Index will rank companies on human rights in effort to drive better performance
A group of investors, an NGO, a think-tank and an investor research agency, have joined forces to launch the first free and public wide-scale project to rank companies on their human rights performance.
The Corporate Human Rights Benchmark (CHRB) will build on a competitive approach to drive better human rights performance among corporations. The initiative will initially evaluate and rank 500 of the largest global companies from the agriculture, ICT, apparel and extractives industries. The four sectors were selected based on the severity of human rights impacts prevalent in the sector, the extent of previous work on human rights in the sector and global economic influence by size, among other criteria.
While still in its initial stages, the CHRB has already received support in the form of financial pledges. The UK’s Department for Business, Innovation and Skills is pledging government support for the benchmark, including providing £80,000 start-up funding. The CHRB’s first free and public ranking is currently timetabled for 2016 after a pilot in 2015.
The organisers of the long-term project include Aviva Investors, the Business and Human Rights Resource Center, the Institute for Human Rights and Business, VBDO, a sustainable investment forum for socially responsible investors in the Netherlands, as well as environmental, social, governance (ESG) global research providers for responsible investors EIRIS.
Prior to getting together in order to bring the CHRB to life, the parties involved had pursued human rights related work independently. “All of us have a long history of interest in, support for and conducting research into these issues. And then at EIRIS 30th anniversary event in 2013 we all came together and the ideas we had each had coalesced into what has now become the CHRB,” explains Stephen Hine, head of responsible investment development at EIRIS.
While other corporate human rights rankings exist, such as Maplecroft’s customisable Human Rights Due Diligence Dashboard, Ethical Consumer’s company ratings, or Human Rights Campaign’s buyer guide to companies, Hine explains that which will set the CHRB apart. “It will cover hundreds companies which is more than other initiatives and rankings, and on a broader set of human rights, if at a higher level, with a particular emphasis on the General Principles such as due diligence, access to remedy, and tracking, the result of which will be measuring human rights impacts. Plus there will be sector specific indicators.”
Increased awareness, boosted by NGO pressure, new regulation, and ease of communication, has allowed greater scrutiny into corporations’ records on human rights. Companies are also increasingly yielding to pressure from human rights and consumer groups over their accountability, while others are internalising the benefits of a clear human rights track record as part of their corporate responsibility.
“We recognise our responsibility to respect human rights and strive to comply with laws, regulations and standards wherever we operate,” says Lydia Méziani, senior corporate spokesperson at Nestlé. “Consequently in 2013, Nestlé became the first major multinational company to report publicly on its human rights impacts across seven countries and what it is doing to address them.” Méziani adds that the company is working to raise awareness among employees; “since 2010, we have trained more than 50,000 employees on human rights.”
“The CHRB is at the beginning of a process which we hope will be as inclusive and transparent as possible,” says Méziani. Details around the criteria, which will be used by the CHRB to assess companies on their human rights performance are still being developed. As to the impact the benchmark might have, the team behind the project is confident that by making information on companies’ human rights performance publicly available it will provide an opportunity for investors, civil society and other stakeholders to engage with companies on human rights issues.
“Investors will be able to allocate capital to those companies that are doing best and engage with laggards. Policy makers will have an objective means by which to focus on those companies and sectors that have greatest human rights impacts, and especially those which are under-performing, thereby highlighting where regulation or incentives might be needed,” says Hine.CHRB company ranking EthicsWatch Human rights investors