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New benchmark ranks corporate human rights performance
16
Mar '17
The first-ever public ranking of corporate human rights performance has been launched to incentivise companies in a race to the top for the moral and commercial advantages of a strong human rights record. The product of 2 year consultation with over 400 companies, it is supported by 85 investors, accounting for $5.3 trillion in assets under management.

Marks & Spencer Group and Adidas are among the small group of leading performers, while Macy's, forms a part of the much larger group with lower scores.

The Benchmark is led by investors and non-profit groups and analyses 98 companies from three high-risk industries – agricultural products, apparel and extractives – but will grow year-on-year to cover the world's 500 largest listed enterprises.

"This first Benchmark is a baseline. In the future, we want to see companies move up as they respond to increased public scrutiny and engagement from investors. Inaction runs a high reputational risk and low scoring companies should act decisively, learn from leading practices, and rapidly improve," said Vicky Dodman, chief executive of the Corporate Human Rights Benchmark.

The Benchmark examines companies' policies, governance, processes, practices and transparency, as well as how they respond to serious allegations of human rights abuse. This is done by scoring the companies on 100 indicators across six measurement themes. A small number of companies emerged as leaders scoring between 55-69 per cent, but the results skew significantly to the lower bands. A clear majority, 63 out of 98 companies, score below 30 per cent.

Investors are encouraged to use the benchmark's results in their analysis of companies and investment decision making, including the identification of key human rights risks to discuss with management. Successful companies will have lowered their exposure to potential legal, reputational and financial risks that could arise from human rights abuses. The ranking also paves the way for governments to use a smart mix of regulation and incentives to enhance transparency and minimum standards of corporate behaviour to make the business case for the respect of human rights.

Companies in the middle and lower bands of the benchmark should demonstrate their respect for human rights and seek to emulate the best practice of industry leaders. Companies that have yet to start implementing their human rights responsibilities have no time to lose, because any inaction runs a high reputation risk with investors, customers and prospective employees.

"In our company engagements, we have noticed that public benchmarks make sustainability topics more concrete for companies and create a 'race to the top'. We expect the Corporate Human Rights Benchmark to do the same for international and industry-specific standards on human rights and responsible business conduct," said Angélique Laskewitz, director, Dutch Association for Sustainable Investing. (KD)

Fibre2Fashion News Desk – India


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