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$4.8tn investor coalition rallies in support of first corporate human rights benchmark

Leading investors pledge support for new benchmark

An investor group representing $4.8tn of assets has pledged support to a new benchmark of companies according to their human rights policies, with names such as Hermes, Aviva Investors and APG (full list below) backing an assessment of corporate behavior on issues including labor, safety and discrimination.

The group, which is coordinated by SRI asset manager Boston Common Asset Management, submitted its pledge as an additional statement in the UN Guiding Principles Reporting Framework in a bid to encourage companies to disclose more human rights information to the benchmark’s developers.

The supplemental statement says that the Framework’s signatories, which comprise some of the world’s largest institutional investors, “welcome and support” the benchmark’s creation and would urge companies “to make proper disclosure” pertaining to human rights issues according to the UN’s guidelines.

It also argues that those companies that do not do enough to identify and manage human rights issues face potentially widespread legal, reputational and financial harm, while those that do gain a significant competitive advantage.

The Corporate Human Rights Benchmark (CHRB) announced in December 2014 that it would be researching and ranking the world’s top 100 companies in the agriculture, apparel and extractive industries according to their human rights policies, targeting the creation of a full benchmark of the world’s 500 largest listed firms in November 2016.

The CHRB was founded by research provider EIRIS, investors Aviva and Calvert, Dutch investor association VBDO, the Institute for Human Rights and Business and UK-based NGO the Business & Human Rights Resource Centre.

The organization has been assessing firms’ publically available disclosures since the announcement of the pilot scheme two years ago, and later consulted on the proposed indicators that would be used to rank companies in July 2015, as reported in RI.

It will now move on to conducting its own research on the 100 selected firms using a methodology that has been developed over the past two years, according to Vicky Dodman, CHRB’s Programme Manager.She added: “The support of the investor coalition means that when companies come back and engage with us post-research, we can point to their statement as an indicator that there is a need for more disclosure in this area.”

The benchmark will eventually be published online at the CHRB’s portal and made available to the public. It will also provide a comparative year-on-year “snapshot” of corporate human rights performance, identify policies and practices that companies have in place as well as their responses when human rights issues emerge.

Lauren Compere, Managing Director at Boston Common Asset Management, said that investors “want to protect value” by knowing that human rights issues are being tracked at the companies they are invested in.

In a column in RI in March, Steve Waygood, Chief Responsible Investment Officer at Aviva Investors, noted that measuring corporate human rights could have a profound impact on the capital markets, but conceded that the qualities assessed “are fundamentally qualitative and hard to measure”.

Elsewhere, the Equality and Human Rights Commission, the independent statutory body in the UK, has published a five-step guide for company boards to help respect human rights and meet new reporting requirements under the new Modern Slavery Act and the forthcoming EU Non-Financial Reporting Directive.

Signatories:

• Boston Common Asset Management
• F & C Investments
APG Asset Management
• Interfaith Center on Corporate Responsibility (ICCR)
• Aviva Investors
• Calvert Investments
• Robeco
• Church of Sweden
BNP Paribas Investment Partners
• MN Services
• Alliance Trust
• Rockefeller Sustainability and Impact Investing Group
• Hermes Equity Ownership Services
• Domini Social Investments LLC
NEI Investments
• Walden Asset Management