Corporate Human Rights Performance
The first-ever public ranking of corporate human rights performance launched today, seeking to highlight the moral and commercial advantages for companies with a strong human rights record.
BHP Billiton, Marks & Spencer, Rio Tinto, Nestlé, Adidas and Unilever were identified as some of the top performers, while Costco Wholesale, Macy’s, Grupo Mexico and Yum! Brands were among the brands with the lowest scores.
The CHRB’s Pilot Methodology is the result of extensive multi-stakeholder consultation around the world over two years, involving representatives from over 400 companies, governments, civil society organisations, investors, academics and legal experts. The Corporate Human Rights Benchmark is supported by 85 investors, accounting for $5.3 trillion in assets under management.
The Benchmark is led by investors and non-profit groups and analyzes 98 companies from three high-risk industries — agricultural products, apparel and extractives — but will grow year-on-year to cover the world’s 500 largest listed enterprises.
Key industrial risks for 2016 pilot benchmark
Agricultural Products
Child labour
Forced labour
Freedom of association and collective bargaining
Health and safety
Land rights Water
Sanitation
Women’s rights
Apparel
Child labour
Forced labour
Freedom of association and collective bargaining
Health and safety
Women’s rights
Working hours
Extractives
Freedom of association and collective bargaining
Health and safety Indigenous peoples rights and FPIC
Land rights
Security Water and sanitation
Scope of business relationships
Agricultural Products and Apparel industries
Within the Agricultural Products and Apparel industries
The 2016 Pilot Benchmark focuses on the supply chain. This focus varies in individual indicators, between direct suppliers with which the company has formal and contractual relationships on the one hand and all those within and beyond the first tier on the other. References to business relationships in these industries therefore vary between:
Suppliers: Defined as direct, contracted or tier 1.
Supply Chain: Defined as all supply chain business relationships, including both direct and indirect, tier 1 and beyond.
Extractives Within the Extractives industry
The 2016 Pilot Benchmark focuses on what are referred to as ‘extractive business partners.
Extractive business partners: Defined as operational level contractors (including on-site and off-site contractors involved in operations, such as those involved in resettlement operations or other similar operations off-site, contracted security providers, etc.) and joint ventures or similar contractual arrangements with multiple parties to carry out exploration and/or production.
Coverage of Company Structures
The following company structures are included in the definition as part of the company:
Subsidiaries (+50% equity ownership)
Associated companies (20-50% inclusive)
Subsidiaries of associated companies
Associated companies of subsidiary companies
Joint ventures or consortia (with at least a 20% equity stake)
Franchises
Divisions
Operating units
Discontinued operations where it is clear turnover is still being derived (but subject to one year review)
Key Messages from 2017 Findings
There are some clear leaders, but improvements can still be made
There are leading companies in each industry which are out ahead of the pack on human rights. But these leaders are both few in number – 3, 3, and 12 companies in the top three bands respectively – and do not yet achieve top marks across the board. The highest band any company has earned is in the 60-69% range, with the bulk of leaders scoring between 40-49%. With at least two companies from each industry in the top two bands, these leaders provide the examples of current best practice that other companies can quickly learn from and emulate.
The results skew significantly to the lower bands
The 2017 results are significantly skewed toward the lower bands. This reflects the relatively early stage that many companies are still at when implementing the UN Guiding Principles and other internationally recognised human rights and industry standards. Nearly six years on from the UN Guiding Principles’ endorsement, this is an important if uncomfortable finding.
Lowest performing companies must improve urgently
The large majority of low-performing companies (0-29%) are falling overwhelmingly behind, with all the dangers of human rights abuse of workers and communities that this implies.
They need to act decisively, learn from leading practices, and emulate rapidly their existing standards. Many of the companies in the Benchmark have strong public brands, have a large market capitalisation, and in high risk industries for human rights. With increasing public scrutiny, any inaction runs a high reputation risk with investors, customers, and the talent that their future success depends on.
Commitments must be followed through
Companies tend to perform more strongly on policy commitments, high-level governance arrangements, and the early stages of human rights due diligence.
Performance drops, however, even amongst leading companies, when it comes to acting on those risks, tracking responses, communicating effectiveness, remediating harms, and undertaking specific practices linked to preventing key industry risks.
It is clear that for any company to improve their corporate human rights performance moving forward, a concentrated focus must be put on implementation in practice and continually learning the valuable lessons the ongoing due diligence and remedy processes offer.
Engagement with those potentially affected is lacking
56% of companies do not score any points for their commitments to such engagement; 84% do not score any points for having a framework for such engagement; and an alarming 91% of companies do not score any points for involving users in the design or performance of their grievance mechanisms. There is a gap between responding publicly to serious allegations and taking appropriate action
The 2017 results indicate that there are few companies that could safely feel they are performing strongly against this fundamental feature of meaningful corporate performance on human rights.
There is a gap between responding publicly to serious allegations and taking appropriate action
The 2017 results indicate that the companies that faced serious allegations were those in the top and bottom bands of the Benchmark. In other words, the companies in the middle bands tended not to face allegations meeting CHRB’s threshold of severity for inclusion.
Implication: it is a good sign that companies begin the journeys of paying attention to and incorporating human rights as part of their business policies at various extents but overall it is still a long way ahead.
https://www.corporatebenchmark.org/guide-benchmark
https://www.corporatebenchmark.org/sites/default/files/2017-03/CHRB_methodology_singles.pdf