Looking at more than 3,000 companies listed in 35 countries, the latest Vigeo Eiris survey on corporate behaviour regarding the respect of human rights reveals striking findings.
Companies report more on their commitments to human rights than on the protection of the environment. However, only a minority of companies comprehensively commit on all areas associated with human rights for which they are responsible. Even fewer are those companies that go beyond adopting a defensive position, through the setup of risk mapping and prevention mechanisms (i.e. due diligence) to avoid human rights abuses.
Nevertheless, this minority of leaders, mainly European companies, provide evidence that businesses operating at worldwide level can successfully incorporate the respect of human rights in their corporate strategy and in their operations across their whole value chain, including their supply chain.
This study is based on Equitics©, the exclusive methodology of analysis and rating developed by Vigeo Eiris in 2002. This assesses the degree to which listed companies around the globe commit and act to prevent violations, respect and promote fundamental human rights, employee labour rights, guarantee non-discrimination, and promote diversity at work in both their operations and their supply chain.
Our study reveals that:
- Less than 4% of companies disclose commitments that comprehensively cover human rights areas for which they have responsibility, as defined by the United Nations conventions and declarations, the ‘Guiding Principles on Businesses and Human Rights’ endorsed by the UN Human Rights Council in its resolution 17/4 on June 16 2011*, the ILO conventions, as well as in the OECD Guidelines for Multinational Enterprises (2011).
- The overall score of multinationals on human rights issues is limited (score of 32/100), which is less than the score in our 2012 survey (37/100). This decrease can be explained, on the one hand, by the lack of charge in commitments disclosed by firms listed in industrialised countries, and on the other hand, by the inclusion within our study of new companies that are listed in emerging markets.
- A detailed examination of our findings reveals disparities in companies’ behaviour depending on the categories of human rights under review, and depending also on the sector and regions in which they operate. As in our 2012 study, the respect and promotion of employees’ freedom of association and the right to collective bargaining is the area where the average company’s score is the weakest (29/100). This theme appears as a “blind spot” among human rights themes under review. In particular, only 10% of companies communicate on internal processes in place to enable employees to exercise their union rights (information to employees, risk mapping, audit and whistleblowing procedures, etc.).
- As to the respect and promotion of fundamental human rights and workers rights in the supply chain, the average score of companies is also limited (30/100). With respect to fundamental human rights in society, companies achieve the highest but still limited overall score of 35/100. Finally, concerning the respect and promotion of non-discrimination and diversity in the workplace, companies obtain an average score of 33/100 and this is the issue on which they communicate the most.
- On the four human rights themes under review, nine out of the ten countries where companies perform the best are European ones. France (48/100) ranks first, followed by Sweden (42/100), Spain (41/100), Finland (39/100) and Denmark. Countries where companies get the lower scores on human rights are mainly in emerging markets, especially South Eastern Asian countries.
- Among the top 30 performers, 96.6% are headquartered in Europe, compared to 80% in our 2012 review.
- Best performing companies: some are development banks, which assess and prevent negative human rights impacts associated with the projects they finance (e.g: respect of the rights of indigenous people and labour rights conditions) or potential abuses (forced resettlements). Others are exposed to the scrutiny of civil society due to the nature of their activities or products, or due to the complexity of their supply chain. This is the case for companies in the Luxury Goods and Services sector, the Publishing sector, but also the Forest, Tobacco, or Mining and Metals sectors.
- As in our 2012 survey, more than 20% of companies in the study face at least one controversy. One-third are involved in controversies with a high or critical degree of severity.
- Overall, human rights controversies represent nearly 11% of all controversies identified by Vigeo Eiris. Over half (51%) are linked to violations of fundamental human rights (e.g. right to privacy, right to property, freedom of expression, rights of indigenous populations etc.), 11% are related to violations of labour rights, 21% to employees discrimination, and 17% to human rights violations in the supply chain (child labour, forced labour, etc.).
- In 43% of controversy cases, companies did not respond to allegations, while only 3% were proactive in having adopted permanent corrective measures and consulted stakeholders.
- The Banks, Food and Mining & Metals sectors face the highest number of allegations.
- One-third of the allegations have been identified in the United States, where cases of allegations of human rights abuses tend to be more often brought to court.
- Finally, as in our 2012 review, human rights is the third ESG theme most addressed by companies in their CSR reporting, after corporate governance and business behaviour issues, but before environment, community involvement and human resources related issues.
Fouad Benseddik, Director of Methods and Institutional Relations at Vigeo Eiris said: “This study confirms that even though fundamental human rights remain corporate responsibility’s Achilles’ heel, good practices do exist and can be further developed. This issue is crucial for the future of globalisation and for companies’ capacity to create sustainable wealth”.