Human Rights & Finance : What clients want, regulators expect, and investors should consider

Fri, 22/03/2019, 17:52
Paper written with Markus Loening 
Over the past few years, and following the adoption of the Paris climate agreement and the UN Sustainable Development Goals, sustainable (responsible or ESG) finance considerations have increasingly been in the spotlight. “Although there is no definitive list of which issues or factors are covered by the terms "ESG", they are, according to the United Nations Environmental Programme (UNEP) Inquiry and the United Nations Principles for Responsible Investment (UN PRI), broadly defined as follows: “(i) Environmental (E) issues relate to the quality and functioning of the natural environment and natural systems; (ii) Social (S) issues relate to the rights, well-being and interests of people and communities; and (iii) Governance (G) issues relate to the governance of companies and other investee entities.”  While environmental issues are very much in the focus and governance is also widely discussed (among others in terms of gender diversity and equality), less light has been shed on the “S” element, which very much relates to human rights issues.
This paper sets out the regulatory aspects linked to human rights in investments by financial service entities (be it through banks, insurance companies or asset managers/funds). This discussion is of particular importance to the Luxembourg financial industry as a major financial hub and the biggest fund industry in Europe. By depicting the recent legal developments in the financial sector, this paper outlines the different responsibilities and expectations for various stakeholders. Finally, practical recommendations to meet such expectations will be provided.
For full paper, click here