Most businesses failing on human rights due diligence, major ranking shows
Over half of major companies in apparel, extractive, food & beverage and tech manufacture are failing on human rights - particularly on due diligence - in new Corporate Human Rights Benchmark;
Steady improvements seen over three years, but one in five companies fail to improve on low scores;
Tech manufacturing sector added for first time and scores poorly – urgent action needed;
Monster Beverages, Starbucks and Costco still amongst the poorest performers in the ranking, while Adidas, Rio Tinto, Unilever, M&S and Hewlett Packard are leading their sectors.
London, UK – The latest Corporate Human Rights Benchmark (CHRB – a part of the World Benchmarking Alliance ) – shows how most companies in the apparel, food & beverage, extractive and tech manufacture sectors are failing to meet basic corporate human rights expectations.
CHRB measures how companies perform across 100 indicators based on the UN Guiding Principles on Business and Human Rights (UNGPs). It uses publicly available information on issues such as forced labour, protecting human rights activists and the living wage to give companies a maximum possible score of up to 100% (2).
While some leading companies have improved significantly, more than half of those assessed are failing to demonstrate they are meeting any of the UNGP’s basic requirements on human rights due diligence (3). As this is the tool for companies to both “know and show” that they are respecting human rights, this year’s benchmark shows that more urgently needs to be done by companies, investors and governments. The CHRB data is already being used by multiple investors (such as Aviva Investors, APG and Nordea to inform investments and dialogue) and is used by multi-trillion-dollar investor coalitions when they engage with companies (4).
“Our rankings show some leading companies demonstrating that action on human rights is possible within a competitive environment. But far too many low scoring companies have not changed their practices at all. CHRB is calling for a rapid acceleration in the uptake of human rights due diligence to ensure companies respect human rights. States and investors also have a key role and they should use this data to motivate companies to rapidly improve,” said Steve Waygood, Chief Responsible Investment Officer, Aviva Investors and Chair of the CHRB Board.
75% of companies have improved their scores, with top movers since 2017 including ENI, Diageo, Repsol, Danone, Heineken, Fast Retailing, Kellogg, Inditex and Pepsico. Leaders, such as Adidas, Unilever and Marks & Spencer retain top positions and score above 70%. But most companies are performing poorly - the average overall score is 24%, while companies added to the ranking this year scored 17% on average (5). Tech companies averaged just 18% in the 2019 ranking, although this is the first year they are featured.
CHRB believes the data shows its benchmarking, supported by stakeholder pressure, has prompted some companies to change their approach to human rights. However, there are still plenty of laggards who consistently refuse to meet the basic requirements and who need further and greater pressure to act.
“The CHRB scores reflect the market failures around human rights where some companies rely on business models and practices that abuse people’s rights and avoid scrutiny and accountability. This latest data shows welcome improvements from many, but the majority are not moving fast enough toward respecting human rights. States have a duty to protect people from corporate abuse and while recent measures to improve human rights due diligence are welcome, more needs to be done to make respect for human rights ‘business as usual’,” said Phil Bloomer, Executive Director of the Business & Human Rights Resource Centre and board member of the CHRB (6) (7).
For copies of the report and interviews, please contact Oliver Courtney, email@example.com +44 (0)7815 731889
CHRB (www.corporatebenchmark.org) is a UK based not for profit, supported by a mix of investors, civil society organisations and governments. It produces in-depth assessments and rankings of how well companies in high-risk sectors perform on human rights issues. CHRB aims to harness the competitive nature of the markets to drive better corporate human rights performance, by providing companies, investors, consumers, governments and civil society with the information to make better decisions on the allocation of capital, purchasing, procurement, legislation and campaigns. CHRB is part of the World Benchmarking Alliance (WBA) and is in the process of merging with the WBA. The WBA will assess and rank 2,000 keystone actors on their contribution to the 2030 sustainable development agenda, with all companies being assessed against social indicators, which will have human rights at their core.
CHRB assesses companies on Human Rights Due Diligence via five indicators in Theme B.2. 95 companies from the total group scored zero on each of the five indicators (looking at identifying, assessing, acting, tracking and communicating on human rights impacts and risks), while 110 companies failed to achieve a score of 1 point (basic requirement) in any of the five indicators. 22% of companies scored half the max available points on B.2 (roughly equating to meeting the basic expectations in each of the five indicators).
The CHRB Methodology is the result of extensive multi-stakeholder consultation, involving representatives from over 400 companies, governments, civil society organisations, investors, academics and legal experts. Grounded in the UN’s Guiding Principles on Human Rights, it produces a proxy for corporate human rights performance across six key themes: governance and policies, embedding respect and human rights due diligence into the business, remedies and grievance mechanisms, human rights practices, responses to allegations of serious human rights impacts and transparency. The research, delivered with our partner EIRIS Foundation and supported by RepRisk (a provider of ESG risk metrics and analytics for the CHRB serious allegations), is based on public information, supported by (optional) company engagements and is made freely available to all interested stakeholders. Scores of zero does not necessarily mean that bad practices are present or that there is no company action on the issue. Rather, it means that we have been unable to identify the required information in public documentation
The CHRB data has been used by individual investors (such as Aviva, APG, Nordea, MN and Union Investment) in their engagement and decision making, as well as to inform investor coalitions (such as the UNGP Reporting Framework Investor Coalition and the Investor Alliance for Human Rights) and collaborative engagement via the PRI. More examples are detailed in the CHRB 2018 Progress Report.
The average score of all ‘new’ companies assessed in 2019 is 17%. Exceptions include Burberry, Puma, Newmont-Goldcorp, Hewlett Packard, Microsoft, Wilmar and Barrick Gold who all scored above 40%. ICT Manufacturing is a brand new sector, so it would be unlikely to compare well to the other three sectors. The 40 ICT Manufacturing companies average 17.8%, with only three companies scoring above 40% (Hewlett Packard Enterprise, Microsoft Corporation and HP Inc). 12 of the ICT companies score less than 10% including Western Digital, Qualcomm, Broadcom and Microchip Technology. In the first CHRB benchmark in 2017 the average score was 18%, similar to the ICT sector in their first year.
The UNGPs are clear on State duties: “States must protect against human rights abuse within their territory and/or jurisdiction by third parties, including business enterprises. This requires taking appropriate steps to prevent, investigate, punish and redress such abuse through effective policies, legislation, regulations and adjudication… In meeting their duty to protect, States should: Enforce laws that are aimed at, or have the effect of, requiring business enterprises to respect human rights, and periodically to assess the adequacy of such laws and address any gaps; and Encourage, and where appropriate require, business enterprises to communicate how they address their human rights impacts.”
The French Vigilance Law, the UK & Australian Modern Slavery Acts and the EU Non-Financial Reporting Directive are examples of efforts in this space, but it is clear from the CHRB data that these approaches have not yet had the desired outcome for corporate human rights performance and transparency. There is a growing push by civil society, investors and companies themselves to level the playing field by introducing mandatory human rights due diligence. The newest effort for investors is led by the Investor Alliance for Human Rights (IAHR) which has invited investors to sign on to a statement entitled The Investor Case for Mandatory Human Rights Due Diligence, calling on all governments to develop, implement and enforce mandatory human rights due diligence requirements for companies headquartered or operating within their jurisdictions. The statement and list of supporting investors will be launched in December 2019.”