Investors from across the globe, with $3.9 trillion (£2.5tn) of assets under management, have urged companies to use a new guide to help them report human rights risks. The investors point out that human rights abuses can be financially material, as well as an ethical issue.
The call comes as the UN has published a new Principles Reporting Framework, which acts as a guidance for companies to report on human rights in line with UN Guiding Principles.
The investor coalition, led by Boston Common, includes investors from Europe, North America and Australia. The group notes that companies that do not proactively assess and manage human rights issues face potential legal, reputational and other financial risk, whilst those who act can gain a competitive advantage.
Investors urging companies to embrace the new framework include Aviva Investors, BNP Paribas, F&C Investments and Alliance Trust.
Lauren Compere, managing director at Boston Common Asset Management, said, “Ultimately investors want to protect value by knowing human rights risks are being monitored and managed by the companies they invest in.”
She continued that the new tool provides “smart and comprehensive” guidance that means investors can identify and understand the human rights risks their portfolio may be exposed to.
“We hope [the tool] will encourage more investors to engage with companies on human rights as investors can now say to their investee companies – ‘please use this guidance as a straightforward way to start improving your controls and disclosure on human rights’,” Compere added.
Globally responsible investment is growing, reaching $21.4 trillion in assets last year, a 61% increase over a two-year period. Polls have revealed that investors often cite companies that have human rights abuses as their biggest concern and amongst businesses they want to avoid investing in.
Last year, investors with a total £195 billion in assets under management called for Transparency in Supply Chains legislation to be embedded in the UK modern slavery bill. The group of investors argued that human rights abuses not only present ethical concerns but also place financial returns at risk.
Speaking about the new tool, Steve Waygood, chief responsible investment officer at Aviva Investors, commented, “There is no question that human rights issues are frequently material to the financial performance to many companies. Long-term investors want to be able to benchmark corporate performance in this area, however, this is not at all easy to do.
“This reporting framework is a very welcome step in absolutely the right direction. It provides companies with helpful clarification and guidance. This is invaluable given the recent growth in reporting requirement on human rights.”
Photo: eastop via Freeimages