companies. This is lacking in all
initiatives of financial institutions that want to guarantee compliance with human rights for thecompanies in which they invest or finance. An earlier UN report by prof. John Ruggie had
indicated that “In the absence of an effective grievance mechanism, the credibility of suchinitiatives and institutions may be questioned.”893
Financial institutions are accountable to local communities and other stakeholders for
involvement in companies they invest in or finance. The companies themselves are primarily
responsible for the social and environmental effects of their activities; any grievances ofcommunities should first be directed at them. However, this does not absolve a financial
institution from the obligation to ensure that all investees meet the standards set by thefinancial institution in its investment and finance policies.
According to the Office of the High Commissioner for Human Rights, UNGP 29 expects banks
to have grievance mechanisms in place (their own, or one they participate in or cooperate with).
Furthermore, in line with UNGP22 banks too are expected to take responsibility for enabling
remediation to communities and individuals that have been adversely impacted by the activities
of companies that are financed by the bank. While operational level grievance mechanisms(either of the bank itself or established by other entities) are one means through which
remediation can be provided, some impacts may be best remediated through other legitimate
mechanisms, including State-based judicial and non-judicial mechanisms. Banks should respect
stakeholder preferences with respect to use of a grievance mechanism or other legitimate
processes, and “engage with the latter in good faith”.894
Most multilateral development banks and export credit insurance companies have a grievances
procedure. Although limited in scope, the OECD National Contact Points can be considered asa grievance mechanism.895 Financial institutions should therefore cooperate with OECD National
Contact Points if stakeholders prefer to use it as a grievance mechanism.
For non-judicial grievance mechanisms, both State-based and non-State-based, to be effective,
the UNGPs expect it to be:896
•
•
•
•
•
•
•

Legitimate;
Accessible;
Predictable;
Equitable;
Transparent;
Rights-compatible; andA source of continuous learning.

Page | 265

On the point of transparency, the guidance for UNGP 31 further stresses that a non-judicial
grievance mechanism should keep parties to a grievance up-to-date about its progress, andprovide sufficient information about the mechanism’s performance, in order to build
confidence in its effectiveness and meet any public interest at stake.897
This is also relevant for operational-level grievance mechanisms. FFGI expects financial
institutions that choose to establish a grievance mechanism themselves, to report aboutcomplaints received and about the progress of the complaints that are dealt with by thefinancial institution.
This leads to assessment elements
21

The financial institution offers complaint mechanisms for clients and non-clients.

22

The financial institution establishes or participates in effective operational-level grievancemechanisms for individuals and communities that may be adversely impacted by activities that it isconnected to.

23

The financial institution reports on the grievance mechanism process, including its progress andperformance.

24

The financial institution commits to respecting and cooperating in good faith with State-based
non-judicial and judicial grievance mechanisms when cases that it is connected to are brought tosuch a mechanism.

4.4.3 Assessment elements
For financial institutions that take social responsibility seriously, transparency and accountability isof great importance. The following elements are crucial regarding the financial institution's internal
operations:
1. The financial institution describes its finance and investment framework regarding
environmental and social issues and provides insight into how the financial institution ensuresthat investments meet the conditions set in its policies.
2. The financial institution's finance and investment performance regarding environmental andsocial issues is audited vis-à-vis its relevant policies by a third party and the results are
published.
3. The financial institution publishes the names of governments in which it invests.
4. The financial institution publishes the names of companies in which it invests.
5. The financial institution mentions and describes all companies (on its website) to which it
grants new credits.
6. The financial institution mentions and describes all companies (on its website) to which it has
granted credits.
7. The financial institution discloses the names of all outstanding project finance transactions andproject-related corporate loans, including the information required by the Equator Principles III.
8. The financial institution publishes a breakdown of its portfolio by region, size and industry (inline with GRI G4 FSSD FS6).
9. The financial institution publishes a breakdown of its portfolio in a cross table, combining
industry and region data.
10. The financial institution publishes a sufficiently detailed breakdown of its portfolio, for example
based on the first two digits of NACE and ISIC.
11. The financial institution publishes a sufficiently detailed breakdown of its portfolio, for example
based on the first four digits of NACE and ISIC.

Page | 266

12. The financial institution publishes the number of companies with which there has beeninteraction on social and environment topics (in line with GRIs G4 FSSD FS10).
13. The financial institution publishes the names of companies with which there has beeninteraction on social and environmental topics.
14. The financial institution publishes the results of engagement, including the topics, goals anddeadlines.
15. The financial institution publishes the names of companies that are excluded from investment
due to sustainability issues, including the reasons for this exclusion.
16. The financial institution publishes its voting record.
17. The financial institution publishes a sustainability report that may contain (a number of)
disclosures from the GRI Standards.
18. The financial institution publishes a sustainability report that is set up in accordance with the(Core or Comprehensive option of the) GRI Standards.
19. The financial institution’s sustainability report has been verified externally.
20. The financial institution reports on the consultation with civil society organisations and otherstakeholders.
21. The financial institution offers complaint mechanisms for clients and non-clients.
22. The financial institution establishes or participates in effective operational-level grievancemechanisms for individuals and communities that may be adversely impacted by activities that
it is connected to.
23. The financial institution reports on the grievance mechanism process, including its progress andperformance.
24. The financial institution commits to respecting and cooperating in good faith with State-based
non-judicial and judicial grievance mechanisms when cases that it is connected to are brought
to such a mechanism.

Page | 267

References
1

ISO (2010), ISO 26000: 2010 Guidance on Social Responsibility, Geneva, Switzerland: ISO.

2OECD (2011), OECD Guidelines for Multinational Enterprises, Paris, France: OECD Publishing.

3

European Commission (2014), Corporate Social Responsibility National Public Policies in the European Union
Compendium 2014, London, the United Kingdom: European Commission.

4

Investopedia (2014), “Definition of ‘Pension Fund’”, online: http://www.investopedia.com/terms/p/pensionfund.asp,
viewed in March 2016.

5

Institute for Responsible Investment (2007), Handbook on Responsible Investment Across Asset Classes, Chestnut
Hill, the United States: Boston College Center for Corporate Citizenship.

6

Investopedia (2014), “Definition of ‘Hedge Fund’”, online: http://www.investopedia.com/terms/h/hedgefund.asp,
viewed in March 2016.

7

Towers Watson (2015, February), “Global Pension Assets Study 2014”, online: https://www.towerswatson.com/nlNL/Insights/IC-Types/Survey-Research-Results/2015/02/Global-Pensions-Asset-Study-2015, viewed in March 2016.

8

De Groot, P. D. Stichtman and Snieder, E. (2012), “Beheersing Uitbestedingsrelatie Vraagt om Redeneren vanuit
Gemeenschappelijk Belang”, in KPMG (ed.), De pensioenwereld in 2013, Amstelveen, the Netherlands: KPMG
Advisory N.V., pp.117-121.

9

The Principles for Responsible Investment (2013), Aligning Expectations: Guidance for Asset Owners on
Incorporating ESG Factors into Manager Selection, Appointment and Monitoring, London, the United Kingdom: PRI.

10UNCTAD (2010), Investment and Enterprise Responsibility Review. Analysis of Investor and Enterprise Policies on
Corporate Social Responsibility, Switserland, Geneva: UNCTAD;
UNEP and PRI (2011), Universal Ownership. Why Environmental Externalities Matter to Institutional Investors, Paris,
France: UNEP Finance Initiative and London, the United Kingdom: PRI Association.

11

European Commission (2007), Special Eurobarometer 270: Attitudes of EU Citizens to Animal Welfare, Brussels,
Belgium: European Commission.

12

WAP (n.d.), “Back a Universal Declaration on Animal Welfare”, online: www.worldanimalprotection.org/takeaction/back-universal-declaration-animal-welfare, viewed in November 2019.

13

FAO (n.d.), “Livestock and Income Generation”, online:
www.fao.org/ag/againfo/themes/en/income_generation.html, viewed in November 2019.

14

FAO (n.d.), “What is the Gateway to Animal Welfare?”, online: www.fao.org/ag/againfo/themes/animal-welfare/awabthegat/aw-whaistgate/en/, viewed in November 2017.

15

Dawkins, M.S. (2017), “Animal welfare and efficient farming: is conflict inevitable?”, Animal Production Science, 57:
201-208;
Chemineau, P. (2016), “Importance of animal health and welfare for the stability of the three pillars of sustainabilityof livestock systems”, Advance in Animal Biosciences, 7(2): 208-204;
Llonch, P., Haskell, M.J., Dewhurst, R.J. and S.P. Turner (2017), “Review: current available strategies to mitigate
greenhouse gas emissions in livestock systems: an animal welfare perspective”, Animal, 11(2): 274-284.

16

FAIRR (2016), Factory Farming: Assessing Investment Risks: 2016 Report, p. 10, FAIRR.

17

Committee on Considerations for the Future of Animal Science Research (2015, March), Critical Role of Animal
Science Research in Food Security and Sustainability, Washinton (DC), United States: National Academies Press, p.
24, 70-79;
Parente, S. and H. van de Weerd (2012, August), Food Security And Farm Animal Welfare, Surrey / London, United
Kingdom: CIWF / WAP, p. 8.

Page | 268

18

EurActiv (2016), “CAP and animal welfare: Simply incompatible”, online: www.euractiv.com/section/agriculturefood/opinion/cap-and-animal-welfare-simply-incompatible/, viewed in December 2017.

19

ECDC (European Centre for Disease Prevention and Control), EFSA (EuropeanFood Safety Authority), and EMA(European Medicines Agency) (2017). “ECDC/EFSA/EMA second jointreport on the integrated analysis of theconsumption of antimicrobial agents and occurrence ofantimicrobial resistance in bacteria from humans and foodproducing animals–Joint InteragencyAntimicrobial Consumption and Resistance Analysis (JIACRA) Report”. EFSA
Journal, 15(7):4872,135.

20

WHO (2017, November 7), Stop using antibiotics in healthy animals to prevent the spread of antibiotic resistance,
online: https://www.who.int/news-room/detail/07-11-2017-stop-using-antibiotics-in-healthy-animals-to-preventthe-spread-of-antibiotic-resistance, viewed in November 2019.

21

RSPCA (n.d.), “Key welfare issues”, online: https://www.rspca.org.uk/adviceandwelfare/farm/livetransport/keyissues,viewed in November 2019.
Animals International (n.d.), “European Live export investigation 2016/2017”, online: www.animalsaustraliamedia.org/upload/photos/eu-live-export/, viewed in December 2017;
Philips, C.J. (2016, October 6), “The welfare risk and impacts of heat stress on sheep shipped from Australia to theMiddle East”, Veterinary Journal, 218:78-85.

22

RSPCA (n.d.), “Key welfare issues”, online: https://www.rspca.org.uk/adviceandwelfare/farm/slaughter/keyissues,viewed in November 2019.

23

RSPCA (n.d.), “Laboratory animals”, online: https://www.rspca.org.uk/adviceandwelfare/laboratory, viewed in
November 2019.

24

RSPCA (n.d.), “Genetically altered animals”, online:
https://www.rspca.org.uk/adviceandwelfare/laboratory/biotechnology/geneticallyalteredanimals, viewed in
November 2019.

25

AWI (n.d.), “Puppy Mills”, online: www.awionline.org/content/puppy-mills, viewed in November 2019;
One green Planet (n.d.), “Why Breeding Dogs is a Problem, Even if the Breeder is ‘Reputable’”, online:
www.onegreenplanet.org/animalsandnature/why-breeding-dogs-is-a-problem-even-if-the-breeder-is-reputable/,viewed in November 2019;ASPCA (n.d.), “Puppy mills”, online: www.aspca.org/animal-cruelty/puppy-mills, viewed in November 2019.

26

Fur Free Alliance (n.d.), “Fur Bans”, online: www.furfreealliance.com/fur-bans/, viewed in November 2019.
Parliament of the United Kingdom (2000, November), Fur Farming (Prohibition) Act 2000.

27

Fur Europe (2015), Annual Report 2014, Brussels, Belgium: Fur Europe.

28

World Animal Protection (2017), Checking out of cruelty. How to end wildlife tourism’s holiday horrors, London,
United Kingdom: World Animal Protection.

29

United Nations (2015, Septemer 27), Transforming Our World: The 2030 Agenda for Sustainable Development,
A/RES/70/1, New York City, the United States: United Nations.

30

United Nations (n.d.), “SUSTAINABLE DEVELOPMENT GOAL 2”, online: https://sustainabledevelopment.un.org/sdg2,
viewed in November 2019;
United Nations (n.d.), “SUSTAINABLE DEVELOPMENT GOAL 3”, online: https://sustainabledevelopment.un.org/sdg3,
viewed in November 2019.
CFS (2016), Sustainable Agriculture Development for Food Security and Nutrition: What Roles for Livestock?, Rome,
Italy: Committee on World Food Security (CFS), p. 5.
United Nations CFS (2014), Principles on Responsible Investment in Agriculture and Food Systems, Rome.

31

United Nations (n.d.), “SUSTAINABLE DEVELOPMENT GOAL 12”, online:
https://sustainabledevelopment.un.org/sdg12, viewed in November 2019.

Page | 269

32

United Nations (n.d.), “SUSTAINABLE DEVELOPMENT GOAL 14”, online:
https://sustainabledevelopment.un.org/sdg14, viewed in November 2019;
United Nations (n.d.), “SUSTAINABLE DEVELOPMENT GOAL 15”, online:
https://sustainabledevelopment.un.org/sdg15, viewed in November 2019.

33

ISO (2010), ISO 26000: 2010 Guidance on social responsibility, Geneva, Switzerland: ISO.

34

Eurogroup for Animal (2015, September 8), “European Parliament Commits to Ban the Cloning of Animals for Food
Production”, online: http://www.eurogroupforanimals.org/european-parliament-commits-to-ban-the-cloning-ofanimals-for-food-production, viewed in November 2019.

35

Russell, W.M.S. and Burch, R.L., (1959), The Principles of Humane Experimental Technique, London, United Kingdom:
Methuen;UU (2015), “Verantwoord proefdieronderzoek”, online: http://www.uu.nl/onderzoek/onderzoek-aan-deuu/kwaliteit-en-integriteit/verantwoord-proefdieronderzoek, viewed in November 2019.

36

European Commission (2015, 26 October), “Animals used for scientific purposes: Replacement, Reduction and
Refinement – the Three R’s”, online: www.ec.europa.eu/environment/chemicals/lab_animals/3r/alternative_en.htm,
viewed in December 2017.

37

IFC (2014, December), Good Practice Note: Improving Animal Welfare in Livestock Operations, Washington, theUnited States, p. 1.

38

Amos, N. and R. Sullivan (2017), The Business Benchmark on Farm Animal Welfare 2016 Report, London, United
Kingdom: BBFAW, p. 5.

39

FAIRR (2016), Factory Farming: Assessing Investment Risks: 2016 Report, p. 2, FAIRR.

40

FARMS initiative (2019, July), “Principles Underlying the Responsible Mininmum Standards”, online: https://farmsinitiative.com/wp-content/uploads/2019/07/PRINCIPLES-OF-RMS-COPYRIGHT-FARMS-INITIATIVE.pdf, viewed in
November 2019.

41

Chandroo, K.P., Duncan, I.J.H., Moccia, R.D. (2004). “Can fish suffer?: Perspectives on sentience, pain, fear and stress”,
Applied Animal Behaviour Science, 86: 225–250;
Low, P. J. Panksepp et al (2012, July 7), The Cambridge Declaration on Consciousness, Cambridge, United Kingdom:
University of Cambridge;
AVMA Panel on Euthanasia (2013), AVMA Guidelines for the Euthanasia of Animals: 2013 Edition, Schaumber,
United States of America: American Veterinary Medical Association, p. 13.

42

ASC (n.d.), “About ASC”, online: www.asc-aqua.org/index.cfm?act=tekst.item&iid=2&lng=1, viewed in November
2019.

43

Fur Free Alliance (n.d.), “Fur Bans”, online: www.furfreealliance.com/fur-bans/, viewed in February 2018.
Parliament of the United Kingdom (2000, November), Fur Farming (Prohibition) Act 2000.

44

Financieel Dagblad (2015), “Gerechtshof acht verbod op houden en doden van nertsen rechtsgeldig” [Court finds
ban on keeping and killing mink legally sound], online: www.fd.nl/ondernemen/1126690/gerechtshof-acht-verbodop-houden-en-doden-van-nertsen-rechtsgeldig, viewed in November 2019.

45

RSPCA (n.d.), “Wild animals in circuses”, online:
https://www.rspca.org.uk/adviceandwelfare/wildlife/captivity/circuses, viewed in January 2020;
RSPCA (n.d.), “Wild animals in captivity”, online: https://www.rspca.org.uk/adviceandwelfare/wildlife/captivity,
viewed in January 2020;
World Animal Protection (2014, October 1), “Animals in zoos: our key principles”, online:
https://d31j74p4lpxrfp.cloudfront.net/sites/default/files/int_files/world-animal-protection-wildlife-zoosprinciples.pdf, viewed in January 2020.

Page | 270

46

Eurogroup for Animals (2017, June 20), “Over 1 million European citizens call to #STOPTHETRUCKS”, online:
http://www.eurogroupforanimals.org/1-million-european-citizens-call-stopthetrucks, viewed in November 2019.

47

Eurogroup for Animals (2017, September 21), “Commission promises to put live animal transport high on theagenda”, online: https://www.eurogroupforanimals.org/commission-promises-put-live-animal-transport-highagenda, viewed in November 2019;
Eurogroup for Animals (2017, November 10), “Eurogroup for animals hails outcomes of second meeting of EU
platform on animal welfare,” online: https://www.eurogroupforanimals.org/eurogroup-animals-hails-outcomessecond-meeting-eu-platform-animal-welfare, viewed in November 2019.

48

WHO, (2015, May), Global Action Plan on Antimicrobial Resistance, Geneva, Switzerland: WHO, p. 8.

49

Wardle, R., Rose, E. And A. Herron (2016, November), Superbugs and Super Risks: The Investment Case for Action. A
briefing for investors, London, United Kingdom: FAIRR Initiative.

50

FAIRR (2017, November), Best Practice Policy on Antibiotics Stewardship, London, United Kingdom: FAIRR.

51

ISO (2010), ISO 26000: 2010 Guidance on Social Responsibility, Geneva, Switzerland: ISO, p. 6.

52

ISO (2010), ISO 26000: 2010 Guidance on Social Responsibility, Geneva, Switzerland: ISO, p. 72.

53

IPCC (2014): Climate Change 2014: Synthesis Report: Summary for Policymakers., Geneva, Switzerland:Intergovernmental Panel on Climate Change, p. 2.

54

UNFCCC (2015, April 22), Paris Agreement, Paris, France: United Nations Framework Convention on Climate Change,
p. 3.

55

Stern, N. (ed.) (2007), The Economics of Climate Change: the Stern Review, Cambridge, the United Kingdom:
Cambridge University Press.

56

IPCC (2014): Climate Change 2014: Synthesis Report. Contribution of Working Groups I, II and III to the Fifth
Assessment Report of the Intergovernmental Panel on Climate Change, Geneva, Switzerland: Intergovernmental
Panel on Climate Change, p. 151.

57

IPCC (2014): Climate Change 2014: Synthesis Report. Contribution of Working Groups I, II and III to the Fifth
Assessment Report of the Intergovernmental Panel on Climate Change, Geneva, Switzerland: Intergovernmental
Panel on Climate Change, p. 151.

58

IPCC (2014): Climate Change 2014: Synthesis Report. Contribution of Working Groups I, II and III to the Fifth
Assessment Report of the Intergovernmental Panel on Climate Change, Geneva, Switzerland: Intergovernmental
Panel on Climate Change, p. 10.

59

IPCC (2007), Climate Change 2007: Impacts, Adaptation and Vulnerability. Contribution of Working Group II to the
Fourth Assessment Report of the Intergovernmental Panel on Climate Change, , Cambridge, the United Kingdom:
Cambridge University Press, p. 976;
Stern, N. (ed.) (2007), The Economics of Climate Change: the Stern Review, Cambridge, the United Kingdom:
Cambridge University press.

60

Goodman, L.K. and K. Mulik (2015), Clearing the Air, Palm Oil, Peat Destruction and Air Pollution, Cambridge theUnited States: Union of Concerned Scientists;
Climate Progress (2015), “For Peat’s Sake: Drying and Burning Wetlands Amplify Global Warming”, online:
thinkprogress.org/climate/2015/01/13/3610618/peat-wetlands-global-warming/, viewed in December 2017;
International Peat Society (2008), “Peatlands and Climate Change – Executive Summary for Policymakers”, online
www.peatsociety.org/peatlands-and-peat/peatlands-and-climate-change, viewed in December 2017.

61

United Nations (2014), “International Decade for Action ‘Water for Life’ 2005 – 2015”, online:
www.un.org/waterforlifedecade/scarcity.shtml, viewed in November 2019.

62

Oxfam International (2009), Suffering the Science: Climate Change, People and Poverty, Oxfam Briefing Paper 130,
Oxford, the United Kingdom: Oxfam International.

Page | 271

63

Oxfam International (2009), Suffering the Science: Climate Change, People and Poverty, Oxfam Briefing Paper 130,
Oxford, the United Kingdom: Oxfam International.

64

IPCC (2014): Climate Change 2014: Synthesis Report. Contribution of Working Groups I, II and III to the Fifth
Assessment Report of the Intergovernmental Panel on Climate Change, Geneva, Switserland: Intergovernmental
Panel on Climate Change, p. 20.

65

IEA (2019, March), Global Energy & CO2 Status Report: The latest trends in energy and emisisons in 2018, Paris,
France; International Energy Agency.

66

UNFCCC (2015, December 12), Historic Paris Agreement on Climate Change. 195 Nations Set Path to Keep

Temperature Rise Well Below 2 Degrees Celsius;
UNFCCC (2016, January 29), Report of the Conference of the Parties on its twenty-first session, held in Paris from 30
November to 13 December 2015, p.2.
67

Climate Action Tracker (2019, September 19), “Pledged action leads to 2.9°C - time to boost national climate
action”, online: https://climateactiontracker.org/publications/time-to-boost-national-climate-action/, viewed in
November 2019.

68

Climate Action Tracker (2015, December 8), “Climate pledges will bring 2.7°C of warming, potential for moreaction”, online: climateactiontracker.org/news/253/Climate-pledges-will-bring-2.7C-of-warming-potential-formore-action.html, viewed in November 2019.

69

IPCC (2018), Global Warming of 1.5°C. An IPCC Special Report on the impacts of global warming of 1.5°C above

pre-industrial levels and related global greenhouse gas emission pathways, in the context of strengthening the
global response to the threat of climate change, sustainable development, and efforts to eradicate poverty , Geneva,
Switzerland: Intergovernmental Panel on Climate Change, p. 5 - 21.
70

IPCC (2018), Global Warming of 1.5°C. An IPCC Special Report on the impacts of global warming of 1.5°C above

pre-industrial levels and related global greenhouse gas emission pathways, in the context of strengthening the
global response to the threat of climate change, sustainable development, and efforts to eradicate poverty, Geneva,
Switzerland: Intergovernmental Panel on Climate Change, p. vi.
71

McGlade, C. and P. Elkins (2015), “The geographical distribution of fossil fuels unused when limiting global warming
to 2°C”, Nature, 517, p. 187–190.

72

Williamson, P. (2016, 11 February), Scrutinize CO2 removal methods, Nature, Volume 530, p. 153; Greenpeace (2016,
1 July), “Carbon capture and storage a costly, risky distraction”, online:
www.greenpeace.org/international/en/campaigns/climate-change/Solutions/Reject-false-solutions/Reject-carboncapture--storage/, viewed in November 2019.

73

UNISDR (2015), Sendai Framework for Disaster Risk Reduction 2015-2030, Geneva, Switzerland: United Nation
Office for Disaster Risk Reduction, p. 18.

74

UNEP (2016), The Adaptation Finance Gap Report 2016, Nairobi, Kenya: United Nations Environment Programme.

75OECD (2016), 2020 Projections of Climate Finance Towards the USD 100 Billion Goal: Technical Note , Paris, France:
OECD Publishing.
OECD (2019), Climate Finance Provided and Mobilised by Developed Countries in 2013-2017, Paris, France: OECD
Publishing.

76

Oxfam International (2018, May), Climate Finance Shadow Report 2018: Assessing Progress towards the $100 Billion
Commitment, Oxford, the United Kingdom: Oxfam GB.

77

Oxfam GB (2014), Breaking the Standoff. Post-2020 climate finance in the Paris agreement, Oxford, the United
Kingdom: Oxfam GB.

78

Oxfam GB (2014), Breaking the Standoff. Post-2020 climate finance in the Paris agreement, Oxford, the United
Kingdom: Oxfam GB, p. 40.

79

Oxfam (2014), Standing on the sidelines. Why food and beverage companies must do more to tackle climatechange, Oxford, the United Kingdom: Oxfam GB, p. 1 – 38.

Page | 272

80

Eurodad (2014), UN Financing for Development Negotiations: What outcomes should be agreed in Addis Ababa in
2015?, Brussels, Belgium: Eurodad;
BankTrack (2017, 7 September), “Banks and coal”, online: www.banktrack.org/campaign/banks_and_coal, viewed in
November 2019; Urgewald (2017), “Global Coal Exit List: Divestment Made Easy!”, online: coalexit.org/, viewed in
November 2019.

81

United Nations (n.d.), “SUSTAINABLE DEVELOPMENT GOAL 13”, online:
https://sustainabledevelopment.un.org/sdg13, viewed in November 2019.

82

United Nations (n.d.), “SUSTAINABLE DEVELOPMENT GOAL 11”, online:
https://sustainabledevelopment.un.org/sdg11, viewed in November 2019.

83

United Nations (n.d.), “SUSTAINABLE DEVELOPMENT GOAL 2”, online: https://sustainabledevelopment.un.org/sdg2,
viewed in November 2019.

84

United Nations (n.d.), “SUSTAINABLE DEVELOPMENT GOAL 3”, online: https://sustainabledevelopment.un.org/sdg3,
viewed in November 2019.

85

FSB (20165, 21 January 16), “FSB announces membership of Task Force on Climate-related Financial Disclosures”,
online: https://www.fsb.org/2016/01/fsb-announces-membership-of-task-force-on-climate-related-financialdisclosures/, viewed in November 2019.

86

TCFD (2017, June), Recommendations of the Task Force on Climate-related Financial Disclosures, Basel, Switzerland:
Financial Stability Board.

87

UNEP Inquiry (2015), The Financial System We Need, Geneva, Switzerland: UNEP Inquiry.

88

UNEP Inquiry (2015), The Financial System We Need, Geneva, Switzerland: UNEP Inquiry.
IPCC (2014): Climate Change 2014: Synthesis Report. Contribution of Working Groups I, II and III to the Fifth
Assessment Report of the Intergovernmental Panel on Climate Change, Geneva, Switserland: Intergovernmental
Panel on Climate Change, p. 20.

89

UNFCCC (2015, December 12), Historic Paris Agreement on Climate Change. 195 Nations Set Path to Keep

Temperature Rise Well Below 2 Degrees Celsius;
UNFCCC (2016, January 29), Report of the Conference of the Parties on its twenty-first session, held in Paris from 30
November to 13 December 2015, p.2.
90

Climate Action 100+ (n.d.), “About us”, online: https://climateaction100.wordpress.com/about-us/, viewed in
January 2020.

91

Climate Action 100+ (n.d.), “Investors”, online: https://climateaction100.wordpress.com/investors/, viewed in
January 2020.

92

UNEP FI (n.d.), “The UN-Convened Net-Zero Asset Owner Alliance”, online: https://www.unepfi.org/wordpress/wpcontent/uploads/2019/09/AOACollectiveCommitment.pdf, viewed in January 2020.

93

AODP (2015, October 1), “AODP Calls For Extensive Climate Risk Disclosure Ahead Of Paris COP21 Talks”, online:
aodproject.net/news/95-aodp-calls-for-extensive-climate-risk-disclosure-cop21.html, viewed in November 2019.
AODP (2015, September 11), “AODP Digs Deeper Into 2015 Global Climate 500 Index”, online:
aodproject.net/news/93-aodp-digs-deeper-into-2015-global-climate-500-index.html, viewed in November 2019.
AODP (n.d.), “Survey”, online: aodproject.net/survey/, viewed in November 2019.

94

TCFD (2017, June), Recommendations of the Task Force on Climate-related Financial Disclosures, Basel, Switzerland:
Financial Stability Board.

95

TCFD (2017, June), Implementing the Recommendations of the Task Force on Climate-related Financial Disclosures,
Basel, Switzerland: Financial Stability Board.

96

TCFD (2017, June), Recommendations of the Task Force on Climate-related Financial Disclosures, Basel, Switzerland:
Financial Stability Board, p. 13.

Page | 273

97

TCFD (2017, June), Implementing the Recommendations of the Task Force on Climate-related Financial Disclosures,
Basel, Switzerland: Financial Stability Board, p. 24.

98

European Commission (n.d.), “2030 climate & energy framework”, online:
https://ec.europa.eu/clima/policies/strategies/2030_en, viewed in November 2019.

99

PCAF (2017, December), Paving the Way Towards a Harmonised Carbon Accounting Approach for the Financial
Sector, Utrecht, the Netherlands: Ecofys.

100 IPCC (2014): Climate Change 2014: Synthesis Report. Contribution of Working Groups I, II and III to the Fifth
Assessment Report of the Intergovernmental Panel on Climate Change, Geneva, Switserland: Intergovernmental
Panel on Climate Change.
101 Pfeiffer, A. et al (2016, January), The ‘2°C capital stock’ for electricity generation: cumulative committed carbon
emissions and climate change, Oxford, United Kingdom: Institute for New Economic Thinking, p. 2.
102 IPCC (2018), Global Warming of 1.5°C. An IPCC Special Report on the impacts of global warming of 1.5°C above

pre-industrial levels and related global greenhouse gas emission pathways, in the context of strengthening the
global response to the threat of climate change, sustainable development, and efforts to eradicate poverty , Geneva,
Switzerland: Intergovernmental Panel on Climate Change, p. 12.
103 UNEP (2019), Emissions Gap Report 2019, Nairobi, Kenya: United Nations Environment Programme (UNEP), p. xx.
104 UNEP (2019), Emissions Gap Report 2019, Nairobi, Kenya: United Nations Environment Programme (UNEP), p. xxii.
105 UNEP (2017), The Emissions Gap Report 2017, United Nations Environment Programme (UNEP), Nairobi, Kenia, p.
xv.
106 International Energy Agency (2019, November), World Energy Outlook 2019: Executive Summary, IEA Publications,pp. 1-2.
107 Mutitt, G. et al (2016, September), The sky’s limit: why the Paris climate goals require a managed decline of fossil
fuel production, Washington, United States: Oil Change International, p. 5.
108 Schücking, H. (2017, 9 November), “It's time for impact divesting: the Global Coal Exit List for the finance industry islaunched”, BankTrack, online:www.banktrack.org/blog/its_time_for_impact_divesting_the_global_coal_exit_list_for_the_finance_industry_is_launche
d#, viewed in December 2017.
109 Coal Exit (n.d.), “Database: Companies on Coal Expansion Course”, online: coalexit.org/database, viewed in
November 2019.
110 European Commission (n.d.), “Biofuels”, online: https://ec.europa.eu/energy/en/topics/renewableenergy/biofuels/overview, viewed in November 2019;
Lapola, D.M. et al. (2010), “Indirect land-use changes can overcome carbon savings from biofuels in Brazil”, PNAS,
107(8).
111 Roundtable on Sustainable Biomaterials (n.d.), “Working with the RSB Standard”, online: https://rsb.org/the-rsbstandard/working-with-the-rsb-standard/, viewed in November 2019.
112 Roundtable on Sustainable Biomaterials (2016), RSB Principles & Criteria for Sustainable Biofuel Production [RSBSTD-01-001 (version 3.0), Geneva, Switzerland: RSB.
113 Roundtable on Sustainable Biomaterials (n.d.), “Working with the RSB Standard”, online: https://rsb.org/the-rsbstandard/working-with-the-rsb-standard/, viewed in November 2019.
114 EC (n.d.), “Biofuels”, online: ec.europa.eu/energy/en/topics/renewable-energy/biofuels, viewed in November 2019.
115 Trommelen, J. (2013, December 6), “Bij klimaatneutraal vliegen zit je niet zomaar op de eerste rang”, De Volkskrant.
116 Gold Standard (2019), “Carbon pricing: What is a carbon credit worth?”, online: https://www.goldstandard.org/blogitem/carbon-pricing-what-carbon-credit-worth, viewed in Novbember 2019.
117 Bos, J. en U. Jonker (2013, juli 4), “Brussel mag alsnog ingrijpen in markt voor emissierechten”, Financieel Dagblad;Page | 274

Planbureau voor de Leefomgeving (2013), Evaluatie van Opties om het Europese Emissiehandelssysteem te
Hervormen, The Hague, the Netherlands: Planbureau voor de Leefomgeving
118 Alliance of Energy Intensive Industries, (2013, April 15), Why the European Parliament needs to reject back-loading Recommendation by the Alliance of Energy Intensive Industries, Brussels, Belgium: Alliance of Energy Intensive
Industries.
119 Vandermosten, J. and D. Moris (2012, November), Carbon Fat Cats in Belgium. Bending the carbon rules in the heartof Europe, Brussels, Belgium: WWF Belgium and London, United Kingdom: Sandbag.
120 Influence Map (2016, April), “An investor enquiry: how much big oil spends on climate lobbying”, online:
influencemap.org/report/Climate-Lobbying-by-the-Fossil-Fuel-Sector, viewed in November 2019.
121 OECD (2011), OECD Guidelines for Multinational Enterprises, Paris, France: OECD Publishing, p. 21.
122 ISO (2010), ISO 26000: 2010 Guidance on Social Responsibility, Geneva, Switzerland: ISO, p. 6.
123 ISO (2010), ISO 26000: 2010 Guidance on Social Responsibility, Geneva, Switzerland: ISO, p. 72.
124 Climate Action 100+ (n.d.), “Investors”, online: https://climateaction100.wordpress.com/investors/, viewed in
January 2020.
125 Transparency International (n.d.), “What is corruption?”, online: https://www.transparency.org/what-is-corruption,
viewed in November 2019.
126 Transparency International (n.d.), “Corruption Perceptions Index 2018”, online:
https://www.transparency.org/cpi2018, viewed in November 2019.
127 The World Bank (2011), Ill-gotten Money and the Economy – Experiences from Malawi and Namibia, Washington
DC, the United States: The World Bank;
The World Bank (2017), World Development Report 2017: Governance and the Law, Washington DC, the UnitedStates: The World Bank.
128 Transparency International (n.d.), “What is corruption?”, online: https://www.transparency.org/what-is-corruption,
viewed in November 2019;
Global Witness (2015, October), Banks and Dirty Money: how the financial system enables state looting at adevastating human cost, London, United Kingdom: Global Witness.
129 DNB (2014), “DNB Publiceert Good Practices Bestrijd Corruptie”, DNB, online:
https://www.dnb.nl/nieuws/nieuwsoverzicht-en-archief/dnbulletin-2014/dnb308952.jsp, viewed in November 2017.
130 Transparency International (2015, April), Lobbying in Europe: Hidden Influence, Privileged Access, Berlin, Germany:
Transparency International.
131 United Nations (n.d.), “SUSTAINABLE DEVELOPMENT GOAL 16”, online:
https://sustainabledevelopment.un.org/sdg16, viewed in November 2019.
132 United Nations (n.d.), “SUSTAINABLE DEVELOPMENT GOAL 10”, online:
https://sustainabledevelopment.un.org/sdg10, viewed in November 2019.
133 United Nations (n.d.), “SUSTAINABLE DEVELOPMENT GOAL 1”, online: https://sustainabledevelopment.un.org/sdg1,
viewed in November 2019.
134 Stolen Asset Recovery Initiative (2011), The Puppet Masters: How the Corrupt Use Legal Structures to Hide Stolen
Assets and What to Do About It, Washington DC, the United States: World Bank and UNODC.
135 UNDODC (n.d.), “United Nations Convention against Corruption”, online:
https://www.unodc.org/unodc/en/corruption/uncac.html, viewed in November 2019.
136 OECD (n.d.), “OECD Convention on Combating Bribery of Foreign Public Officials in International BusinessTransactions”, online: http://www.oecd.org/corruption/oecdantibriberyconvention.htm, viewed in November 2019.
137 Transparency International (2013), Business Principles for Countering Bribery: A Multi-Stakeholder Initiative led byTransparency International, Berlin, Germany: Transparency International.

Page | 275

138 ISO (2010), ISO 26000: 2010 Guidance on Social Responsibility, Geneva, Switzerland: ISO, p. 6.
139 ISO (2010), ISO 26000: 2010 Guidance on Social Responsibility, Geneva, Switzerland: ISO, p. 72.
140 UN Committee on the Elimination of Discrimination against Women (2010), General Recommendation N. 28 The
Code Obligations of States Parties under Article 2 of the Convention, CEDAW/C/CG/28, para 5, New York, theUnited States: United Nations, p.31.
141 UN WOMEN (2017) “The UN WOMEN Gender and Economics Training Manual”, New York, the United States:
United Nations.
142 UN WOMEN (2015), “The World’s Women 2015-2016”, New York, the United States: United Nations.
143 Demirgüç-Kunt, A., L. Klapper, D. Singer, S. Ansar and Jake Hess (2018), The Global Findex Database 2017:
Measuring Financial Inclusion and the Fintech Revolution, Washington D.C., the United States: World Bank.
144 World Bank (2019), Women, Business and the Law 2019, Washington D.C., the United States: World Bank.
145 UNWOMEN (2015), The World’s Women 2015-2016, New York, the United States: United Nations.
International Labour Organization (2019), Global Wage Report 2018-19: What lies behind gender pay gaps, Geneva,
Switzerland: ILO.
146 WHO (2013), Global and Regional Estimates of Violence against Women: Prevalence and Health Effects of Intimate
Partner Violence and Non-partner Sexual Violence, Rome, Italy: World Health Organization.
147 UNWOMEN (2015), “The World’s Women 2015-2016”, New York, the United States: United Nations.
148 Equileap (2019), Gender Equality Global Report & Ranking: 2019 Edition, Amsterdam, The Netherlands: Equileap.
149 International Finance Corporation (n.d) “Bridging the Gender Gap in Access to Finance”, online:
https://www.ifc.org/wps/wcm/connect/news_ext_content/ifc_external_corporate_site/news+and+events/news/bridg
ing+the+gender+gap+in+access+to+finance, viewed in Novermber 2019.
150 UN WOMEN (2017), The UN WOMEN Gender and Economics Training Manual, New York, the United States: United
Nations;
Equileap (2019), Gender Equality Global Report & Ranking: 2019 Edition, Amsterdam, The Netherlands: Equileap.
151 McCarthy, L. et al. (2012) Gender Equality: It’s Your Business, Oxford, the United Kingdom: Oxfam International;
ActionAid Zambia (n.d.), “Impact of the Mining Industry on Women in Zambia”, online: https://actionaid.nl/wpcontent/uploads/2017/10/20150608-Impacts-of-Mining-on-Women-in-Zambia_Revised-Report.pdf, viewed in
November 2019.
152 Dovey, K. et al (n.d.), “Submission to the UN Working Group on Human Rights and Transnational Corporations andother Business Enterprises”, The Gender, Business and Human Rights Reference Group, online:
https://www.ohchr.org/Documents/Issues/TransCorporations/Submissions/MultiStakeholder/GenderBusinessAndH
umanRightsReferenceGroup.pdf, viewed in November 2019.
153 Oxfam International (2014), Close the Gap How to Eliminate Violence Against Women beyond 2015, Oxford, theUnited Kingdom: Oxfam International.
154 UN WOMEN (n.d.), “Intergovernmental mandates on gender mainstreaming”, online:
www.un.org/womenwatch/osagi/intergovernmentalmandates.htm, viewed in December 2017.
155 United Nations (n.d.), “SUSTAINABLE DEVELOPMENT GOAL 5”, online: https://sustainabledevelopment.un.org/sdg5,
viewed in November 2019.
156 United Nations (n.d.), “SUSTAINABLE DEVELOPMENT GOAL 10”, online:
https://sustainabledevelopment.un.org/sdg10, viewed in November 2019.
157 United Nations (n.d.), “SUSTAINABLE DEVELOPMENT GOAL 1”, online: https://sustainabledevelopment.un.org/sdg1,
viewed in November 2019.

Page | 276

158 United Nations (n.d.), “SUSTAINABLE DEVELOPMENT GOAL 4”, online: https://sustainabledevelopment.un.org/sdg4,
viewed in November 2019.
159 United Nations (n.d.), “SUSTAINABLE DEVELOPMENT GOAL 8”, online: https://sustainabledevelopment.un.org/sdg8,
viewed in November 2019.
160 Mishra, K. and M. Simons (2018, December 13), Eerlijke Bankwijzer: Beoordeling van het duurzaamheidsbeleid vanzeven bankgroepen – 17e actualisering, Amsterdam, Nederland: Profundo, p. 32.
161 Marston, A. (2014) Women, Business and Human Rights: A background paper for the UN Working Group on
Discrimination Against Women in Law and Practice, London, the United Kingdom: Marston Consulting, p.29.
162 Equileap (2017), Gender Equality Global Report & Ranking, Amsterdam: The Netherlands, Equileap;
Equileap (2019), Gender Equality Global Report & Ranking: 2019 Edition, Amsterdam, The Netherlands: Equileap.
163 Ben-Amar, W., M. M. Chang and P. McIlkenny (2017), “Board Gender Diversity and Corporate Response to
Sustainability Initiatives: Evidence from the Carbon Disclosure Project”, Journal of Business Ethics, 142 (2): p. 369383.
Boulouta, I (2013), “Hidden Connections: The Link between Board Gender Diversity and Corporate Social
Performance”, Journal of Business Ethics, 113 (2): 185-197.
Kassinis, G., A. Panayiotou, A. Dimou and G. Katsifaraki (2016), “Gender and Environmental Sustainability: A
Longitudinal Analysis”, Corporate Social Responsibility and Environmental Management, Februari 2016, DOI: DOI:
10.1002/csr.1386.
164 UN Office of the High Commissioner for Human Rights (OHCHR) (n.d), “Women’s Human Rights and Gender
Equality”, online: https://www.ohchr.org/EN/Issues/Women/WRGS/Pages/WRGSIndex.aspx, viewed in November
2019.
165 United Nations (1948, December), Universal Declaration of Human Rights, United Nations General Assembly
resolution 217 A (III), article 23, New York, the United States: United Nations..
166 United Nations (1948, December), Universal Declaration of Human Rights, United Nations General Assembly
resolution 217 A (III), article 23, New York, the United States: United Nations..
167 UN WOMEN (1979), "Convention on the Elimination of All Forms of Discrimination against Women", online:
https://www.ohchr.org/EN/ProfessionalInterest/Pages/CEDAW.aspx, Article 1, viewed in November 2019.
168 UN Committee on the Elimination of Discrimination against Women (2010), General Recommendation N. 28 The
Code Obligations of States Parties under Article 2 of the Convention, CEDAW/C/CG/28, para 9, New York, theUnited States: United Nations.
169 UN Committee on the Elimination of Discrimination against Women (2010), General Recommendation N. 28 The
Code Obligations of States Parties under Article 2 of the Convention, CEDAW/C/CG/28, para 10, New York, theUnited States: United Nations.
170 UN Committee on the Elimination of Discrimination against Women (2010), General Recommendation N. 28 The
Code Obligations of States Parties under Article 2 of the Convention, CEDAW/C/CG/28, para 24, New York, theUnited States: United Nations.
171 UN Committee on the Elimination of Discrimination against Women (2010), General Recommendation N. 28 The
Code Obligations of States Parties under Article 2 of the Convention, CEDAW/C/CG/28, para 25, New York, theUnited States: United Nations.
172 UN Committee on the Elimination of Discrimination against Women (2010), General Recommendation N. 28 The
Code Obligations of States Parties under Article 2 of the Convention, CEDAW/C/CG/28, para 25, New York, theUnited States: United Nations.
173 UN Committee on the Elimination of Discrimination against Women (1992), General Recommendation N. 19
Violence against women, CEDAW/C/CG/19, para 4, New York, the United States: United Nations.
174 UN Office of the United Nations High Commissioner for Human Rights (2007, September), Special Procedures of

the United Nations Human Rights Council, State Responsibilities to Regulate and Adjudicate Corporate Activities

Page | 277

under the United Nations’ core Human Rights Treaties, Individual Report on the United Nations Convention on the
Elimination of All Forms of Discrimination against Women, Report No. 4, Geneva, Switzerland: UN OHCHR, p. 41-42.
175 ILO (n.d.), “Gender equality”, online: www.ilo.org/global/topics/equality-and-discrimination/gender-equality/lang-en/index.htm, viewed in November 2019.
176 Gender, Equality and Diversitay Branch – Conditions of Work and Equality Department (2015), Pay Equity. A key
driver of gender equality,Geneva, Switzerland: International Labour Office;Gender, Equality and Diversitay Branch – Conditions of Work and Equality Department (2015), “Women on Boards.
Building the female talent pipeline”, Geneva, Switzerland: International Labour Office.
177 International Labour Organization (2017, March), Tripartite Declaration of Principles Concerning Multinational
Enterprises and Social Policy, Fifth edition 2017, Geneva, Switzerland: International Labour Office, p. 8.
178 International Labour Organization (2017, March), Tripartite Declaration of Principles Concerning Multinational
Enterprises and Social Policy, Fifth edition 2017, Geneva, Switzerland: International Labour Office, p. 8.
179 Ruggie, J. (2011), Guiding Principles on Business and Human Rights: Implementing the United Nations “Protect,
Respect and Remedy” Framework, New York, the United States: United Nations Human Rights Council,
A/HRC/17/31, Preamble.
180 Ruggie, J. (2011), Guiding Principles on Business and Human Rights: Implementing the United Nations “Protect,
Respect and Remedy” Framework, New York, the United States: United Nations Human Rights Council,
A/HRC/17/31, Preamble.
181 Dovey, K. et al (n.d.), Submission to the UN Working Group on Human Rights and Transnational Corporations andother Business Enterprises, The Gender, Business and Human Rights Reference Group.
182 Dovey, K. et al (n.d.), Submission to the UN Working Group on Human Rights and Transnational Corporations andother Business Enterprises, The Gender, Business and Human Rights Reference Group, p. 1.
183 United Nations Working Group on the issue of human rights and transnational corporations and other businessenterprises (2019, May 23rd), Gender Dimensions of the Guiding Principles on Business and Human Rights, NewYork City, the United States: United Nations Human Rights Council, pp. 10-11.
184 UN Women (n.d.), “Beijing Declaration and Platform for Action, Beijing +5 Political Declaration and Outcome”,
online: https://www.unwomen.org//media/headquarters/attachments/sections/csw/pfa_e_final_web.pdf?la=en&vs=800, viewed in November 2019.
185 UN Women (n.d.), “Beijing Declaration and Platform for Action, Beijing +5 Political Declaration and Outcome”,
online: https://www.unwomen.org//media/headquarters/attachments/sections/csw/pfa_e_final_web.pdf?la=en&vs=800, viewed in November 2019.
186 Boffey, D. (2017, November 20), “EU to push for 40% quota for women on company boards”, The Guardian, online:
https://www.theguardian.com/world/2017/nov/20/eu-to-push-for-40-quota-for-women-on-company-boards,
viewed in November 2019.
European Commission (14 November 2012), “Women on Boards: Commission proposes 40% objective”, online:
europa.eu/rapid/press-release_IP-12-1205_en.htm, viewed in November 2019.
187 Lee, L, R. Marshall, D. Rallis, M. Moscardi (2015, November), Women on Boards: Global Trends in Gender Diversity
on Corporate Boards, New York City, United States: MSCI.
188 OECD (2011), OECD Guidelines for Multinational Enterprises, Paris, France: OECD Publishing, p. 39.
189 OECD (2011), OECD Guidelines for Multinational Enterprises, Paris, France: OECD Publishing, p. 32.
190 OECD (2011), OECD Guidelines for Multinational Enterprises, Paris, France: OECD Publishing, p. 32.
191 IFC (2012, January 1), Performance Standard 2: Labor and Working Conditions, Washington DC, the United States:
International Finance Corporation, p. 3.
192 IFC (2012, January 1), Performance Standard 2: Labor and Working Conditions, Washington DC, the United States:
International Finance Corporation, p. 3.

Page | 278

193 UN Women (2011), “Women’s Empowerment Principles”, online: https://www.unwomen.org//media/headquarters/attachments/sections/library/publications/2011/10/women-s-empowermentprinciples_en%20pdf.pdf?vs=1504&vs=1504, viewed in November 2019.
194 UN Women (2011), “Women’s Empowerment Principles”, online: https://www.unwomen.org//media/headquarters/attachments/sections/library/publications/2011/10/women-s-empowermentprinciples_en%20pdf.pdf?vs=1504&vs=1504, viewed in November 2019.
195 United Nations (2008, March), UN Declaration on the Rights of Indigenous Peoples, New York, the United States:
United Nations, Articles 21, 22 .
196 Equileap (2017), Gender Equality Global Report & Ranking, Amsterdam: The Netherlands, Equileap.
Equileap (2018), Gender Equality Global Report & Ranking: 2018 Edition, Amsterdam, The Netherlands: Equileap.
Equileap (2019), Gender Equality Global Report & Ranking: 2019 Edition, Amsterdam, The Netherlands: Equileap.
197 ISO (2010), ISO 26000: 2010 Guidance on Social Responsibility, Geneva, Switzerland: ISO, p. 6.
198 ISO (2010), ISO 26000: 2010 Guidance on Social Responsibility, Geneva, Switzerland: ISO, p. 72.
199 Xu, K., A. Soucat, J. Kutzin et al (2018), Public Spending on Health: A Closer Look at Global Trends, Geneva,
Switzerland: World Health Organization.
200 World Health Organization (2006), Constitution of the World Health Organization. Basic Documents, Forty-Fifth
edition, Supplement, Geneva: Switzerland: World Health Organization..
201 UN General Assembly (1966, December 16), International Covenant on Economic, Social and Cultural Rights,
Geneva, Switzerland: Office of the United Nations High Commissioner for Human Rights, Resolution 2200A (XXI),
Article 12.
202 OHCHR and WHO (2008, June),The Right to Health. Fact Sheet No. 31, Geneva, Switzerland: Office of the United
Nations High Commissioner for Human Rights / World Health Organization.
203 OHCHR and WHO (2008, June), The Right to Health. Fact Sheet No. 31, Geneva, Switzerland: Office of the United
Nations High Commissioner for Human Rights / World Health Organization.
204 ISO (2010), ISO 26000: 2010 Guidance on Social Responsibility, Geneva, Switzerland: ISO.
205 ISO (2010), ISO 26000: 2010 Guidance on Social Responsibility, Geneva, Switzerland: ISO.
206 ILO (n.d), “Safety and health at work”, online: www.ilo.org/global/topics/safety-and-health-at-work/lang-en/index.html, last viewed in November 2019.
207 WHO (2019, June), “Fact sheet – Drinking-water”, online: https://www.who.int/en/news-room/factsheets/detail/drinking-water, viewed in November 2019.
208 WHO (n.d.), “Air pollution”, online: https://www.who.int/health-topics/air-pollution#tab=tab_1, viewed in November
2019.
209 WHO (2018, February), “Climate change and health: Fact sheet Nr. 266”, online:, https://www.who.int/en/newsroom/fact-sheets/detail/climate-change-and-health, viewed in November 2019.
210 European Environment Agency (2013), A closer look at urban transport – TERM 2013: transport indicators tracking
progress towards environmental targets in Europe, EEA Report No 11/2013, Luxembourg: Publications Office of theEuropean Union.
211 Goodman, L.K. and K. Mulik (2015), Clearing the Air, Palm Oil, Peat Destruction and Air Pollution, Cambridge, theUnited States: Union of Concerned Scientists;
Climate Progress (2015), “For Peat’s Sake: Drying and Burning Wetlands Amplify Global Warming”, online:
https://thinkprogress.org/for-peats-sake-drying-and-burning-wetlands-amplify-global-warming-8c03f190a086/,
viewed in November 2019.
212 WWF International (n.d.), “Toxic Chemicals”, online:
http://wwf.panda.org/knowledge_hub/teacher_resources/webfieldtrips/toxics/, viewed in November 2019.

Page | 279

213 European Parliament (2016), Setting criteria on endocrine disruptors Follow-up to the General Court judgment,
EPRS | European Parliamentary Research Service, p. 8;
Gore, A.C. et al. (2015), “EDC-2: The Endocrine Society’s Second Scientific Statement on Endocrine-Disrupting
Chemicals”, Endocrine Reviews, 36(6):1-150.
WWF International (n.d.), “Endocrine Disrupting Chemicals. Problems with toxic: EDC’s. Wildlife and humans are
exposed daily to these pervasive chemicals”, online:
http://wwf.panda.org/knowledge_hub/teacher_resources/webfieldtrips/toxics/our_chemical_world/, viewed in
November 2019.
214 ISO (2010), ISO 26000:2010 Guidance on social responsibility, Geneva, Switzerland: ISO.
215 Access to Medicine Foundation (2018, November), Access to Medicine Index 2018, Amsterdam, The Netherlands:
Access to Medicine Foundation.
216 Access to Medicine Foundation (2018, November), Access to Medicine Index 2018, Amsterdam, The Netherlands:
Access to Medicine Foundation.
217 United Nations (n.d.) “SUSTAINABLE DEVELOPMENT GOAL 3”, online: https://sustainabledevelopment.un.org/sdg3,
viewed in November 2019.
218 Access to Medicine Foundation (2018, November), Access to Medicine Index 2018, Amsterdam, The Netherlands:
Access to Medicine Foundation.
219 WHO (2017, November), “Antimicrobial resistence fact sheet”, online: https://www.who.int/en/news-room/factsheets/detail/antimicrobial-resistance/, viewed in November 2019.
220 ECDC (2017, July 17), Antimicrobial resistance and causes of non-prudent use of antibiotics in human medicine:results of the ARNA project;
Paget, J. et al (2017, April), Antimicrobial Resistance and causes of non-prudent use of antibiotics in human
medicine in the EU, Luxembourg: Publications Office of the European Union.
221 ECDC (European Centre for Disease Prevention and Control), EFSA (EuropeanFood Safety Authority), and EMA(European Medicines Agency) (2017). “ECDC/EFSA/EMA second jointreport on the integrated analysis of theconsumption of antimicrobial agents and occurrence ofantimicrobial resistance in bacteria from humans and foodproducing animals–Joint InteragencyAntimicrobial Consumption and Resistance Analysis (JIACRA) Report”. EFSA
Journal, 15(7):4872,135;
222 WHO (n.d.), “Breastfeeding”, online: https://www.who.int/nutrition/topics/exclusive_breastfeeding/en/, viewed in
December 2019.
223 WHO (n.d.), “Infant and young child feeding”, online: https://www.who.int/en/news-room/fact-sheets/detail/infantand-young-child-feeding, viewed in November 2019.
224 WHO (2015), WHO global report on trends in prevalence of tobacco smoking, Geneva, Switzerland: World HealthOrganization, p. 1.
225 WHO (n.d.), “Tobacco”, online: https://www.who.int/health-topics/tobacco, viewed in December 2019.
226 WHO (n.d.), “Tobacco: key facts”, online: https://www.who.int/news-room/fact-sheets/detail/tobacco, viewed in
December 2019.
227 WHO (2019), WHO Report on the Global Tobacco Epidemic, 2019: Offer help to quit tobacco use , Geneva,
Switzerland: World Health Organization, p. 60.
228 United Nations (n.d.), “SUSTAINABLE DEVELOPMENT GOAL 3”, online: https://sustainabledevelopment.un.org/sdg3,
viewed in November 2019.
229 United Nations (n.d.), “SUSTAINABLE DEVELOPMENT GOAL 6”, online: https://sustainabledevelopment.un.org/sdg6,
viewed in November 2019.
230 Institute for Human Rights and Business (2011), More than a Resource: Water, Business and Human Rights, London,
the United Kingdom, Institute for Human Rights and Business.

Page | 280

231 ILO, “Programme on Occupational Health and Safety”, online: www.ilo.org/safework/lang--en/index.htm, viewed in
November 2019.
232 ILO (2008), Beyond deaths and injuries: The ILO’s role in promoting safe and healthy jobs, Geneva, Switzerland: ILO.
233 Stockholm Convention (n.d.), “The new POPs under the Stockholm Convention”, online
http://chm.pops.int/TheConvention/ThePOPs/TheNewPOPs/tabid/2511/Default.aspx, viewed in November 2019.
234 Basel Convention (2019, September 13), “Entry into force of amendment to UN treaty boosts efforts to prevent
waste dumping”, online: http://www.basel.int/Default.aspx?tabid=8120, viewed in December 2019.
235 Bourguignon, D. (2015, December), The Precautionary Principle: Definitions, Applications and Governance, Brussels,
Belgium: European Parliamentary Research Service.
236 Ethical Investment Research Services (2006), Beyond REACH – Chemical safety and sustainability concerns, London,
the United Kingdom: Ethical Investment Research Services.
237 European Commission (n.d.), “Endocrine disruptors”, online:
https://ec.europa.eu/environment/chemicals/endocrine/index_en.htm, viewed in November 2019.
238 Multinational Monitor (2004), “REACH and the long arm of the chemical industry”, online:
www.multinationalmonitor.org/mm2004/092004/digangi.html, viewed in November 2019.
239 ISO, (2010), ISO 26000:2010 Guidance on social responsibility, Geneva, Switzerland: ISO.
240 ISO, (2010), ISO 26000:2010 Guidance on social responsibility, Geneva, Switzerland: ISO, p. 43.
241 Access to Medicine Foundation (2018, November), Access to Medicine Index 2018, Amsterdam, The Netherlands:
Access to Medicine Foundation.
242 WHO (2015), Global Action Plan on Antimicrobial Resistance, Rome, Italy: World Health Organization.
243 Access to Nutrition Index (n.d.), “BMS Ranking”, online: www.accesstonutrition.org/bms-ranking, viewed in
November 2019.
244 WHO (2017), WHO report on the global tobacco epidemic, 2017: monitoring tobacco use and prevention policies,
Geneva, Switzerland: World Health Organization;
WHO (2019), WHO report on the global tobacco epidemic, 2019: Offer help to quit tobacco use, Geneva,
Switzerland: World Health Organization.
245 UN Global Compact (2017, July 19), “UNGC Board Meeting Report, 19 July 2017”, online:
https://www.unglobalcompact.org/docs/about_the_gc/UNGC-Board-Meeting_Report_07-19-17.pdf, viewed in 2019.
246 NCD Alliance (NCDA), Framework Convention Alliance (FCA), Union for International Cancer Control (UICC), The
International Union Against Tuberculosis and Lung Diseases (The Union), Vital Strategies, World Heart Federation(WHF) and Tobacco Free Kids (TFK) (2017, September 12), “Join Statement: UN Global Compact ban recognises thetobacco industry’s incompatibility with responsible, sustainable business”, online:
https://www.uicc.org/sites/main/files/atoms/files/UNGCBansTobaccoIndustry_JointStatement_FINAL.pdf, viewed in
November 2019.
247 ISO (2010), ISO 26000: 2010 Guidance on Social Responsibility, Geneva, Switzerland: ISO, p. 6.
248 ISO (2010), ISO 26000: 2010 Guidance on Social Responsibility, Geneva, Switzerland: ISO, p. 72.
249 United Nations (1948, December), Universal Declaration of Human Rights, United Nations General Assembly
resolution 217 A (III), article 23, New York, the United States: United Nations.
250 UN (1979, December 18), “Convention on the Elimination of All Forms of Discrimination against Women”, online:
https://www.ohchr.org/EN/ProfessionalInterest/Pages/CEDAW.aspx, viewed in November 2019.
UN (1989, November 20), “Convention on the Rights of the Child”, online:
https://www.ohchr.org/en/professionalinterest/pages/crc.aspx, viewed in November 2019.
251 IDSN (2015), International Convention on the Elimination of All Forms of Racial Discrimination Recommendations
and Comments on Caste-based Discrimination, Copenhagen, Denmark: International Dalit Solidarity Network.

Page | 281

252 Amnesty International (n.d.), “Corporations”, online www.amnesty.org/en/what-we-do/corporate-accountability/,
viewed in November 2019.
253 Windfuhr, Michael (2017, July), Analysis: Safeguarding Human Rights in Land Related Investments: Comparison of

the Voluntary Guidelines Land with the IFC Performance Standards and the World Bank Environmental and Social
Safeguard Framework, Berlin, Germany: German Institute for Human Rights.
254 Amnesty International (2018, February), Amnesty International Report 2017-18: The state of the world’s humanrights, London, the United Kingdom: Amesty International.
255 Front Line Defenders (2018), Stop the Killings, Dublin, Ireland: Front Line, the International Foundation for theProtection of Human Rights Defenders.
256 Global Witness (2018, July 24), At What Cost? Irresponsible business and the murder of land and environmental
defenders in 2017, London, the United Kingdom: Global Witness.
257 United Nations General Assembly (2019, July 15), Report of the Special Rapporteur on the situation of human rights
defenders, A/74/159, New York City, United States: United Nations.
258 UN Commission on Human Rights, Forced evictions, (1993, March) E/CN.4/RES/1993/77, para 6.
259 Vidal, J. and W. Bowcott (2016, September 15), “ICC widens remit to include environmental destruction cases”, The
Guardian, online: https://www.theguardian.com/global/2016/sep/15/hague-court-widens-remit-to-includeenvironmental-destruction-cases, viewed in November 2019;
International Criminal Court (2016, September 15), Policy paper on case selection and prioritisation, The Hague, The
Netherlands: International Criminal Court.
260 Equator Principles Association (2017, November 2), “EP Association Annual Meeting 2017 Outcomes”, online:
https://equator-principles.com/ep-association-news/ep-association-annual-meeting-2017-outcomes/, viewed in
November 2019.
261 Ruggie, J. (2011), Guiding Principles on Business and Human Rights: Implementing the United Nations “Protect,
Respect and Remedy” Framework, New York, the United States: United Nations Human Rights Council,
A/HRC/17/31, Para 6, p. 4.
262 United Nations Office of the High Commissioner of Human Rights, (n.d.), “Business and human rights”, online:
www.ohchr.org/EN/Issues/Business/Pages/BusinessIndex.aspx, November 2019.
263 OECD (n.d.), “Responsible business conduct in the financial sector,”, online: mneguidelines.oecd.org/rbc-financialsector.htm, viewed in November 2019.
UNEP FI (n.d.), “Human rights and the finance sector”, online: www.unepfi.org/humanrightstoolkit/finance.php,
viewed in November 2019.
264 United Nations Office of the High Commissioner of Human Rights (n.d.), “Open-ended intergovernmental working
group on transnational corporations and other business enterprises with respect to human rights”, online:
https://www.ohchr.org/EN/HRBodies/HRC/WGTransCorp/Pages/IGWGOnTNC.aspx, viewed in November 2019.
265 United Nations Office of the High Commissioner of Human Rights (n.d.), “Fifth session of the open-ended
intergovernmental working group on transnational corporations and other business enterprises with respect tohuman rights”, online: https://www.ohchr.org/EN/HRBodies/HRC/WGTransCorp/Session5/Pages/Session5.aspx ,viewed in November 2019.
266 United Nations (n.d.), “Sustainable Development Goals”, online: https://sustainabledevelopment.un.org/sdgs,
viewed in November 2019.
267 United Nations (n.d.), “Goal 8”, online: www.sustainabledevelopment.un.org/sdg8, viewed in November 2019.
268 United Nations (1948, December), Universal Declaration of Human Rights, United Nations General Assembly
resolution 217 A (III), article 23, New York, the United States: United Nations.

Page | 282

269 United Nations General Assembly (2002), General Comment No. 15. The right to water. UN Committee on
Economic, Social and Cultural Rights, November 2002 Resolution A/RES/64/292, Geneva, Switzerland: United
Nations General Assembly.
270 Committee on Economic, Social and Cultural Rights (2000), General Comment 14, The right to the highest
attainable standard of health U.N. Doc. E/C.12/2000/4, Geneva, Switzerland: Committee on Economic, Social andCultural Rights.
See for further on the topic of ESCR, Committee on Economic, Social and Cultural Rights (2017), General comment

No. 24 on State obligations under the International Covenant on Economic, Social and Cultural Rights in the context
of business activities, U.N. Doc. E/C.12/GC/24, Geneva, Switzerland: Committee on Economic, Social and Cultural
Rights.
271 Ruggie, J. (2011), Guiding Principles on Business and Human Rights: Implementing the United Nations “Protect,
Respect and Remedy” Framework, New York, the United States: United Nations Human Rights Council,
A/HRC/17/31, p. 13.
272 United Nations (2011), Guiding Principles on Business and Human Rights: Implementing the United Nations“Protect, Respect and Remedy” Framework, New York, the United States: United Nations, HR/PUB/11/04, p. 21.
273 United Nations (2011), Guiding Principles on Business and Human Rights: Implementing the United Nations“Protect, Respect and Remedy” Framework, New York, the United States: United Nations, HR/PUB/11/04, p. 15.
274 UN Office of the High Commissioner of Human Rights (2017, June 12), OHCHR response to request from BankTrackfor advice regarding the application of the UN Guiding Principles on Business and Human Rights in the context ofthe banking sector, Geneva, Switzerland: UN OHCHR;
Brightwell, R., Frijns, J. and A. Missbach (2017, December) How Banks Contribute to Human Rights Violations,
Briefing Paper, Nijmegen, The Netherlands: BankTrack.
275 United Nations Human Rights Council (2008), Promotion and Protection of All Human Rights, Civil, Political,
Economic, Social and Cultural Rights, Including the Right to Development, A/HRC/8/5, United Nations Human
Rights Council, p. 26.
276 Ruggie, J. (2011), Guiding Principles on Business and Human Rights: Implementing the United Nations “Protect,
Respect and Remedy” Framework, New York, the United States: United Nations Human Rights Council,
A/HRC/17/31, p.31-35;
277 Amnesty International (2010), Haki Zetu. ESC rights in Practice. Land and Human Rights, Amsterdam, theNetherlands: Amnesty International Netherlands, p.10.
278 Amnesty International (2010), Haki Zetu. ESC rights in Practice. Land and Human Rights, Amsterdam, theNetherlands: Amnesty International Netherlands, p.26.
279 United Nations Human Rights Council (2013), Report of the Special Rapporteur on adequate housing as acomponent of the right to an adequate standard of living, and on the right to non-discrimination in this context,
Raquel Rolnik; Mission to the World Bank 15th February 2013, A/HRC/2/46/Add.3, Para.16. Geneva, Switzerland:
OHCHR.
280 UN Commission on Human Rights, Forced evictions, (1993, March) E/CN.4/RES/1993/77, para 6.
281 UN Office of the High Commissioner of Human Rights (2009), Large-scale land acquisitions and leases: A set of core

principles and measures to address the human rights challenge. Mr. Olivier De Schutter, Special Rapporteur on theright to food, Geneva, Switzerland: OHCHR, p. 8.
282 De Schutter, Oliver (2016), Tainted Lands: Corruption in Large-Scale Land Deals, ICAR and Global Witness: online:
https://www.globalwitness.org/en-gb/campaigns/land-deals/tainted-lands-corruption-large-scale-land-deals/,
viewed in November 2019.
283 International Land Coalition (2011, May 27), Tirana Declaration, p. 2.

Page | 283

284 FAO (2014), Respecting Free, Prior and Informed Consent: Practical guidance for governments, companies, NGOs,
indigenous peoples and local communities in relation to land acquisition, Rome, Italy: Food and Agriculture
Organization of the United Nations, p. 9.
Greenspan, E. (2014), “Free, Prior, and Informed Consent in Africa: An emerging industry standard for extractive
industry projects”, Oxfam America Research Backgrounder series, online:
https://www.oxfamamerica.org/explore/research-publications/fpic-in-africa/, viewed in November 2019.
Roundtable on Sustainable Palm Oil (2016, January 21), “Free, Prior and Informed Consent Guide for RSPO
Members (2015 endorsed)”, online: https://rspo.org/news-and-events/announcements/free-prior-and-informedconsent-guide-for-rspo-members-2015-endorsed, viewed in November 2019.
285 UN Committee on the Elimination of Discrimination against Women (2016, March 4), General Recommendation No.
34 on the Rights of Rural Women, CEDAW/C/GC/34, New York City, United States: United Nations.
286 FAO (2012), Voluntary Guidelines on the Responsible Governance of Tenure of Land, Fisheries and Forests in theContext of National Food Security, Rome, Italy: Food and Agriculture Organization of the United Nations.
287 The Interlaken Group and the Rights and Resources Initiative (2019), Respecting Land and Forest Rights: A Guide forCompanies, revised. Washington, D.C.: The Interlaken Group and RRI.
288 Amnesty International (2010), Haki Zetu. ESC rights in Practice. Land and Human Rights, Amsterdam, theNetherlands: Amnesty International Netherlands, p.35.
289 United Nations (2007, September 13), Declaration on the Rights of Indigenous People, New York City, the UnitedStates: United Nations.
290 FAO (2012), Voluntary Guidelines on the Responsible Governance of Tenure of Land, Fisheries and Forests in theContext of National Food Security, Rome, Italy: Food and Agriculture Organization of the United Nations, p. 14.
291 Inter-American Development Bank (2006), Operational Policy on Indigenous Peoples and Strategy for Indigenous
Development, Washington DC, theUnited States of America: IADB.
292 United Nations (2008, March), UN Declaration on the Rights of Indigenous Peoples, New York, the United States:
United Nations, Articles 21, 22.
293 International Court of Justice (2004), Legal Consequences of the Construction of a Wall in the Occupied Palestinian
Territory. Advisory Opinion, The Hague, the Netherlands: International Court of Justice.
294 ISO (2010), ISO 26000:2010 Guidance on social responsibility, Geneva, Switzerland: ISO.
295 ISO (2010), ISO 26000:2010 Guidance on social responsibility, Geneva, Switzerland: ISO, p. 72.
296 Ruggie, J. (2011), Guiding Principles on Business and Human Rights: Implementing the United Nations “Protect,
Respect and Remedy” Framework, New York, the United States: United Nations Human Rights Council,
A/HRC/17/31, Guiding Principle 13;
OECD (2014, June 26-27), Due diligence in the financial sector: adverse impacts directly linked to financial sector
operations, products or services by a business relationship. Paris, France: OECD, Working Paper of the Global Forumon Responsible Business Conduct.
297 The World Bank (2012), World Development Report 2013: Jobs, Washington DC, United States,: The World Bank;
298 The World Bank (2011), World Development Report 2012: Gender Equality and Development, Washington D.C.,
United States: The World Bank.
299 United Nations Office for the High Commissioner on Human Rights (1979, December), Convention on the
Elimination of All Forms of Discrimination agains Women, New York, United States: OHCHR.
300 United Nations (n.d.), “SUSTAINABLE DEVELOPMENT GOAL 5”, online:
https://sustainabledevelopment.un.org/SDG5, viewed in November 2019.
301 International Labour Organization (2018), ILO Global Estimates on International Migrant Workers – Results andMethodology, 2nd Ed., Geneva, Switzerland: ILO.

Page | 284

302 Kelly, N. McIntyre and P. Pattison (2019, October 2), “Revealed: hundreds of migrant workers dying of heat stress in
Qatar each year”, The Guardian, online: https://www.theguardian.com/global-development/2019/oct/02/revealedhundreds-of-migrant-workers-dying-of-heat-stress-in-qatar-each-year, viewed in November 2019.
303 International Labour Organization (2019), World Employment and Social Outlook: Trends 2019, Switzerland,Genève, ILO;
304 United Nations (n.d.), “SUSTAINABLE DEVELOPMENT GOAL 8”, online: www.sustainabledevelopment.un.org/sdg8,
viewed in November 2019.
305 ILO, OECD, IOM and UNICEF (2019), Ending child labour, forced labour and human trafficking in global supply
chains, Geneva, Switzerland: International Labour Organization, Organization for Economic Co-operation andDevelopment, International Organization for Migration and United Nations Childrens Fund.
306 United Nations (n.d.), “SUSTAINABLE DEVELOPMENT GOAL 8”, online: https://sustainabledevelopment.un.org/sdg8,
viewed in November 2019.
307 United Nations (n.d.), “SUSTAINABLE DEVELOPMENT GOAL 10”, online:
https://sustainabledevelopment.un.org/sdg10, viewed in November 2019.
308 International Labour Organization (n.d.), “Conventions and Recommendations”, online:
https://www.ilo.org/global/standards/introduction-to-international-labour-standards/conventions-andrecommendations/lang--en/index.htm, viewed in November 2019.
309 International Labour Organization (1948), Freedom of Association and Protection of the Right to Organise
Convention, Geneva, Switzerland: ILO;
International Labour Organization (1949), Right to Organise and Collective Bargaining Convention, Geneva,
Switzerland: ILO.
310 International Labour Organization (1930), Forced Labour Convention, Geneva, Switzerland: ILO;
International Labour Organization (1957), Abolition of Forced Labour Convention, Geneva, Switzerland: ILO.
311 International Labour Organization (1973), Minimum Age Convention, Geneva, Switzerland: ILO;
International Labour Organization (1999), Worst Forms of Child Labour Convention, Geneva, Switzerland: ILO.
312 International Labour Organization (1958), Discrimination (Employment and Occupation) Convention, Geneva,
Switzerland: ILO;
International Labour Organization (1951), Equal Remuneration Convention, Geneva, Switzerland: ILO.
313 Narayan, P.K. (2015), An assessment of the Indian financial services sector, Geneva, Switzerland: ILO;
International Labour Organization (2015), “Tripartite Workshop on Employment, Social Dialogue and LabourManagement Relations in the Financial Services Sector in Selected Countries in Asia and the Pacific”, online:
www.ilo.org/jakarta/whatwedo/eventsandmeetings/WCMS_381561/lang--en/index.htm, viewed in November 2019.
314 International Labour Organization (2017, March 17), “Press release: ILO revises its landmark Declaration on
multinational enterprises”, online: http://www.ilo.org/global/about-the-ilo/newsroom/news/WCMS_547615/lang-en/index.htm, viewed in November 2019.
315 International Labour Organization (2017, March), Tripartite Declaration of Principles concerning Multinational
Enterprises and Social Policy, Geneva, Switzerland: ILO.
316 International Labour Organization (n.d.), “Fair Recruitment”, online: https://www.ilo.org/global/topics/fairrecruitment/lang--en/index.htm, viewed in November 2019.
317 International Labour Organization (2019), General Principles and Operational Guidelines for Fair Recruitment &Definition of Recruitment Fees and Related Costs, Geneva, Switzerland: ILO.
318 International Labour Organization (n.d), “ILO Thesaurus”, online: www.ilo.org/thesaurus/default.asp, viewed in
November 2019.

Page | 285

319 United Nations (1948, December), Universal Declaration of Human Rights, United Nations General Assembly
resolution 217 A (III), article 23, New York, the United States: United Nations.
320 OECD (2011), OECD Guidelines for Multinational Enterprises, Paris, France: OECD Publishing.
321 Anker, R (2005), A new methodology for estimating internationally comparable poverty lines and living wage rates ,Switzerland Geneva: International Labour Office.
322 Platform Living Wage Financials (n.d.), “Platform Living Wage Financials”, online:
https://www.livingwage.nl/platform-living-wage-financials/, viewed in January 2020.
323 ISO (2010), ISO 26000:2010 Guidance on social responsibility, Geneva, Switzerland: ISO.
324 ISO (2010), ISO 26000: 2010 Guidance on Social Responsibility, Geneva, Switzerland: ISO, p. 6.
325 ISO (2010), ISO 26000: 2010 Guidance on Social Responsibility, Geneva, Switzerland: ISO, p. 72.
326 UN (2011), Guiding Principles on Business and Human Rights. Implementing the United Nations “Protect, Respect
and Remedy” Framework, Geneva, Switzerland: United Nations, p. 18.
327 IPBES (2019), Summary for Policymakers of the Global Assessment Report on Biodiversity and Ecosystem Services of
the Intergovernmental Science-Policy Platform on Biodiversity and Ecosystem Services, Bonn, Germany:Intergovernmental Science-Policy Platform on Biodiversity and Ecosystem Services.
328 WEF (2017), “We need to save Africa’s forests. Here’s how”, online:
www.weforum.org/agenda/2016/11/deforestation-africa-palm-oil/, viewed in November 2019;
ANU (2017), “ANU study shows the cost of deforestation in Cambodia”, online: www.anu.edu.au/news/allnews/anu-study-shows-the-cost-of-deforestation-in-cambodia, viewed in November 2019.
329 UNEP (n.d.), “Rate of Environmental Damage Increasing Across Planet but Still Time to Reverse Worst Impacts”,
online: www.un.org/sustainabledevelopment/blog/2016/05/rate-of-environmental-damage-increasing-acrossplanet-but-still-time-to-reverse-worst-impacts/, viewed in November 2019.
330 IPCC (2015), Climate Change 2014: Synthesis Report: Summary for Policymakers,Geneva, Switserland:Intergovernmental Panel on Climate Change, p.8.
331 IPCC (2015), Climate Change 2014: Synthesis Report: Summary for Policymakers, Geneva, Switserland:Intergovernmental Panel on Climate Change, p. 13.
332 United Nations (n.d.), “SUSTAINABLE DEVELOPMENT GOAL 14”, online:
https://sustainabledevelopment.un.org/sdg14, viewed in November 2019.
333 United Nations (n.d.), “SUSTAINABLE DEVELOPMENT GOAL 15”, online:
https://sustainabledevelopment.un.org/sdg15, viewed in November 2019.
334 United Nations (n.d.), “SUSTAINABLE DEVELOPMENT GOAL 2”, online: https://sustainabledevelopment.un.org/sdg2,
viewed in November 2019.
335 United Nations (n.d.), “SUSTAINABLE DEVELOPMENT GOAL 3”, online: https://sustainabledevelopment.un.org/sdg3,
viewed November 2019.
336 United Nations (n.d.), “SUSTAINABLE DEVELOPMENT GOAL 6”, online: https://sustainabledevelopment.un.org/sdg6,
viewed in November 2019.
337 Saikku, L. et al (2015), Implementing the Green Economy in a European context: Lessons learned from theories,
concepts and case studies, p. 7, Helsinki, Finland: Partnership for European Environmental Research.
338 Saikku, L. et al (2015), Implementing the Green Economy in a European context: Lessons learned from theories,
concepts and case studies, p. 8, Helsinki, Finland: Partnership for European Environmental Research.
339 Convention on Biological Diversity (n.d.), “The Convention - List of Parties”, online:
www.cbd.int/information/parties.shtml, viewed in November 2019.

Page | 286

340 UN Environment (2017, 14 December), “UN Environment Assembly moves to curb pollution from extractive
industries”, online: www.unenvironment.org/news-and-stories/story/un-environment-assembly-moves-curbpollution-extractive-industries, viewed in November 2019.
341 Inter alia: International Convention for the Regulation of Whaling (1946);
Agreement on the Conservation of Polar Bears (1973);
North Pacific Fur Seal Convention (1911);
Convention for the Conservation of Antarctic Seals (1972);
Inter-American Convention for the Conservation of Sea Turtles (1996).
342 CITES (n.d.), “How CITES works”, online: www.cites.org/eng/disc/how.php, viewed in November 2019.
343 United Nations (1992, June), UN Convention on Biological Diversity.
344 European Parliament, Council of the European Union (2014, October), Regulation (EU) No 1143/2014 of theEuropean Parliament and of the Council of 22 October 2014 on the prevention and management of theintroduction and spread of invasive alien species.
345 ISO (2010), ISO 26000:2010 Guidance on social responsibility, Geneva, Switzerland: ISO.
346 GRI (2013), G4 Sustainability Reporting Guidelines, Amsterdam, the Netherlands: Global Reporting Initiative.
347 Forest Heroes (n.d.), “About Us”, online: www.forestheroes.org/about-us/, viewed in November 2019;
Wilmar International (2013, December 5), “No Deforestation, No Peat, No Exploitation Policy”, online: www.wilmarinternational.com/wp-content/uploads/2012/11/No-Deforestation-No-Peat-No-Exploitation-Policy.pdf, viewed in
November 2019.
348 ISO (2010), ISO 26000: 2010 Guidance on Social Responsibility, Geneva, Switzerland: ISO, p. 6.
349 ISO (2010), ISO 26000: 2010 Guidance on Social Responsibility, Geneva, Switzerland: ISO, p. 72.
350 IEEP (2016), “IEEP steps up work on the multiple benefits of biodiversity”, online:
www.ieep.eu/news/biodiversity/valuing-biodiversity-and-ecosystem-services/ieep-steps-up-work-on-the-multiplebenefits-of-biodiversity, viewed in November 2019.
351 IMF (2014), IMF Policy Paper Spillovers in International Corporate Taxation, Washington D.C., United States:
International Monetary Fund.
352 ActionAid (2011), Addicted to tax havens: The secret life of the FTSE 100, London, the United Kingdom: ActionAid;
ActionAid (2013), How tax havens plunder the poor, London, the United Kingdom: ActionAid;
ICIJ (n.d.), “The Panama Papers: Politicians, Criminals and the Roques Industry That Hides Their Cash”, online:
https://panamapapers.icij.org/, viewed in November 2019;ICIJ (nd.), “Paradise papers: Secrets of the global elite”, online: https://www.icij.org/investigations/paradise-papers/,
viewed in November 2019.
353 Eurodad (2014), Going Offshore. How development finance institutions support companies using the world’s mostsecretive financial centres, Eurodad;
UNCTAD Investment and Enterprise Division (2015, March), FDI, Tax and Development. The fiscal role ofmultinational enterprises: towards guidelines for Coherent International Tax and Investment Policies , UNCTAD.
354 Henry, J. S. (2012, July), The Price of Offshore Revisited: New Estimates for “Missing” Global Private Wealth, Income,Inequality, and Lost Taxes, London, United Kingdom: Tax Justice Network.
355 Weyzig, F. (2015, November), Still broken: Governments must do more to fix the international corporate tax system,
Oxford, the United Kingdom: Oxfam GB, p. 1.
356 UNCTAD (2015), World Investment Report 2015: Reforming International Investment Governance, New York, UnitedStates: United Nations, p. 200;

Page | 287

Oxfam (2013, 3 September), “Tax evasion robs more than $100b from poor countries”, online:
http://www.oxfamamerica.org/press/tax-evasion-robs-more-than-100b-from-poor-countries-oxfam/, viewed in
November 2019.
357 IMF (2014, June 25), “IMF Launches New Study on Spillovers in International Corporate Taxation”, IMF, online:
http://www.imf.org/external/np/sec/pr/2014/pr14303.htm, viewed in November 2019;
IMF (2014, May 9), Spillovers in International Corporate Taxation, Washington DC, the United States: International
Monetary Fund.
358 Weyzig, F. (2015, November), Still broken: Governments must do more to fix the international corporate tax system,
Oxford, the United Kingdom: Oxfam GB.
359 United Nations General Assembly (2014, 15 August), Report of the Intergovernmental Committee of Experts on
Sustainable Development Financing, A/69/315*, Sixty-ninth session, p. 8.
360 Prats, A. (2013, December 16), “Tax evasion and avoidance finally came under scrutiny this year”, The Guardian;
ActionAid International et al. (2013), Fixing the Cracks in Tax: A Plan of Action, London, the United Kingdom:
Christian Aid;
Molina, N. (2015, February 13), “A UK tax avoidance bill could save developing countries billions”, The Guardian.
361 United Nations (n.d.), “SUSTAINABLE DEVELOPMENT GOAL 16”, online:
https://sustainabledevelopment.un.org/sdg16, viewed in November 2019.
362 United Nations (n.d.), “SUSTAINABLE DEVELOPMENT GOAL 17”, online:
https://sustainabledevelopment.un.org/sdg17, viewed in November 2019.
363 OECD (n.d.) ‘List of Unco-operative Tax Havens’, online: http://www.oecd.org/countries/monaco/listofuncooperativetaxhavens.htm, viewed in November 2019.
364 European Commission (n.d.), “Common EU list of third country jurisdictions for tax purposes”, online:
https://ec.europa.eu/taxation_customs/tax-common-eu-list_en, viewed in November 2019.
365 OECD (n.d.), “Action 5: Harmful tax practices”, online: http://www.oecd.org/tax/beps/beps-actions/action5/, viewed
in November 2019.
366 OECD (n.d.), “Committee on Fiscal Affairs releases outcome of review of preferential tax regimes in OECD countries”,
online:http://www.oecd.org/tax/harmful/committeeonfiscalaffairsreleasesoutcomeofreviewofpreferentialtaxregimesinoecd
countries.htm, viewed in November 2019;
OECD (2006), The OECD’s Project On Harmful Tax Practices: 2006 Update On Progress In Member Countries , Paris,
France: OECD.
367 OECD (n.d.), “About the Global Forum”, online: http://www.oecd.org/tax/transparency/about-the-global-forum/,viewed in November 2019.
368 Christian Aid (2015, February 2015), Information for the Nations. How developing countries are being excluded
from automatic information exchange, and how to change it,.
369 Financial Secrecy Index (n.d.) “What has corruption to do with cross-border secrecy?”, online:
http://www.financialsecrecyindex.com/faq/what-has-corruption-to-do-with-cross-border-secrecy, viewed in
November 2019.
370 Boerrild, T, Kohonen, M. and R. Sarin (2015, November 17), Getting to Good – Towards Responsible Corporate Tax
Behaviour, the United Kingdom: ActionAid UK / Christian Aid / Oxfam, p. 25.
371 OECD (2011), OECD Guidelines for Multinational Enterprises, OECD Publishing, p. 60.
372 Karananou, A and Guha, A. (2015), Engagement Guidance on Corporate Tax Responsibility: Why and how to engage
with your investee companies, Paris, France: PRI Association, p. 7.

Page | 288

373 European Commission (2017, 21 June), “Transparency for intermediaries”, online:
https://ec.europa.eu/taxation_customs/business/company-tax/transparency-intermediaries_en, viewed in
November 2019.
374 FACT Coalition (2018, November), Muddled Markets: Investors Increasingly at Risk from Lack of Disclosures about
Corporate Tax Practices, Washington DC, United States: The FACT Coalition, p. v.
375 Boerrild, T, Kohonen, M. and R. Sarin (2015, November 17), Getting to Good – Towards Responsible Corporate Tax
Behaviour, the United Kingdom: ActionAid UK / Christian Aid / Oxfam, p. 21.
376 GRI (2016), GRI 201: Economic Performance 2016, Global Reporting Initiative, p. 6 and p. 12.
377 OECD (n.d.), “About BEPS”, online: http://www.oecd.org/tax/beps-about.htm, viewed in November 2019.
378 European Union (2013, June 26), Directive 2013/36/EU of the European Parliament and of the Council, Official
Journal of the European Union, Article 89.
379 Aubrey, M. and Dauphin, T. (2017, 27 March), The use of tax havens by Europe’s biggest banks, Oxfam International.
380 European Commission (2016, April), “Proposal for a directive on corporate tax transparency (country-by-country
reporting)”, online: https://ec.europa.eu/info/publications/proposal-directive-corporate-tax-transparency-countrycountry-reporting_en, viewed in November 2019.
381 Remeur, C. (2017, 30 June), Briefing - EU Legislation in Progress: Public country-by-country reporting by
multinational enterprises, European Parliament, European Parliamentary Research Service.
382 ISO (2010), ISO 26000: 2010 Guidance on Social Responsibility, Geneva, Switzerland: ISO, p. 6.
383 ISO (2010), ISO 26000: 2010 Guidance on Social Responsibility, Geneva, Switzerland: ISO, p. 72.
384 Small Arms Survey (n.d.), “Weapons and Markets”, online: http://www.smallarmssurvey.org/weapons-andmarkets.html, viewed in November 2019.
Vranckx, A., F. Slijper, and R. Isbister (2011), Lessons from MENA: appraising EU transfers of military and security
equipment to the Middle east and North Africa, Gent, Belgium: Academia Press.
Campaign Against Arms Trade (2017, 10 July), “Stop arming Saudi Arabia”, online:
https://www.caat.org.uk/campaigns/stop-arming-saudi, viewed in November 2019.
386 Tian, N. Et al (2019), Global developments in military expenditure, Sweden, Stockholm: Stockholm International
Peace Research Institute.
387 United Nations (n.d.), “Over-Armed”, online: http://www.un.org/disarmament/over-armed/, viewed in December
2019;
Archer, C. and Willi, A. (2012), Opportunity Costs: Military Spending and the UN’s Development Agenda: A View
from the International Peace Bureau, Geneva, Switzerland: International Peace Bureau.
388 SIPRI (n.d.), “SIPRI Military Expenditure Database”, online:
http://www.sipri.org/research/armaments/milex/milex_database, viewed in November 2019.
389 Archer, C. and Willi, A. (2012), Opportunity Costs: Military Spending and the UN Development Agenda, Geneva,
Switzerland: International Peace Bureau, p. 16.
390 Perlo-Freeman, S. (2016, 3 August), “Transparency and accountability in military spending”, online:
https://www.sipri.org/commentary/topical-backgrounder/2016/transparency-and-accountability-military-spending,viewed in November 2017; Roeber, J. (2005), Parallel Markets: Corruption in the International Arms Trade, Goodwin
Paper #3, London, the United Kingdom: CAAT;
Feinstein, A., P. Holden and B. Pace (2011), Corruption and the Arms Trade: Sins of Commission, SIPRI Yearbook
2011, Sweden, Stockholm: Stockholm International Peace Research Institute.
391 Feinstein, A., Holden, P. and Pace, B. (2011) “Corruption and arms trade: sins of commission” in SIPRI (eds.), SIPRI
Yearbook 2011, Oxford, the United Kingdom: Oxford University Press, p. 13-37.

Page | 289

392 Transparency International (2012, 23 July), “Anti-Corruption and the UN Arms Trade Treaty”, online:
http://www.transparency.org/news/pressrelease/20120723_anti_corruption_and_the_un_arms_trade_treaty, viewed
in December 2019.
393 Shah, A. (2013), “The Arms Trade is Big Business”, online: http://www.globalissues.org/article/74/the-arms-trade-isbig-business, viewed in November 2019.
394 United Nations (n.d.), “SUSTAINABLE DEVELOPMENT GOALS”, online: https://sustainabledevelopment.un.org/sdgs,
viewed in December 2019.
395 International Committee of the Red Cross (2010), “Civilians protected under international humanitarian law”, online:
https://www.icrc.org/eng/war-and-law/protected-persons/civilians/overview-civilians-protected.htm, viewed in
December 2019.
396 Cluster Munition Coalition (2010), CMC Policy Papers on the Convention on Cluster Munitions, London, the United
Kingdom: Cluster Munition Coalition;
Cluster Munition Coalition (2013), Briefing Paper on the Convention on Cluster Munitions, London, the United
Kingdom: Cluster Munition Coalition;
PAX (2017, 23 May), Worldwide Investments in Cluster Munitions: A Shared Responsibility, the Netherlands, Utrecht:
PAX.
397 PAX (2017, 23 May), Worldwide Investments in Cluster Munitions: A Shared Responsibility, the Netherlands, Utrecht:
PAX;
CMC (n.d.), “Stop Explosive Investments”, online: www.stopexplosiveinvestments.org, last viewed December 2019.
398 United Nations (2017, 7 July), UN Treaty on the Prohibition of Nuclear Weapons.
399 Campaign to Stop Killer Robots (n.d.), “The Problem”, online: https://www.stopkillerrobots.org/learn/, viewed in
December 2019.
400 Campaign to Stop Killer Robots (n.d.), “The Problem”, online: http://www.stopkillerrobots.org/learn/, viewed in
December 2019.
401 United Nations for Disarmament Affairs (2013), The Impact of Poorly Regulated Arms Transfers on the Work of theUnited Nations: United Nations Coordinating Action on Small Arms 2013, UNODA Occasional Papers No. 23, New
York, the United States: United Nations;
United Nations Development Program (2012, February 16), UN Officials Call for Comprehensive and Robust Arms
Trade Treaty, New York, the United States: UNDP;
Oxfam International (n.d.), “Why we need a Global Arms Trade Treaty”, online:
http://www.oxfam.org/en/campaigns/conflict/controlarms/why-we-need-global-arms-trade-treaty, viewed in
December 2019.
402 SIPRI (2012, November 12), “EU arms embargo on China”, online:
http://www.sipri.org/databases/embargoes/eu_arms_embargoes/china, viewed in December 2019.
403 SIPRI (2017, February 2), “EU arms embargo on Egypt”, online:
http://www.sipri.org/databases/embargoes/eu_arms_embargoes/egypt/eu-arms-embargo-on-egypt, viewed in
December 2019.
404 SIPRI (2013), “Transfers of small arms and light weapons to fragile states: strengthening oversight and control”,
SIPRI Insights on Peace and Security, Solna, Sweden: SIPRI, No. 2013/1.
405 Arms Trade Treaty (n.d.), “Treaty Status”, online: https://thearmstradetreaty.org/treatystatus.html?templateId=209883, viewed in December 2019.
406 Control Arms (n.d.), "About the Arms Trade Treaty (ATT)", online: http://https://controlarms.org/att/, viewed in
December 2019.

Page | 290

407 IKV Pax Christi (2013), "Mensenrechten staan centraal in historisch Wapenhandelverdrag", online:
https://www.paxvoorvrede.nl/actueel/nieuwsberichten/mensenrechten-staan-centraal-in-historischwapenhandelverdrag, viewed in December 2019.
408 Control Arms (2013), Summary Analysis of the Arms Trade Treaty, the United States, New York: Control Arms.
409 The Council Of The European Union (2008), Common Position 2008/944/CFSP of 8 December 2008 defining
common rules governing control of exports of military technology and equipment, Brussels, Belgium: Official
Journal of the European Union.
410 The Economist (2019), Democracy Index 2018: Me Too?, United Kingdom, London: The Economist.
411 Guido Schmidt-Traub and Jeffrey D. Sachs (2015, June), Financing Sustainable Development: Implementing theSDGs through Effective Investment Strategies and Partnerships, UN Sustainable Development Solutions Network(SDSN), Working Paper;
C-Change (2017, March), SDG Investing: Advancing a New Normal on Global Capital Markets, Report commissionedby the Financing for Development Office and the Division for Sustainable Development of the United Nations
Department of Economic and Social Affairs.
412 Wachenfeld, M., Dowell-Jones and Aizawa, M. (2016), Human Rights and Sustainable Finance: Exploring theRelationship, UNEP and IHRB inquiry working paper, Nairobi, Kenya: UNEPFI, p. 10.
413 BankTrack (2019, December 6), “What are dodgy deals”, online: www.banktrack.org/page/what_are_dodgy_deals,
viewed in December 2019;
Forests and Finance (n.d.), “About this project”, online: https://forestsandfinance.org/about/, viewed in December
2019.
Facing Finance (2017, February), Dirty Profits 5: Report on Companies and Financial Institutions Benefiting from
Human Rights Violations and Environmental Destruction, Berlin, Germany: Facing Finance;
414 Choudhury, A. (2019, March 26), “Banker Bonuses”, online: www.bloomberg.com/quicktake/banker-bonuses, viewed
in December 2019;
VOX CEPR’s Policy Portal (2012, January 12). “Bankers’ bonuses and the financial crisis”, online
www.voxeu.org/article/bankers-bonuses-and-financial-crisis, viewed in December 2019.
415 United Nations (n.d.), “SUSTAINABLE DEVELOPMENT GOALS”, online: https://sustainabledevelopment.un.org/sdgs,
viewed in December 2019.
416 IFC (n.d.), “Sustainable Banking Network”, online:
https://www.ifc.org/wps/wcm/connect/topics_ext_content/ifc_external_corporate_site/sustainability-atifc/company-resources/sustainable-finance/sbn, viewed in December 2019.
417 UN Environment and World Bank Group (2017, November), Roadmap for a Sustainable Financial System,
Washington D.C., United States and Nairobi, Kenya: World Bank Group and UNEP.
418 PRI, UNEP FI, the Generation Foundation (n.d.), “Fiduciary Duty in the 21st Century”, online:
https://www.fiduciaryduty21.org/, viewed in December 2019.
419 PRI, UNEP FI, the Generation Foundation (2019, October), Fiduciary Duty in the 21st Century: Final Report, London,
the United Kingdom: PRI.
420 Network for Greening the Financial System (2019, April 17), A call for action: Climate change as a source of financial
risk, Paris, France: Network of Central Banks and Regulators for Greeninng the Financial System, p. 4.
421 OECD (2013, May), Environmental and Social Risk Due Diligence in the Financial Sector, Paris, France: OECD.
422 OECD (n.d.), “Responsible business conduct in the financial sector”, online: https://mneguidelines.oecd.org/rbcfinancial-sector.htm, viewed in December 2019.
423 PRI (n.d.), “What are the principles for responsible investment?”, online: https://www.unpri.org/pri/an-introductionto-responsible-investment/what-are-the-principles-for-responsible-investment, viewed in December 2019.

Page | 291

424 PRI (n.d.) “Signatories to the Principles for Responsible Investment”, online:
http://www.unpri.org/signatories/signatories/ viewed in December 2019.
425 Equator Principles (n.d.), “EP Association Members & Reporting”, online: https://equator-principles.com/membersreporting/, viewed in December 2019.
426 Equator Principles (n.d.), “About the Equator Principles”, online: https://equator-principles.com/about/, viewed in
December 2019.
427 Equator Principles (2019, June), “Summary of Proposed Changes in EP4 Draft”, online: https://equatorprinciples.com/wp-content/uploads/2019/06/Summary-of-changes-in-draft-of-EP4-for-consultation.pdf, viewed in
December 2019.
428 Equator Principles (n.d.), “Review of the Equator Principles – EP4”, online: https://equator-principles.com/ep4/,
viewed in December 2019.
429 International Capital Market Association (2018, June), Green Bonds Principles: Voluntary Process Guidelines for
Issuing Green Bonds, Paris, France: International Capital Market Association.
430 International Capital Market Association (2018, June), Green Bonds Principles: Voluntary Process Guidelines for
Issuing Green Bonds, Paris, France: International Capital Market Association.
431 BankTrack (2003, 27 January), “Pressure Groups Target the Private Banks Behind Corporate Misdeeds”, online:
https://www.publiceye.ch/en/media-corner/press-releases/detail/pressure-groups-target-the-private-banksbehind-corporate-misdeeds, viewed in December 2019.
432 Global Alliance for Banking on Values (n.d.), “About us”, online: http://www.gabv.org/about-us, viewed in January
2020.
433 WWF (n/d), “Smart fishing – Why we need to act”, online:
www.wwf.panda.org/what_we_do/footprint/smart_fishing/why_we_need_to_act_/, viewed December 2019.
434 FAO (2018), The state of the world fisheries and aquaculture, Rome, Italy: FAO, pp. 40.
435 FAO (2018), The state of the world fisheries and aquaculture, Rome, Italy: FAO, pp. 23.
436 FAO (2016), The state of the world fisheries and aquaculture, Rome, Italy: FAO, pp. 38.
437 ASOC (n.d.), “Krill conservation”, online: www.asoc.org/advocacy/krill-conservation, viewed in December 2019;
Trathan, P.N. et al. (2014), “Pollution, habitat loss, fishing, and climate change as critical threats to penguins”,
Conservation Biology, vol. 29, (1), p.31-41.
438 FAO (2018), The state of the world fisheries and aquaculture, Rome, Italy: FAO;
Greenpeace International (2018, May 24), “Taiwanese seafood giant linked to human rights violations”, online:
https://www.greenpeace.org/international/press-release/16676/taiwanese-seafood-giant-linked-to-human-rightsviolations-greenpeace/, viewed in December 2019.
FAO (2016), Scoping study on decent work and employment in fisheries and aquaculture: Issues and actions fordiscussion and programming, Rome, Italy: FAO;
OECD (2013), Evading the Net: Tax Crime in the Fisheries Sector, Paris, France: OECD.
439 Marine Conservation Institute (n.d.), “Destructive Fishing”, online www.marine-conservation.org/what-wedo/program-areas/how-we-fish/destructive-fishing/, viewed in December 2019;440 The Global Slavery Index (2018), “Fishing”, online: https://www.globalslaveryindex.org/2018/findings/importingrisk/fishing/, viewed in December 2019;
Overseas Development Institute (2016, June), Western Africa’s missing fish, London, the United Kingdom: Overseas
Development Institute.
441 Global Ocean Commission (2014), From Decline to Recovery – A Rescue Package for the Global Ocean, Oxford, theUnited Kingdom: Global Ocean Commission, pp. 17; ;Page | 292

Global Ocean Commission (2013), Policy Options Paper #6: Elimination of harmful fisheries subsidies affecting thehigh seas, Oxford, the United Kingdom: Global Ocean Commission.
442 Carpenter, G. and A. Esteban (2013, July), “Paying for overfishing: Why subsidising new vessel construction is bad
news for EU taxpayers and our oceans”, online:
https://neweconomics.org/uploads/files/3ec5a3806145366618_5cm6b52du.pdf, viewed in December 2019.
443 Oceana (2017, June), Healthy fisheries are good for business: How better management of European fi sheries will
create jobs and improve the economy, Madrid, Spain: Oceana.
444 Crilly, R. and A. Esteban (2012, February), Jobs lost at sea: Overfishing and the jobs that never were, London, theUnited Kingdom: New Economics Foundation.
445 Consortium for Wildlife Bycatch Reduction (n.d.), “About bycatch” online: www.bycatch.org/about-bycatch, viewed
in December 2019.
446 FAO (2018, February 2), “Our oceans are haunted”, online: http://www.fao.org/fao-stories/article/en/c/1099596/,
viewed in December 2019.
447 Global Ocean Commission (2014), From Decline to Recovery – A Rescue Package for the Global Ocean, Oxford, theUnited Kingdom: Global Ocean Commission, pp. 48 -53;
The World Bank Group (2017), The Sunken Billions Revisited Progress and Challenges in Global Marine Fisheries,
Washington DC. The United States: the World Bank Group, pp. 18 – 20;
The Guardian (2016, June 29), “Tackling illegal fishing in western Africa could create 300,000 jobs”, online:
www.theguardian.com/global-development/2016/jun/29/tackling-illegal-fishing-in-western-africa-could-create300000-jobs, viewed in December 2019.
448 Institute for Security Studies (2015), “How can Senegal combat illegal fishing?”, online: https://issafrica.org/isstoday/how-can-senegal-combat-illegal-fishing, viewed in December 2019.
Africa Progress Panel (2014), Grain, fish, money. Financing Africa’s green and blue revolutions. Africa Progress
Report 2014, Geneva, Switzerland: Africa Progress Panel.
449 FAO (2018), The state of the world fisheries and aquaculture, Rome, Italy: FAO, p. 84.
450 Allsopp, M., P. Johnston and D. Santillo (2008), Challenging the aquaculture industry on sustainability, Exeter, UK:
Greenpeace International;
Aquaculture Stewardship Council (n.d.), “Why certify aquaculture”, online: https://www.asc-aqua.org/what-wedo/our-approach/why-certify-aquaculture/, viewed in December 2019.
451 FAO (n.d.), “Code of Conduct for Responsible Fisheries”, online: http://www.fao.org/3/v9878e/v9878e00.htm, viewed
in December 2019.
452 United Nations (n.d.), “Goal 14”, online: www.sustainabledevelopment.un.org/sdg14, viewed in December 2019.
453 United Nations (n.d.), “SUSTAINABLE DEVELOPMENT GOALS”, online: https://sustainabledevelopment.un.org/sdgs,
viewed in December 2019.
454 UN Food and Agriculture Organization (1995), Code of Conduct for Responsible Fisheries, Article 6.6., Rome, Italy:
FAO.
455 UN Food and Agriculture Organization (1995), Code of Conduct for Responsible Fisheries, Article 6.6., Rome, Italy:
FAO.
456 UN Food and Agriculture Organization (1995), Code of Conduct for Responsible Fisheries, Article 7.6.4., Rome, Italy:
FAO.
457 UN Food and Agriculture Organization (1995), Code of Conduct for Responsible Fisheries, Article 8.4.2., Rome, Italy:
FAO.
458 United Nations (1990), UN General Assembly Resolution Nos. 44-225, 45-197, and 46-215, New York, the UnitedStates: UN;

Page | 293

European Parliament (2014), Initial Appraisal on the Prohibition on driftnet fisheries, Brussels, Belgium: European
Parliament.
459 International Commission for the Conservation of Atlantic Tunas (ICCAT) (2004), Recommendation by ICCATConcerning the Conservation of Sharks Caught in Association with Fisheries Managed by ICCAT, Madrid, Spain:
ICCAT;
Inter-American Tropical Tuna Commission (2005), Resolution on the Conservation of Sharks Caught in Association
with Fisheries in the Eastern Pacific Ocean, Res. C-05-03,.
460 UN Food and Agriculture Organization (1995), Code of Conduct for Responsible Fisheries, Article 7.6.10., Rome,
Italy: FAO.
461 UN Food and Agriculture Organization (1995), Code of Conduct for Responsible Fisheries, Article 7.2.1. Rome, Italy:
FAO.
462 UN Food and Agriculture Organization (1995), Rome Consensus on World Fisheries, Rome, Italy: FAO.
463 UN Food and Agriculture Organization (1991), Report of the Expert Consultation on the Marking of Fishing Gear,
Rome, Italy: FAO;
UN Food and Agriculture Organization (1991), FAO Fisheries Report 485, FIIT/R485, Rome, Italy: FAO;
UN Food and Agriculture Organization (1993), Supplement to FIIT/R485 (Sup.) Recommendations on the Markingof Fishing Gear, Rome, Italy: FAO.
464 FAO (n.d.), “1. International Plan of Action – IUU”, online: http://www.fao.org/3/Y3536E/y3536e04.htm, viewed in
December 2019.
465 The World Bank Group (2017), The Sunken Billions Revisited Progress and Challenges in Global Marine Fisheries,
Washington DC. The United States: the World Bank Group, pp. 19-20;
Haenlein, C. (2017), Below the Surface How Illegal, Unreported and Unregulated Fishing Threatens our Security,
London, the United Kingdom: RUSI.
466 International Transport Workers’ Federation (n.d.), “Flags of convenience”, online:
https://www.itfglobal.org/en/sector/seafarers/flags-of-convenience, viewed in December 2019;467 MSC (2017), Global Impacts Report 2017, London, the United Kingdom: MSC, pp. 5;
MSC (2017), The MSC at 20. Wild. Certified. Sustainable. Annual Report 2016 – 17, London, the United Kingdom:
MSC.
468 UN Food and Agriculture Organization (2006), Countries welcome new guidelines on shrimp farming, Rome, Italy:
FAO.
469 ASC (n.d.), “About ASC”, online: https://www.asc-aqua.org/about-us/about-the-asc/, viewed in December 2019.
470 ISO (2010), ISO 26000: 2010 Guidance on Social Responsibility, Geneva, Switzerland: ISO, p. 6.
471 ISO (2010), ISO 26000: 2010 Guidance on Social Responsibility, Geneva, Switzerland: ISO, p. 72.
472 UN (2011), Guiding Principles on Business and Human Rights. Implementing the United Nations “Protect, Respect
and Remedy” Framework, Geneva, Switzerland: United Nations, p. 18.
473 United Nations (1948, December), Universal Declaration of Human Rights, United Nations General Assembly
resolution 217 A (III), article 25, New York, the United States: United Nations.
474 UN Food and Agriculture Organization (2005), Voluntary Guidelines to support the progressive realization of theright to adequate food in the context of national food security, Rome, Italy: FAO, p. 5.
475 UN (n.d.), “SUSTAINABLE DEVELOPMENT GOAL 2”, online: https://sustainabledevelopment.un.org/sdg2, viewed in
November 2019.
476 Global Reporting Initiative (2014), Sustainability Reporting Guidelines & Food Processing Sector Supplement,
Amsterdam, the Netherlands: Global Reporting Initiative.

Page | 294

477 European Commission (n.d.), “Biofuels”, online: https://ec.europa.eu/energy/en/topics/renewableenergy/biofuels/overview, viewed in November 2019;478 ILO (n.d.), “Child labour in agriculture”, online: https://www.ilo.org/ipec/areas/Agriculture/lang-en/index.htm#P2_481, viewed in December 2019.
479 UNEP FI (n.d.), “Human rights issues by sector – Agriculture and fisheries”, online:
www.unepfi.org/humanrightstoolkit/agriculture.php, viewed in December 2019.
480 Mills, E., (2017, April), Land Grabbing and Human Rights: The Role of EU Actors Abroad, Heidelberg, Gemany: FIANInternational.
481 TNI (2013, February), The Global Land Grab. A primer. Amsterdam, The Netherlands: The Transnational Insitute(TNI).
482 UNCCD (2017), Global Land Outlook: First edition, Bonn, Germany: United Nations Convention to Combat
Desertification.
483 IPBES (2019), Summary for Policymakers of the Global Assessment Report on Biodiversity and Ecosystem Services of
the Intergovernmental Science-Policy Platform on Biodiversity and Ecosystem Services, Bonn, Germany:Intergovernmental Science-Policy Platform on Biodiversity and Ecosystem Services.
484 CIFOR (2015), “Clearing the smoke: The causes and consequences of Indonesia’s fires”, online:
blog.cifor.org/37016/clearing-the-smoke-the-causes-and-consequences-of-indonesias-fires?fnl=en, viewed in
December 2017;
Rainforest Action Network (n.d.), “Responsible food systems”, online: www.ran.org/responsible_food_systems,
viewed in December 2017.
485 Poore, J. and T. Nemeek (2018, June 1), “Reducing food’s environmental impacts through producers andconsumers”, Science, 360: 987 – 992;
FAO (n.d.), “Animal production”, online: http://www.fao.org/animal-production/en/, viewed in December 2019.
486 NASA Earth Observatory (n.d.), “Causes of deforestation”, online:
www.earthobservatory.nasa.gov/Features/Deforestation/deforestation_update3.php, viewed in December 2019;
Union of Concerned Scientists (2016, February 8), “What’s Driving Deforestation?”, online:
https://www.ucsusa.org/resources/whats-driving-deforestation, viewed in December 2019.
487 Union of Concerned Scientists (2013), The Rise of Superweeds—and What to Do About It, Cambridge, the UnitedStates: Union of Concerned Scientists;
Profundo (2014), Soy Barometer 2014: A research report for the Dutch Soy Coalition, Amsterdam, the Netherlands:
Profundo, p. 25-26.
488 IFC (2014), Good practice note: Improving animal welfare in livestock operations, online:
https://www.ifc.org/wps/wcm/connect/c39e4771-d5ae-441a-9942dfa4add8b679/IFC+Good+Practice+Note+Animal+Welfare+2014.pdf?MOD=AJPERES&CVID=kGxNx5m, viewed in
December 2019.
489 RSPCA (n.d.), “Key welfare issues”, online: https://www.rspca.org.uk/adviceandwelfare/farm/livetransport/keyissues,viewed in November 2019.
Animals International (n.d.), “European Live export investigation 2016/2017”, online: www.animalsaustraliamedia.org/upload/photos/eu-live-export/, viewed in November 2019;
Philips, C.J. (2016, October 6), “The welfare risk and impacts of heat stress on sheep shipped from Australia to theMiddle East”, Veterinary Journal, 218:78-85.
490 RSPCA (n.d.), “Key welfare issues”, online: https://www.rspca.org.uk/adviceandwelfare/farm/slaughter/keyissues,viewed in November 2019.
491 ECDC (European Centre for Disease Prevention and Control), EFSA (EuropeanFood Safety Authority), and EMA(European Medicines Agency) (2017). “ECDC/EFSA/EMA second jointreport on the integrated analysis of the

Page | 295

consumption of antimicrobial agents and occurrence ofantimicrobial resistance in bacteria from humans and foodproducing animals–Joint InteragencyAntimicrobial Consumption and Resistance Analysis (JIACRA) Report”. EFSA
Journal, 15(7): p. 4872, 135.
492 WHO (2017, November 7), Stop using antibiotics in healthy animals to prevent the spread of antibiotic resistance.
493

IPCC (2014), Climate Change 2014: Impacts, Adaptation, and Vulnerability. Part A: Global and Sectoral Aspects.
Contribution of Working Group II to the Fifth Assessment Report of the Intergovernmental Panel on Climate
Change [Field, C.B., V.R. Barros, D.J. Dokken, K.J. Mach, M.D. Mastrandrea, T.E. Bilir, M. Chatterjee, K.L. Ebi, Y.O.
Estrada, R.C. Genova, B. Girma, E.S. Kissel, A.N. Levy, S. MacCracken, P.R. Mastrandrea, and L.L. White (eds.)],Cambridge, the United Kingdom and New York, the United States: Cambridge University Press, p. 1132;
Oxfam (2014), Standing on the sidelines. Why food and beverage companies must do more to tackle climatechange, Oxford, the United Kingdom: Oxfam GB.

494 UCSUSA (2013), “Deforestation and global warming”, online: www.ucsusa.org/global_warming/solutions/stopdeforestation/deforestation-global-warming-carbon-emissions.html#.VrIbHbIrK70, viewed in January 2020.
495 Goodman, L.K. and K. Mulik (2015), Clearing the Air, Palm Oil, Peat Destruction and Air Pollution, Cambridge theUnited States: Union of Concerned Scientists;
Turetsky, M. R., B. Benscoter, S. Page, G. Rein, G. R. van der Werf and A. Watts (2015), “Global vulnerability ofpeatlands to fire and carbon loss”, Nature Geoscience 8: p. 11-14;
International Peatland Society (2008), Peatlands and Climate Change – Executive Summary for Policymakers,
Finland: International Peatland Society.
496 Think Progress (2015, 13 January), “For Peat’s Sake: Drying and Burning Wetlands Amplify Global Warming”, online:
www.thinkprogress.org/climate/2015/01/13/3610618/peat-wetlands-global-warming/, viewed in December 2019.
497 European Commission, (n.d.) “Sustainability Criteria”, online: https://ec.europa.eu/energy/en/topics/renewableenergy/biofuels/sustainability-criteria#content-heading-0 , viewed in December 2019.
498 European Commission, (n.d.) “Sustainability Criteria”, online: https://ec.europa.eu/energy/en/topics/renewableenergy/biofuels/sustainability-criteria#content-heading-0, viewed in December 2019;
Lapola, D. M., Schaldach, R., Alcamo, J., Bondeau, A., Koch, J., Koelking, C., & Priess, J. A. (2010), “Indirect land-use
changes can overcome carbon savings from biofuels in Brazil.”, Proceedings of the National Academy of Sciences of
the United States of America, 107(8), p. 3388–3393.
499 UN Food and Agriculture Organization (2013), Tackling Climate Change Through Livestock – A global assessment ofemissions and mitigation opportunities, Rome, Italy: FAO.
500 Oxfam (2014), Standing on the sidelines. Why food and beverage companies must do more to tackle climatechange, Oxford, the United Kingdom: Oxfam GB.
501 FAO (2016), “Pollinators vital to our food supply under threat”, online:
www.fao.org/news/story/en/item/384726/icode/, viewed in December 2019.
502 Nature News (2017) “Controversial pesticides found in honey samples from six continents”, online:
www.nature.com/news/controversial-pesticides-found-in-honey-samples-from-six-continents-1.22762, viewed in
December 2019;
Woodcock, B.A., J.M. Bullock, R.F. Shore, M.S. Heard, M.G. Pereira, J. Redhead, L. Ridding, H. Dean, D. Sleep, P.
Henrys, J. Peyton, S. Hulmes, L. Hulmes, M. Sárospataki, C. Sarue, M. Edwards, E. Genersch, S. Knäbe and R. F Pywell(2017, June 30), “Country-specific effects of neonicotonoid pesticides on honey bees and wild bees”, Science, 356(6345): pp. 1393-1395.
503 DNV GL AS (2016), Global Opportunity Report 2016, Høvik, Oslo: DNV GL AS;
West, P. et al. (2014), “Leverage points for improving global food security and the environment”, Science, 345(6194),
p. 325-328;

Page | 296

504 UN Food and Agriculture Organization (2013), “Animal Production and Health”, online:
www.fao.org/ag/againfo/themes/en/Environment.html viewed December 2017;
UN Food and Agriculture Organization (2013), Tackling Climate Change Through Livestock – A global assessment ofemissions and mitigation opportunities, Rome, Italy: FAO;
Environment America Research and Policy Center (2016), America’s next top polluter – Company profile: Tyson
Foods Inc., Washington D.C., the United States: Environment America Research and Policy Center.
505 UN-Water (2018), Sustainable Development Goal 6: Synthesis Report on Water and Sanitation, New York City,
United States: United Nations.
506 World Trade Organization (n.d.), “Export competition/subsidies”, online:
www.wto.org/english/tratop_e/agric_e/ag_intro04_export_e.htm, viewed in November 2019;
Bailey, R. (2011), Growing a Better Future: Food Justice in a Resource-Constrained World, Oxford, the United
Kingdom: Oxfam GB.
507 World Trade Organization (2015, 21 December), Export Competition: Ministerial Decision of 19 December 2015, p.
17.
508 World Trade Organization (2015, 21 December), Export Competition: Ministerial Decision of 19 December 2015 , p.
18.
509 FAO (2019), The State of Food Security and Nutrition in the World 2019: Safeguarding against Economic
Slowdowns and Downturns, Rome, Italy: FAO, p. 3.
510 Murphy, S. and K. Hansen-Kuhn (2017), Counting the costs of agricultural dumping, Washington DC, the UnitedStates: Institute for Agriculture and Trade Policy.
511 The Guardian (2017, September 27), “Demand for biofuels is increasing global food prices, says study”, online:
www.theguardian.com/sustainable-business/2017/sep/20/demand-for-biofuels-is-increasing-global-food-pricessays-study, viewed in December 2019;
Rullie, M.C, D. Bellomi, A. Cazzoli, G. De Carolis and P. D’Odorico (2016), The water-land-food nexus of first
generation biofuels, Scientific Reports 6(22521), p. 1-10.
512 United Nations (n.d.), “Goal 2”, online: www.sustainabledevelopment.un.org/sdg2, viewed in December 2019.
513 United Nations (n.d.), “SUSTAINABLE DEVELOPMENT GOALS”, online: https://sustainabledevelopment.un.org/sdgs,
viewed in December 2019.
514 FAO (2004), Voluntary Guidelines to support the progressive realization of the right to adequate food in the context
of national food security, Rome, Italy.
515 United Nations (1948, December), Universal Declaration of Human Rights, United Nations General Assembly
resolution 217 A (III), article 25, New York, the United States: United Nations.
516 United Nations Special Rapporteur on the right to food (2009), Large-scale land acquisitions and leases: A set ofcore principles and measures to address the human rights challenge, Geneva, Switzerland: United Nations, p. 5.
517 Access to Nutrition Index (n.d.), “Nutrition challenges”, online: http://www.accesstonutrition.org/us-spotlightindex/context/nutrition-challenges , viewed in December 2019.
518 Access to Nutrition Index (n.d.), “Objectives”, online: http://www.accesstonutrition.org/objectives-0 , viewed in
December 2019.
519 Access to Seeds Index (n.d.), "About", online: www.accesstoseeds.org/about/, viewed in December 2019.
520 Access to Seeds Index (n.d.), "About", online: www.accesstoseeds.org/about/, viewed in December 2019.
521 Amnesty International (2010), Haki Zetu. ESC rights in Practice. Land and Human Rights, Amsterdam, theNetherlands: Amnesty International Netherlands, p.10.

Page | 297

522 UN Environment (2017, 14 December), “UN Environment Assembly moves to curb pollution from extractive
industries”, online: www.unenvironment.org/news-and-stories/story/un-environment-assembly-moves-curbpollution-extractive-industries, viewed in December 2019.
523 United Nations (2014, September 23), Declaration would end billions of tons of climate pollution per year, restore

350 million hectares of forest; backed by tangible private sector commitments. Governments, Business, Civil Society
Pledge to End Loss of Forests, New York, the United States: United Nations.
524 NYDF Assessment Partners (2019), Protecting and Restoring Forests: A story of large commitments yet limited
progress. New York Declaration on Forests Five-Year Assessment Report, online:
https://forestdeclaration.org/images/uploads/resource/2019NYDFReport.pdf, viewed in December 2019.
525 FAO (2015), The Second Report on the State of the World’s Animal Genetic Resources for Food and Agriculture,
Rome, Italy: FAO Commission on genetic resources for food and agriculture, p. xxxvii.
526 FAO (2015), The Second Report on the State of the World’s Animal Genetic Resources for Food and Agriculture,
Rome, Italy: FAO Commission on genetic resources for food and agriculture, p. xxxix.
527 IFC (2014, December), Good Practice Note: Improving Animal Welfare in Livestock Operations, Washington, theUnited States, p. 1.
528 FAIRR (2016), Factory Farming: Assessing Investment Risks: 2016 Report, p. 2, FAIRR.
529 FARMS initiative (2019, July), “Principles Underlying the Responsible Mininmum Standards”, online: https://farmsinitiative.com/wp-content/uploads/2019/07/PRINCIPLES-OF-RMS-COPYRIGHT-FARMS-INITIATIVE.pdf, viewed in
November 2019.
530 Greenpeace (n.d.), “The Amazon soya moratorium”, online: https://www.greenpeace.org/archiveinternational/Global/international/code/2014/amazon/index.html, viewed in January 2020.
531 RSPO (2018), Principles and Criteria for the Production of Sustainable Palm Oil 2018, Kuala Lumpur, Malaysia:
Roundtable on Sustainable Palm Oil.
532 Wilmar International (2013), ”No Deforestation, No Peat, No Exploitation Policy”, online: http://www.wilmarinternational.com/wp-content/uploads/2012/11/No-Deforestation-No-Peat-No-Exploitation-Policy.pdf, viewed in
December 2019;
533 Roundtable on Sustainable Biomaterials (n.d.), “Working with the RSB Standard”, online: https://rsb.org/the-rsbstandard/working-with-the-rsb-standard/, viewed in November 2019.
534 Rainforest Alliance (n.d.), “2020 Rainforest Alliance Certification Program”, online: https://www.rainforestalliance.org/business/solutions/certification/agriculture/2020-certification-program/, viewed in November 2019.
535 Rainforest Alliance (n.d.), “2020 Rainforest Alliance Certification Program”, online: https://www.rainforestalliance.org/business/solutions/certification/agriculture/2020-certification-program/, viewed in November 2019.
536 Banking Environment Initiative (2014), ‘Soft Commodities’ Compact, Cambridge, the United Kingdom: University ofCambridge Institute for Sustainability Leadership.
537 Banking Environment Initiative (2014), ‘Soft Commodities’ Compact, Cambridge, the United Kingdom: University ofCambridge Institute for Sustainability Leadership.
538 ISO (2010), ISO 26000: 2010 Guidance on Social Responsibility, Geneva, Switzerland: ISO, p. 6.
539 ISO (2010), ISO 26000: 2010 Guidance on Social Responsibility, Geneva, Switzerland: ISO, p. 72.
540 UN (2011), Guiding Principles on Business and Human Rights. Implementing the United Nations “Protect, Respect
and Remedy” Framework, Geneva, Switzerland: United Nations, p. 18.
541 OECD and FAO (2016, March), OECD-FAO Guidance for Responsible Agricultural Supply Chains, Rome, Italy: FAO
and Paris, France: OECD, p. 3.
542 Worldbank (n.d.), “Forest area (% of land area)”, online: https://data.worldbank.org/indicator/AG.LND.FRST.ZS,
viewed in December 2019.

Page | 298

543 Keenan, R. et al. (2015), “Dynamics of global forest area: Results from the FAO Global Forest Resources Assessment
2015”, Forest Ecology and Management, 352, p. 9-20;
FAO (2018), State of the World’s Forests 2018, Rome, Italy: FAO.
544

FAO (2018), State of the World’s Forests 2018, Rome, Italy: FAO, p. 11.

545 WWF International (n.d.), “Forest habitat”, online: www.worldwildlife.org/habitats/forest-habitat, viewed in
December 2019.
546 FAO (1997), People and forests in Asia and the Pacific: Situation and prospects, Bangkok, Thailand: Regional
Community Forestry Training Centre and Rome, Italy: Forestry Policy and Planning Division.
547 WWF (n.d), “Forest habitat”, online: www.worldwildlife.org/habitats/forest-habitat, viewed in December 2019.
548 Nature (2015, July 2), “The hunt for the world’s missing carbon”, online: www.nature.com/news/the-hunt-for-theworld-s-missing-carbon-1.17867, viewed in December 2019.
549 UCSUSA (2013), “Deforestation and global warming”, online: www.ucsusa.org/global_warming/solutions/stopdeforestation/deforestation-global-warming-carbon-emissions.html#.VrIbHbIrK70, viewed in January 2020.
550 IPCC (2014), Climate Change 2014: Mitigation of Climate Change. Contribution of Working Group III to the Fifth
Assessment Report of the Intergovernmental Panel on Climate Change, Cambridge, United Kingdom and New York,the United States: Cambridge University Press, p. 825.
551 UN Forum on Forests (2017, May 1), “Protection of forests ‘fundamental to security of humanity’s place on thisplanet,’ UN Forum told”, online: www.un.org/esa/forests/news/2017/05/protection-of-forests-fundamental-tosecurity-of-humanitys-place-on-this-planet-un-forum-told/index.html, viewed in December 2019;
PEFC (n.d.), “Benefits of Forests”, online: https://www.pefc.org/what-we-do/why-forests-are-important/the-benefitsof-forests, viewed in December 2019.
552 UNEP (2013), Green Economy and Trade – Trends, Challenges and Opportunities, Nairobi, Kenya: UNEP, p. 133.
553 FAO (2016), State of the World’s Forests 2016, Rome, Italy: FAO, pp. 72.
FAO (2015), The Global Forest Resources Assessment 2015, Rome, Italy: FAO..
554 United Nations Forum on Forests (2013), Background Paper 1: Economic Contributions of Forests, Istanbul, Turkey:
United Nations;
FAO (2014), Contribution of the Forestry Sector to National Economies, 1990-2011, Rome, Italy: FAO, pp. 1-5.
555 FAO (2015), The Global Forest Resources Assessment 2015, Rome, Italy: FAO.
556 FERN (2017), Tackling deforestation and forest degradation: a case for EU action in 2017, Brussels, Belgium: FERN. ;Goodman, L.K. and K. Mulik (2015), Clearing the Air, Palm Oil, Peat Destruction and Air Pollution, Cambridge, theUnited States: Union of Concerned Scientists
557 UNEP (2017), Environmental Crime Tackling the Greatest Threats to our Planet, Nairobi, Kenya: UNEP, pp. 10-11. .
558 WWF (n.d.), “Deforestation”, online: www.worldwildlife.org/threats/deforestation, viewed in December 2019.
559 Global Witness (2015), Exporting Impunity – How Congo’s Rainforest is illegally logged for international markets,
London, the United Kingdom: Global Witness, pp. 6;
FERN (2015), Stolen Goods: The EU’s complicity in illegal tropical deforestation, Brussels, Belgium: FERN.
560 European Commission (2016), Report from the Commission to the European Parliament and the Council. Regulation

EU/995/2010 of the European Parliament and of the Council of 20 October 2010 laying down the obligations ofoperators who place timber and timber products on the market (the EU Timber Regulation), Brussels, Belgium:
European Commission.
561 Roberts, J. et al (2014, March), The State of the Paper Industry. Monitoring the Indicators of Environmental
Performance, Ashville, the United States: Environmental Paper Network;

Page | 299

Taylor, R. et al (2012, December), WWF Living Forests Report: Chapter 1. Forests for a Living Planet, Gland,
Switzerland: WWF;
Taylor, R. et al (2012, December), WWF Living Forests Report: Chapter 4. Forests and Wood Products, Gland,
Switzerland: WWF.
562 CIFOR (2015), “Clearing the smoke: The causes and consequences of Indonesia’s fires”, online:
blog.cifor.org/37016/clearing-the-smoke-the-causes-and-consequences-of-indonesias-fires?fnl=en, viewed in
December 2017;
Rainforest Action Network (n.d.), “Responsible food systems”, online: www.ran.org/responsible_food_systems,
viewed in December 2017.
563 CIFOR (2017), 5 Reasons stopping mangrove deforestation makes a whole lot of sense for climate change
mitigation in indonesia, Bogor, Indonesia: CIFOR;
Scientific American (2016), “How Hunger for Shrimp and Slavery Destroy Mangroves”, online:
www.scientificamerican.com/article/how-hunger-for-shrimp-and-slavery-destroy-mangroves-excerpt/, viewed in
December 2019.
564 WWF (n.d.), “Threats Infrastructure”, online: www.worldwildlife.org/threats/infrastructure, viewed in December 2019.
565 United Nations (n.d.), “Goal 15”, online: www.sustainabledevelopment.un.org/sdg15, viewed in December 2019.
566 United Nations (n.d.), “SUSTAINABLE DEVELOPMENT GOALS”, online: https://sustainabledevelopment.un.org/sdgs,
viewed in December 2019.
567 High Conservation Value Resource Network (2017, September), Common Guidance for the Identification of High

Conservation Values – A good practice guide for identifying HCVs across different ecosystems and production
systems, HCV Resource Network: online: https://hcvnetwork.org/wpcontent/uploads/2018/03/HCVCommonGuide_English.pdf, viewed in December 2019, p. 3.
568 High Conservation Value Resource Network (2017, September), Common Guidance for the Identification of High

Conservation Values – A good practice guide for identifying HCVs across different ecosystems and production
systems, HCV Resource Network: online: https://hcvnetwork.org/wpcontent/uploads/2018/03/HCVCommonGuide_English.pdf, viewed in December 2019.
569 EU Commission (n.d.), “What does the law say?”, online: https://ec.europa.eu/environment/eutr2013/what-doesthe-law-say/index_en.htm, viewed in December 2019.
570 United Nations (2014, September 23), Declaration would end billions of tons of climate pollution per year, restore

350 million hectares of forest; backed by tangible private sector commitments. Governments, Business, Civil Society
Pledge to End Loss of Forests, New York, the United States: United Nations.
571 NYDF Assessment Partners (2019), Protecting and Restoring Forests: A story of large commitments yet limited
progress. New York Declaration on Forests Five-Year Assessment Report, online:
https://forestdeclaration.org/images/uploads/resource/2019NYDFReport.pdf, viewed in December 2019.
572 Banking Environment Initiative (2014), ‘Soft Commodities’ Compact, Cambridge, the United Kingdom: University ofCambridge Institute for Sustainability Leadership.
573 Banking Environment Initiative (2014), ‘Soft Commodities’ Compact, Cambridge, the United Kingdom: University ofCambridge Institute for Sustainability Leadership.
574 EPN (2014), Global Paper Vision, Ashville, the United States: Environmental Paper Network.
575 EPN (2014), Global Paper Vision, Ashville, the United States: Environmental Paper Network. p. 2.
576 Amnesty International (2010), Haki Zetu. ESC rights in Practice. Land and Human Rights, Amsterdam, theNetherlands: Amnesty International Netherlands, p.10.
577 Forest Stewardship council (2015, July 22), FSC Principles and Criteria for Forest Stewardship, Bonn, Germany: FSC.
578 Programme for the Endorsement of Forest Certification (2018, November 28), Sustainable Forest Management –Requirements, Geneva, Switzerland: PEFC.

Page | 300

579 PEFC (n.d.), "About PEFC - Facts & Figures", online: https://www.pefc.org/discover-pefc/facts-and-figures, viewed in
December 2019.
580 Kusumaningtyas, R. (2019, July), Forest Certification and International Guidelines on the protection of Human andLabour Rights, Amsterdam, The Netherlands: Profundo.
581 World Wildlife Fund for Nature (2015, May 18), “WWF Forest Certification Assessment Tool (CAT)”, online:
https://wwf.panda.org/?246871/WWF-Forest-Certification-Assessment-Tool-CAT, viewed in December 2019.
582 Friends of the Earth Netherlands (2009), Input for the TPAC Stakeholder Forum Discussion on PEFC International:

Case on destructive logging in PEFC-certified forests: Why PEFC International does not meet the Dutch
Procurement Criteria for Timber, Amsterdam, the Netherlands: Milieudefensie.
583 Greenpeace (2011, October 17), Sustainable Forestry Certificate Proves Unreliable in Practice.
584 World Wildlife Fund for Nature (2015, May 18), “WWF Forest Certification Assessment Tool (CAT)”, online:
https://wwf.panda.org/?246871/WWF-Forest-Certification-Assessment-Tool-CAT, viewed in December 2019;
Greenpeace (2011, October 17), Sustainable Forestry Certificate Proves Unreliable in Practice .
Centrum Hout (2014, June), Certificeringsystemen (keurmerken) voor duurzaam bosbeheer. MTCS: Malaysian
Timber Certification Scheme, Almere, Nederland: Centrum Hout.
585 Environmental Paper Network (n.d.), “Source fibre responsibly”, online: https://environmentalpaper.org/tools-andresources/paper-resources/responsible-sourcing/, viewed in December 2019.
586 CDP (2017), Global Forests Report 2017. From risk to revenue: The investment opportunity in addressing corporate
deforestation, London, the United Kingdom: Carbon Disclosure Project.
CDP (2019), Global Forests Report 2019. The Money Trees: The role of corporate action in the fight against
deforestation, London, the United Kingdom: Carbon Disclosure Project.
587 ISO (2010), ISO 26000: 2010 Guidance on Social Responsibility, Geneva, Switzerland: ISO, p. 6.
588 ISO (2010), ISO 26000: 2010 Guidance on Social Responsibility, Geneva, Switzerland: ISO, p. 72.
589 UN (2011), Guiding Principles on Business and Human Rights. Implementing the United Nations “Protect, Respect
and Remedy” Framework, Geneva, Switzerland: United Nations, p. 18.
590 UNEP and IEA (2017), Towards a zero-emission, efficient, and resilient buildings and construction sector. Global
Status Report 2017, Nairobi, Kenya: United Nations Environment Programme.
591 UN Habitat (n.d.), “UN-Habitat at a glance”, online: https://unhabitat.org/un-habitat-at-a-glance/, viewed in
December 2019.
592 UNEP FI (2015, November 23), Integrating Climate Risks in Real Estate;
UN One Planet Network (n.d.), “Sustainable Buildings and Construction Programme”, online:
https://www.oneplanetnetwork.org/sustainable-buildings-and-construction, viewed in December 2019;
European Commission (n.d.), “Buildings”, online: https://ec.europa.eu/energy/en/topics/energy-efficiency/energyperformance-of-buildings/overview, viewed in December 2019.
593 UNEP and IEA (2018), 2018 Global Status Report: Towards a zero-emission, efficient and resilient buildings andconstruction sector, Nairobi, Kenya: United Nations Environment Programme.
594

UNEP (2017). The Emissions Gap Report 2017. Nairobi , Kenya: United Nations Environment Programme (UNEP), p.
29.

595 Jones, S.A. and D. Laquidara-Carr (2018), World Green Building Trends 2018, Bedford, United States: Dodge Data &Analytics.
Landrenau, A. (2017, May 2), “Green buildings don't have to cost more”, Building Design and Construction
Magazine.

Page | 301

596 WGBC (n.d.), “About Green Building”, online: http://www.worldgbc.org/what-green-building, viewed in December
2019.
597 GRESB (2017, August 15), “Waste Not, Want Not in the Commercial Real Estate Sector”, online:
www.gresb.com/waste-not-want-not-commercial-real-estate-sector/, viewed in December 2019;
TNO (n.d.), “The circular economy and the environment: 'Directing and accelerating sustainability'”, online:
www.tno.nl/en/focus-areas/circular-economy-environment/, viewed in December 2019.
598 Battes, P. (2016, March 13), “Leegstand stabiel door nieuwe functie voor kantoorruimte”, Financieel Dagblad.
599 GRI (2013), G4 Sector Disclosures Construction and Real Estate, Amsterdam, The Netherlands: Global Reporting
Initiative.
600 United Nations (1948, December), Universal Declaration of Human Rights, United Nations General Assembly
resolution 217 A (III), article 25, New York, the United States: United Nations.
601 United Nations (n.d.), “Goal 11”, online: www.sustainabledevelopment.un.org/sdg11, viewed in December 2019.
602 United Nations (n.d.), “Sustainable Development Goals”, online: https://sustainabledevelopment.un.org/sdgs,
viewed in December 2019.
603 UN Habitat (n.d.), “Key Elements | Implementing the New Urban Agenda”, online:
http://nua.unhabitat.org/index.html#KE, viewed in December 2019;
UN General Assembly (2016, September 29), Draft outcome document of the United Nations Conference on
Housing and Sustainable Urban Development (Habitat III), A/CONF.226/4, Geneva, Switserland: United Nations.
604 World Economic Forum (2014, January), Towards the Circular Economy: Accelerating the scale-up across global
supply chains, Geneva, Switzerland, p. 15.
605 Circle Economy (n.d.), “Making Sense of the Circular Economy The 7 Key Elements”, online: www.circleeconomy.com/the-7-key-elements-of-the-circular-economy, viewed in December 2019.
606 Olivier J.G.J., G. Janssens-Maenhout, M. Muntean and J.A.H.W. Peters (2016), Trends in global CO2 emissions; 2016
Report, The Hague, the Netherlands: PBL Netherlands Environmental Assessment Agency and European
Commission Joint Research Centre, p. 65.
607 Bosteels, T. and P. Sweatman (2016, February), “Sustainable Real Estate Investment. Implementing the Paris Climate
Agreement: An Action Framework”. online:
http://www.unepfi.org/fileadmin/documents/SustainableRealEstateInvestment.pdf, viewed in March 2016, p. 3-4,
18-36.
608 EU Commission (n.d.), “Energy performance of buildings”, online: http://ec.europa.eu/energy/en/topics/energyefficiency/buildings, viewed in December 2019.
609 EU Commission (n.d.), “Energy performance of buildings”, online: http://ec.europa.eu/energy/en/topics/energyefficiency/buildings, viewed in December 2019.
610 UN Habitat (May 2014), A new strategy of sustainable neighbourhood planning: five principles, New York, theUnited States: The United Nations, p. 1.
611 UN Habitat (May 2014), A new strategy of sustainable neighbourhood planning: five principles, New York, theUnited States: The United Nations, p. 1.
612 BREEAM, “Technical Standards Finder”, online: https://www.breeam.com/discover/technical-standards/, viewed in
December 2019.
613 USGBC, "Green building leadership is LEED”, online: https://new.usgbc.org/leed, viewed in December 2019.
614 ILO (1948), Freedom of Association and Protection of the Right to Organise Convention, 1948 (No. 87), Geneva,
Switzerland: ILO;
ILO (1949), Right to Organise and Collective Bargaining Convention, 1949 (No. 98), Geneva, Switzerland: ILO.
615 ILO (1930), Forced Labour Convention, 1930 (No. 29), Geneva, Switzerland: ILO;

Page | 302

ILO (1957), Abolition of Forced Labour Convention, 1957 (No. 105), Geneva, Switzerland: ILO.
616 ILO (1973), Minimum Age Convention, 1973 (No. 138), Geneva, Switzerland: ILO;
ILO (1999), Worst Forms of Child Labour Convention, 1999 (No. 182), Geneva, Switzerland: ILO.
617 ILO (1958), Discrimination (Employment and Occupation) Convention, 1958 (No. 111), Geneva, Switzerland: ILO;
ILO (1951), Equal Remuneration Convention, 1951 (No. 100), Geneva, Switzerland: ILO.
618 ILO (2017, March 17), “ILO revises its landmark Declaration on multinational enterprises”, online:
http://www.ilo.org/global/about-the-ilo/newsroom/news/WCMS_547615/lang--en/index.htm, viewed in December
2019.
619 Amnesty International (2010), Haki Zetu. ESC rights in Practice. Land and Human Rights, Amsterdam, theNetherlands: Amnesty International Netherlands, p.26.
620 ISO (2010), ISO 26000:2010 Guidance on social responsibility, Geneva, Switzerland: ISO.
621 The European Parliament and the Council of the European Union (2014), “Directive 2014/17/EU of the European
Parliament and the Council of 4 February 2014 on credit agreements for consumers relating to residential
immovable property and amending Directives 2008/48/EC and 2013/36/EU and Regulation (EU) No 1093/2010”,
Official Journal of the European Union, L 60: 34-85.
622 World Green Building Council (2018, January 5), “EU considering changes to banking rules to reward consumers forchoosing greener buildings”, online: https://www.worldgbc.org/news-media/eu-considering-changes-bankingrules-reward-consumers-choosing-greener-buildings, viewed in December 2019.
623 Eurostat (2008), “Statistical Classification of Economic Activities in the European Community, Rev. 2 (2008)”, online:
http://ec.europa.eu/eurostat/ramon/nomenclatures/index.cfm?TargetUrl=LST_NOM_DTL&StrNom=NACE_REV2&St
rLanguageCode=EN&IntPcKey=&StrLayoutCode=HIERARCHIC&CFID=12721637&CFTOKEN=9fa1f017d5f2811eC999B956-E7EA-A517-3AB8BA746C9C60F5&jsessionid=f90060eefcba131dc3c6, viewed in December 2019.
624 KPMG (2017), Time to bloom. A study on the digital transformation of the chemical industry, Düsseldorf, Germany:
KPMG;
Eurostat (2017), “Glossary: High-tech classification of manufacturing industries”, online:
www.ec.europa.eu/eurostat/statistics-explained/index.php/Glossary:Hightech_classification_of_manufacturing_industries, viewed in November 2019.
625 ILO (n.d.), “Employment by sector – ILO modeled estimates, Nov. 2018”, online:
https://www.ilo.org/ilostat/faces/oracle/webcenter/portalapp/pagehierarchy/Page3.jspx?MBI_ID=33&_afrLoop=184
3356316955403&_afrWindowMode=0&_afrWindowId=uj57afktq_1#!%40%40%3F_afrWindowId%3Duj57afktq_1%2
6_afrLoop%3D1843356316955403%26MBI_ID%3D33%26_afrWindowMode%3D0%26_adf.ctrlstate%3Duj57afktq_45, viewed in December 2019.
626 Global Policy Forum (n.d.), “Labor rights and labor movements”, online: https://www.globalpolicy.org/social-andeconomic-policy/labor-rights-and-labor-movements.html, viewed in November 2019.
627 Tax Justice Network (n.d.), “Tax Wars”, online: http://www.taxjustice.net/topics/race-to-the-bottom/tax-wars/,
viewed in November 2019;
ILO (2011), Policies and regulations to combat precarious employment, Geneva, Switzerland: ILO.
628 Human Rights Watch (2015), Work faster or get out: Labor rights abuses in Cambodia’s garment industry, New
York, the United States: Human Rights Watch.
629 UNEP FI (n.d.), “Human rights issues by sector: General Manufacturing”, online:
https://www.unepfi.org/humanrightstoolkit/manufacturing.php, viewed in November 2019.
630 Gallo, F., C. Fossi, R. Weber, D. Santillo, J. Sousa, I. Ingram, A. Nadal and D. Romano (2018), “Marine litter plastics
and microplastics and their toxic chemical components: the need for urgent preventive measures”, Environmental
Science Europe, 30 (1): 13.

Page | 303

631 Zalasiewicz, J., C. N. Waters, J. A. Ivar do Sul, P. L. Corcoran, A. D. Barnosky, A. Cearreta, M. Edgeworth, A. Galuszka,
C. Jeandel, R. Leinfelder, J. R. McNeill, W. Steffen, C. Summerhayes, M. Wagreich, M. Williams, A. P. Wolfe, Y. Yonan(2016), “The geological cycle of plastics and their use as a stratigraphic indicator of the Antropocene”,
Anthropocene, 13: 4 – 17;
Steffen, W. K. Richardson, J. Rockström, S. E. Cornell, I. Fetzer, E. M. Bennett, R. Biggs, S. R. Carpenter, W. de Vries, C.
A. de Wit, C. Folke, D. Gerten, J. Heinke, G. M. Mace, L. M. Persson, V. Ramanathan, B. Reyers, S. Sörlin, (2015),“Planetary Boundaries: Guiding human development on a changing planet”, Science, 347 (6223): 1259855-2.
632 TruCost (n.d.), “Beyond the Brand: leaders in supply chain environmental sustainability”, online:
http://www.trucost.com/blog/104/beyond-the-brand-leaders-in-supply-chain-environmental-sustainability, viewed
in November 2019.
633 United Nations World Water Assessment Programme (2015), The United National Water Development Report 2015
– Water for a Sustainable World, Paris, France: UNESCO.
634 World Economic Forum (2016), “The Future of Jobs – Employment trends”, online:
http://reports.weforum.org/future-of-jobs-2016/employment-trends/, viewed in November 2019.
Hagel, J., J. Brown, D. Kulasooriya, C. Giffi, M. Chen (2015), The future of manufacturing Making things in a changing
world, Deloitte University Press, pp. 17, 23;
ILO (2014), Wages and working hours in the textiles, clothing, leather and footwear industries, Geneva, Switzerland:
ILO, pp. 9-24, 15.
ILRF (n.d.), “Precarious work”, online: www.laborrights.org/issues/precarious-work, viewed in November 2019.
635 United Nations (n.d.), “Goal 8”, online: www.sustainabledevelopment.un.org/sdg8, viewed in December 2019.
636 United Nations (n.d.), “SUSTAINABLE DEVELOPMENT GOALS”, online: https://sustainabledevelopment.un.org/sdgs,
viewed in November 2019.
637 TruCost (2010), Universal ownership: why environmental externalities matter to institutional investors, London, theUnited Kingdom: TruCost.
638 European Commission (2016), “REACH”, online: www.ec.europa.eu/environment/chemicals/reach/reach_en.htm,
viewed in December 2019;
ECHA (n.d.), “Understanding REACH”, online: www.echa.europa.eu/regulations/reach/understanding-reach, viewed
in December 2019;
EEB (2017), “European chemical law has made a difference but still needs to be implemented properly warn EEB”,
online: www.eeb.org/european-chemical-law-has-made-a-difference/, viewed in December 2019.
639 UN (2017, June 9), “Our Oceans, Our Future: Call for Action”, online: https://oceanconference.un.org/callforaction,
viewed in November 2019.
640 Secretariat of the Basel, Rotterdam and Stockholm Conventions (2019, May 10), “Governments agree landmark
decisions to protect people and planet from hazardous chemicals and waste, including plastic waste”, online:www.brsmeas.org/?tabid=8005, viewed in December 2019.
641 ILO (1948), Freedom of Association and Protection of the Right to Organise Convention, 1948 (No. 87), Geneva,
Switzerland: ILO;
ILO (1949), Right to Organise and Collective Bargaining Convention, 1949 (No. 98), Geneva, Switzerland: ILO.
642 ILO (1930), Forced Labour Convention, 1930 (No. 29), Geneva, Switzerland: ILO;
ILO (1957), Abolition of Forced Labour Convention, 1957 (No. 105), Geneva, Switzerland: ILO.
643 ILO (1973), Minimum Age Convention, 1973 (No. 138), Geneva, Switzerland: ILO;
ILO (1999), Worst Forms of Child Labour Convention, 1999 (No. 182), Geneva, Switzerland: ILO.
644 ILO (1958), Discrimination (Employment and Occupation) Convention, 1958 (No. 111), Geneva, Switzerland: ILO;

Page | 304

ILO (1951), Equal Remuneration Convention, 1951 (No. 100), Geneva, Switzerland: ILO.
645 Platform Living Wage Financials (n.d.), “Platform Living Wage Financials”, online:
https://www.livingwage.nl/platform-living-wage-financials/, viewed in January 2020.
646 ISO (2010), ISO 26000: 2010 Guidance on Social Responsibility, Geneva, Switzerland: ISO, p. 6.
647 ISO (2010), ISO 26000: 2010 Guidance on Social Responsibility, Geneva, Switzerland: ISO, p. 72.
648 UN (2011), Guiding Principles on Business and Human Rights. Implementing the United Nations “Protect, Respect
and Remedy” Framework, Geneva, Switzerland: United Nations, p. 18.
649 Li., Z. et al. (2014), “A review of soil heavy metal pollution from mines in China: Pollution and health risk
assessment”, Science of the Total Environment, 468-469: p. 843-853;
Greenpeace International (2016, 1 July), “About coal mining impacts”, online: http://www.greenpeace.org/archiveinternational/en/campaigns/climate-change/coal/Coal-mining-impacts/, viewed in December 2019.
650 Johnson, D.B. and Hallberg, K.B. (2004), “Acid mine drainage remediation options: a review”, Science of the Total
Environment, 338: p. 3-14;
Silva, L. et al. (2013), “Study of environmental pollution and mineralogical characterization of sediment rivers from
Brazilian coal mining acid drainage”, Science of the Total Environment, 447, p. 169-178;
Romero, F. et al. (2010), “Acid drainage at the inactive Santa Lucia mine, western Cuba: Natural attenuation ofarsenic, barium and lead, and geochemical behavior of rare earth elements”, Applied Geochemistry, 25(5), p. 716727.
651 Csavina, Janae et al. (2012), “A Review on the Importance of Metals and Metalloids in Atmospheric Dust andAerosol from Mining Operations.” The Science of the total environment, 433C: p. 58–73;
OKI (n.d.), “Environmental Impacts of Mining and Smelting”, online: http://www.okinternational.org/mining, viewed
in December 2019.
652 Oxfam International (2015), Community consent index 2015. Oil, gas, mining company public positions on Free,
Prior, and Informed Consent, Oxford, the United Kingdom: Oxford GB;
Forest Peoples Programme and the Amerindian peoples Association (2014), Indigenous peoples’ rights and climate
policies in Guyana: a special report;
Oxfam Australia (n.d.), “Impacts of mining”, online: https://www.oxfam.org.au/what-we-do/mining/impacts-ofmining/, viewed in December 2019.
653 Windfuhr, Michael (2017, July), Analysis: Safeguarding Human Rights in Land Related Investments: Comparison of

the Voluntary Guidelines Land with the IFC Performance Standards and the World Bank Environmental and Social
Safeguard Framework, Berlin, Germany: German Institute for Human Rights.
654 Csavina, Janae et al. (2012), “A Review on the Importance of Metals and Metalloids in Atmospheric Dust andAerosol from Mining Operations.” The Science of the total environment, 433C: p. 58–73;
OKI (n.d.), “Environmental Impacts of Mining and Smelting”, online: http://www.okinternational.org/mining, viewed
in December 2019.
655 ILO (n.d.), “Mining (coal; other mining) sector”, online: http://www.ilo.org/global/industries-andsectors/mining/lang--en/index.htm, viewed in December 2019.
656 Auty, R.M. (1993), Sustaining Development in Mineral Economies: The Resource Curse Thesis, London, the United
Kingdom: Routledge.
657 Kaberuka, D. (2013, October 7), “Africa’s Mineral Wealth: A Blessing Or A Curse?”, All Africa. Online:
http://allafrica.com/stories/201310110836.html viewed in December 2019;
Revenue Watch Institute (2013), The 2013 Resource Governance Index – A measure of transparency andaccountability in the oil, gas and mining sector, New York, the United States: Revenue Watch Institute;

Page | 305

Natural Resource Governance Institute (2015, March), The Resource Curse: The Political and Economic Challenges of
Natural Resource Wealth, NRGI reader;Beck, T. (2017, 4 April), “Is there a natural resource curse in finance?”, online:
blogs.worldbank.org/allaboutfinance/there-natural-resource-curse-finance, viewed in December 2019.
658 Mathiason, N. (2011), The Piping Profits Report, Oslo, Norway: Publish What You Pay Norway.
659 Mathiason, N. (2011), The Piping Profits Report, Oslo, Norway: Publish What You Pay Norway;
Van Gelder, JW. et al (2016, 23 December), Tax avoidance by mining companies in developing countries: An analysisof potential Dutch policy initiatives, Amsterdam, the Netherlands: Profundo and Offshore Kenniscentrum.
660 Global Witness (2015), “Responsible Minerals”, online: https://www.globalwitness.org/campaigns/conflict-minerals/,
viewed in December 2019.
661 Intergovernmental Forum on Mining, Minerals, Metals and Sustainable Development (IGF) (2017), Global Trends inArtisanal and Small-Scale Mining (ASM): A review of key numbers and issues, Winnipeg: IISD.
662 Buxton, A. (2013), Responding to the challenge of artisanal and small-scale mining. How can knowledge networks
help?, London, the United Kingdom: IIED Sustainable Markets.
663 Amnesty International (2018, February), Amnesty International Report 2017-18: The state of the world’s humanrights, London, the United Kingdom: Amesty International.
664 United Nations (n.d.), “SUSTAINABLE DEVELOPMENT GOALS”, online: https://sustainabledevelopment.un.org/sdgs,
viewed in December 2019.
665 UN Environment (2017, 14 December), “UN Environment Assembly moves to curb pollution from extractive
industries”, online: www.unenvironment.org/news-and-stories/story/un-environment-assembly-moves-curbpollution-extractive-industries, viewed in December 2019.
666 Responsible Mining Foundation (n.d.), “Tailings Management: learnings and good practice”, online:
https://www.responsibleminingfoundation.org/research/tailing-management/, viewed in November 2019.
667 Amnesty International (2010), Haki Zetu. ESC rights in Practice. Land and Human Rights, Amsterdam, theNetherlands: Amnesty International Netherlands, p.10.
668 United Nations Human Rights Council (2011), Guiding Principles on Business and Human Rights: Implementing theUnited Nations “Protect, Respect and Remedy” Framework, Geneva, Switzerland: UNHRC, p. 22 and 25.
669 Ruggie, J. (2011), Guiding Principles on Business and Human Rights: Implementing the United Nations “Protect,
Respect and Remedy” Framework, New York, the United States: United Nations Human Rights Council,
A/HRC/17/31, p.31-35;
Business and Human Rights Resource Centre (n.d.), “Company-based grievance mechanisms”, online:
https://business-humanrights.org/en/un-guiding-principles/implementation-tools-examples/access-to-remediesgrievance-mechanisms/non-judicial-grievance-mechanisms/company-based-grievance-mechanisms?page=1,
viewed in February 2018.
670 GRI (2016), GRI 201: Economic Performance 2016, Global Reporting Initiative, p. 6 and p. 12.
671 Culotta, K., Engel, T. and J. Perry (2011, April 27), Dodd-Frank’s “Conflict Minerals” Provision: Expected to Impact
Nearly Half of All U.S. Public Companies, Client Alert Energy & Natural Resources Practice, Houston, the UnitedStates: King and Spalding.
672 Natural Resource Governance Institute (2014, 12 June), Natural Resource Charter – 2nd Edition.
673 Culotta, K., Engel, T. and J. Perry (2011, April 27), Dodd-Frank’s “Conflict Minerals” Provision: Expected to Impact
Nearly Half of All U.S. Public Companies, Client Alert Energy & Natural Resources Practice, Houston, the UnitedStates: King and Spalding.
674 European Commission (n.d.), “Combatting Conflict Minerals”, online: https://ec.europa.eu/trade/policy/infocus/conflict-minerals-regulation/, viewed in December 2019.

Page | 306

675 European Commission (2017, 8 June), “Conflict Minerals Regulation”, online: ec.europa.eu/trade/policy/infocus/conflict-minerals-regulation/, viewed in November 2017.
676 European Partnership for Responsible Minerals (n.d.), “About EPRM – Goal”, online: europeanpartnershipresponsibleminerals.eu/goal, viewed in December 2019.
677 Greenpeace (2010, May 6), “Left in the Dust – Areva’s uranium mining in Niger”, online:
https://www.greenpeace.org/archive-international/en/news/Blogs/nuclear-reaction/left-in-the-dust-arevasuranium-mining-in-nig/blog/11734/, viewed in December 2019.
678 WHO (n.d.), “Asbestos: elimination of asbestos-related diseases”, online: https://www.who.int/en/news-room/factsheets/detail/asbestos-elimination-of-asbestos-related-diseases, viewed in November 2019.
679 Asbestos Global (n.d.), “Asbestos bans and regulation”, online: http://asbestosglobal.org/asbestos-bans/, viewed in
November 2019.
680 United Nations Framework Convention on Climate Change (2016, 5 October), “The Paris Agreement”, online:
unfccc.int/paris_agreement/items/9485.php, viewed in December 2019.
681 Oil Change International (2016, September), The Sky’s Limit: Why the Paris Climate Goals Require a Managed
Decline of Fossil Fuel Production, Washington D.C., the United States: Oil Change International.
682 Oil Change International (2016, September), The Sky’s Limit: Why the Paris Climate Goals Require a Managed
Decline of Fossil Fuel Production, Washington D.C., the United States: Oil Change International.
683 Pfeiffer, A. et al (2016, January), The ‘2°C capital stock’ for electricity generation: cumulative committed carbon
emissions and climate change, Oxford, United Kingdom: Institute for New Economic Thinking, p. 2.
684 UNEP (2019), Emissions Gap Report 2019, Nairobi, Kenya: United Nations Environment Programme (UNEP), p. xx.
685 UNEP (2019), Emissions Gap Report 2019, Nairobi, Kenya: United Nations Environment Programme (UNEP), p. xxii.
686 UNEP (2017), The Emissions Gap Report 2017, United Nations Environment Programme (UNEP), Nairobi, Kenia, p.
xv.
687

Hendryx, M. and M. Ahern (2009), “Mortality in Appalachian coal mining regions: the value of statistical life lost”,
Public Health Reports, 124(4): 541-550;
Ahern, M. et al. (2011), “The association between mountaintop mining and birth defects among live births in central
Appalachia, 1996-2003”, Environmental Research, 111(6): 838-846;
Gilbert, N. (2010, October), “Mountaintop mining plans close to defeat Environmental review details 'unacceptable'
impacts.”, Nature News, online: http://www.nature.com/news/2010/101027/full/4671021a.html, viewed in
December 2019.

688 The New York Times (2015), “A New Tack in the War on Mining Mountains PNC Joins Banks Not Financing
Mountaintop Coal Removal”, online: https://www.nytimes.com/2015/03/10/business/dealbook/pnc-joins-banksnot-financing-mountaintop-coal-removal.html, viewed in November 2019;
RAN (2014, December 26), “2014 in Review: Big Banks Ditch Mountaintop Removal Coal”, online:
https://www.ran.org/the-understory/2014_in_review_big_banks_ditch_mountaintop_removal_coal/, viewed in
December 2019.
689 Schücking, H. (2017, 9 November), “It's time for impact divesting: the Global Coal Exit List for the finance industry islaunched”, BankTrack, online:www.banktrack.org/blog/its_time_for_impact_divesting_the_global_coal_exit_list_for_the_finance_industry_is_launche
d#, viewed in December 2019.
690 Coal Exit (n.d.), “Database: Companies on Coal Expansion Course”, online: coalexit.org/database, viewed in
December 2019.
691 UNEP (2012), Sustainable Reconstruction in Disaster-Affected Countries, Nairobi, Kenya: United Nations
Environment Program, RAN, Sierra Club and Swiss Resource Centre and Consultancies for Development;

Page | 307

Collins, B. et al (2015, May 4), The End of Coal? Coal Finance Report Card 2015, Rainforest Action Network, Sierra
Club, BankTrack.
692 International Council on Mining and Metals (n.d.), “ICMM 10 Principles”, online: https://www.icmm.com/engb/members/member-commitments/icmm-10-principles, viewed in December 2019.
693 OECD (n.d.), “Alignment assessment of industry programmes with the OECD mineral guidance”, online:
http://mneguidelines.oecd.org/industry-initiatives-alignment-assessment.htm, viewed in November 2019.
694 Responsible Mining Foundation (2018), Responsible Mining Index 2018, Nyon, Switzerland: Responsible Mining
Foundation.
695 ISO (2010), ISO 26000: 2010 Guidance on Social Responsibility, Geneva, Switzerland: ISO, p. 6.
696 ISO (2010), ISO 26000: 2010 Guidance on Social Responsibility, Geneva, Switzerland: ISO, p. 72.
697 UN (2011), Guiding Principles on Business and Human Rights. Implementing the United Nations “Protect, Respect
and Remedy” Framework, Geneva, Switzerland: United Nations, p. 18.
698 EIA (2017, 1 February), “How does oil affect the environment?”, online:
www.eia.gov/EnergyExplained/index.cfm?page=oil_environment, viewed in December 2019;UCSUSA (n.d.), “Environmental impacts of natural gas”, online: www.ucsusa.org/clean_energy/our-energychoices/coal-and-other-fossil-fuels/environmental-impacts-of-natural-gas.html#.VrsOQvkrK70, viewed in
December 2019;
Rainforest Foundation US (n.d.), “Oil Extraction”, online: https://rainforestfoundation.org/oil-drilling-effects/, viewed
in December 2019.
699 DeMeritt, J. and Young, J. (2013), “A political economy of human rights: Oil, natural gas, and state incentives torepress”, Conflict Management and Peace Science, 30(2): p. 99-120;
UNICEF (2015), Oil and gas scoping study Unicef extractive pilot, Geneva, Switzerland: UNICEF.
700 The Hague Institute for Global Justice (2013), Policy Brief 4. Escaping the Resource Curse in Sub-Saharan Africa, The
Hague, the Netherlands: the Hague Institute for Global Justice.
701 PAX (n.d.), “Natural Resources, Conflict & Human Rights”, online: www.paxforpeace.nl/our-work/themes/naturalresources-conflict-human-rights, viewed in December 2019;
GIZ (2011), “Blessing or curse?”, online: www.giz.de/en/workingwithgiz/12285.html viewed in December 2019.
702 UN (2017, 6 November), “Protect environment from wars and conflicts, UN urges on International Day”, online:
www.un.org/apps/news/story.asp?NewsID=58038#, viewed in December 2019.
703 Milieudefensie (2010), Double Standard: Shell Practices in Nigeria Compared with International Standards toPrevent and Control Pipeline Oil Spills and the Deepwater Horizon Oil Spill, Amsterdam, the Netherlands:
Milieudefensie.
704 Mathiason, N. (2011), The Piping Profits Report, Oslo, Norway: Publish What You Pay Norway
705 Mathiason, N. (2011), The Piping Profits Report, Oslo, Norway: Publish What You Pay Norway ;Dorp, van, M. (2016, January), How Shell, Total and Eni benefit from tax breaks in Nigeria’s gas industry,
Amsterdam, the Netherlands: SOMO;
Weyzig, F. (2013, 21 October), International finance and tax avoidance via Dutch Special Purpose Entities .
706 European Commission (2012), Support to the Identification of Potential Risks for the Environment and Human
Health Arising from Hydrocarbons Operations Involving Hydraulic Fracturing in Europe, Oxfordshire, the United
Kingdom: AEA Technology.
707 Vewin (2013), “EZ-onderzoek schaliegas onvoldoende, risico’s gebagatelliseerd”, online:
www.vewin.nl/nieuws/paginas/EZonderzoek_schaliegas_onvoldoende_risicos_gebagatelliseerd_42.aspx, viewed in
December 2019.

Page | 308

708 Rijksoverheid (n.d.), “Geen winning van schaliegas in Nederland”, online:
https://www.rijksoverheid.nl/onderwerpen/schaliegas/schaliegas-in-nederland, viewed in December 2019;
Natural Gas Europe (2014, December 18), “Netherlands formalises fracking moratorium”, online:
http://www.naturalgaseurope.com/netherlands-formalises-fracking-moratorium-21136, viewed in December 2019;
Greenpeace Nederland (2014), “Tweede Kamer wil verbod olieboringen op Noordpool”, online:
http://www.greenpeace.nl/2014/Nieuwsberichten/Klimaat--Energie/Tweede-Kamer-wil-verbod-olieboringen-opNoordpool, viewed in December 2019.
709 Keep Tap Water Safe (n.d), “List of Bans Worldwide”, online: http://keeptapwatersafe.org/global-bans-on-fracking,viewed in December 2019.
710 Davenport, C. (2019, March 30), “Trumps Order to Open Arctic Waters to Oil Drilling Was Unlawful, Federal Judge
Finds”, The New York Times, online: https://www.nytimes.com/2019/03/30/climate/trump-oil-drilling-arctic.html,
viewed in December 2019.
Climate Home News (2015, 27 January), “Obama bans oil drilling in 9.8 million acres of Arctic Ocean”, online:
www.climatechangenews.com/2015/01/27/obama-bans-oil-drilling-in-9-8-million-acres-of-arctic-ocean/, viewed in
November 2017.
711 United Nations (n.d.), “SUSTAINABLE DEVELOPMENT GOALS”, online: https://sustainabledevelopment.un.org/sdgs,
viewed in December 2019.
712 UN Environment (2017, 14 December), “UN Environment Assembly moves to curb pollution from extractive
industries”, online: www.unenvironment.org/news-and-stories/story/un-environment-assembly-moves-curbpollution-extractive-industries, viewed in December 2019.
713 Milieudefensie (2010), Double Standard: Shell Practices in Nigeria Compared with International Standards toPrevent and Control Pipeline Oil Spills and the Deepwater Horizon Oil Spill, Amsterdam, the Netherlands:
Milieudefensie, p.21.
714 Amnesty International (2010), Haki Zetu. ESC rights in Practice. Land and Human Rights, Amsterdam, theNetherlands: Amnesty International Netherlands, p.10.
715 GRI (2013), G4 Sector Disclosures Oil and Gas, Amsterdam, the Netherlands: GRI.
716 United Nations Human Rights Council (2011), Guiding Principles on Business and Human Rights: Implementing theUnited Nations “Protect, Respect and Remedy” Framework, Geneva, Switzerland: UNHRC, p. 22 and 25.
717 Ruggie, J. (2011), Guiding Principles on Business and Human Rights: Implementing the United Nations “Protect,
Respect and Remedy” Framework, New York, the United States: United Nations Human Rights Council,
A/HRC/17/31, p.31-35;
Business and Human Rights Resource Centre (n.d.), “Company-based grievance mechanisms”, online:
https://business-humanrights.org/en/un-guiding-principles/implementation-tools-examples/access-to-remediesgrievance-mechanisms/non-judicial-grievance-mechanisms/company-based-grievance-mechanisms?page=1,
viewed in February 2018.
718 GRI (2016), GRI 201: Economic Performance 2016, Global Reporting Initiative, p. 6 and p. 12.
719 GRI (2013), G4 Sector Disclosures Oil and Gas, Amsterdam, the Netherlands: GRI, p.12.
720 Mathiesen, K. (2015, March 30), “Doctors and academics call for ban on ‘inherently risky’ fracking’, The Guardian,
online: https://www.theguardian.com/environment/2015/mar/30/doctors-and-academics-call-for-ban-oninherently-risky-fracking, viewed in December 2019;
Mielke, E., L. Diaz Anadon and V. Narayanamurti (2010, October), “Water Consumption of Energy Resource
Extractknio, Processing, and Conversion”, Energy Technology Innovation Policy Project, Belfer Center, online:
https://www.belfercenter.org/publication/water-consumption-energy-resource-extraction-processing-andconversion, viewed in December 2019.
721 United Nations Framework Convention on Climate Change (2016, 5 October), “The Paris Agreement”, online:
unfccc.int/paris_agreement/items/9485.php, viewed in December 2019.

Page | 309

722 Oil Change International (2016, September), The Sky’s Limit: Why the Paris Climate Goals Require a Managed
Decline of Fossil Fuel Production, Washington D.C., the United States: Oil Change International.
723 WWF (2016, 3 October), Infographic: Keep Arctic Oil under the Sea, World Wildlife Fund.
724 UNEP (2019), Emissions Gap Report 2019, Nairobi, Kenya: United Nations Environment Programme (UNEP), p. xx.
725 UNEP (2019), Emissions Gap Report 2019, Nairobi, Kenya: United Nations Environment Programme (UNEP), p. xxii.
726 UNEP (2017), The Emissions Gap Report 2017, United Nations Environment Programme (UNEP), Nairobi, Kenia, p.
xv.
727 International Energy Agency (2017, November), World Energy Outlook 2017: Executive Summary, IEA Publications,p. 8.
728 Mutitt, G. et al (2016, September), The sky’s limit: why the Paris climate goals require a managed decline of fossil
fuel production, Washington, United States: Oil Change International, p. 5.
729 ISO (2010), ISO 26000: 2010 Guidance on Social Responsibility, Geneva, Switzerland: ISO, p. 6.
730 ISO (2010), ISO 26000: 2010 Guidance on Social Responsibility, Geneva, Switzerland: ISO, p. 72.
731 UN (2011), Guiding Principles on Business and Human Rights. Implementing the United Nations “Protect, Respect
and Remedy” Framework, Geneva, Switzerland: United Nations, p. 18.
732 United States Environmental Protection Agency (n.d.), “Global Greenhouse Gas Emissions Data”, online:
www3.epa.gov/climatechange/ghgemissions/global.html, viewed in December 2019.
733 McGlade, C. and P. Elkins (2015), “The geographical distribution of fossil fuels unused when limiting global warming
to 2°C”, Nature, 517, p. 187–190;
UNEP (2017), The Emissions Gap Report 2017, United Nations Environment Programme (UNEP), Nairobi, Kenia, p.
xv.
734 IPCC (2014), Climate Change 2014: Mitigation of Climate Change. Contribution of Working Group III to the Fifth
Assessment Report of the Intergovernmental Panel on Climate Change, Cambridge, the United Kingdom and newYork, the United States: Cambridge University Press.
735 Jones, D. et al (2016, June), Europe’s Dark Cloud: How coal-burning countries are making their neighbours sick,
Brussels, Belgium: WWF European Policy Office, Sandbag, CAN Europe and HEAL..
736 UCSUSA (n.d.), “Coal and air pollution”, online: https://www.ucsusa.org/resources/coal-and-air-pollution, viewed in
December 2019.
737 UCSUSA (.n.d.), “Environmental impacts of natural gas”, online: https://www.ucsusa.org/resources/environmentalimpacts-natural-gas, viewed in December 2019.
738 WWF (2003), WWF Position Paper Nuclear Power, Gland, Switzerland: World Wide Fund for Nature;
Greenpeace (n.d.), “End the nuclear age”, online: https://www.greenpeace.org/archiveinternational/en/campaigns/nuclear/, viewed in December 2019.
739 World Commission on Dams (2000, November), Dams and Development. A New Framework for Decision-making,London, the United Kingdom: Earthscan Publications.
740 Finer, M. and C. N. Jenkins (2012), “Proliferation of Hydroelectric Dams in the Andean Amazon and Implications forAndes-Amazon Connectivity”, PLoS ONE, 7(4).
741 Fearnside, P. and Pueyo, S. (2012), “Greenhouse-gas emissions from tropical dams”. Nature Climate Change, 2, 382– 384;
Union of Concerned Scientists (n.d.). “Environmental impacts of hydroelectric power”, online:
https://www.ucsusa.org/resources/environmental-impacts-hydroelectric-power, viewed in December 2019.
742 International Rivers (2013), “Hydropower”, online: www.internationalrivers.org/resources/hydropower-7901, viewed
in December 2019.

Page | 310

743 United Nations (n.d.), “Goal 7”, online: www.sustainabledevelopment.un.org/sdg7, viewed in December 2019.
744 United Nations (n.d.), “SUSTAINABLE DEVELOPMENT GOALS”, online: https://sustainabledevelopment.un.org/sdgs,
viewed in December 2019.
745 European Commission (2017, 10 February), “New study: investing in renewable energy in the next 30 years”, online:
https://ec.europa.eu/energy/en/news/new-study-investing-renewable-energy-next-30-years, viewed in December
2019.
746 IPCC (2014): Climate Change 2014: Synthesis Report. Contribution of Working Groups I, II and III to the Fifth
Assessment Report of the Intergovernmental Panel on Climate Change, Geneva, Switserland: Intergovernmental
Panel on Climate Change.
747 Pfeiffer, A. et al (2016, January), The ‘2°C capital stock’ for electricity generation: cumulative committed carbon
emissions and climate change, Oxford, United Kingdom: Institute for New Economic Thinking, p. 2.
748 IPCC (2018), Global Warming of 1.5°C. An IPCC Special Report on the impacts of global warming of 1.5°C above

pre-industrial levels and related global greenhouse gas emission pathways, in the context of strengthening the
global response to the threat of climate change, sustainable development, and efforts to eradicate poverty, Geneva,
Switzerland: Intergovernmental Panel on Climate Change, p. 12.
749 UNEP (2019), Emissions Gap Report 2019, Nairobi, Kenya: United Nations Environment Programme (UNEP), p. xx.
750 UNEP (2019), Emissions Gap Report 2019, Nairobi, Kenya: United Nations Environment Programme (UNEP), p. xxii.
751 UNEP (2017), The Emissions Gap Report 2017, United Nations Environment Programme (UNEP), Nairobi, Kenia, p.
xv.
752 International Energy Agency (2019, November), World Energy Outlook 2019: Executive Summary, IEA Publications,pp. 1-2.
753 Schücking, H. (2017, 9 November), “It's time for impact divesting: the Global Coal Exit List for the finance industry islaunched”, BankTrack, online:www.banktrack.org/blog/its_time_for_impact_divesting_the_global_coal_exit_list_for_the_finance_industry_is_launche
d#, viewed in December 2017.
754 Coal Exit (n.d.), “Database: Companies on Coal Expansion Course”, online: coalexit.org/database, viewed in
November 2019.
755 Greenpeace US (n.d.), “Nuclear energy”, online: http://www.greenpeace.org/usa/global-warming/issues/nuclear/,viewed in December 2019.
756 World Commission on Dams (2000, November), Dams and Development. A New Framework for Decision-making,London, the United Kingdom: Earthscan Publications;Finer, M. and C. N. Jenkins (2012), “Proliferation of Hydroelectric Dams in the Andean Amazon and Implications forAndes-Amazon Connectivity”, PLoS ONE, 7(4);Fearnside, P. and Pueyo, S. (2012), “Greenhouse-gas emissions from tropical dams”. Nature Climate Change, 2, 382– 384;
Union of Concerned Scientists (n.d.). “Environmental impacts of hydroelectric power”, online:
https://www.ucsusa.org/resources/environmental-impacts-hydroelectric-power, viewed in December 2019.
757 UN Environment (2017, 14 December), “UN Environment Assembly moves to curb pollution from extractive
industries”, online: www.unenvironment.org/news-and-stories/story/un-environment-assembly-moves-curbpollution-extractive-industries, viewed in December 2019.
758 Amnesty International (2010), Haki Zetu. ESC rights in Practice. Land and Human Rights, Amsterdam, theNetherlands: Amnesty International Netherlands, p.10.
759 United Nations Human Rights Council (2011), Guiding Principles on Business and Human Rights: Implementing theUnited Nations “Protect, Respect and Remedy” Framework, Geneva, Switzerland: UNHRC, p. 22 and 25.

Page | 311

760 Ruggie, J. (2011), Guiding Principles on Business and Human Rights: Implementing the United Nations “Protect,
Respect and Remedy” Framework, New York, the United States: United Nations Human Rights Council,
A/HRC/17/31, p.31-35;
Business and Human Rights Resource Centre (n.d.), “Company-based grievance mechanisms”, online:
https://business-humanrights.org/en/un-guiding-principles/implementation-tools-examples/access-to-remediesgrievance-mechanisms/non-judicial-grievance-mechanisms/company-based-grievance-mechanisms?page=1,
viewed in December 2019.
761 International Rivers Network (2002), Citizen’s Guide to the World Commission on Dams, Berkeley, the United States:
International Rivers Network;
WWF Global Freshwater Programme (2005), To Dam or not to Dam? Five years on from the World Commission on
Dams, Zeist, The Netherlands: WWF Global Freshwater Programme.
762 World Commission on Dams (2000, November), Dams and Development. A New Framework for Decision-making,London, the United Kingdom: Earthscan Publications.
763 Hydropower Sustainability Council (n.d.), “Hydropower Sustainability Tools”, online:
https://www.hydrosustainability.org/hydropower-sustainability-tools, viewed in January 2020.
764 European Commission (n.d.), “Biofuels”, online: https://ec.europa.eu/energy/en/topics/renewableenergy/biofuels/overview, viewed in November 2019;
Lapola, D.M. et al. (2010), “Indirect land-use changes can overcome carbon savings from biofuels in Brazil”, PNAS,
107(8).
765 Roundtable on Sustainable Biomaterials (n.d.), “Working with the RSB Standard”, online: https://rsb.org/the-rsbstandard/working-with-the-rsb-standard/, viewed in November 2019.
766 Roundtable on Sustainable Biomaterials (2016), RSB Principles & Criteria for Sustainable Biofuel Production [RSBSTD-01-001 (version 3.0), Geneva, Switzerland: RSB.
767 Roundtable on Sustainable Biomaterials (n.d.), “Working with the RSB Standard”, online: https://rsb.org/the-rsbstandard/working-with-the-rsb-standard/, viewed in November 2019.
768 EC (n.d.), “Biofuels”, online: ec.europa.eu/energy/en/topics/renewable-energy/biofuels, viewed in November 2019.
769 ISO (2010), ISO 26000: 2010 Guidance on Social Responsibility, Geneva, Switzerland: ISO, p. 6.
770 ISO (2010), ISO 26000: 2010 Guidance on Social Responsibility, Geneva, Switzerland: ISO, p. 72.
771 UN (2011), Guiding Principles on Business and Human Rights. Implementing the United Nations “Protect, Respect
and Remedy” Framework, Geneva, Switzerland: United Nations, p. 18.
772 The World Commission on Dams (2000), Dams and Development: A New Framework for Decision-making - The
Report of the World Commission on Dams, London and Sterling VA: Earthscan Publications.
773 European Commission (2011, March), Proposal for a Directive of the European Parliament and of the Council on
Credit Agreements relating to residential property, Brussels, Belgium: European Commission, p. 14.
774 Lefevre, A. and M. Chapman (2017), Behavioural economics and financial consumer protection - OECD Working
Papers on Finance, Insurance and Private Pensions, Paris, France: OECD Publishing, p. 6-10;
P. Muller et al. (2014), Consumer Protection Aspects of Financial Services, Brussels, Belgium: European Parliament
Directorate General For Internal Policies Policy Department A: Economic And Scientific Policy, p. 92-94.
775 A. Demirguc-Kunt et al. (2018), The Global Findex Database 2017: Measuring Financial Inclusion around the World,
Washington DC, the United States: The World Bank Development Research Group Finance and Private Sector
Development Team.
S. Rutledge, N. Annamalai, Lester, R. and R. L. Symonds (2010, August), Good practices for consumer protection andfinancial literacy in Europe and Central Asia: a diagnostic tool; Washington, the United States: World Bank, p. ii.

Page | 312776 Consumers International (2011, March), Safe, fair and competitive markets in financial services: recommendations
for the G20 on the enhancement of consumer protection in financial services, London, United Kingdom: Consumers
International, p.1.
777 Consumers International (2011), Safe, fair and competitive markets in financial services: recommendations for theG20 on the enhancement of consumer protection in financial services, London, United Kingdom: Consumers
International, p.1.
778 Consumers International (2011), Safe, fair and competitive markets in financial services: recommendations for theG20 on the enhancement of consumer protection in financial services, London, United Kingdom: Consumers
International, p.5;
Lefevre, A. and M. Chapman (2017), Behavioural economics and financial consumer protection - OECD Working
Papers on Finance, Insurance and Private Pensions, Paris, France: OECD Publishing, p. 16
779 Consumers International (2011), Safe, fair and competitive markets in financial services: recommendations for theG20 on the enhancement of consumer protection in financial services, London, United Kingdom: Consumers
International, p.5;
P. Muller et al. (2014), Consumer Protection Aspects of Financial Services, Brussels, Belgium: European Parliament
Directorate General For Internal Policies Policy Department A: Economic And Scientific Policy, p. 18.
780 Consumers International (2011), Safe, fair and competitive markets in financial services: recommendations for theG20 on the enhancement of consumer protection in financial services, London, United Kingdom: Consumers
International, p.8.
781 Consumers International (2011), Safe, fair and competitive markets in financial services: recommendations for theG20 on the enhancement of consumer protection in financial services London, United Kingdom: Consumers
International, p.8;
P. Muller et al. (2014), Consumer Protection Aspects of Financial Services, Brussels, Belgium: European Parliament
Directorate General For Internal Policies Policy Department A: Economic And Scientific Policy, p. 119.
782 Hubbard-Solli, J. (2013), Responsible lending: An international landscape, London, United Kingdom: Consumers
International
783 United Nations (n.d.), “SUSTAINABLE DEVELOPMENT GOAL 10”, online:
https://sustainabledevelopment.un.org/sdg10, viewed in December 2019;
United Nations (n.d.), “SUSTAINABLE DEVELOPMENT GOAL 16”, online:
https://sustainabledevelopment.un.org/sdg16, viewed in December 2019.
784 OECD (n.d.), “Financial Consumer Protection”, online: www.oecd.org/g20/topics/financial-sectorreform/financialconsumerprotection.htm, viewed in December 2019.
785 OECD (2011, October), G20 High-Level Principles on Financial Consumer Protection, Paris, France: OECD
786 OECD (2013, September), Update Report on the work to support the implementation of the G20 High-Level

Principles on Financial Consumer Protection. G20/OECD Task Force On Financial Consumer Protection. Principles 4,
6 and 9, Paris, France: OECD, p.8.
787 OECD, (2011), Guidelines for Multinational Enterprises, Paris, France: OECD, Chapter VIII.
788 UNCTAD (2016), United Nations Guidelines For Consumer Protection - UNCTAD, Geneva, Switzerland: United
Nations, p. 6.
789 UNCTAD (2016), United Nations Guidelines For Consumer Protection - UNCTAD, Geneva, Switzerland: United
Nations, p. 21-22;
Unctad (N.D.), “United Nations Guidelines on Consumer Protection”, online:
unctad.org/en/Pages/DITC/CompetitionLaw/UN-Guidelines-on-Consumer-Protection.aspx, viewed in December
2017.

Page | 313

790 The European Parliament and the Council of the European Union (2008), “Directive 2008/48/EC of the European
Parliament and of the Council of April 2008 on credit agreements for consumers and repealing Council Directive
87/102/EEC”, Official Journal of the European Union, L 133: 66-92.
791 The Commission of the European Communities (2001), “Commission Recommendation of 1 March 2001 on precontractual information to be given to consumers by lenders offering home loans (notified under document
number C(2001) 477) (Text with EEA relevance) (2001/193/EC)”, Official Journal of the European Union, L 69: 25-29.
792 The European Commission (2011), “Commission Directive 2011/90/EU of 14 November 2011 amending Part II of
Annex I to Directive 2008/48/EC of the European Parliament and of the Council providing additional assumptions
for the calculation of the annual percentage rate of charge”, Official Journal of the European Union, L 296: 35-37.
793 UNCTAD (2016), United Nations Guidelines For Consumer Protection - UNCTAD., Geneva, Switzerland: United
Nations.
794 OECD (2011, October), G20 High-Level Principles on Financial Consumer Protection, Paris, France: OECD, p.7.
795 Hubbard-Solli, J. (2013, November), Responsible lending: An international landscape, London, United Kingdom:
Consumers International, p.11.
796 United Nations (2007), Convention on the Rights of Persons with Disabilities, New York, United States: United
Nations.
797 CGAP (2015), Digital Financial Inclusion, Washington DC, United States: CGAP;
Next Billion (2017), “The Longest Last Mile: Are India’s Poor Ready for Digital Financial Services?”, online:
https://nextbillion.net/the-longest-last-mile-are-indias-poor-ready-for-digital-financial-services/, viewed in
December 2019.
798 UN Department of Economic and Social Affairs (2003), United Nations Guidelines for Consumer Protection (asexpanded in 1999), New York, United States: United Nations
799 United Nations (2015, December 22), Resolution adopted by the General Assembly on 22 December 2015,
A/RES/70/186, New York, United States: United Nations General Assembly.
800 OECD (2011), Guidelines for Multinational Enterprises, Paris, France: OECD.
801 OECD (2011, October), G20 High-Level Principles on Financial Consumer Protection, Paris, France: OECD, p.7.
802 Hubbard-Solli, J. (2013, November), Responsible lending: An international landscape, London, United Kingdom:
Consumers International.
803 The European Parliament and the Council of the European Union (2014), “Directive 2014/17/EU of the European
Parliament and the Council of 4 February 2014 on credit agreements for consumers relating to residential
immovable property and amending Directives 2008/48/EC and 2013/36/EU and Regulation (EU) No 1093/2010”,
Official Journal of the European Union, L 60: 34-85.
804 Hubbard-Solli, J. (2013, November), Responsible lending: An international landscape, London, United Kingdom:
Consumers International.
805 OECD (2011, October), G20 High-Level Principles on Financial Consumer Protection, Paris, France: OECD, p.7.
806 Demirgüç-Kunt, A., L. Klapper, D. Singer, S. Ansar and J. Hess (2018), The Global Findex Database 2017: Measuring
Financial Inclusion and the Fintech Revolution, Washington, DC, the United States: World Bank, p. 4.
807 Carroll Moody, J. and Gilbert C. Fite (1984), The Credit Union Movement: Origins and Development 1850 to 1980,
Dubuque, United States: Kendall/Hunt Publishing Co;
Grameen Bank (n.d.), “About us”, online: www.grameen-info.org/about-us/, viewed in December 2019.
808 The World Bank (2018, October 1), “UFA2020 Overview: Universal Financial Access by 2020”, online:
www.worldbank.org/en/topic/financialinclusion/brief/achieving-universal-financial-access-by-2020, viewed in
December 2019.

Page | 314

809 Demirgüç-Kunt, A., L. Klapper, D. Singer, S. Ansar and J. Hess (2018), The Global Findex Database 2017: Measuring
Financial Inclusion and the Fintech Revolution, Washington, DC, the United States: World Bank, p. 23.
The World Bank (2016, February 24), “UFA2020 Overview: Universal Financial Access by 2020”, online:
www.worldbank.org/en/topic/financialinclusion/brief/achieving-universal-financial-access-by-2020, viewed in
December 2019.
810 International Finance Corporation (2017), MSME Finance Gap: Assessment of the shortfalls and opportunities infinancing micro, small and medium enterprises in emerging markest, Washington D.C., the United States: IFC: p. 2526.
811 Center for Financial Inclusion (n.d.), “Mission&Vision”, online:
https://www.centerforfinancialinclusion.org/about/mission, viewed in December 2019.
812 Ledgerwood, J., J. Earne and C. Nelson (2013), The New Microfinance Handbook. A Financial Market System
Perspective, Washington D.C., United States: The World Bank, p. 17.
813 United Nations Department of Economic and Social Affairs (DESA) and the United Nations Capital Development
Fund (UNCDF) (2006, May), Building Inclusive Financial Sectors for Development, New York, United States, p. 5.
814 Shastri, R.K. (2009), “Microfinance and Poverty Reduction in India: A Comparative Study with other Asian Countries”,
African Journal of Business Management, Vol. 3 No 4: 136-140, p. 139.
815 United Nations (1996), Report of the World Summit for Social Development Copenhagen, 6-12 March 1995, New
York, United States.
816 Global Partnership for Financial Inclusion (GPFI) (n.d.), “About GPFI”, online: www.gpfi.org/about-gpfi, viewed in
December 2019.
817 G 20 Toronto Canada 2010 (2010, June 27), “The G-20 Toronto Summit Declaration June 26 - 27”, online:
www.g20.utoronto.ca/2010/to-communique.html, viewed in December 2019.
818 Mehrotra, A. and J. Yetman (2015, March), “Financial inclusion – issues for central banks”, BIS Quarterly Review.
819 Erenhouse, R. (2014, January 21), “MasterCard Discusses Financial Inclusion at World Economic Forum in Davos”,
Industry News, online: http://newsroom.mastercard.com/news-briefs/mastercard-discusses-financial-inclusion-atworld-economic-forum-in-davos/, viewed in December 2019.
820 Pouchous, A. (2012, September), The Regulation and Supervision of Microfinance: Main issues and progress,
Winnipeg, Canada: The International Institute for Sustainable Development.
821 UNEP Inquiry/Institute for Human Rights and Business (2016, February), Human Rights and Sustainable Finance.
Exploring the Relationship, Geneva, Switzerland/London, United Kingdom, p. 8, 61.
822 Consumers International (2017), Banking on the future: an exploration of FinTech and the consumer interest,
London, the United Kingdom: Consumers International.
823 United Nations (n.d.), “SUSTAINABLE DEVELOPMENT GOAL 1”, online: https://sustainabledevelopment.un.org/sdg1,
viewed in December 2019.
824 United Nations (n.d.), “SUSTAINABLE DEVELOPMENT GOAL 5”, online: https://sustainabledevelopment.un.org/sdg5,
viewed in December 2019.
825 United Nations (n.d.), “SUSTAINABLE DEVELOPMENT GOAL 8”, online: https://sustainabledevelopment.un.org/sdg8,
viewed in December 2019.
826 United Nations (n.d.), “SUSTAINABLE DEVELOPMENT GOAL 9”, online: https://sustainabledevelopment.un.org/sdg9,
viewed in December 2019.
827 United Nations (n.d.), “SUSTAINABLE DEVELOPMENT GOAL 10”, online:
https://sustainabledevelopment.un.org/sdg10, viewed in December 2019.
828 Ledgerwood, J, J. Earne and C. Nelson (2013), The New Microfinance Handbook. A Financial Market System
Perspective, Washington D.C., United States: The World Bank, p. 17.

Page | 315

829 Consultative Group to Assist the Poor (2004, January), Key Principles of Microfinance, Washington DC, the UnitedStates: CGAP, Principles 1, 3, 4, 6, 7 and 8.
830 Global Partnership for Financial Inclusion (2014, September 2), 2014 Financial Inclusion Action Plan, p. 2;
Wachenfeld, M., Aizawa, M. and M. Dowell-Jones (2016, February), Human Rights and Sustainable Finance, Nairobi,
Kenya: UNEP / UNEP Inquiry / Institute for Human Rights and Business;
Center for Financial Inclusion (n.d.), “Financial Inclusion 2020”, online:
https://www.centerforfinancialinclusion.org/about/what-we-do/financial-inclusion-2020, viewed in December 2019.
831 Consultative Group to Assist the Poor (CGAP) (n.d.), “Frequently Asked Questions about Financial Inclusion”, online:
www.cgap.org/about/faq, viewed in December 2019.
832 Consultative Group to Assist the Poor (CGAP) (2004, January), Key Principles of Microfinance, Washington DC, theUnited States: CGAP.
833 Global Partnership for Financial Inclusion (2014, September 2), 2014 Financial Inclusion Action Plan;
Global Partnership for Financial Inclusion (n.d.), G20 Financial Inclusion Indicators, online:
http://www.gpfi.org/sites/gpfi/files/documents/G20%20Financial%20Inclusion%20Indicators%20%282016%20Upda
te%29.pdf, viewed in December 2019.
834 UN Principles for Responsible Investment (2011), Principles for Investors in Inclusive Finance, London, the United
Kingdom: PRI.
835 Alliance for Financial Inclusion (2012, April), A Quick Guide to the Maya Declaration on Financial Inclusion, Kuala
Lumpur, Malaysia: Alliance for Financial Inclusion.
836 UNEP Inquiry/Institute for Human Rights and Business (2016, February), Human Rights and Sustainable Finance.
Exploring the Relationship, Geneva, Switzerland/London, United Kingdom, p. 6, 62.
837 Consultative Group to Assist the Poor (CGAP) (2004, January), Key Principles of Microfinance, Washington DC, theUnited States: CGAP.
838 Consultative Group to Assist the Poor (CGAP) (2004, January), Key Principles of Microfinance, Washington DC, theUnited States: CGAP.
839 Center for Financial Inclusion (2013, September), Technology Enables Full Financial Inclusion,Washington DC, theUnited States: Center for Financial Inclusion / Accion.
840 The European Parliament and the Council of the European Union (2014), “Directive 2014/92/EU of the European
Parliament and the Council of 23 July 2014 on the comparability of fees related to payment accounts, payment
account switching and access to payment accounts with basic features”, Official Journal of the European Union, L
257/214.
841 Consultative Group to Assist the Poor and Center for Financial Inclusion (n.d.), “The Client Protection Principles in
Microfinance”, online: https://ec.europa.eu/europeaid/documents/microfinance-e-booklet/pdf-documentsfr/client-principles_en.pdf, viewed in December 2019.
842 Center for Financial Inclusion (2013, September), “Protecting New and Vulnerable Clients as Financial Inclusion
Proceeds”, online: https://centerforfinancialinclusionblog.files.wordpress.com/2013/10/client-protection.pdf, viewed
in December 2019.
843 Kolk, A. and Perego, P. (2014), “Sustainable Bonuses: Sign of Corporate Responsibility or Window Dressing?”,
Journal of Business Ethics, 119(1), 1 – 15. DOI: doi=10.1007/s10551-012-1614-x
844 VOX CEPR’s Policy Portal (2012, January 12). “Bankers’ bonuses and the financial crisis”, online
www.voxeu.org/article/bankers-bonuses-and-financial-crisis, viewed in November 2019.
845 The Graduate Institute Geneva (2010), The Financial and Economic Crisis and Developing Countries, Switzerland:
Geneva: the Graduate Institute Geneva.
846 Oxfam International (2010), The Global Economic Crisis and Developing Countries;

Page | 316

UNICEF (2014). Children of the Recession – The impact of the economic crisis on child well-being in rich countries,
Florence, Italy: UNICEF Office of Research;
UNCTAD (2012), Development and globalization Facts and Figures, United Nations.
847 Choudhury, A. (2017, 18 February), “Banker Bonuses”, online: www.bloomberg.com/quicktake/banker-bonuses,
viewed in December 2019;
VOX CEPR’s Policy Portal (2012, January 12). “Bankers’ bonuses and the financial crisis”, online
www.voxeu.org/article/bankers-bonuses-and-financial-crisis, viewed in December 2019.
848 Maas, K. and S. Rosendaal (2011), Duurzame beloningen leveren een bijdrage aan duurzame ontwikkeling, The
Netherlands, Rotterdam, the Netherlands: Erasmus Universiteit.
849 UN Global Compact and Accenture (2010), A New Era of Sustainability. CEO Reflections on Progress to Date,
Challenges Ahead and the Impact of the Journey Towards a Sustainable Economy, Accenture / UN Global Compact.
850 United Nations (n.d.), “SUSTAINABLE DEVELOPMENT GOAL 10”, online:
https://sustainabledevelopment.un.org/sdg10, viewed in December 2019;
United Nations (n.d.), “SUSTAINABLE DEVELOPMENT GOAL 16”, online:
https://sustainabledevelopment.un.org/sdg16, viewed in December 2019.
851 Harvard Law School Forum on Corporate Governance and Financial Regulation (2011, June 9), “Clawbacks Under
Dodd-Frank and Other Federal Statutes”, online: http://corpgov.law.harvard.edu/2011/06/09/clawbacks-underdodd-frank-and-other-federal-statutes/, viewed in December 2019.
852 Harvard Law School Forum on Corporate Governance and Financial Regulation (2013, August 18), “Remuneration
Regulation in the European Financial Services Industry”, online:
https://corpgov.law.harvard.edu/2013/08/18/remuneration-regulation-in-the-european-financial-services-industry/,
viewed in November 2017.
853 European Parliament (2013, March 21), Bonus caps for fund managers and safeguards for retail investors;
Slater, S. (2013, October 24), Europe set to allow banker bonus cap to hit 250 percent of salary, Reuters UK.
854 Norton Rose Fulbright (n.d.), “European Union”, online: http://www.nortonrosefulbright.com/knowledge/technicalresources/banking-reform/remuneration-requirements-for-banks---a-global-analysis/european-union/, viewed in
December 2019.
855 Commission Delegated Regulation (EU) (2014, March), No 604/2014 supplementing Directive 2013/36/EU of theEuropean Parliament and of the Council with regard to regulatory technical standards with respect to qualitative
and appropriate quantitative criteria to identify categories of staff whose professional activities have a material
impact on an institution's risk profile Text with EEA relevance. Online: http://eur-lex.europa.eu/legalcontent/EN/TXT/?uri=uriserv:OJ.L_.2014.167.01.0030.01.ENG, viewed in January 2020.
856 Harvard Law School Forum on Corporate Governance and Financial Regulation (2011, June 9), “Clawbacks Under
Dodd-Frank and Other Federal Statutes”, online: http://corpgov.law.harvard.edu/2011/06/09/clawbacks-underdodd-frank-and-other-federal-statutes/, viewed in January 2020.
857 Harvard Law School Forum on Corporate Governance and Financial Regulation (2011, June 9), “Clawbacks Under
Dodd-Frank and Other Federal Statutes”, online: http://corpgov.law.harvard.edu/2011/06/09/clawbacks-underdodd-frank-and-other-federal-statutes/, viewed in January 2020.
858 Fried, J. and Shilon, N. (2012), “The Dodd-Frank Clawback And The Problem Of Excess Pay”, The Corporate Board,
January/February, p.1.
859 Harvard Law School Forum on Corporate Governance and Financial Regulation (2011, June 9), “Clawbacks Under
Dodd-Frank and Other Federal Statutes”, online: http://corpgov.law.harvard.edu/2011/06/09/clawbacks-underdodd-frank-and-other-federal-statutes/, viewed in January 2020.
860 Harvard Law School Forum on Corporate Governance and Financial Regulation (2013, August 18), “Remuneration
Regulation in the European Financial Services Industry”, online:

Page | 317

https://corpgov.law.harvard.edu/2013/08/18/remuneration-regulation-in-the-european-financial-services-industry/,
viewed in January 2020.
European Banking Authority (2015, March 4), Consultation Paper. Draft Guidelines on Sound Remuneration Policies

under Article 74(3) and 75(2) of Directive 2013/36/EU and disclosures under Article 450 of Regulation (EU) No
575/2013, London, the United Kingdom: European Banking Authority.
861 Norton Rose Fulbright (n/d), “United States”, online: http://www.nortonrosefulbright.com/knowledge/technicalresources/banking-reform/remuneration-requirements-for-banks---a-global-analysis/united-states/, viewed in
January 2020.
862 Norton Rose Fulbright (n/d), “United States”, online: http://www.nortonrosefulbright.com/knowledge/technicalresources/banking-reform/remuneration-requirements-for-banks---a-global-analysis/united-states/, viewed in
January 2020;
United States Department of the Treasury Federal Register(2010, June 25), Guidance on Sound Incentive
Compensation Policies, – Notices, Vol. 75, No. 122, p. 36396,.
863 Harvard Law School Forum on Corporate Governance and Financial Regulation (2013, August 18), “Remuneration
Regulation in the European Financial Services Industry”, online:
https://corpgov.law.harvard.edu/2013/08/18/remuneration-regulation-in-the-european-financial-services-industry/,
viewed in January 2020.
864 Ministerie van Financiën (2013, November), Consultatie Wet beloningsbeleid financiële ondernemingen. And:
Staatsblad van het Koninkrijk der Nederlanden (2015), 45: Wet van 28 januari 2015 tot wijziging van de Wet op het

financieel toezicht houdende regels met betrekking tot het beloningsbeleid van financiële ondernemingen (Wetbeloningsbeleid financiële ondernemingen).
865 Ministerie van Financiën (2018), Evaluatie Wet Beloningsbeleid Financiële Ondernemingen, Den Haag, The
Netherlands: Dutch Ministry of Finance.
866 United Kingdom Department for Business, Energy & Industrial Strategy (n.d.), “New executive pay transparency
measures come into force”, online: https://www.gov.uk/government/news/new-executive-pay-transparencymeasures-come-into-force, viewed in November 2019.
867 World Economic Forum (2018), The Global Risks Report 2018: 13th Edition, Geneva, Switzerland: World Economic
Forum, p. 9.
868 Oxfam International (2018, January), Reward work, not wealth., p. 10.
869 Oxfam International (2018, January), Reward work, not wealth., p. 56.
870 Board of Governors of the Federal Reserve System, Federal Deposit Insurance Corporation, Office of theComptroller of the Currency and Office of Thrift Supervision (2010, June), Federal Reserve, OCC, OTS, FDIC Issue

Final Guidance on Incentive Compensation.
871 European Banking Authority (2015, 21 December), Guidelines on sound remuneration policies under Article 74(3)and 75(2) of Directive 2013/36/EU and disclosures under Article 450 of Regulation (EU) No 575/2013 , p. 9
872 United Nations Human Rights Council (2008), Promotion and Protection of All Human Rights, Civil, Political,
Economic, Social and Cultural Rights, Including the Right to Development, A/HRC/8/5, United Nations Human
Rights Council, p. 26.
873 GRI (2017, 4 May), “Supply chain transparency: A change tool for successful global businesses”, online:
www.globalreporting.org/information/news-and-press-center/Pages/Supply-chain-transparency-A-change-toolfor-successful-global-businesses.aspx, viewed in January 2020;
Gaita, E. (2017, 3 November), “Illuminating the shadows: Why country-by-country reporting benefits us all”,
Transparency International EU, online: https://transparency.eu/illuminating-the-shadows/, viewed in January 2020.
874 IFC (n.d.), “Projects - Disclosed Projects”, online: https://disclosures.ifc.org/#/landing/, viewed in January 2020;
Eurostat (n.d.), "Glossary: Statistical classification of economic activities in the European Community (NACE)", online:
ec.europa.eu/eurostat/statistics-

Page | 318

explained/index.php/Glossary:Statistical_classification_of_economic_activities_in_the_European_Community_(NACE),
last updated: 24 February 2016, viewed in January 2020;
EBA (n.d.), "2019 EU-wide transparency exercise", online: https://eba.europa.eu/risk-analysis-and-data/eu-widetransparency-exercise, viewed in January 2020.
875 United Nations (n.d.), “SUSTAINABLE DEVELOPMENT GOAL 16”, online:
https://sustainabledevelopment.un.org/sdg16, viewed in January 2020.
876 United Nations (n.d.), “SUSTAINABLE DEVELOPMENT GOAL 12”, online:
https://sustainabledevelopment.un.org/sdg12, viewed in January 2020.
877 Global Reporting Initiative (2016, 13 January), "Share your knowledge: standards and policy initiatives on assuranceof non-financial information", online: www.globalreporting.org/information/news-and-presscenter/Pages/Standards-on-assurance-of-non-financial-information.aspx, viewed in January 2020.
878 IFC (n.d.), “IFC Project Information & Data Portal”, online: https://disclosures.ifc.org/#/landing, viewed in January
2020.
879 Eurostat (n.d.), "Glossary: Statistical classification of economic activities in the European Community (NACE)", online:
ec.europa.eu/eurostat/statisticsexplained/index.php/Glossary:Statistical_classification_of_economic_activities_in_the_European_Community_(NACE),
last updated: 24 February 2016, viewed in January 2020.
880 EBA (n.d.), "2019 EU-wide transparency exercise", online: https://eba.europa.eu/risk-analysis-and-data/eu-widetransparency-exercise, viewed in January 2020.
881 European Commission (n.d.), “Non-Financial Reporting”, online: ec.europa.eu/finance/company-reporting/nonfinancial_reporting/index_en.htm#related-information-csr, viewed in November 2017.
882 ISO (2010), ISO 26000: 2010 Guidance on Social Responsibility, Geneva, Switzerland: ISO.
883 OECD (2011), OECD Guidelines for Multinational Enterprises, p. 27, Paris, France: OECD Publishing.
884 Ruggie, J. (2011), Guiding Principles on Business and Human Rights: Implementing the United Nations “Protect,
Respect and Remedy” Framework, New York, the United States: United Nations Human Rights Council,
A/HRC/17/31, PreambleGuiding Principle 21.
885 GRI (2013), G4 Sustainability Reporting Guidelines, Amsterdam, the Netherlands: Global Reporting Initiative.
886 Global Reporting Initiative (n.d.), “Questions and Feedback”, online: www.globalreporting.org/standards/questionsand-feedback/writing-a-report-in-accordance-with-the-standards/, viewed in January 2020.
887 Global Reporting Initiative (2013), The external assurance of sustainability reporting, Amsterdam, the Netherlands:
Global Reporting Initiative.
888 Global Reporting Initiative (2013), G4 Sector Disclosures: Financial Services, Amsterdam, the Netherlands: Global
Reporting Initiative, p. 36.
889 OECD (2017), Responsible business conduct for institutional investors: Key considerations for due diligence under
the OECD Guidelines for Multinational Enterprises, p. 43.
890 OECD (2017), Responsible business conduct for institutional investors: Key considerations for due diligence under
the OECD Guidelines for Multinational Enterprises, p. 44.
891 ISO (2010), ISO 26000: 2010 Guidance on Social Responsibility, Geneva, Switzerland: ISO.
892 BankTrack (2006), The Do’s and Don’ts of Sustainable Banking, The Netherlands, Nijmegen: BankTrack;
UNEP FI (2011), UNEP FI Guide to Banking and Sustainability, Geneva, Switzerland: The United Nations Environment
Programme.
893 United Nations Human Rights Council (2008), Promotion and Protection of All Human Rights, Civil, Political,
Economic, Social and Cultural Rights, Including the Right to Development, A/HRC/8/5, United Nations Human
Rights Council, p. 26.

Page | 319

894 UN OHCHR (2017, June 12), Office of the High Commissioner for Human Rights response to request fromBankTrack for advice regarding the application of the UN Guiding Principles on Business and Human Rights in thecontext of the banking sector, Geneve, Switserland: Office of the High Commissioner for Human Rights, p. 13-16.
895 Rijksoverheid (n.d.), “OECD Guidelines for responsible business conduct”, online:
https://www.oecdguidelines.nl/ncp, viewed in January 2020;
OECD (n.d.), “National Contact Points for the OECD Guidelines for Multinational Enterprises “, online:
http://www.oecd.org/investment/mne/ncps.htm, viewed in January 2020.
896 Ruggie, J. (2011), Guiding Principles on Business and Human Rights: Implementing the United Nations “Protect,
Respect and Remedy” Framework, New York, the United States: United Nations Human Rights Council,
A/HRC/17/31, PreambleGuiding Principle 31.
897 Ruggie, J. (2011), Guiding Principles on Business and Human Rights: Implementing the United Nations “Protect,
Respect and Remedy” Framework, New York, the United States: United Nations Human Rights Council,
A/HRC/17/31, p. 33.

Page | 320

The methodology is developed by Profundo together
with the civil society organisations collaborating in Fair
Finance International.
The work of Fair Finance International is financially
supported by SIDA.

Radarweg 505
1043 NZ Amsterdam
The Netherlands+31 (0)20 8208320
profundo@profundo.nl
www.profundo.nl