The Principles for Responsible Investment has kickstarted its collaborative human rights stewardship initiative, RI has learnt.
The initiative aims to maximise investor contributions towards business respect for human rights and investor efforts to address social challenges. Paul Chandler, the PRI’s Director of Stewardship, explained to RI: “It’s also about recognising the power of stewardship. We wanted to bring together our members in a way that could have a meaningful difference in trying to avert some of these challenges.”
“That's partly because it's the right thing to do, partly because investors have obligations under various human rights laws (under the UNGPs and under the OECD guidelines), but also, investors have an interest in this. We all rely on functioning societies to generate returns – a well-functioning economy means having respect for human rights," he added.
‘This is a long-term initiative so we’re not expecting transformations overnight’ – Paul Chandler, PRI
In August, RI exclusively revealed that efforts on a Human rights 100+ was underway by the PRI.
The launch of the initiative comes as today the world celebrates Human Rights Day, which commemorates the UN General Assembly's adoption and proclamation of the Universal Declaration of Human Rights in 1948.
Representatives from investors including Storebrand Asset Management, Robeco, Hermes EOS, and Pensioenfonds Detailhandel will sit on the initiative’s advisory committee, which will provide strategic direction, advice and guidance on the engagement, and act as informal ambassadors.
The initiative will begin identifying and selecting the two (or more) most important sectors that it will kick off engagement with – both in terms of their size and commonality and/or severity of human rights issues. From there, a list of between 30-50 companies will be finalised by February. “We will grow to cover more sectors and companies as the initiative scales up,” Chandler said.
In its second year the initiative will begin engaging with policymakers.
When it comes to the metrics which will be used when engaging companies and tracking their progress, Chandler said it will be a mix of both quantitative and qualitative indicators, anchored in three pillars.
They include the adoption and full implementation of the UNGPs, as well as looking at companies’ political influence and policy engagement, ensuring they are aligning activities such as lobbying with their commitment to human rights. The PRI will also be looking at specific and salient issues for each company, depending on the characteristics of the company and the sector they are operating in.
Human rights have been increasingly rising up the investor agenda. Just yesterday, RI reported on investors ramping up engagement with the solar industry on human rights concerns.
And last week the PRI issued a request for proposals (RfP) for research on investor data needs and challenges related to managing human rights.
Chandler said the engagement initiative will be taking inspiration from Climate Action 100+, which the PRI is one of five coordinating partners of. For example, it will have lead investors for specific companies and promote tools beyond corporate engagement such as shareholder resolutions.
“There will also be a natural dialogue between the two as CA100+ is currently updating its framework, to include an assessment of the social implications of corporate climate strategies – known as the Just Transition,” he added.
However, there are signs of some differences. When RI asked whether the human rights initiative could potentially create a benchmark – like the one launched by CA100+ earlier this year – Chandler explained this approach isn’t ruled out, but that the initiative may instead look to an external organisation to conduct an independent review of progress.
In addition, he said it is unlikely a firm deadline would be set on the initiative ending. Rather, it is set to span at least over the next five years (until 2027) with annual reports published each year, starting from Autumn 2023.
Today’s announcement marks the latest spin off from Climate Action 100+. On the biodiversity side of things, Robeco is working with the Finance for Biodiversity Pledge, the World Bank, and the World Benchmarking Alliance to develop a Nature Action 100+, which RI also exclusively revealed.
Moving forward, the PRI will start to take expressions of interest of investor members who want to join. In February, once the company list is finalised, it will reach out to said investors so that they can apply to be lead investors for specific engagements.
The programme will be officially launched and named in spring 2022. It will also have a technical advisory group – with representatives from OECD, BHRRC, WBA, and Peking University, which will meet with the advisory committee later this month for an initial meeting.
Asked where he’d like the initiative to be in a year, Chandler said: “This is a long-term initiative so we’re not expecting transformations overnight, but we’d like to have seen investors start to develop change strategies for each focus company, relationships between investors and focus companies developing where they don’t already exist, and to have established our means of assessing results for the initiative.”