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The 2022 Corporate Human Rights Benchmark report assessed three main sectors: food and agriculture, information and communication technology (ICT) manufacturing, and automotive manufacturing, totaling 129 companies. 5 key trends were highlighted in this report:
Although these findings prove that there is increased attention to human rights in corporate operations, it is clear that there is still much work to be done. Going beyond the highlighted findings, it is very important to understand the underlying variables of a company achieving human rights success. An example of a variable that contributes to the end results is the strong correlation that was found between human rights success and board-level human rights discussions.
Just because there is room for improvement does not mean that there is a problem, but unfortunately, in this case, it does. The current status quo in human rights and more broadly in ESG is to put forth just enough effort to look good, but not truly excel. A prime example of this is when a company publishes a human rights report discussing their efforts but they do not disclose any key data or metrics reinforcing the ways in which they are advancing the lives of its (in)direct employees. It is seen far too often where a company outlines a goal, objective, or plan but cannot provide any concrete evidence of the execution or results of their efforts. This point is largely supported by the aforementioned report when it mentions that 66% of companies say they engage with stakeholders about human rights, yet only 29% do so on a regular basis; or when it shows that despite a company verbally expressing human rights expectations to suppliers, many of those same suppliers do not monitor key aspects of basic human rights such as child and forced labor or women’s rights and living wages.
The standards of corporate human rights are moving in the right direction but there is a need for increased transparency. With the lack of regulation or consequences for human rights laggards, the status quo does not demand accountability.
Looking at the highlighted findings above, there appears to be similarities between the current state of corporate human rights and the recent struggles that sustainable investing has recently started to move past. Similar to the evolution of sustainable investing, human rights issues will need to gain increased attention from the board and executive levels, increase transparency through company reports displaying the results of their actions, and regulations to hold companies accountable if they do not fulfill their promises. If we want a world with a more equitable future, corporate companies will need to stop doing ‘just enough’ and start leading by example.
Physis is a fintech company that offers investors a variety of sustainability tools and data to track the impact of their investments, including insights on a company’s labor management or gender equity performance! We make it easy for institutional investors to prove the sustainability of a company or fund beyond the ambiguous ESG score. Find out how we can help you today!