Report: Big businesses falling ‘overwhelmingly behind’ on human rights
A large majority of businesses are in danger of falling "overwhelmingly behind" on human rights issues, according to a new report which benchmarks the ethical performance of some of the world's biggest businesses.
The inaugural Corporate Human Rights Benchmark (CHRB) report, released this week, focuses on 98 publicly traded firms from three industries – agricultural products, apparel and extractives.
Businesses are benchmarked on a range of indicators such as governance and policies, transparency, human rights due diligence, and responses to serious allegations.
The report highlights a number of leading companies in each industry: Marks and Spencer (M&S), BHP Billiton and Rio Tinto all scored in the 60-69% range, while Nestlé, Unilever and Adidas follow just behind with scores between 50-59%.
However, these leaders are few in number, with just under half of companies (48) scoring an overall mark in the 20-29% bracket. McDonalds, Walmart, and Yum! Brands are among the firms that are ranked below the 20% band range. These companies are being urged by CHRB to “act decisively, learn from leading practices, and emulate rapidly their existing standards”.
“Implementing respect for human rights across a company’s activities and business relationships is not simple,” CHRB chair Steve Waygood said. “It takes commitment, resources, and time to embed respect for human rights into the ways that a large and diverse workforce thinks and acts.
“Moreover, companies rarely control all the circumstances in which they operate; those contexts may change rapidly and serious human rights dilemmas may arise. That is why it is critical for all stakeholders in different roles to take action and use these results to drive improved corporate human rights performance.”
Follow the leaders
The report notes that the company scores are significantly skewed toward the lower percentage bands, reflecting the early stage that many companies are at when implementing the UN Guiding Principles – the 2011 global standard for addressing the risk of adverse impacts on human rights linked to business activity.
CHRB suggests that low-performing companies must follow the example of current industry leaders and recognise the moral imperative, business case and commercial viability of taking action on human rights. The paper warns that inaction runs a high reputation risk with investors, customers and “the talent that their future success depends on”.
According to CHRB, companies tend to perform strongly on policy commitments, high-level governance arrangements and the early stages of due diligence. The results point to a growing willingness to understand the risks a company poses to human rights, but the report notes that a general inertia exists around undertaking specific practices linked to preventing key industry risks.
For instance, levels of corporate performance are low when it comes to engagement with stakeholders such as communities and workers – 84% do not score any points for having a framework for such engagement.
‘Just the beginning’
An “enormous amount” therefore has to be done in relation to staff engagement, according to Colleen Theron, the director of sustainability and human rights consultancy CLT envirolaw. With only three companies in the CHRB report scoring more than 60% in the overall benchmark, Theron notes there remains much more to be done for companies to improve their corporate human rights performance moving forward.
“The results of the CHRB report reflect our own research on how companies are performing in relation to the Modern Slavery Act (MSA) – they are stronger on policy commitment’s but at the very early stages of due diligence,” Theron told edie. “The results really are quite revealing – only 12% of companies are integrating human rights risk and tracking them.
“This is really just the beginning – transparency demands will increase with growing legislation such as the EU Non-financial Reporting Directive and MSA. Companies should be considering what resources they need to be able to address human rights issues.”
The CHRB report concludes that it is up to civil society and the media to press for action and support advances, providing reputation reward for leading companies and reputation risk for laggards.
Commenting on this suggestion, Theron said: “The question is whether the benchmark will indeed empower civil society. The media and better public information can promote and reward advances by companies making well informed choices that they engage with.”
In a recent blog written exclusively for edie, Theron provided a list outlining 10 steps that companies should take to get a handle on modern slavery and human trafficking.
Read the full Corporate Human Rights Benchmark (CHRB) report here.