Nearly 40 percent of the world’s largest publicly traded corporations are failing to demonstrate respect for human rights “on paper or in practice,” according to an annual appraisal of 101 extractive, agricultural and clothing or footwear companies across a raft of indicators based on the United Nations Guiding Principles on Human Rights.
Though Adidas handily defended its No. 1 spot in this year’s Corporate Human Rights Benchmark (CHRB), chalking up between 80 percent to 90 percent on issues such as forced labor, protecting human-rights activists and living wages, two-thirds of ranked companies clinched less than 30 percent overall.
“While we see clear progress from some companies, the majority are failing to make the grade,” Margaret Wachenfeld, CHRB independent director and co-lead of the CHRB methodology committee, said in a statement. “Seventy years after the adoption of the Universal Declaration of Human Rights, this is very concerning. If businesses will not clearly demonstrate their respect for human rights, then governments should step in with tougher laws to protect people.”
Inaugurated in 2017, the CHRB is a collaborative of pension-fund managers, socially minded investors and nonprofits, including Aviva Investors, the Business & Human Rights Resource Centre, Calvert Research and Management, Eiris Foundation, the Institute for Human Rights and Business and the Dutch Association of Investors for Sustainable Development (VBDO). To make its assessments, it uses publicly available information from public or company websites, documents and additional company input to the CHRB Disclosure Platform.
Related Stories
While the average score across all companies have increased since last year’s pilot, it remains “unacceptably low” at 27 percent, said Wachenfeld and her team. Businesses, as a whole, need to get better at “walking the talk” by matching their paper commitments with “clear, consistent action” where human-rights abuses or risks are identified, the CHRB added. Still, the fact that some businesses are moving to higher brands shows that this is neither an “impossible task, nor a hindrance to good financial performance.”
Adidas was trailed by Marks & Spencer and VF Corp. (which owns Timberland, The North Face and Vans) in the 60 percent to 70 percent category, and Gap and Inditex (which operates Zara) in the 50 percent to 60 percent category.
Companies that performed well demonstrated the importance of identifying and managing risks in their supply chains, particularly with regard to human-rights transparency, the ranking observed.
Businesses that lagged near the bottom of the ranking, on the other hand, failed to show any engagement with human-rights concerns. “This should raise urgent questions for investors and consumers as to whether these companies are serious about avoiding harm to people in their pursuit of profits,” the CHRB noted.
Virtually no companies, it said, showed “strong commitments” to paying living wages to workers in their own operations and supply chains, and less than 10 percent of businesses have pledged to respect human-rights defenders such as those exercising their rights to freedom of expression, association, public assembly and protest. At the same time, the ranking perceived a “clear gap” between companies acknowledging allegations of serious human-rights impacts and engaging with those affected.
“This ranking should serve as a wake-up call for businesses everywhere,” said Steve Waygood, chief responsible investment officer at Aviva Investors. “Too many are still not doing enough to respect the rights of those involved in or impacted by their operations, despite increasing investor scrutiny and the negative impact it has on a company’s long-term performance and prospects. While some businesses are showing the way forward, the overall picture is deeply concerning.”