Complaints to financial institutions
Contents
Complaints to financial institutions at a glance
Banks and other financial institutions can play an important role in projects that affect people and communities. They may provide loans, investments, guarantees or technical support to companies and projects in various sectors. A financial institution could therefore be connected to a human rights or environmental harm even when it did not cause the harm itself.
For example, a bank may have financed a project that resulted in land loss of local communities. In such situations, a complaint to the bank can be a way of asking the financial institution to look into the concerns, use its influence over the company or project, and help address the harm.
A complaint to a financial institution is therefore a different route from complaining directly to the company responsible for the project. It can provide an additional pathway, especially where the financial institution has its own grievance mechanism or is part of an independent accountability mechanism.
Opportunities and limitations
A complaint can inform the financial institution that people or the environment are experiencing harm connected to a project it has financed. It may encourage the institution to review the concerns, examine whether it followed its own policies, as well as its responsibilities under the UN and OECD’s due diligence standards, and use its influence with the company or project. This can create additional pressure for the company or project to address the harm and support wider advocacy. In some cases, a complaint might contribute to remedy.
It is important to have realistic expectations. A bank may not have the power to directly order a company to stop a project or compensate affected people. What a financial institution can do depends on its relationship with the company, the terms of its financing and the powers of its particular grievance mechanism.
Limitations
Bank grievance mechanisms can be useful tools, but they also have limitations. Many mechanisms are relatively new, so there may be few previous cases to show what outcome can be expected. Confidentiality requirements can also make it difficult to establish the bank's relationship with a project or to move a complaint forward.
It can also be difficult to identify which bank financed a particular project, especially where several financial institutions are involved.
Complaints can take months or even years, and remedy is not guaranteed. Direct compensation through a bank grievance mechanism is particularly uncommon. Complaints are therefore often most effective when they form part of a wider strategy that may also include engagement with public authorities, the company, civil society organisations, communities, media or other accountability mechanisms.
How and against who can I raise complaints?
The exact process depends on the financial institution and its complaint mechanism.
However, most processes include the following steps:
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1. Identify the financial institution and its complaint mechanisms
Start by finding out which bank, investor or other financial institution is connected to the company or project directly causing the harm. This may not always be easy, particularly where a project has several financiers or where financial relationships are not publicly disclosed.
Once you have identified a possible financial institution, check whether it has a complaint or grievance mechanism that affected people or communities can use. The mechanism may be operated directly by the bank or by an independent accountability body. Organisations such as BankTrack or SOMO might be able to support finding the financial institution.
Not every mechanism can provide compensation or other forms of remedy. Before submitting a complaint, check (e.g. on its website or in independent reports) what the particular mechanism can do and what outcome you can realistically expect.
2. Submit your complaint
If you have found a financial institution and mechanism, you can submit your complaint according to the required information of the mechanism.
Usually you will need to explain what happened, who was affected, where and when it happened, which company or project is involved, and why you believe the financial institution is connected to it. Include any evidence you have. You do not need to know every detail about the bank's financing to submit a complaint.
Think about your safety first
Before sharing names, documents or other sensitive information, consider whether doing so could expose you or other people to retaliation, intimidation or other risks.
Some mechanisms allow complaints to be made confidentially or anonymously. However, anonymity can sometimes make it more difficult for the company to investigate the complaint or communicate with you.
Before submitting a complaint, check the company's rules to understand whether there are any specific requirements and whether using the mechanism could affect another process.
Do not agree to waive legal rights or accept a settlement without understanding its consequences if the proposed remedy involves a release of legal claims, compensation agreement or other legally binding document.
If you are concerned about your safety or unsure about any agreement, it may be helpful to seek advice from a lawyer, CSO, trade union or other support organisation before submitting the complaint.
3. The institution checks your complaint
The institution will check whether the project and financial relationship are covered by its complaint mechanism and whether you are eligible to use it.
4. Preliminary investigation
The institution may ask for more information, review project documents, speak with affected people or other stakeholders, and, where appropriate, visit the project site.
5. Mediation, dialogue or investigation
This stage depends on the mechanism. Some mechanisms offer dialogue or mediation, allowing affected people and the company or project to discuss the concerns and look for a solution.
Other mechanisms can carry out an independent investigation into whether the financial institution followed its own policies and procedures.
6. Outcome and follow-up
The outcome will depend on the powers of the particular mechanism. It may lead to recommendations, corrective action, changes to the project or the financial institution's practices, an agreement between the parties, or monitoring of agreed actions.
Who can I complain to?
There are several financial institutions, both commercial banks and multilateral development banks. who have implemented accountability mechanisms. Below you can find some information on this:
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Commercial banks
Commercial banks finance companies and projects in many different sectors. Some have established their own human rights grievance mechanisms, while others participate in a mechanism operated by another organisation.
These mechanisms can allow people and communities affected by a bank's financing to raise concerns about human rights or environmental impacts connected to the bank's clients or investments.
According to BankTrack's Users' Guide, at least eight large commercial banks have either established or joined grievance mechanisms that can consider human rights-related complaints from people and communities affected by their finance:
- ANZ
- Commonwealth Bank of Australia
- National Australia Bank
- ABN AMRO
- Deutsche Bank
- MUFG
- SMBC
- Mizuho
Many German and French banks, as well as German and French branches of foreign banks, may also operate complaints and alert mechanisms under the German Supply Chain Act (LkSG) or French Duty of Vigilance Law if they have large enough local presence to be covered by either or both laws. With regard to the LkSG, there is an ongoing debate about whether it applies only to a bank’s own business operations – such as IT procurement and facility management – or also extends to its core financial business, including loans, financing, and foreign investments.
Multilateral banks
Multilateral development banks (MDBs) are development banks owned or governed by several countries. They use funds from their member countries and other sources to finance development projects, often in countries where access to finance may be more limited.
The World Bank Group, the European Bank for Reconstruction and Development (EBRD), the European Investment Bank (EIB), the African Development Bank (AfDB), the Asian Development Bank (ADB) and the Inter-American Development Bank (IDB) are all MDBs.
Some of these MDBs have their own mechanisms. For example, the World Bank Accountability Mechanism provides an independent complaints mechanism for people and communities who believe they have been, or are likely to be, harmed by a World Bank-funded project.
A complaint can lead to an assessment of whether the World Bank has complied with its own operational policies and procedures. Where an investigation is approved, affected people and the borrower can also choose to participate in a voluntary and independent dispute resolution process.
Other avenues to raise complaints, incl. Whistleblowing Channels, Equator Principles
Even where a bank does not have a dedicated human rights grievance mechanism, there may be other routes.
Whistleblower channels by banks
Some banks allow people outside the bank, including workers, communities and other rightsholders, to use their whistleblowing channels to report human rights and environmental concerns. These channels were traditionally created to report issues such as fraud, corruption or breaches of company rules. However, some banks now state that their channels can also be used to report actual or potential human rights impacts, including impacts connected to the bank’s financing.
Banco Bradesco, Bank of America, BBVA, BNP Paribas, Citi, Commerzbank, Danske Bank, Nordea, Scotiabank, TD Bank and UniCredit all allow the usage of their whistleblower channels; Click here to learn more
The exact process varies between banks. A whistleblowing channel may allow you to submit a report confidentially or anonymously. The bank may then review the information and, depending on its procedures, investigate the concern or request further information. However, a whistleblowing channel is not necessarily the same as a grievance mechanism. Whistleblowing systems are generally designed to identify misconduct or breaches of rules, while a human rights grievance mechanism should provide a clear process for affected people to raise concerns and seek remedy.
These channels are still relatively new in the context of human rights complaints. The fact that a bank accepts a human rights report does not necessarily mean that it will provide compensation, remedy, or an independent investigation.
Equator Principles
The Equator Principles are a voluntary framework used by participating financial institutions to identify, assess and manage environmental and social risks in certain types of project-related finance.
They were launched in 2003 and are currently in their EP4 iteration. The framework is used globally by participating financial institutions for certain forms of project finance and related financing. The Equator Principles Association reported 138 Equator Principles Financial Institutions in 38 countries at the end of 2022.
The Equator Principles are not a law. They are a voluntary framework adopted by participating financial institutions.
Important: the fact that a bank has adopted the Equator Principles does not automatically mean that every project it finances is covered, or that every complaint will be accepted. Check whether the particular project and financing fall within the framework.
The framework is intended to help financial institutions identify and manage environmental and social risks associated with covered projects. These can include issues affecting:
- communities;
- land and livelihoods;
- Indigenous Peoples;
- workers;
- health and safety; and
- the environment.
BankTrack operates equator-complaints.org, a channel through which communities can raise concerns about projects financed under the Equator Principles. BankTrack identifies this as one of the additional avenues available to people affected by bank finance.
Other channels to complain about banks can also include:
- OECD National Contact Point complaints
- UN Special Procedures and
- industry-level grievance mechanism in which banks are part of, click here to learn more.