A new report has been issues criticising the investment practices of a number of Belgian banks:
While the report is rather inflamatory in its presentation of the findings, it makes some valuable reccomendations as to how Banks can reduce their exposure to reputational risks. There report concludes that the current polices of AXA, Dexia, Fortis, ING and KBC offer no guarantees against investments in the violation of human rights.
Banks are increasingly being asked to consider the appropriateness of their investments and the reputation of the companies they invest in. Shareholders are increasing placing pressure on Banks to ensure that the companies they invest in can demonstrate they have good environmental and social practices.
The establishment of of effective policies is an important stage in this process as it provides companies with a clear indication of the requirements they are expected to meet. It can also reassure shareholders that banks are tacking these issues effectively.
The report from Netwerk Vlaanderen “Where do you draw the line?”, reveals investments in fourteen controversial companies and a number of large-scale infrastructure projects.
Support for dictatorships
The five researched banks invest a combined total of almost US$ 2.4 billion in shares of Total. Total currently has investments in a gas pipeline in Burma, a land that is ruled with an iron fist by a military junta. Total refuses to pay attention to the international call for disinvestment. The company uses Burmese soldiers, known for their extreme brutality, to clear and protect the route of the pipeline. This Total project ensures a substantial income for the military rulers of the country. The oppression of the local population is strengthened by the activities of Total.
Violations of the rights of workers
The five researched bank groups have invested a combined total of more than US$ 1.6 billion in Wal-Mart. This US distribution chain is widely known for its continued breaches of basic workers’ rights.
Wal-Mart has been condemned for breaching the child labour laws in its warehouses. In the United States there are still dozens of cases pending against the company for ‘union-busting’. The management registers, threatens and illegally fires trade union activists. Trade unions are not welcomed by Wal-Mart, and Wal-Mart has already been found guilty of ‘union busting’ on a number of occasions. Poor conditions are also routine in the subcontractors of Wal-Mart, which advertises itself using the slogan ‘Always Low Prices’.
Human rights abuses related to infrastructure projects
KBC, Fortis, Dexia and ING are also heavily involved in large-scale projects that have been linked to human rights abuses. One example of this is the BTC pipeline, that runs through Turkey, Azerbaijan and Georgia.
The project has been called into question because of the support for undemocratic regimes, the fuelling of regional conflicts, the violation of human rights, and environmental damage. Many communities protested against these practices, but the protests were heavily repressed in all three countries. The consultation with the effected communities left a lot to be desired. Those making their criticisms of the pipeline public were often the target of serious repression, arrest and intimidation by the authorities. This is not surprising given the human rights situation in each of the countries.
Towards a watertight human rights policy
Savers and investors cannot judge the human rights profile of their bank group without clear information. Netwerk Vlaanderen demands that the banks make their human rights policies public, along with a list of the companies and governments in which they are investing.
The report concudes that the polices of AXA, Dexia, Fortis, ING and KBC offer no guarantees against investments in the violation of human rights. The complete report gives a number of concrete steps that can be taken to achieve a more watertight human rights policy.