Financiers can have significant influence over the operations of multinational companies and their role needs to be the subject of greater interrogation, in theory, policy and practice. Financial institutions are the less visible players in the work of corporations. This is probably why, in the international business and human rights debate, there is little focus on the role of financial institutions. But the lack of focus remains strange given the indispensable and powerful role played by those who finance the operations of corporations. Part of the reason for this, as Dowell-Jones and Kinley point out, is that human rights lawyers and actors are not au fait with financial doctrine and language. In order to address the role – both positive and negative – of financial institutions, we need to remedy the inability to understand financial language. This was part of the motivation behind the Wits University Round Tables in 2011 which brought together bankers, activists and academics. These meetings resulted in the Draft Johannesburg Principles – yet to be adopted by industry – which speak to the overall protection of human rights by financial institutions. They provide a set of proposed steps that banks could and should take to comply with international human rights standards when making investment and loan decisions.
In addition to the goal of learning each other’s language, it was important to create principles that are developed in the Global South for banks operating in this region. Most international principles are developed in New York and Geneva and we wanted to steer away from this norm. Sub-Saharan Africa is the location of a peculiar co-existence of increasing wealth and increasing poverty, particularly in South Africa. South Africa is both the recipient and perpetrator of harmful transnational corporate conduct. As is the case with most BRICS countries, this bifurcated character manifests itself in a developing economy housing a stubbornly high proportion of indigent people. This anomaly is not new but its coexistence with the development of business and human rights principles in international law is. These reasons are at the heart of our focus on the Global South and sub-Saharan Africa.
It is also significant to note that the harm that needs to be addressed is moored in the structure of poverty. In the context of global economic inequality, the phenomenon that is most often under-discussed in the business and human rights debate is that of poverty. Poverty represents a range of human rights violations. Financial institutions have a role, albeit limited, to promote corporate activity that has the potential to alleviate poverty through wealth creation and (crucially) wealth distribution. The inverse is also true: financial institutions have a role to play in ensuring that corporate activity does not profess to alleviate poverty when, in fact, it entrenches structural poverty in its areas of operation.
The Draft Johannesburg Principles are unique in that they develop the notion of compliance with human rights standards. This notion of compliance was developed by both banks and human rights actors. And the result is a set of highly relevant and practical approaches for financial institutions to ensure compliance with human rights. The only remaining question is: will they comply?
Bonita Meyersfeld is the Director for the Centre for Applied Legal Studies, University of the Witwatersrand. David Kinley is the Chair in Human Rights Law, Sydney School of Law, The University of Sydney. For more on the prospects and possibilities of the Johannesburg Principles, see ‘Banks and Human Rights: A South African Experiment: How facilitating dialogue between banks and the human rights sector results in gains for all.’ Click here for the text of the draft Johannesburg Principles.