How are Financial Institutions in Europe Addressing Human Rights in Their Core Business Activities?

Berit Knaak & Dorothée Baumann-Pauly

March 2025

For the third time, we have explored how financial institutions integrate human rights into their core business activities. Through research and discussions with practitioners and industry experts across Europe, we have identified key trends, persistent challenges, and opportunities for progress. In this study (PDF), we build upon the findings of our previous reports (2020, 2022) to assess the current state of human rights integration within financial decision-making.

Key Findings

• Growing recognition, but structural gaps: Financial institutions are increasingly recognizing their role for human rights but lack systematic structures and incentives to effectively implement human rights due diligence and measure impacts.
• Reactive approach: Rather than being proactive agenda-setters, financial institutions often address human rights issues in response to external drivers, such as regulatory requirements and reputational considerations.
• Lack of reliable data: The absence of standardized and reliable human rights data remains a critical challenge for financial institutions.

Recommendations

To move beyond compliance and drive meaningful impact, financial institutions and stakeholders can take concrete steps:

• Strengthening internal human rights management capacity: Financial institutions need to invest in their internal human rights management capacity to move beyond legal compliance.
• Increasing leverage over investee companies: To advance positive impacts for rightsholders, financial institutions should increase their leverage over investee companies, e.g., by collaborating with industry peers, and set incentives for companies to monitor impacts over time.
• Improving standards and data: Rating agencies, ESG-data providers, and investee companies themselves should offer better data on salient human rights issues based on industry standards – applying a clear and consistent benchmark, capturing the entire value chain and considering whether companies effectively mitigate risks.
• Engaging all stakeholders: Other stakeholders can strengthen human rights in finance: e.g., policymakers should create an enabling frame for financial institutions to advance human rights, trade bodies should provide convening platforms to exchange on specific human rights issues, and clients can demand products and services with a dedicated human rights focus.

This report highlights both progress and persistent challenges in embedding human rights into financial decision-making. It offers a roadmap for industry leaders, policymakers, and stakeholders committed to responsible finance. For a deeper dive into these findings and to explore actionable steps, read the full study.