BHP Billiton and Rio Tinto were ranked in the top three firms in the first Corporate Human Rights Benchmark (CHRB) report, released last week. Leading consumer brands have also performed relatively well while major State-owned oil and gas companies and household names have been amongst the worst performers.
The CHRB is produced by Aviva Investors, the Business & Human Rights Resource Centre, Calvert Research and Management, the Eiris Foundation, the Institute for Human Rights and Business and VBDO (the Dutch Association of Investors for Sustainable Development). The CHRB seeks to assess and rank the human rights performance of 98 publicly-traded companies in the "high-risk" agricultural products, apparel and extractive sectors. Firms were given a score out of 100% based on analysis of their policies, processes, practices and transparency by reference to the standards set out in the United Nations Guiding Principles on Business and Human Rights (UNGPs). Firms were also scored according to the manner in which they had responded to allegations of human rights abuses.
Key findings were that a small group of leaders in each industry provide examples of best practice but that, in general, many companies remain at a very early stage in their efforts to implement the UNGPs.
The companies assessed included the 35 largest agricultural products companies, the 30 largest apparel companies and the 41 largest extractives companies. The lowest overall average score was in the apparel sector (27.3%) with the extractives sector (29.4%) narrowly out-performing the agricultural products sector (28.8%). Only six companies (BHP Billiton, Marks & Spencer, Rio Tinto, Nestle, Adidas and Unilever) scored over 50%.
A goal of the CHRB is to equip investors with information that can be used for investment analysis and capital allocation decision-making. In this regard, the sponsors of the report are encouraging investors to use their voting power and influence, for example, in relation to remuneration, to promote better corporate practice.
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© Herbert Smith Freehills 2020