Banks as human rights enforcers? A comparative analysis of soft law instruments

The issue of business and human rights has been under the spotlight for the last decade, but, at the international level, there is still no legally binding and comprehensive mechanism to impose human rights obligations on multinational enterprises. The governance gaps created by the shortcomings of the existing formal legal structures are one of the most significant dangers of globalization. This article focuses on the unique situation of financial institutions, which have the ability to influence the behavior of foreign investors, in addition to their own. It explores alternative, pragmatic, solutions to the problem of business and human rights, through the analysis of recent attempts by intergovernmental, institutional, and private bodies to hold banks accountable for the impacts of their lending decisions. This analysis demonstrates that there is significant international consensus as to the human rights responsibilities of financial institutions; moreover, the article argues that banks can and should play the role of human rights enforcers, and thus contribute to closing the governance gaps brought about by globalization.