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5 Oct 2021

Joseph Wilde-Ramsing, OECD Watch

UN Human Rights office confirms banks’ human rights responsibilities

[T]he OHCHR stated that bank policies setting out “how the FI embeds human rights criteria across its activities, products, and services” should “include services such as nominee shareholding.” It is noted that the “limited visibility of human rights risks inherent to the construction of certain financial services”, such as nominee shareholdings, does not negate the FIs responsibility to conduct human rights due diligence for this type of transaction... The OHCHR outlines a two-pronged approach to assessing actual and potential adverse human rights risks in the context of nominee shareholding. Firstly, FIs must assess the risks connected to its beneficial owner clients. If an FI identifies risks associated with its clients, “or where there is a particularly high risk section of its nominee shareholder portfolio…the FI should undertake due diligence on high risk investee companies.”

... [I]n a situation where the FI does not have the leverage to prevent or mitigate the adverse impacts and is also unable to increase its leverage, “it should consider ending the relationship, taking into account credible assessments of potential adverse human rights impacts of doing so.” Furthermore, the OHCHR set out that the FI is expected to “formally report” how they address severe human rights risks and adverse impacts connected to its activities, products and services.