An average score of 5.2 out of 15: this is the result awarded to twelve commercial banks operating in Luxembourg by a study from IDV and BankTrack on their human rights policies. The figure primarily describes what the institutions make public and how their systems are assessed. It is not a judicial finding that a bank caused a specific human rights harm.
This distinction changes how the assessment should be read. The study does not simply ask whether a bank makes a commitment in principle. It also examines how it identifies risks linked to its financing, reports on its efforts, and enables affected people to voice their concerns or obtain remedy.
A benchmark based on fifteen criteria
The “Luxembourg Human Rights Benchmark” was commissioned by the Initiative for a Duty of Vigilance (IDV), a civil society network, and carried out by BankTrack with consultant Lucilla Viola. The twelve commercial banks were assessed against fifteen criteria inspired by the United Nations Guiding Principles on Business and Human Rights. The criteria are grouped into four areas: policy commitments, due diligence, disclosure and remedy mechanisms.
Here, due diligence means the process by which a company identifies risks of human rights abuses linked to its activities, seeks to prevent or mitigate them, and then monitors the responses. In the case of a bank, the question extends beyond its own offices: it also concerns the activities of clients to which it provides financing, and the possible consequences for workers or communities.
The average score of 5.2 out of 15 is below the average of 5.9 achieved in BankTrack’s global benchmark in 2024, which covered fifty banking groups. However, the two studies cover different samples. Eight of the twelve institutions assessed scored less than half the available points, and none reached the “leader” category defined by the benchmark.
Commitments are more visible than their implementation
Results vary considerably across the four areas. The banks scored 62.5% of the available points for their policy commitments, compared with 36.7% for due diligence, 33.3% for disclosure and 11.5% for remedy. In other words, general statements are easier to document than the steps that would show how they translate into practices and concrete responses.
The difficulty is particularly evident when it comes to consulting people who may be affected. According to the report, half of the banks provide no evidence that they consult communities or people affected by their financing. Ten of the twelve institutions do not show that they assess whether their activities have caused or contributed to negative impacts.
The study also identifies a lack of clarity around the Luxembourg subsidiaries of international groups. Ten of the twelve institutions examined are subsidiaries that rely heavily on policies defined at parent-company level. The benchmark says it is difficult to see from the published information how these policies are applied by entities in Luxembourg. For readers, therefore, a group policy and its local implementation are two distinct elements to look for.
Remedy, the weakest area
The remedy area received the lowest score. According to the report, none of the twelve institutions provides public evidence that it has provided or enabled remedy for harm linked to its activities. Nor does any demonstrate that its grievance mechanism fully meets the effectiveness criteria set out in the UN Guiding Principles.
A grievance mechanism is a way to report a problem and seek a response. To be useful, it is not enough for it to exist on paper: affected people must be able to access it and have their complaint effectively examined. Remedy can take different forms depending on the harm and the situation. The study’s score concerns the public evidence associated with these processes. The absence of published evidence does not prove that no remedy has ever been provided; it means that the benchmark did not find the evidence needed to establish this according to its criteria.
This weakness highlights a broader limitation of sustainability reports: publishing a policy or describing a procedure does not necessarily indicate which risks have been identified, what measures have been taken or what results they have achieved. IDV and BankTrack are calling on banks to make these steps more concrete and to better incorporate the testimony of affected people before financing decisions are made.
European transposition: a choice in implementation
The report also calls on the Luxembourg government to set due diligence requirements for the financial sector when transposing and implementing the European Corporate Sustainability Due Diligence Directive, known by the acronym CSDDD. The authors believe that Luxembourg has room to make decisions in this process and urge it to put human rights at the centre of its sustainable finance strategy.
This is a recommendation from the organisations behind the benchmark, not a new rule that the study says already applies to banks. The specific scope of the obligations will depend on the legislative framework adopted. The issue highlighted is how to move from general commitments and procedures to requirements that make it possible to assess risks, publish the actions taken and handle complaints.
To compare institutions beyond their scores, three questions are therefore useful: are risks linked to financing identified precisely? Are people who may be affected consulted? Are the results of measures and avenues for redress published? The IDV and BankTrack benchmark addresses these questions by examining publicly available information. Its central conclusion concerns the gap between stated commitments and evidence of their implementation.
References
- IDV and BankTrack, introduction to the Luxembourg Human Rights Benchmark
- RTL Today, report on the study of banks in Luxembourg
Kirchberg in Luxembourg, photographed in 2019. Illustrative photo of the Luxembourg context.
