According to Anna Pot, there is no room for complacency
Corporate action to protect human rights has improved in the past five years, with a clear direct link between senior leadership responsibility and progress. Yet big gaps remain, with over one-third of all companies still scoring zero on human rights due diligence in the 2022 Corporate Human Rights Benchmark (CHRB).
In 2022, the CHRB (part of the World Benchmarking Alliance) assessed 127 companies in the food & agriculture, ICT and automotive sectors on their human rights performance. There are clear signs that holding companies to account on human rights is driving faster progress. Since first being included in the benchmark, 66% of food & agricultural companies, 65% of ICT companies, and 57% of automotive companies have increased their score.
On the right track
The top performing company in the benchmark is Unilever, which is singled out for its human rights governance, policy commitments and practices. Other companies included in the top-5 are Wilmar International (food) PepsiCo (food), Hewlett Packard (ICT) and Coles Group (food). Elevating human rights responsibilities to the board level appears to be key for better action on human rights.
“These leading companies demonstrate that action on human rights is possible within a competitive framework”, says Anna Pot, Head of Responsible Investment Capital Markets at APG. ‘It is encouraging to see that corporate performance on human rights is improving. This means we are on the right track and should continue in this direction.”
Still, the research also shows that benchmarked companies need to do more to translate commitments into action. For instance, while many companies include issues related to child labor, land rights and living wages in supplier codes of conduct and contractual agreements, the vast majority fail to follow through and monitor progress.
“There is no room for complacency”, Anna says. “Too many companies still fail to meet minimum requirements regarding human rights policies, processes and practices. Over one-third of all companies score zero on human rights due diligence. Lagging companies need further and greater pressure to act. We make clear to investee companies what we expect from them. We do this through engagement – also together with other investors in the Investor Alliance for Human Rights – and by voting on behalf of our clients at shareholder meetings.”
The World Benchmarking Alliance calls on policymakers to urgently put in place legislation that encourages human rights laggards to act. “While the UN Guiding Principles (2011) have set a baseline for action, further regulation is required to mandate corporate action on human rights where voluntary efforts are proving insufficient.”
APG, on behalf of its pension fund clients, was one of the CHRB founders in 2017 and took 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”, Anna explains. “The CHRB provides good quality data which we, as a responsible long-term investor, need to make investment decisions and engage with investees.”