About 40% of major extractive, agricultural and clothing or footwear companies ranked by the 2018 Corporate Human Rights Benchmark (CHRB) are failing to demonstrate respect for human rights, on paper or in practice – and investors should take notice, the organization says.
CHRB measures how companies perform across 100 indicators based on the UN Guiding Principles on Human Rights. It uses publicly available information on issues such as forced labor, protecting human rights activists and the living wage to give companies a maximum possible score of up to 100%. In this year’s ranking, 40 out of 101 companies are “failing to make the grade,” says Margaret Wachenfeld, CHRB Independent Director and co-lead of the CHRB Methodology Committee.
CHRB is calling on investors to challenge poorly performing companies, and to use their leverage to drive improvements. The organization points out that Aviva, APG and Nordea, who manage over a trillion dollars between them, have all confirmed that the 2018 benchmark will be used to inform their investment decisions.
“This ranking should serve as a wake-up call for businesses everywhere. Too many are still not doing enough to respect the rights of those involved in or impacted by their operations, despite increasing investor scrutiny and the negative impact it has on a company’s long-term performance and prospects. While some businesses are showing the way forward, the overall picture is deeply concerning,” said Steve Waygood, chief responsible investment officer for Aviva Investors.
Costco Wholesale, Kraft Heinz, PetroChina, Phillips 66, Prada and Starbucks are among the poorly scoring companies. Adidas had the highest score. Other high scoring companies include Rio Tinto, BHP Billiton, Marks & Spencer Group, Unilever, Vale, ENI and VF.
At 27%, the average score across all companies increased since the pilot in 2017. Still, two-thirds of companies scored less than 30% overall.
Companies at the top end of the rankings scored well for the fact that identifying and managing human rights risks is a key part of their core business. They scored particularly well on transparency of human rights policies and practices. Meanwhile companies at the bottom of the ranking failed to show any engagement with human rights concerns. “This should raise urgent questions for investors and consumers as to whether these companies are serious about avoiding harm to people in their pursuit of profits,” CHRB says.
Other key findings include:
- Virtually no companies demonstrate strong commitments to ensuring living wages are paid to workers in their own operations and supply chains;
- Less than 10% of companies commit to respecting human rights defenders (HRDs), including those HRDs exercising their rights to freedom of expression, association, public assembly and protest.
- There is a clear gap between companies acknowledging allegations and actually engaging with those affected.
CHRB is using the results of the rankings to suggest that “governments should step in with tougher laws to protect people.”
The methodology of the study is the result of multi-stakeholder consultation around the world, involving representatives from over 400 companies, governments, civil society organisations, investors, academics and legal experts, says CHRB.