Of the twelve banks assessed, eight failed to score even half the points in a study by BankTrack and the Due Diligence Initiative. Their commitments remain far better documented than their actual actions.
Do banks operating in Luxembourg demonstrate that they take human rights into account in their financing activities? A study published on Tuesday 10 November by BankTrack and the Initiative for a Duty of Care (IDV), a network of 17 NGOs, trade unions and organisations, highlights serious shortcomings. The twelve institutions assessed scored an average of 5.2 out of 15, compared with 5.9 for the 50 banking groups examined in BankTrack’s 2024 global assessment. None achieved the ‘leader’ category, which requires a score of 11 or above.
ING Luxembourg tops the table with 9 out of 15, ahead of BGL BNP Paribas and Deutsche Bank Luxembourg, both on 8.5, followed by Banco Bradesco Europa on 7.5. The other eight institutions scored less than half the available points. Spuerkeess scored 4.5 and Banque Internationale à Luxembourg (BIL) 4. At the bottom of the rankings are China Construction Bank EU, with 1 point, Industrial and Commercial Bank of China Europe, with 0.5, and Bank of China Europe, with zero.
However, this ranking assesses what banks publicly disclose regarding their policies and practices, based on fifteen criteria derived from the United Nations Guiding Principles on Business and Human Rights. A poor score therefore does not prove that an institution causes more harm than a higher-ranked competitor. The twelve banks were invited to comment on their provisional results; seven took part in this exchange. Comparison with 2024 also calls for caution, as the global assessment focused on the groups as a whole, whereas this study examines their Luxembourg-based entities.
A lack of visibility
The main discrepancy lies between the stated commitments and the evidence of their implementation. Banks score 62.5% of the available points for their human rights commitments, but only 36.7% for measures aimed at identifying and preventing the negative impacts of their activities, and 33.3% for the publication of information. When it comes to redressing harm, the score drops to 11.5%. “Banks are failing to demonstrate that they have effective systems in place to identify their impacts, particularly on vulnerable communities,” emphasises Lucilla Viola, a human rights research consultant at BankTrack.
In practical terms, half of the organisations provide no evidence that they have consulted with the people and communities potentially affected by their funding. Ten out of twelve fail to demonstrate that they assess whether they have caused or contributed to negative impacts. None provides public evidence meeting the study’s criteria to show that it has ensured or facilitated redress for harms linked to its activities. Nor does any demonstrate that its complaints-handling mechanism fully meets the effectiveness criteria set out in the UN Guiding Principles.
The study also highlights a lack of transparency regarding local practices. Ten of the twelve banks are subsidiaries of international groups and rely heavily on their parent companies’ policies. Seven publish an annual report specific to Luxembourg, but, according to the authors, none of these reports contains substantial information on human rights or the main impacts of their activities in this area. It is therefore difficult to ascertain how the group’s commitments are reflected in the decisions taken from within the Grand Duchy.
According to Robert McCorquodale, Chair of the United Nations Working Group on Business and Human Rights, banks’ responsibility extends to loans, investments and other financial services that may link them to human rights abuses. The IDV is calling on the government to strengthen the due diligence requirements applicable to the financial sector and to lead by example through the banks in which the state holds a stake. “It is time to move from words to action,” says its co-coordinator, Jean-Louis Zeien.
