London—The majority of banks in the ِArab world turn a blind eye to standards requiring them to respect human rights, particularly the UN Guiding Principles of Business and Human Rights (UNGPs).

A new study conducted by ImpACT International for Human Rights Policies finds that Middle Eastern financial institutions are violating basic human rights both directly through their own actions and indirectly by investing in noncompliant companies.

The first of its kind in the Arab World, the study surveyed 42 banks in 14 countries. Only three banks—two in Qatar and one in Morocco—demonstrated the minimum performance required for integration of the UN Guiding Principles into their business practices. ImpACT International evaluated each bank's adherence to the UN Guiding Principles in four categories: policies, commitment to due diligence, reporting on compliance and citizens’ access to remedies when violations occur.

The survey found that 74% of banks' senior management have not even adopted human rights policy statement.

While financing activities that result in human rights violations such as child labour or human trafficking harm the very fabric of society, almost 80% of the surveyed banks report having made no substantive efforts to examine the potential consequences of their investments. This means they are neglecting their responsibility to conduct due diligence, engage in meaningful consultation with affected groups, and develop a process for impact evaluation.

One example of the abuse for which banks can be responsible occurred in 2016, when the Sudanese Minister of Justice revealed that some of the country’s banks and their employees had helped 34 pharmaceutical companies divert $230 million in proceeds from non-oil exports that had been allocated for the import of medicines.

Conducting due diligence to monitor for compliance is at the heart of the UNGPs, which were adopted in June 2011 by the UN Human Rights Council. They also require assessment of any adverse impacts, communication of the results and action to mitigate or prevent harm. However, none of the surveyed banks reported having adequate processes in place that allow individuals or groups to file complaints and seek remediation.  

“This is in large part because most banks have not even thought about the role they play in upholding human rights,” says ImpACT International.  “The survey found that 74% of banks' senior management have not even adopted human rights policy statement.”

ImpACT International is calling on all financial institutions in the Arab World to commit to more rigorous public reporting on their compliance with the UN Guiding Principles on Business and Human Rights.

It further recommends that more banks follow the lead of Dutch bank ABN AMRO, which issued its second human rights report this year. However, even ABN Amro issued only two such reports since 2016. These types of public accounting should be issued annually and subjected to community review and comment.

To download the report, click here