Great expectations: Investors push for human rights change

How companies are managing human rights is an important commercial issue, and the competitive nature of the market is a powerful driver for change.

In the first public wide-scale ranking of corporate human rights performance, 98 of the world’s largest publicly traded companies from the agricultural products, apparel and extractives industries were ranked on 100 human rights indicators. The inaugural Corporate Human Rights Benchmark (CHRB) results were unveiled at a launch event held in London on 13 March 2017.

The initial report available online, showed a small cluster of seven companies – BHP Billiton, Marks & Spencer Group, Rio Tinto, Nestle, Adidas and Unilever – out-performing their peers with scores between 55-69% out of 100%, yet the vast majority of companies were revealed to be significantly underperforming at 30%.

For a more detailed briefing on the 2017 results, have a look at the key findings on the CHRB website.

Human rights

To improve human rights performance, the CHRB investors are expecting companies to:

Publicly acknowledge their responsibility to respect human rights and formally incorporate this into publicly available statements of policy.

Use the UN Guiding Principles Reporting Framework as guidance for their reporting on human rights issues.

Include oversight of human rights-related risk as part of the Board’s responsibility

Embed human rights policy commitments in management systems, business operations and stakeholder engagements

Implement due diligence processes to assess and address human rights risks

Provide remedy in addressing actual adverse impacts on human rights

Ensure that appropriate processes are in place so that grievances may be addressed early and remediated directly where appropriate

Maintain management systems to respond to severe and substantiated allegations

Respect and protect human rights

In a recent letter, the CHRB investors – Nordea, Aviva, APG, Calverts plus Boston Common Asset Management on behalf of 85 investors supporting the UN Guiding Principles Reporting Framework – urge the 98 assessed companies to carefully consider the outcomes of the results of the 2017 CHRB pilot study.

The UN Guiding Principles expects companies to both “know and show” that they are respecting human rights in their own operations, as well as in supply chains and other business relationships. As institutional investors we share this expectation. Companies that do not pro-actively assess and manage human rights risks and impacts face potential legal, operational, and reputational risks, which can have financial implications.

Investor expectations

In the letter, the CHRB investor group encourage the companies to help shape and strengthen the CHRB methodology and to follow up on The Corporate Human Rights Benchmark Investor Expectations on Human Rights (as set out in the letter).

The Benchmark aims to provide a “comparative snapshot year-on-year of human rights performance of the largest companies on the planet” and is welcomed by the investment community as a valuable engagement tool to help advance progress on corporate human rights programs. We will measure progress on the expectations in the next CHRB benchmark assessment planned for 2018.

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