International financial institutions must show the way on human rights and good governance, says UN expert

In a new report, a UN human rights expert has said international financial institutions (IFIs) must systematically take all necessary measures to ensure that their activities and the projects that they support do not lead to human rights violations, including those committed by clients.

“Through their economic policies and the safeguards they have put in place, IFIs can have a direct influence on how national authorities as clients deliver on good governance and therefore abide by their obligation to respect the human rights of their population,” the Independent Expert on the promotion of a democratic and equitable international, Livingstone Sewanyana, told the Human Rights Council.

In his annual report, the expert addressed stakeholder engagement and issues of public participation, transparency and reprisals; State responsiveness to the needs of the population and retrogressive measures; and the fight against corruption.

Recourse gave evidence to the Independent Expert’s review, especially regarding the particular problems posed by investing through financial intermediaries in terms of obstructing communities’ access to justice. The report noted: “Another hurdle to the effective public participation of communities is the extensive use by international financial institutions of financial intermediaries, such as equity funds and commercial banks. Civil society actors have complained to the Independent Expert that they have little to no information on the identity of the financial beneficiaries (whether company or project), and public participation is therefore impossible.”

The Independent Expert called on IFIs to ensure that their safeguard frameworks contain a clear commitment to respecting human rights and to conducting human rights due diligence; conduct human rights impact assessments prior to imposing loan conditions that compel States to take retrogressive measures; and embrace a human rights-based approach to combating corruption that focuses on the victim, State responsibility, prevention and redress.

Importantly, IFIs must use their substantial leverage to ensure that their clients respect human rights and the principle of good governance, Sewanyana said.

“While IFIs should always aspire to be actors of positive change on the ground, it is first and foremost the responsibility of States, in particular in their capacity as IFIs’ clients, to ensure good governance and respect for human rights on the ground,” he said. “This responsibility starts with ensuring a safe environment that is conducive to the exercise of fundamental rights and freedoms, and pursuing accountability.”

Crucially, respect for human rights, good governance and the interests of local communities must be at the very heart of what drives sustainable development. “This requirement is all the more important in the context of the current COVID-19 pandemic, which has exacerbated several of the challenges identified in my report and increased the vulnerability of groups at risk,” the expert said.