Companies in sectors at risk for involvement in human rights abuses show modest progress in respecting human rights. Since the launch of Corporate Human Rights Benchmark (CHRB) three years ago, 75% of companies have improved their scores. APG uses the results in its engagements with companies on human rights.
A limited number of companies score particularly well in the annual benchmark, which was published for the third time in London on Friday. Adidas (apparel), Unilever and Marks & Spencer (agricultural products) and Rio Tinto (extractives) are leaders in their respective industries. In addition, there are a number of companies that have significantly improved their human rights performance since the launch of the CHRB in 2017, e.g. Inditex (known for the Zara brand), Heineken and Repsol.
On the right track
“The leading companies demonstrate that action on human rights is possible within a competitive framework,” says Anna Pot, Manger Responsible Investments US at APG Asset Management. “We see that corporate performance on human rights is improving. Companies disclose more information about their efforts and challenges and increasingly incorporate respect for human rights into their strategies. We are on the right track and should continue in this direction.”
While some leading companies have improved significantly, there is no reason to be complacent, says Pot. “Over half of the companies assessed fail to demonstrate they are meeting any of the United Nations Guiding Principles on Business and Human Rights’ (UNGP) requirements. These laggards need further and greater pressure to act, in particular on effective due diligence.”
APG, on behalf of its pension fund clients, was one of the CHRB co-founders in 2017 and actively takes part in the building of the benchmark. “We contribute to this since we, as stewards of capital, are keen to improve corporate human rights performance,” Pot explains. “The CHRB provides good quality data which we, as a responsible long-term investor, need to make investment decisions and to engage with investees.”
The CHRB measures how 187 companies in the apparel, food & beverage, extractive and tech manufacture sectors perform across 100 indicators based on the UNGPs on Human Rights. It uses publicly available information on issues such as forced labor, protecting human rights activists and the living wage.
APG uses the CHRB data to review (potential) investments and inform engagements with companies. This relates in particular to the thematic engagements that APG, on behalf of its pension fund clients, does in the apparel and extractive industries. Other investors are now using this data as well. “The CHRB is increasingly recognized as the standard on measuring corporate human rights performance,” says Pot. The merger with the World Benchmark Alliance (WBA), also announced on Friday, offers the opportunity to greatly increase the number of companies assessed on human rights performance.
“I am also glad to see that the scope of the benchmark is expanding to include more companies and sectors,” says Pot. This is all the more important since the results show that the publication of the CHRB can have a positive impact on corporate human rights performance.” This year, tech companies were included in the benchmark for the first time.