A group of institutional investors with a collective $5.8 trillion in assets is pressing companies to do better when it comes to human rights.
Members of the Investor Alliance for Human Rights, an initiative of the Interfaith Center on Corporate Responsibility, include asset management firms, public pension funds, trade union funds, faith-based institutions, family funds and endowments.
Alliance members sent a statement to 106 companies that scored zero on human rights due diligence indicators in the 2020 Corporate Human Rights Benchmark Report, which assesses human rights disclosures of 230 global companies across five sectors identified as presenting a high risk of negative human rights impacts: agricultural products; apparel; extractives such as mining, oil and gas; information and communications technology manufacturing; and automotive manufacturing.
The indicators were established by the U.N. Guiding Principles on Business and Human Rights, and the OECD Due Diligence Guidance for Responsible Business Conduct.
According to the latest ranking, the 106 companies account for nearly half of the 230 largest public companies in high-risk sectors that are measured against the five human rights due diligence indicators. Automotive manufacturing, new to the benchmark this year, was the worst-performing sector, with two-thirds of automotive companies scoring zero.
The 2020 benchmark report found progress, with numerous companies meeting the fundamental expectations of the U.N. guiding principles, but also two significant challenges. One is that only a minority of companies demonstrate the willingness and commitment to take human rights seriously; the second is "a disconnect between commitments and processes on the one hand and actual performance and results on the other," the report said.
Some companies may be doing better but failing to disclose to investors how they are addressing human rights risks, said Anita Dorett, director of the investor alliance, in a statement.
Magdalena Kettis, active ownership director for alliance member Nordea Asset Management, said in the statement: "A core tenet of the UNGPs' human rights due diligence process is that companies be prepared to 'know and show' their potential risks on an ongoing basis. We are expecting companies to take action in response to this latest outreach, and if not, we are fully prepared to invoke the proxy process to motivate laggard companies."
