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March 31, 2016
Corporate Human Rights Benchmark Launched
    by Robert Kropp

Members of the Corporate Human Rights Benchmark complete methodology based in part on UN Guiding Principles on Business and Human Rights, and plan to publish the first benchmark of corporate human rights performance in November.


After more than a year of consultations with over 400 contributors, a consortium led by Aviva Investors, and including Calvert Investments and the sustainable investment research firm Vigeo Eiris, has produced a 150-page Pilot Methodology for the Corporate Human Rights Benchmark (CHRB), which will publish its first ranking—of the top 100 companies from the agricultural products, apparel and extractives industries—in November.

“We do not yet have a wide-scale, publicly available way of identifying how companies are performing,” CHRB Steering Committee Chair Steve Waygood of Aviva Investors wrote in the report’s introduction. “As a result, companies and investors are not routinely incorporating the costs of getting human rights wrong or right into their investment decisions.”

Inspired by the
Guiding Principles on Business and Human Rights, authored by Professor John Ruggie and Endorsed by the United Nations’ Human Rights Council in 2010, the Pilot Methodology of CHRB adds weighting to the five key performance indicators—leadership, governance, management systems, performance, and reporting/transparency—that were announced in July, 2015. Embedding respect for human rights and due diligence will make up 25% of the score of corporations being benchmarked, while two aspects of performance—corporate human rights practices and responses to serious allegations—each will make up 20% of company scores.

“Given the recent establishment of the UN Guiding Principles as the first clear baseline for how businesses should conduct their activities to avoid negative impacts on people, many companies are only beginning to implement or improve their human rights related policies, processes, practices and responses,” the report states. Creating such a baseline, however, presents challenges: “Human rights are about the dignity of each and every human life and about the core values that make life worth living,” the report continues. “Ultimately, that is very hard to measure.”

The initial solution for CHRB members and contributors to the methodology rests in the following key features: transparency; policies, processes, practices and responses; international and industry specific standards; key industry risks; and comparability, which, according to the report, “is vital in order for the CHRB to track progress over time.”

As noted above, the Pilot Benchmark will be published in November, 2016. Participants in the benchmark expect that it will continue to be updated with successive iterations.

“Respecting rights should ultimately be a competitive advantage,” Waygood of Aviva stated. “By creating a comparative ranking, companies will be incentivized to race to the top of the annual benchmark. The Benchmark will be public, meaning all stakeholders can draw their own conclusions about which companies are living up to society’s basic expectations. The leaders deserve to be recognized while the laggards should be pressed to improve. This is good for responsible companies, long term shareholders and society more broadly.”

Investors were quick to praise the development of the CHRB. “Benchmarking human rights performance of companies, especially those with large global supply chains, is critically important to workers and affected communities impacted by corporate activity,” said David Schilling, senior program director for Human Rights and Resources at the
Interfaith Center on Corporate Responsibility (ICCR). “ICCR is especially pleased that the CHRB includes a ‘No Fees’ component which focuses on the prohibition of workers paying fees to obtain employment and on employers restricting workers’ movement through the retention of personal papers.”

 

 
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