Report: Majority of top global firms falling short on human rights and ethical standards

Companies headquartered in the Pacific, Europe and North America perform relatively better overall.

This is according to the World Benchmarking Alliance (WBA)’s new Social Benchmark, which assesses the world’s top 2,000 companies, representing 45% of global GDP, based on three measurement areas – respecting human rights, providing decent work, and acting ethically.

These companies, dubbed as ‘SDG2000’, employ nearly 95 million people directly and hundreds of millions more through their supply chains. Some of these major brands include Amazon, BMW, Nestlé, Rio Tinto, Pfizer, Shein, Standard Chartered and AGL Energy.

According to the report, more than 30% of companies scored between just 0 and 2 points out of 20 total possible points.

The report highlights that while more than 60% of the companies have some disclosure on decent wages, only 4% are committed to or are currently paying their employees a living wage.

Similarly, while more than 45% of companies have some disclosure on working hours, a mere 3% currently have a working hours policy that complies with International Labour Organisation (ILO) standards.

WBA’s social transformation lead Namit Agarwal said: “The SDG2000 companies have resources and influence equivalent to some of the biggest countries, impacting more people than the populations of many nations.

“The fact that 90% of these companies are failing to act on fundamental social expectations shows the state of play of the private sector. Regulation, guidance, and external pressure are necessary to steer businesses in the right direction.”

Human rights legislation

Moreover, the report highlights that companies headquartered in countries with human rights legislation score almost 60% higher on human rights due diligence (HRDD) than those in countries without such regulations.

Earlier this year, the European Parliament granted final approval for the Corporate Sustainability Due Diligence Directive (CSDDD), mandating companies and their partners across supply chains to prevent, cease, or alleviate their negative influence on human rights and the environment.

WBA recommends all governments set minimum legal behavioural standards on HRDD for companies of all sizes, in order to prevent their human rights risks and impacts in line with the UN Guiding Principles on Human Rights.

Sectoral performance

While the overall average performance of the 2,000 assessed companies is low (23%), consumer-facing sectors such as Apparel & Footwear (33%), ICT (30%) and Retail (28%) perform slightly better due to heightened public scrutiny.

The Apparel & Footwear sector scores the highest in human rights and decent work, while the ICT sector leads in ethical behaviour, anti-bribery and anti-corruption due to strict regulations.

Regional Insights

In terms of regional impact, companies headquartered in the Pacific, Europe and North America perform relatively better overall.

Nevertheless, WBA argues that responsible social practices are possible despite regional differences, with all regions, except Central Asia, being represented in the top 10% of companies. The regional scores are as follows:

  • Pacific: Highest overall score (35%). Australian companies lead in disclosing income taxes and paying living wages. Top companies: Coles Group and Woolworths Group (13/20 points).
  • Europe: Second highest (33%). High disclosure of living wages and tax strategies. Top companies: EDP, Glencore, Unilever and Yara (15.5/20 points).
  • North America: Third (24%). US companies align with the overall average (23%). Top companies: Hershey, VF Corporation, Newmont and Teck Resources (15/20 points).
  • Asia: Varies significantly. Southeast Asia scores highest (21%), while East and South Asia score lowest (14%). Excluding Chinese companies, East Asia’s score would rise to 28%. Top company: Wilmar International, Singapore (14.5/20 points).
  • Middle East and North Africa: Lowest performance (11%). Minimal commitment to ILO standards and living wages. Top company: OCP, Morocco (14.5/20 points).

Related article: Rise in Profits from Forced Labour: An ILO Report Reveal (edie.net)

Related feature: Key Updates on 2024 UK and EU Sustainability Disclosure Rules (edie.net)

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