Children from one of the communities in Ocean Division, southern Cameroon, who lost much of their forestland after the government leased it to a logging company. Credit: Monde Kingsley Nfor/IPS

By Carey L. Biron
WASHINGTON, Dec 9 2014 (IPS)

Just half of major global banks have in place a public policy to respect human rights, according to new research, despite this being a foundational mandate of an international convention on multinational business practice.

Further, of the 32 global banks examined, researchers found that none has publicly put in place a process to deal with human rights abuses, if identified. None has even created grievance mechanisms by which those impacted by potential abuses can complain to the banks.“The findings of this report are quite sobering about what can be expected from self-regulatory principles.” -- Aldo Caliari

The findings, published by BankTrack, an international network of watchdog groups, come three and a half years after the adoption of the United Nations Guiding Principles on Business and Human Rights. These principles, unanimously endorsed by the U.N. Human Rights Council in 2011, specify a range of actions and obligations for all businesses, including the financial sector.

Yet banks have a unique role in underwriting nearly all of the business activity around the globe, even as they are typically shielded from the impacts of those investments.

“Banks covered in this report have been found to finance companies and projects involving forced removals of communities, child labour, military backed land grabs, and abuses of indigenous peoples’ right to self-determination,” the report, released last week, states.

“Policies and processes, open to public scrutiny and backed by adequate reporting, are important tools for banks to ensure that these kinds of abuses do not happen, and that where they do, those whose rights have been impacted have the right to effective remedy … If these policies and procedures are to be meaningful, the finance for such ‘dodgy deals’ must eventually dry up.”

One of the banks studied in the new report, JPMorgan Chase, is one of the leading U.S. financiers of palm oil, through loans and equity investments. While the bank does have a human rights policy, BankTrack’s researchers find this policy applies only to loans, not investments.

“When it comes to reporting on implementation, the bank falls flat, making the policy little more than window-dressing,” Jeff Conant, an international forests campaigner with Friends of the Earth U.S., a watchdog group that is working on palm-oil financing, told IPS.

“We’ve spoken with JPMorgan Chase about the need to give impacted people an opportunity to file complaints about the human rights impacts of its financing, with the belief that this is a first step towards accountability. Frankly, from the bank’s response, I don’t see them stepping up anytime soon.”

While private finance today facilitates almost the full range of corporate activity, Conant notes, “the finance institutions themselves are wholly unaccountable.”

Sobering results

According to the new study, a few banks appear to be well on their way to conformity with the Guiding Principles. The top-ranked institution, the Dutch Rabobank, received a score of eight out of 12, with Credit Suisse and UBS close behind.

These are the exceptions, however. Against a set of 12 criteria, the average score was only a three.

Many scored at or near zero. While those ranked at the very bottom include several Chinese institutions, they also include banks in the European Union and the United States.

Indeed, Bank of America, one of the largest financial institutions in the world, scored just 0.5 out of 12, receiving a minor bump for having expressed some commitment to carrying out human rights-related due diligence. (The bank failed to respond to request for comment for this story by deadline.)

“The findings of this report are quite sobering about what can be expected from self-regulatory principles,” Aldo Caliari, the director of the Rethinking Bretton Woods Project at the Center of Concern, a Washington think tank, told IPS.

“The Guiding Principles are the bare minimum of any human rights framework in the corporate sector, a framework that has the companies’ consent. So the fact that there is so little [adherence to] such a relatively weak tool, where every effort to court corporations’ support has been made, is, indeed, very telling.”

Despite the spectrum of findings on implementation, the financial services industry as a whole has taken note of the Guiding Principles.

In 2011, four European banks met to discuss the principles’ potential implications for the sector. Three more banks eventually joined what is now called the Thun Group, and in October 2013 the grouping released an initial paper on the results of these discussions, including recommendations for compliance.

A previously existing set of voluntary guidelines for the banking sector, known as the Equator Principles, were also updated in 2013 to reflect the new existence of the Guiding Principles. So far, the Equator Principles have been signed by 80 financial institutions in 34 countries.

“To date, banks’ efforts to implement the UN Guiding Principles have mainly revolved around producing discussion papers on the best way forward,” Ryan Brightwell, the new report’s author, said in a statement.

“BankTrack has welcomed these discussions, but some three and a half years on from the launch of these Principles, it is time to move onto implementation.”

Strengthening accountability

The new findings on lagging implementation will strengthen arguments from those who want to tweak or supplant the Guiding Principles. Some suggest, for instance, that the framework be changed to treat financial institutions differently from other sectors.

“[T]he financial sector requires an exceptional treatment when it comes to the application of the Guiding Principles,” the Center of Concern’s Caliari wrote last year in comments for the Working Group on Business and Human Rights.

“Financial companies, more than other companies, have the potential, with their change of behaviour, to influence the behaviour of other actors. That means they also should be upheld to a greater level of responsibility when they fail to do so.”

Caliari and others are also part of a movement to move beyond voluntary frameworks such as the Guiding Principles (at least in their current form), and instead to see through the creation of a binding mechanism.

This decades-long effort received a significant boost in June, when the U.N. Human Rights Council voted to allow negotiations to begin toward a binding treaty around transnational companies and their human rights obligations. (This same session also approved a popular second resolution, aimed instead at strengthening implementation of the Guiding Principles process.)

The new data on banks’ relative lack of compliance with the Guiding Principles, Caliari says, is one of the reasons the call for a legally binding treaty “has been gaining ground.”

He continues: “It is increasingly clear that mechanisms that rely on the consent of the companies cannot be the total of available accountability mechanisms. More is needed.”

Edited by Kitty Stapp

The writer can be reached at cbiron@ips.org

In addition to its prized value as an ingredient in high-end perfumes, the vetiver plant has important conservation benefits, preventing soil erosion and helping maintain water quality. Credit: treesftf/cc by 2.0

By Desmond Brown
PYEONGCHANG, Republic of Korea, Oct 7 2014 (IPS)

Haiti, the poorest country in the Western Hemisphere, is the world’s leading producer of vetiver. In the southwest of the country, vetiver production is hard to ignore.

Driving into Les Cayes, the largest town in the south, one is greeted by fields of vetiver on either side of the road. The same is true if driving from Les Cayes to Port Salut. Steep hillsides of the green grass line many of the ridges between the two towns.Synthetic biology differs from conventional genetic engineering in its technique, scale, and its use of novel and synthetic genetic sequences – raising new risks to biodiversity.

Haitian vetiver is highly regarded among perfumers, and it is a key ingredient in some of the finest and most expensive perfumes in the world.

However, struggling Haitians who farm this product could be dealt another harsh blow with the introduction of a new industry – synthetic biology. Although still undefined, synthetic biology can be described as ‘extreme genetic engineering,’ and refers broadly to the use of computer-assisted, biological engineering to design and construct new synthetic biological parts, devices and systems, and to redesign existing biological organisms.

“In countries like Haiti there are high-value agricultural exports that form a significant part of the economy, and those high-value low-volume goods are slated to be created by companies like Evolva and could replace the truly natural products,” Dana Perls, food and technology campaigner with the civil society group Friends of the Earth U.S., told IPS.

“Evolva is creating synthetic biology flavours and fragrances which could be offered at a much cheaper price and would ultimately remove the need for different farmers of flavours and fragrances.”

Haiti’s vetiver crop is processed by 10 distillers, but it provides jobs for some 27,000 farming families in the southwest. For these farmers, the vetiver plant has important conservation benefits, preventing soil erosion, and helping maintain water quality.

The global value of the synthetic biology market reached 1.6 billion dollars in 2011and it will further grow to 10.8 billion by 2016, increasing at a compound annual growth rate (CAGR) of 45.8 percent.

Haiti’s share of worldwide vetiver exports grew from 40 percent in 2001 to over 60 percent in 2007. But in the wake of the worldwide financial crisis, Haiti has seen a sharp reduction in vetiver exports. The country, which shares the island of Hispaniola with the Dominican Republic, produces about 50 to 60 tonnes of vetiver annually, about 50 percent of the world’s supply.

An estimated 60,000 people in Haiti’s Les Cayes region depend on vetiver as their primary income source. The crop is grown on 10,000 hectares.

Before 2009, Haiti’s vetiver crop was valued at approximately 15-18 million dollars per year. In recent years, Haiti’s export earnings from vetiver have declined to around 10 million per year.

While biotechnology has been portrayed as a panacea for climate change and other societal ills, critics say these claims are largely unproven. Credit: Bigstock

Synthetic biology differs from conventional genetic engineering in its technique, scale, and its use of novel and synthetic genetic sequences – raising new risks to biodiversity.

Friends of the Earth International is urging caution and has made several recommendations to the 12th meeting of the Conference of the Parties to the Convention on Biological Diversity (COP 12) being held here from Oct. 6-17.

“We are recommending a moratorium on the environmental release and the commercial use of synthetic biology, specifically because of the lack of international regulations and virtual lack of environmental and safety assessments anywhere in the world. We are encouraging the CBD to stand behind the precautionary approach which countries have already agreed to by being signatories to the CBD,” Perls said.

“This is a new and emerging issue and needs to be treated as such. Many of the concerns have to do with the environmental, cultural, social impacts of this new technology, including what would happen if a product like ginseng here in Korea were to be produced using synthetic biology. The impact that it would have on small famers across this country could be immense.

“It would also have a large impact on countries like Brazil where the feed stock would be grown in order to produce these synthetic biology organisms, which will churn out whatever you’ve designed it to churn out,” she added.

While biotechnology has been portrayed as a panacea for climate change and other societal ills, Friends of the Earth said the claims that genetically engineered plants and microbes can sequester more carbon in the soil and produce more fuels when processed than conventional methods have yet to be proven.

The group noted that “in the wake of these unfulfilled promises” emerges synthetic biology, a more extreme form of genetic engineering, which has also been touted as the solution to the climate crisis.

But the group said synthetic biology is not a sustainable solution to the climate crisis and has the potential to create an entirely new set of problems.

The Philippines is the world’s biggest producer and exporter of coconut oil. Twenty-five million people in a population of 100 million are directly or indirectly dependent on the coconut industry for their livelihoods and domestic food security.

Neth Dano, programme manager with the ETC Group, told IPS, “There is a lot at stake for the Philippines” on this issue because synthetic biology could potentially replace coconut oil in the global market.

“In the Philippines, coconut production is not done in a plantation way, it’s small scale. And in the structure of rural economies, in most cases the coconut producers are among the poorest ones,” Dano explained.

Dano said the CBD as the United Nations body responsible for looking at potential impacts of development on biodiversity and also primarily for conservation of biodiversity can do a lot to address the concerns over synthetic biology.

“The CBD is the only body in the United Nations that had taken up synthetic biology so far and addressed the concerns on its potential impacts on biodiversity,” Dano said.

Dano noted also that most of the commercial beginnings of synthetic biology were related to climate change.

“The earlier research and development efforts were focusing on algae that actually would produce biofuels. And biofuels were seen as a solution to address this problem of massive greenhouse gas emissions that cause global warming. So it was actually presented as a solution to climate change as a mitigation strategy,” she said.

“The big oil companies invested so much in the development of biofuels from synthetically modified algae but the investments did not deliver, so now they’ve shifted their attention to low-volume high-value and this is where the lauric oils come in,” Dano added.

Edited by Kitty Stapp

The writer can be contacted at destinydlb@gmail.com