Business, Human Rights and Climate Due Diligence: Understanding the Responsibility of Banks

Chiara Macchi and Nadia Bernaz
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Chiara Macchi: Law Group, Wageningen University and Research, Hollandseweg 1, 6706 KN Wageningen, The Netherlands
Nadia Bernaz: Law Group, Wageningen University and Research, Hollandseweg 1, 6706 KN Wageningen, The Netherlands

Sustainability, 2021, vol. 13, issue 15, 1-21

Abstract: Under the 2011 UN Guiding Principles on Business and Human Rights (UNGPs), banks, like all businesses, have a responsibility to respect human rights and to carry out human rights due diligence. Although climate due diligence is not explicitly included in the UNGPs, tackling an enterprise’s direct and indirect climate change impacts is arguably a dimension of the corporate responsibility to respect human rights and should form part of the human rights due diligence process. At present, it is unclear how such responsibility applies to banks, whose contribution to climate change is mostly indirect. This article addresses the research question: how should the law be interpreted to form a coherent climate due diligence standard for banks? To address it, the article first maps out the climate responsibility of banks under international soft law standards and assesses privately developed guidance. It then elucidates the emerging concept of climate due diligence, reading climate change responsibilities into the now well-established corporate responsibility to respect human rights as authoritatively elaborated in the UNGPs. Finally, it explains how such normative standard applies to banks and unpacks the key elements that a bank’s climate due diligence process should include.

Keywords: climate change; human rights; due diligence; banks; UN Guiding Principles on Business and Human Rights (search for similar items in EconPapers)
JEL-codes: O13 Q Q0 Q2 Q3 Q5 Q56 (search for similar items in EconPapers)
Date: 2021
References: View references in EconPapers View complete reference list from CitEc
Citations: View citations in EconPapers (1)

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