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Human Rights Really Aren’t All That Important: Just Ask 200 Leading Companies

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That is the conclusion one reaches after reading the latest report by the Corporate Human Rights Benchmark (CHRB), which was set up by investors and civil society organisations dedicated to creating the first open and public benchmark of corporate human rights performance.  CHRB was founded in 2013 as a non-profit and is now part of the World Benchmarking Alliance (WBA) which I wrote about in my previous post. It is supported by major investors such as APG Asset Management, Aviva Investors, and Nordea Wealth Management. “Preventing adverse impacts on workers, communities and consumers is one of the most pressing challenges almost every company faces in today’s globalised marketplace. The CHRB seeks to tap into the competitive nature of the market as a powerful driver for change in confronting this challenge.”  

 Since 2017 the CHRB has assessed some of the largest listed companies in the world in three industries— agricultural products, apparel, and extractives. In 2019 it added electronics manufacturing for a total of 200 companies. They are assessed on a variety of indicators organized into six themes and grounded in the UN Guiding Principles for Business and Human Rights, as well as other international and industry-specific standards on human rights and responsible business conduct. The results shown in the full report, broken down by industry and country, are mostly bad, sometimes very bad. The average theme scores are Governance and Policy Commitments (2.6/10), Embedding Respect & Human Rights in Due Diligence (5.7/25), Remedy and Grievance Mechanisms (3.1/15), Performance: Company Human Rights Practices (4.3/20), Performance: Response to Serious Allegations (8.6/20), and Transparency (3.2/10). Rather remarkably, 95 of these 200 companies score zero across every indicator in the theme of human rights due diligence.  

 On a scale of 1 to 100, two-thirds score 30 or less with one quarter scoring 10 or less. Only seven companies score 70 or more. None scores above 90. To some extent these scores are due to the lack of data being provided by companies. But this lack of transparency is telling. Given the good work of the UN Global Compact and other organizations over many years, these findings are somewhat remarkable. Human rights is such a, well, basic, human right. And if some of the best-known and highly visible companies in the world are scoring so poorly, the results for smaller and less well-known companies are undoubtedly worse. It is hard to imagine how the SDGs can be accomplished when so little attention is being paid to human rights, a foundation for all of them. 

 The company with the highest score is the apparel company Adidas, the only one in the 80-90% range. It scores consistently well across the board, as follows: 

  • Governance and Policy Commitments (7.4/10.0)
  • Embedding Respect & Human Rights Due Diligence (21.4/25.0)
  • Remedy and Grievance Mechanisms (15.0/15.0)
  • Performance: Company Human Rights Practices (16.1/20.0)
  • Performance: Response to Serious Allegations (15.0/20.0)
  • Transparency (8.4/10.0) 

 In the sustainability page of its corporate website Adidas has an extensive discussion of its commitment to human rights, including its approach to human rights due diligence. “In 2014, Adidas established a third party complaints mechanism. As part of this mechanism, Adidas committed, at the end of each year, to communicate, via its corporate website, how many third party complaints it has received related to labor or human rights violations and the status of those complaints (i.e. being investigated, successfully resolved, etc.) and how it engages with human rights defenders ('A human rights defender (HRD) can be any person or group of persons working to promote human rights locally, regionally or internationally. Defenders can be of any gender, any age, from any part of the world and with different backgrounds and different interests. Typically, trade union organizers, environmental interest groups, human rights campaigners and labor rights advocates would be considered to be HRDs’).” 

Illustrating that industry does not drive the ranking, consider that the very fashionable brands of LVMH, Nordstrom, Ralph Lauren, and Prada all rank in the second-to-last category of 10-20%. All have scores in the single digits for all six themes. All have sustainability reports, albeit with little or no attention human rights. 

  • LVMH says: “Our social responsibility is rooted in the fundamental principle of respect for people and their individuality.” 
  • Nordstrom has a page for Sustainable Fashion and  says: “Since Nordstrom was founded in 1901, one of our goals has been to ‘leave it better than we found it.’ Part of this means taking care of our communities, including respecting human rights.” 
  • Ralph Lauren: No wonder they rank so low. Their corporate website is basically only for marketing. Search really hard and you can find their nicely designed Corporate Citizenship & Sustainability report which covers a wide range of topics and not in alphabetical order. Dead last is Worker Empowerment and Well-Being. On this they say (and I guess you have to compliment them on their long-term view): “By 2023, we will roll out our Wage Management Strategy to all of our strategic suppliers to address fair and timely compensation for factory workers. By 2030, we will make empowerment and life-skills programs available to 250,000 workers across our supply chain.” 
  • Prada: Like Ralph Lauren but with older and more static models. As best I can tell, there is nothing in their latest sustainability report about human rights, although they are concerned about Trademark Protection.  

The two conclusions are obvious here. First, deeds not words. Second, I’m guessing that many (most) of the upper-middle and upper class consumers who buy these products think they are buying them from “responsible” companies. Maybe not. But the onus is more on CHRB to get these data to consumers until these companies come clean. 

“The latest results show poor performance across the different measurement areas, from policy commitments to practices. But scores drop even lower in the area of the assessment that look at company actions in relation to specific human rights risks, such as child or force labor, freedom of association, and collective bargaining. Companies need to demonstrate that they are following through on their policy commitments,” said Camille le Pors, CHRB Lead at WBA.

In the next category (70-80%) below Adidas are the familiar names of Unilever (agricultural products) and Marks & Spencer (agricultural products and apparel), along with four companies in the extractives industry—Rio Tinto, BHP, Freeport-McMoRan, and Repsol. The latter illustrate that respecting human rights can be done in even the most challenging of industries.  

The mining and metals company Rio Tinto came in second after Adidas, which it proudly announces on its sustainability website. It outscores Unilever on  Remedy and Grievance Mechanisms (10.8 vs. 9.6), Performance: Company Human Rights Practices (14.4 vs. 11.0), and Performance: Response to Serious Allegations (15.2 vs. 13.8). Rio Tinto prominently states: 

“Everywhere we work, we respect and support all internationally recognised human rights, in line with the United Nations’ Universal Declaration of Human Rights. We were the first mining company to embrace Indigenous land rights in the Pilbara, Australia in 1997, and we were also one of the first companies in the world with a standalone human rights policy. We are proud of these achievements, but know we have more to do. 

Respect for human rights starts with everyday actions. It is a responsibility we take seriously every day, every shift – from governance, overseen by the Sustainability Committee of the Board of Directors, to processes like pre-screening suppliers and providing human rights training to our employees.” 

This is followed by an extensive discussion of the international human rights’ standards they follow, the policies they have for implementing them, and how they work with civil society organizations. Their 2018 Annual Report clearly states their performance against targets, including when they have been missed. Although not labeled as such, it qualifies for me as an integrated report and is better than many of the self-proclaimed integrated reports I’ve seen. 

In the bottom category there are some usual suspects in all of these four industries, but also a few real surprises, such as Starbucks which received a score of 8.5 out of 100. It scored less than 2.0 on all six themes. Also in the bottom category is the Swiss chocolate company Lindt & Spruengli which manages to score less than 1.0 on three of the six categories and actually gets a zero on Remedy and Grievance Mechanisms. Both of these companies score below the oil & gas company Phillips 66. The Starbucks 2018 Global Social Impact Report is brand color and logo appropriate with quotes from well-known people but says almost nothing about human rights, being focused more on environmental issues. The Lindt & Spruengli 2018 Sustainability Report has a nice chocolate-colored color, many pretty pictures, substantial discussion about employees but next to nothing about human rights and very little in the way of performance data on any sustainability topic.  

Please don’t get me wrong. I’m a big fan of both companies’ products and am not impugning their motives. It could be that they don’t see human rights as an issue given their business models, although with their supply chains I think that’s doubtful. My point is a very simple one. Respecting human rights is as fundamental as dealing with climate change and the two are obviously related. The CHRB is rightly calling our attention to this and giving companies the tools to make sure that human rights are preserved and protected. It is also empowering investors, governments, civil society, and the general public with credible data to inform their decisions. Investors are paying close attention to the human rights performance of companies and increasingly calling them to account.

Gerbrand Haverkamp, Executive Director of WBA, said “Human rights really are ‘all that’ important and they are essential to achieving the SDGs. We are seeing a new era of human rights show and tell with companies being measured on their actions as well as their commitments. Right here, right now.”

In 2020 the Corporate Human Rights Benchmark is assessing 230 companies, including 30 companies from the newly added automotive sector. The 2020 results will be published in November 2020.

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