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Banks and human rights abuses

Crowd of people at protest with banner which says 'no justice no peace'
Clare Carlile
By
Clare Carlile

Banks are funding some of the most notorious corporations around the world - from companies profiting from oppressive regimes to those violating indigenous rights.

So which banks are involved in human rights abuses and what can consumers do about it?

How are banks funding human rights abuses?

Banks pump money into corporations behind some of the worst abuses in the world. Through their loans, insurance and other financial services, they are financing companies involved in arms, the exploitation of indigenous lands, and the support of oppressive regimes.

As the Facing Finance 'Dirty Profits' report said in May 2022, these institutions “not only profit themselves” from supporting companies involved in abuses, “in many cases [they] make such business models possible in the first place through the capital provided.”

Which banks are involved in human rights abuses?

Most high street banks are likely to be implicated in some human rights abuses.

Few banks really prioritise ethical criteria when it comes to making their investment choices. While some may have policies to refuse finance to the very worst of industries – for example, chemical weapons –, most do not robustly screen the companies they invest in for abuses such as arms manufacture, indigenous rights violations or other human exploitation.

Three quarters of the brands rated in our Current Accounts guide lost a full or half mark under Human Rights. This included all of the five major UK high street banks.

Lloyds, Santander, HSBC and Allianz have all also been named and shamed in NGO reports for their links to specific abuses. More on this below.

What human rights abuses are banks funding?

Financial services provided by banks are implicated in a number of human rights abuses including the war in Yemen, indigenous rights abuses, illegal Israeli settlements, and destructive mines. Each of these is explored below.

Facing Finance released a report in May 2019 highlighting the ten European banks with some of the highest investments in 11 of the global arms companies supplying weapons used in Iraq, Libya, Syria and Yemen. The total finance amounted to €24.2 billion.

Since 2000, an estimated 60% of the world’s conflict-related deaths have been in the Middle East and North Africa (MENA) region, while violence in Iraq, Libya, Syria, and Yemen continues to displace millions of people annually.

Banks are linked to the human rights abuses that occur in these countries, through their support for arms companies.

Lloyds Bank was one of the two largest overall providers of loans to the arms companies, totalling €4.1 billion. In terms of actual shareholdings in the arms companies, Deutsche Bank ranked second of all the banks with holdings in all of the arms companies, totalling €2.6 billion. Barclays and Santander were both also named.

Read more about the report in our article on banks and arms.

In 2022, Facing Finance released another report which specifically looked at the supply of weapons and aircraft to Yemen. It found that Deutsche Bank, Allianz and Axa were all financing companies involved.

Banks have provided trillions in funding for fossil fuels since the Paris Agreement. Not only is climate breakdown linked to a multitude of human rights issues, many fossil fuel projects directly violate indigenous rights.

TransMountain Pipeline Project

The TransMountain Pipeline Expansion project in Canada will nearly triple the flow of tar sands from the Alberta oil sands to the Canadian coast. Tar sands produce 15% more carbon dioxide emissions than conventional oil. Local communities already face oil spills from the pipeline.

In June 2020, 190,000 litres of oil split over an aquifer that supplies water to the indigenous community Sumas First Nations’ reserve. It was the fourth spill in 15 years on the community’s land.

Many First Nations groups in Canada say that they have not been properly consulted and that the pipeline is a threat to their way of life.

Between 2014-17, Citigroup, Deutsche Bank, NatWest Group and others co-financed a CA$14 billion loan to the former owner of the project. In 2017, Barclays and HSBC provided a further CA$315 million and CA$200 million in loans respectively.

Cerrejón

The Cerrejón coal mine is the largest in Latin America. Its expansion over the last five decades has led to the destruction of whole villages populated by local indigenous and Afro-Colombian people.

The diversion of water to the mine, combined with a ten-year drought in the region, is said to have left 37,000 indigenous children malnourished and caused at least 5,000 deaths from starvation (with others saying the figure is closer to 14,000).

Local Indigenous communities have repeatedly appealed to the UN to halt mining at Cerrejón, including in light of the Coronavirus.

“What we are demanding of Cerrejón is our children’s health. We are fighting for our rights to live in a healthy territory, in a reserve without pollution, just as it was before Cerrejón came in,” says Luz Ángela Uriana from the Wayuu Indigenous Community.

Names of just some of the communities devastated or wiped off the map by the project include: Roche, Chancleta, Tamaquitos, Manantial, Tabaco, Palmarito, El Descanso, Caracoli, Zarahita, Patilla.

In 2013, Barclays, HSBC, Lloyds Banking Group and NatWest Group provided loans totalling over $13 billion for the Cerrejón coal mine. Since then, multiple banks have continued to finance its owners – Anglo American, BHP Group and Glencore – including Bank of Montreal (owner of BMO Funds), Barclays, BNP Paribas (part owner of Impax Fund), Citigroup, Deutsche Bank, HSBC, Santander, and NatWest Group.

Read more about destructive fossil fuel projects here.

In 2022, campaign coalition Don’t Buy Into Occupation (DBIO) published a report exposing financial relationships between European institutions and companies actively involved with the illegal Israeli settlements.

Israeli settlements, their maintenance and expansion are illegal under international law. Yet international companies sell everything from the surveillance equipment used in the settlement to equipment for the demolition of Palestinian homes and olive groves.

The report found European financial institutions had provided USD $171.4 billion in the form of loans and under-writings to businesses that are actively involved with Israeli settlements, between 2019-2022. They also held USD $115.5 billion in investments in these companies.

725 European financial institutions, including banks, asset managers, insurance companies, and pension funds were involved.

The ten companies providing the largest total in loans and underwritings included: 

  • HSBC (USD $15.04 billion)
  • Deutsche Bank (USD $14.07 billion)
  • Barclays (USD $12.29 billion)
  • Santander (USD $9.46 billion).

The ten largest investors included Deutsche Bank (USD $6.38 billion), Legal & General (USD $5.52 billion) and Allianz (USD $4.00 billion).

What are illegal Israeli settlements?

Under international law, Israeli settlements, their maintenance and expansion are illegal and comprise a number of acts that amount to war crimes and crimes against humanity.

The settlement enterprise has resulted in a myriad of human rights violations against the Palestinian population. Israel has evicted Palestinians from their homes and created coercive environments that force displacement. The Israeli government has also introduced discriminatory planning and zoning policies in the Occupied Palestinian Territory (OPT) and demolished houses to facilitate the creation and expansion of settlements. The settlements are also accused of rendering sustainable and independent social and economic development for Palestinians in the OPTs impossible to achieve.

The maintenance and growth of the settlements would not have been possible without private actors, including businesses and financial institutions. The companies listed in the Don't Buy Into Occupation report have facilitated the establishment, maintenance and expansion of Israeli settlements.

Booking.com and Israel

A major company that received credit from several big financial institutions is Booking.com - a subsidiary of Booking Holdings, and which is highlighted in the DBIO report.

Booking.com is well known for its online travel services around the world, and covers over 220 countries and territories.

According to the report, Booking.com provides booking services for a range of hotels, guest houses, and holiday apartments in Israeli settlements in the OPT, including the eastern part of Jerusalem.

The report lists Booking.com's biggest creditors as Deutsche Bank, BNP Paribas, HSBC, and Standard Chartered.

Booking.com is included in our travel booking companies guide.

What should banks and financial institutions do?

Recently, several financial institutions and companies have taken up their responsibility by divesting from business enterprises linked to Israeli settlements.

Two important examples are those of Kommunal Landspensjonskasse (KLP) and the Norwegian Government Pension Fund Global (GPFG). KLP is Norway’s largest pensions company, who in July 2021, divested from 16 companies linked to Israel’s settlement enterprise. In a similar vein, GPFG announced in September 2021 that it will exclude three companies that are actively involved with Israeli settlements. The 19 companies excluded by KLP and GPFG were listed in the UN database of businesses involved in certain activities relating to Israeli settlements in the OPT, which was mandated by the Human Rights Council in 2016, and published in February 2020.

These businesses, creditors and investors have a responsibility to ensure that they are not involved in violations of international law and or complicit in international crimes, and to address any negative human rights impacts arising from their business activities and financial relationships.

International financial institutions, including banks and pension funds, have a responsibility to use their leverage to ensure their investee companies act responsibly and inline with international law standards, and to divest from those who are unable or unwilling to do so. Where financial institutions do divest, they must do so in a responsible manner and ensure that human rights are protected throughout the process.

In May 2018, Facing Finance published ‘Dirty Profits 6’. The report looked at the global extractives industry, which was involved in some of the worst labour, environmental and human rights violations. It found that:

“The rights of communities, farmers and indigenous people are being trampled in the push for ever more extraction.”

The report also looked at whether implicated companies and the financial institutions behind them had responded to evidence of violations published in its 2012 ‘Dirty Profits’ report. It found that companies had largely failed to respond.

Barclays, BNP Paribas (owns 25% of Impax), Deutsche Bank (owns 19% of ICICI) and HSBC were all criticised for their financing of the extractive industries.

What can consumers do about banks and human rights?

1. Find out what your bank is doing

Our guides to Current Accounts, Savings Accounts and Small Business Accounts rate and rank over 35 companies on Human Rights.

Our rating looks at companies’ investments and includes information from NGO reports, including those discussed above.

2. Consider switching banks to a more ethical one

Switching accounts is remarkably quick and easy. Within just seven days, all your money could be transferred to a company that will not fund human rights abuses for profit.

If you set up an account with a new bank, it will usually ask you if you want to switch accounts from an existing one. It is then up to the bank to move all your money, direct debits and standing orders over, as well as closing your existing account. Any money paid into your old account should be automatically forwarded for the next three years.

Plus: Tell your bank why you’ve switched

Companies really care what consumers think, especially when it’s affecting their bottom line. If enough of us tell companies that funding human rights abuses is unacceptable, practice may eventually change.

If you are switching accounts for ethical reasons and want to write to your previous bank to let them know why, we have published a template letter for you to use.

How does Ethical Consumer rate banks in terms of human rights?

We focus on two key areas when rating banks for Arms & Military Supply:

1. Do they have any investments in companies linked to human rights abuses?

2. Have they been linked to human rights violations by NGOs or in the news?

For example, HSBC loses half a mark under Human Rights for financing companies linked to the Myanmar military, behind the country’s coup in 2021.

Also of interest

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  • Ethical Savings Accounts

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