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The Corporate Human Rights Benchmark has led to a surge in human rights reporting since it was launched a year ago, but the failure of more than a quarter of companies to engage is cause for deep concern, says Magdalena Kettis of Sweden’s Nordea Bank
It is almost seven years since the UN adopted the Guiding Principles on Business and Human Rights, and there are now positive signs that more companies than ever before are taking steps to address gaps in their human rights management. A race to the top is starting to take root, spurred not just by new legislation (such as the UK’s Modern Slavery Act) or civil society pressure but also by investors’ initiatives to stimulate competition on the issue.
One of these is the Corporate Human Rights Benchmark (CHRB), which ranks 100 of the world’s largest apparel, agriculture and extractives companies on human rights. We are now beginning to see how the introduction of competition and ranking on corporate human rights performance is catalyzing some companies to take action on human rights.
Since the launch of the pilot benchmark in 2017, CHRB has seen a domino effect of corporations taking action in reporting on human rights and committing to transparency.
More companies are committing to transparency since the CHRB benchmark's launch in 2017. (Credit: CHRB)
The rise in companies submitting human rights reports has increased four-fold from 13 in 2015 to 52 in 2017, according to the Shift Project, a non-profit organisation.
As reported in CHRB’s Progress Report this week, specialist consultancies and advisors are witnessing increased demand for human rights support. Companies are aiming to improve both their absolute human rights performance and their performance relative to their peers.
Furthermore, more than 5,000 companies have now reported on their public commitments to avoid modern slavery in their supply chain. Meanwhile, poor human rights performance is becoming a discussion point among companies, with the threat of exclusion from specific funds looming for corporations that pass on tackling human rights issues.
Companies are failing to disclose the information that stakeholders rely on to make informed choices around human rights
As greater accountability permeates the corporate landscape, several benchmarked companies have been recognized for improving their performance
It’s also been encouraging to see that the CHRB has had an impact on the corporate world beyond those scored in the benchmark and companies are now using the CHRB methodology as the tool with which to understand their human rights strengths, weaknesses and relative performance, and to reach out to external parties to understand where they might improve.
While companies are by and large moving in the right direction, 28 corporations were cited in the CHRB report for failing to respond to the investor coalition and CHRB invitations, and not participating in the 2018 benchmark engagements.
While more than a quarter of companies are not meaningfully engaging, it’s also cause for concern that the average performer is a poor performer. Fewer than half of the companies surveyed could demonstrate board level leadership in human rights. Companies are, on average, failing to disclose the information that stakeholders rely on to make informed choices around human rights.
Perhaps most concerning about the lack of engagement from around a quarter of the companies is that many of them are in priority sectors concerning serious human rights impacts. Issues related to human rights can be material to these companies and they could risk impacts on share price and restricted access to capital due to reputational damage and regulatory backlash.
The Rana Plaza tragedy in Bangladesh, which happened five years ago last month, serves as a stark reminder for companies of the importance of prioritizing addressing gaps in human rights management. While the progress to date is encouraging, it is clear there is still a long way to go before the UN Guiding Principles become part of business as usual.
Human rights CHRB UN Guiding Principles modern slavery Nordea Shift project aviva