Last week, the Corporate Human Rights Benchmark (CHRB) released its inaugural results. The CHRB uses 100 human rights indicators to benchmark 98 of the world’s largest publically traded companies in three sectors (agriculture, apparel and extractives). A first of its kind, the CHRB provides a snapshot of progress towards the implementation of the UN Guiding Principles on Business and Human Rights and is a useful proxy for comparing progress over time both across and within industries.
So, what can we learn from this inaugural benchmarking exercise?
Only a few businesses are at the top of the game.
In many ways, the CHRB confirms what many of us know—there are only a few businesses at the top of the game and this small group, the likes of BHP Billiton, Marks and Spencer Group and Rio Tinto are increasingly pulling ahead of the pack when it comes to the implementation of the UN Guiding Principles. These leaders have recognised the business case, commercial viability and moral imperative of acting on human rights.
The CHRB also tells us that most of the top companies have now established policy commitments, governance and due diligence frameworks to support the implementation of UN Guiding Principles. However, the hard work is still very much ahead—embedding these principles through remedies and grievance mechanisms and day to day practice.
The struggle is in engaging with stakeholders along the value chain.
What businesses are struggling with the most is engaging with stakeholders along the value chain, specifically workers and communities whose rights are most likely to be affected. More than 50% of companies have no in-principle commitment towards engaging stakeholders and 84% do not have any framework for such engagement at all. Even worse, 91% do not involve these stakeholders in designing remedial and grievance mechanisms.
The CHRB has also exposed the yawning gap between a company’s public response and internal action. Most companies are now responding publicly to allegations of human rights violations. However, they do not have appropriate internal policies and procedures in place to take action to investigate and resolve such issues.
Interestingly, the CHRB revealed that the companies that faced the most serious allegations were at the top and bottom of the Benchmark. The difference is that the top companies took appropriate action when faced with such allegations. What this tells us is that those in the bottom of the Benchmark run a very real risk of reputational damage with investors, customers and future talent if they fail to take action when faced with allegations of human rights violations. These companies, which includes many leading Asian businesses (e.g. Coal India, China Petroleum and Chemical, Heilan Home) are naturally prone to a greater level of public scrutiny due to their high profile and large market capitalization.
Bridging the gap between the leaders and laggards will take time.
The good news for those looking to improve their human rights practices is that they can emulate the practices and increasing number of standards of leading companies. Ultimately, the CHRB serves to provide a benchmark to work towards and a useful methodology for evaluating what businesses need to do to prevent future human rights abuses.
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