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Banks backing land grabs have ‘no excuse’, report says

Oxfam recently published a briefing paper titled:  No Excuse: How Australia’s big four banks should better respond to land grabs. In technical detail, we describe exactly what the banks should do to construct a Zero Tolerance for Land Grabs approach.

The report discusses the role that transparency and accountability play in the realization (or failure) of bank policies on human rights. It also identifies specific ways that banks should increase their transparency, commitments and accountability relevant to land-related human rights.

And the stakes are high. In 2014 Oxfam’s Banking on Shaky Ground report revealed that Australia’s big four commercial banks – the Australia and New Zealand Banking Group (ANZ), the Commonwealth Bank (CBA), National Australia Bank (NAB) and Westpac – were backing companies connected to land grabs in the agriculture and timber sector overseas. As a result of losing their land, affected communities in countries like Cambodia and Brazil profiled in Banking on Shaky Ground still face food shortages and poor housing, as well as violence and corruption. For those with a deep spiritual connection to land, the loss is unquantifiable.

Banking on Shaky Ground also outlined that land grabs are not just bad for human rights, but also bad for business – exposing the banks to a range of material and reputational risks. NAB and Westpac have since taken some positive first steps, while CBA and ANZ have failed to act. Yet no bank has gone far enough.

The question ‘why do human rights policies fail?’ was foremost in our minds as we started writing the No Excuse report. This led us to explore what we call the Responsibility Triangle – the inter-connected relationship between appropriate transparency, strong policy commitments and accountability. Without addressing all three areas, banks will fail on human rights.

The Responsibility Triangle crystalized our thinking on some basic principles when viewing the banks’ human rights policies from the perspective of grassroots communities.

For example, local people should be able to find out who is funding or seeking to profit from activities on their land and forests. Bank customers and investors should also know how the bank is using their money. Yet undue secrecy prevents communities from knowing if an Australian bank is involved.

In the rare case that local people can find a connection, bank policies do not include any concrete commitment to support redress. Making commitments without consequences for breaking them is a recipe for failure.

Land grabs are also most likely to occur in countries with poor rule of law – leaving communities with few, if any, options to pursue justice in the courts.

Banking on Shaky Ground showed that specific land-related commitments are needed, not general statements supporting human rights. This should include requiring the free, prior and informed consent (FPIC) of local and indigenous communities. For the banks FPIC is also a useful due diligence and risk mitigation tool.

Our next step was to show what the banks can do. In doing so, we reveal the shortcomings of bank arguments against increasing their transparency, commitments and accountability on land-related human rights.

Banks often dismiss the issue of transparency by appealing to a general principle of privacy. While Oxfam understands the importance of privacy in banking, we believe it is critical for banks to adopt greater transparency in dealings that are exposed to land-related risks due to the dire consequences of land grabs and human rights violations. Privacy needs also differ across the diverse aspects of the banks’ business. For example, an asset management fund listing the companies that it invests in has no privacy risk. We also point to a range of existing examples of legally compliant, although ad hoc measures on disclosure – from one bank’s listing the companies its management funds invests in, to another’s naming the projects it finances. Greater transparency can be achieved by simply taking these ad hoc and piecemeal measures and systematising disclosure.

In November 2014 NAB put to bed the notion that banks should not, or could not, make land-specific commitments, by releasing a policy on improper land acquisitions. A week later Westpac committed to only lending to agribusiness and forestry companies that have the FPIC of local and indigenous communities. In May 2015 Westpac extended this FPIC standard to all lending. We have called for NAB, CBA and ANZ to match Westpac’s commitment, or better, to apply FPIC group-wide. We also point out that FPIC commitments can only be fully realised with increased transparency and accountability.

The big Australian banks have committed to increased accountability under the United Nations Guiding Principles on Business and Human Rights (Ruggie Principles). The NGO BankTrack has articulated how the Ruggie Principles apply to banks: such as having their own grievance mechanisms. Our paper calls for the banks to implement these existing commitments, as well as take further steps. We challenge the claim that it is only the banks’ clients, not the banks themselves, that bear responsibility for redress. Banks have a direct and proportional role in legitimizing, enabling and seeking to profit from companies linked to land grabs. If a bank fails to do adequate due diligence to ensure that their clients or companies in which they invest are acting legally and ethically, the bank should be accountable for this.

Lastly, the report list the measures that could comprise a Zero Tolerance on Land Grabs approach – showing that there is no excuse for the banks to fail to act on land grabs.

Shona Hawkes is the Sustainable Food Advocacy Coordinator at Oxfam Australia. Click here to read Oxfam’s full report No Excuse: How Australia’s big four banks should better respond to land grabs.

 

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