The Corporate Human Rights Benchmark has published its key findings for 2019. It reports improvement among the ‘original’ 100 companies, but low scores overall. This article takes a look at the 2019 results and considers the effectiveness of benchmarks as a tool for both monitoring progress and encouraging companies to address the human rights impacts of their operations. It also looks ahead to the future of the CHRB, which is set to expand significantly in the next few years.
Since 2016, the Corporate Human Rights Benchmark (CHRB) has assessed and ranked some of the world’s largest companies in respect of the “policies, processes, and practices they have in place to systematise their human rights approach and how they respond to serious allegations”. Originally monitoring 100 companies in three sectors, its 2019 review expanded to consider a total of 200 companies across four sectors: agriculture, apparel, extractives and ICT manufacturing.
The data for the benchmark is harvested from public sources such as company websites, annual and sustainability reports, policies, statements and other public documents. This data is then used to award each company a score against six ‘measurement themes’, including how well the company embeds respect for human rights and human rights due diligence, responds to serious allegations or discloses information in respect of its human rights safeguards.
The goal of the benchmark is to apply pressure on companies operating in high-risk sectors, encouraging them to participate in a ‘race to the top’ in addressing the impacts of their operations on human rights.
2019 Report: Key Findings
The 2019 results show slow but steady progress for most of the original 100 companies in the benchmark. The average score among those companies has moved from 17% to 31% in 2019, suggesting heightened transparency and commitment to human rights. The report also names a number of companies that are actively engaging with the benchmarking progress and showing impressive efforts to improve their scores.
However, the CHRB’s latest report states that the overall results paint “a distressing picture”. It notes that the average score across all 200 companies was only 24%, with over half scoring less than 20%. The new 100 companies added this year dragged the overall figure down, with an average score of 17%.
The key criticisms of the 2019 report are:
- human rights due diligence is a key weakness for most companies, with nearly 49% of companies scoring zero in this indicator;
- companies are failing to adequately remedy severe allegations of human rights abuses; and
- transparency is lacking, with very few companies disclosing the processes they have in place to manage key risks (e.g. forced labour).
Benchmarks as a tool for monitoring human rights engagement
The CHRB is one of several human rights benchmarks that have sprung up in recent years. Know The Chain, for example, benchmarks companies’ efforts to eradicate modern slavery from their supply chains. Similarly, BankTrack assesses 50 of the largest global banks on their progress towards implementing the UN Guiding Principles on Business and Human Rights (UNGPs), and recently published its own results.
Given the qualitative nature of measures to address human rights risk, and the different kinds of risks that affect companies even within the same sector, benchmarks will never be a perfect tool for monitoring human rights engagement. Moreover, although there is increasing voluntary engagement between the companies included in the benchmark and CHRB analysts, this remains piecemeal, and scores which rely primarily on data in the public domain do not necessarily reflect the true state of affairs.
Nevertheless, disregarding the CHRB carries its own risks. As noted in our previous blog post, low scores can have tangible financial repercussions: Aviva Investors, which manages $364bn of assets, withheld support from 40 companies this year following poor CHRB results.
This reflects the broader trend towards an enhanced role for ESG investment decisions. Earlier this month, Norway’s $1tn oil fund – the largest sovereign wealth fund in the world – announced that it was selling its shares in a global service provider following allegations of human rights abuses linked to its operations in the Middle East.
This trend, coupled with the increasing recognition of the CHRB as a source of relevant data for investors, militates in favour of constructive engagement with the benchmark.
The future of the CHRB
The CHRB is set to expand further. Next year it will assess 25 companies in a fifth sector: the automobile industry; and in the slightly longer term, the CHRB is merging with the World Benchmarking Alliance. The latter is a potentially transformative development, creating the potential for rapid expansion into further sectors, and greater global reach.