5 reasons why the Corporate Human Rights Benchmark matters

LexisNexis Legal & Professional, Business Insight Solutions, 6 April 2017

Last month, the inaugural Corporate Human Rights Benchmark (CHRB) was launched. The Benchmark analysed 98 of the Global 500 largest publicly listed companies on their human rights performance. In this blog, we give insight into the results of the first analysis and explain why the CHRB matters.

The Benchmark will provide a comparative snapshot year-on-year of human rights performance of the largest companies on the planet. It was developed by Aviva Investors, the Business and Human Rights Resource Centre, Calvert Investments, the Institute for Human Rights and Business (IHRB), VBDO and Vigeo Eiris. In this first analysis, companies from the agricultural, apparel and extractives sector were assessed across six uniquely-weighted measurement categories. The companies were chosen based on their size (market capitalization), revenues, and geographic and industry balance.

Source: Business and Human Rights Resource Centre

The Benchmark is grounded in the United Nations Guiding Principles on Business and Human Rights and other international and industry-specific standards on human rights and responsible business conduct. It focuses on companies' policies, processes, practices and transparency, as well as on how they respond to serious allegations.

The CHRB shows three companies that have demonstrated the most leadership regarding human rights performance (scoring more than 60%):

  • BHP Billiton (extractives)
  • Marks & Spencer Group (agricultural products/apparel)
  • Rio Tinto (extractives)

5 reasons why the CHRB matters

As the United Nations notes, "In an increasingly interconnected world, there is closer scrutiny of corporate impact on people and communities. " As such, human rights performance is not just a concern for NGOs and non-profits. The CHRB is an important step because it:

1. Contributes to creating a more balanced and equitable global marketplace
Large businesses have a strong impact in how the global economy works. By benchmarking corporate social performance of large businesses against internationally agreed standards, the CHRB aims to help create a more balanced and equitable global marketplace.

2. Shows the need for better performance
The overall average score across all the 98 businesses analysed was 28.7% and only six businesses achieved over 50%. Nine companies scored below 10%. The CHRB shows clearly that there are considerable opportunities for improvement for businesses to implement and demonstrate good practice. Find out more about the business rankings.

3. Empowers investors to make ethics-based decisions
The CHRB is supported by 85 investors, accounting for $5.3 trillion in assets under management. One of the expected impacts of the Benchmark is that "investors will be better equipped to direct investments to companies performing in line with international human rights standards, and engage with those who are not to improve their performance or shift their capital away if improvements are not achieved." Moreover, consumers increasingly mirror investors' concerns, holding companies they choose to do business with to high ethical standards—also referred to as social compliance.

4. Pushes companies to compete on human rights
The Benchmark harnesses the competitive nature of markets and corporate senior management by encouraging a "race to the top" of the annual ranking to drive improved human rights performance and build best practice standards. Besides investors, the CHRB will inform and equip civil society, workers, customers and consumers to make well-informed decisions about which businesses they want to engage with.

5. Encourages companies to be more transparent
The CHRB differs from other reporting frameworks as it is based on the 'know and show' principle of the UN Guiding Principles. This means that it has only analysed publicly available information, including information from company websites, sustainability and annual reports, other relevant documents and information provided by companies themselves. Not included in the analysis and scoring are business' non-public, human rights-related practices. As John Morrison, Chief Executive of the IHRB explains, this means that "some companies in the initial ranking have scored low not because they are not necessarily engaged in human rights, but because they have yet to communicate effectively around this."