Benchmarking driving companies to improve on human rights

A new report from the Corporate Human Rights Benchmark (CHRB) underlines the importance of corporate management of human rights and reveals that there are signs of improvement - with benchmarks, civil society and investor pressure helping to create a “race to the top”.

The Corporate Human Rights Benchmark (CHRB), a non-profit ranking corporate performance on human rights, is backed by major investors (Aviva Investors, APG and Nordea) and civil society organisations (Institute of Human Rights and Business, EIRIS Foundation, Business and Human Rights Resource Centre and VBDO).

Benchmarked companies, such as Nestle, Gap, Freeport-McMoRan, Mondelez and Tesco are all quoted in the CHRB report as reviewing and positively evolving their programmes and policies to manage and report on human rights. This is backed up by specialist consultancies/advisors such as Freshfields Bruckhaus Deringer and ERM who have seen increased demand for human rights support in the wake of the CHRB pilot. More widely, investors such as Union Investment in Germany, discuss how poor company human rights performance, informed by the CHRB and others, can result in exclusion from specific funds.

The report also names 28 companies that have not meaningfully engaged with the CHRB (not responding to the investor coalition, not responding to CHRB invitations, consultations or communications and not taking part in the 2018 benchmark engagements). These large companies, including Kraft Heinz, Macy’s, Hermes and Prada, had some of the lowest scores in the benchmark, indicating a lack of transparency and public commitment to managing human rights risks and impacts.

Steve Waygood, chair of the CHRB board and chief responsible investment officer at Aviva Investors, said: “Five years on from Rana Plaza and one year on from the first Corporate Human Rights Benchmark, this report indicates that benchmarking is beginning to drive a race to the top on business and human rights. That is good news. However, we should all be concerned by the lack of engagement from around a quarter of companies, particularly as they are in priority sectors concerning serious human rights impacts. Issues such as modern day slavery, worker safety and freedom of association can be material to the financial performance of these companies and they may risk restricted access to capital due to reputational damage and regulatory backlash.”

In 2018, the CHRB members, working with existing and emerging investor coalitions, will push for greater corporate transparency and engagement, with revised results for the apparel, agriculture and extractives sectors to be launched in November. The CHRB is also committed to expanding the assessment into the ICT sector, with a pilot benchmark planned for 2019.

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