Stakeholder engagement: own business operations and consumer lending

Key principles
Key terms and concepts
Stakeholder engagement for own business and consumer banking
Case studies and further reading

Consistent with the UNGPs, meaningful engagement with potentially affected groups and other relevant stakeholders should inform all aspects of an FI’s approach to human rights – from the development of human rights policies, to undertaking human rights due diligence and ensuring access to remedy.

This is an area where a number of FIs have made progress in recent years, with BankTrack’s Global Benchmark noting that 22 banks now detail a process for identifying impacts that includes some form of stakeholder consultation, compared to 11 in 2019. This section outlines principles for stakeholder engagement and sets out the key entry points for financial institutions to consider with respect to engaging with stakeholders (including affected stakeholders).

Key principles

Stakeholder engagement, including engagement with affected stakeholders, in relation to human rights risks should strive to:

Effectively solicit perspectives on how different business activities might impact human rights, and appropriate measures to address risk from stakeholders’ perspectives
When possible, engage directly and in good faith with rightsholders, including critical voices and gain their insights on the challenges, opportunities for change and solutions to human rights risks
Remove barriers to effective engagement such as language, cost, location, marginalisation or risks of retaliation, including integrating a gender-sensitive approach
Identify and seek to engage with human rights organisations, trade unions, experts and credible and legitimate representatives of rights holders, particularly vulnerable groups, and gain their insights on the challenges, opportunities for change and solutions to human rights risks
Understand whether existing policies, processes, and controls can prevent and mitigate adverse impacts and / or which are the main gaps and challenges FIs need to address to effectively respect human rights
Maintain visibility of stakeholder’s views, concerns and experiences on an ongoing basis
Be undertaken by team members that are equipped and supported with the knowledge and skills to design and carry out respectful engagement and act on the results
Protect confidentiality and preserve anonymity where it is permitted and offered
Protect human rights and environmental defenders from threats and abuse

Key terms and concepts

Stakeholder / affected stakeholder. A stakeholder refers to any individual, organisation or community who may affect or be affected by an organisation’s activities. An affected stakeholder refers here specifically to an individual, organisation or community whose human rights have been affected by an enterprise’s operations, products or services.

Stakeholder engagement / consultation. Stakeholder engagement or consultation refers here to an ongoing process of interaction and dialogue between an enterprise and its potentially affected stakeholders that enables the enterprise to hear, understand and respond to their interests and concerns, including through collaborative approaches.

Rightsholders. Stakeholders as a term can include rightsholders. Rightsholders are groups, internal or external to the FI, whose human rights are potentially or actually impacted by the FIs operational or financial activities.

Representatives and proxies. Where access, legal frameworks, resources or the structure of business relationships constrain the feasibility of direct consultation with rightsholders, it is beneficial to consult legitimate representatives or credible proxies. Legitimate representatives are actors selected by or acceptable to a group of rights holders, accurately representing their views, needs and interests in good faith. This might include actors who are (legally or communally) nominated by or accountable to the stakeholder group. Credible proxies are those that have relevant in-depth experience of working with or previously consulting a particular rights holder group and as such may offer an approximation of their likely views. This could include NGOs, academics, or representatives of multi-stakeholder initiatives.

Stakeholder engagement for own business and consumer banking

Potential stakeholders (including rights holders) and functional areas to consult for human rights due diligence concerned with own operations include:

Stakeholder group	Examples
Internal	Human resources Procurement Due diligence functions, including Anti-Money Laundering (AML), Know Your Customer (KYC) Privacy and data protection Compliance, risk, and legal Sustainability / ESG Facilities and branch management Customer service / call centres Security Employees and employee representatives
External	Regulators Clients and investees (and entities in their supply chain) Contractors and suppliers (and their workers) Consumer banking customers Relevant civil society organisations and community groups as legitimate representatives of rights holders (e.g. in relation to inclusive finance, financial literacy, community advocacy organisations as CSOs, human rights experts, as well as right holders’ legitimate representatives, unions, rights holders) Rightsholders / Community (including specific groups such as Indigenous People, minority communities, rural communities etc)

Area	Key considerations
Policy and commitments	Have all relevant stakeholders been engaged in the development of Human Rights policy commitments (either as a standalone commitment or integrated in other relevant policies)? How? Has there been an exercise to map which stakeholders should be consulted in relation to each relevant policy? Does this mapping include FI’s own employees and non-employee workers, consumer banking clients, value chain actors? Has information been provided to stakeholders to support consultation (e.g. provision of existing or draft policies)? Have stakeholders been provided an opportunity to provide comments and feedback on policies? How have stakeholder comments been incorporated into policy developments or updates? Do human rights policies and other policies outline key principles and procedures related to stakeholder engagement? Is the statement of commitment publicly available? Is it communicated actively to relevant stakeholders? And, in the case of operations with significant human rights risks, to potentially affected stakeholders? Is the communication done in a way that takes into account language or other potential barriers to stakeholders’ understanding of the policy?
Human Rights Screening and Risk Assessment	Has an exercise been undertaken to map which stakeholders should be consulted as part of the human rights screening and risk assessment? Are stakeholders provided an opportunity to report historic or ongoing risk issues and human rights impacts? How (e.g. through, surveys, outreach efforts, indirectly representatives such as trade unions, grievance mechanisms)? Who is responsible for receiving and acting upon stakeholder feedback? How is stakeholder feedback acted upon and integrated into decision making? How is this recorded? Have vulnerable groups been specifically identified, and if so, how have they been engaged? Is stakeholder engagement an ongoing process that can continually inform risk assessments and decisions? Are potentially affected stakeholders consulted directly in a manner that takes into account language and other potential barriers to effective engagement? In situations where consultation is not possible, have reasonable alternatives been considered, such as consulting credible, independent expert resources, including human rights defenders and other civil society organisations?
Taking action	Have internal and external stakeholders been consulted on the methods to prevent and mitigate risks (e.g. are actions feasible, will they be effective) taking into account language and other relevant barriers to the consultation? Has this included people who might potentially be impacted? Has consultation been conducted in good faith and in a manner or format where stakeholders can provide meaningful or impartial/independent feedback (e.g. free from intimidation or undue influence)? Are stakeholders views being incorporated into planning and implementation of actions? Have stakeholders been advised on how their views have fed into the planning and implementation of actions?
Monitoring	Is a record being kept on stakeholder engagement activities for reporting purposes? Are stakeholder views being incorporated in the overall monitoring processes? Is feedback from affected stakeholders being used in order to verify whether adverse human rights impacts are being addressed and to track the effectiveness of the FI’s response? Is quantitative and qualitative data from consultations collected securely and reviewed for trends and patterns at regular interviews (e.g the number of supplier surveys completed, percentage of staff completing workplace survey, overall satisfaction with remedy where grievances received, number of grievances submitted by male staff vs female staff)? Do KPIs and other monitoring tools include information from different stakeholders, including employees and non-employee workers, suppliers / service providers, and consumer banking customers, as relevant?
Communicating and disclosing	Have key internal functions been involved in the preparation of communications (e.g. ESG / Sustainability, human resources, legal)? Have the appropriate audiences for communication been identified, including internal (e.g. employees, management team, worker’s organisations) and external (e.g. public, regulators)? Is the format for communication appropriate given the audience (e.g. consideration for language or accessibility concerns)? Have relevant themes been addressed as part of communications?
Grievance	Is an internal grievance mechanism in place, dedicated to workers (including on-site non-employee workers such as contractors and agency staff), that is accessible and allows for confidentiality and anonymity? Is there a grievance mechanism dedicated to consumer banking customers that is accessible and allows for confidentiality and anonymity? Do workers of suppliers and service providers (contractors) have access to a grievance mechanism, and are the uptake and outcomes of this grievance mechanism reported to the FI? Is the design and performance of these grievance mechanisms based on engagement and dialogue – consulting the stakeholder groups for whose use they are intended on their design and performance, and focusing on dialogue as the means to address and resolve grievances? Do the stakeholders to whom the grievance mechanisms is intend know that the mechanism exist, how the mechanism works and are able to use is? Is the existing grievance mechanism aligned with the elements of the UNGP’s effectiveness criteria (see para 31)?
Remedy	When harm or adverse impacts have been identified and remedy is required, is there a procedure to consult impacted individuals on an acceptable solution or action, ensuring safety of impacted individuals? Are there opportunities to engage in dialogue with impacted individuals? Has stakeholder engagement been used to validate approaches to remedy, test feasibility, efficiency and effectiveness and provide feedback?

Case studies and further reading

Citi Bank’s Employee Voice initiatives

Citi Bank conducts an annual Voice of the Employee survey, monitoring the participation, the diversity of participants and the thematic content of collected views. A summary of this data on participation and workers views is disclosed in their annual reporting. In addition to a more static survey format, they also engaged workers in a ‘Voice of the People’ listening tour in 2021 where employees attended in-person and virtual sessions to share views and discuss issues more deeply.

Nordea’s employee survey indexes

Nordea’s employee survey ‘People Pulse’ is conducted quarterly and saw 85% of direct employees participate in 2023. The survey format includes indexes on wellbeing and inclusion that allows the bank to gather precise and comparable views from employees on issues such as working conditions, financial wellbeing, fair treatment and equal opportunities. This detail is then used to provide evidence for both issues and successes in annual external reporting with precision.

Consumer banking customer grievance management

The Alwaye Urban Co-operative Bank’s Customer Grievance Redressal Policy outlines a structured approach to addressing customer complaints efficiently and effectively. The policy aims to enhance customer satisfaction and maintain trust by providing a transparent mechanism for resolving issues. Customers can submit grievances through multiple channels, such as in-person, over the phone, via email, or through the bank’s website. Grievances are acknowledged promptly, and customers receive a unique reference number for tracking the status of their grievance. The bank categorizes grievances based on their nature and severity, and the policy outlines specific timelines for resolving different types of grievances, emphasizing quick and fair resolutions. If customers are dissatisfied with the initial response, they can escalate their grievances. The policy specifies the hierarchy and procedures for such escalations. The bank regularly reviews grievance data to identify patterns and improve service quality. Customer feedback is encouraged to enhance the grievance redressal process.

Local Authority Pension Fund Forum (LAPFF) collaboration

The Local Authority Pension Fund Forum (LAPFF) is a voluntary association of local authority pension funds in the UK. It seeks to promote the interests and shareholder influence of its member funds on issues including corporate governance, corporate responsibility, and social risk. The LAPFF engages with companies on social topics, as well as directly with company stakeholders (including employees and communities). This has entailed using a “risk to rightsholder” lens to identify communities for engagement. As a result, the LAPFF has engaged with local stakeholders such as communities in Brazil affected by mining activities in order to understand human rights impacts and strategies for investor action. This is detailed further in the LAPFF’s Quarterly Engagement Report.

Stakeholder engagement: own business operations and consumer lending

Table of Contents

Key principles

Further reading

Key terms and concepts

Stakeholder engagement for own business and consumer banking

Case studies and further reading

Stakeholder engagement: own business operations and consumer lending

Table of Contents

Key principles

Further reading

Key terms and concepts

Stakeholder engagement for own business and consumer banking

Relevant rightsholders and stakeholders

Key considerations and timelines for stakeholder engagement in own operations

Case studies and further reading