I follow developments with the Corporate Human Rights Benchmark (CHRB) simply because it’s an initiative that could evolve into the most comprehensive global corporate human rights tracker for investment and human rights remedy, among other applications. And also, because two Indian companies, Oil and Natural Gas Corp. Ltd and Coal India Ltd were part of the pilot ranking released in March 2017, among 98 publicly traded companies across the world in agricultural products, apparels and extractives. These three sectors account for some of the worst human rights offences and offenders.
ONGC and Coal India came in at the lowest score band of below 10% across all parameters and across the three industries. They were joined in these spaces by other extreme underperformers like China Petroleum and Chemical Corp., Ross Stores Inc., Kohl’s Corp., Yum! Brands Inc., Grupo Mexico, Macy’s Inc. and Costco Wholesale Corp.
CHRB’s future extensions include finance, engineering, pharmaceuticals and the information and communication technology sectors, to develop a scanning board of 500 companies.
Earlier this week, CHRB announced a course correction, for which the organization spent much of 2017 talking to stakeholders across the world.
A company’s corporate governance and policies, shared equally between board level accountability and policy commitments, currently receive 10% weight; the same as transparency. “Embedding respect and human rights due diligence" has 25%. Remedies and grievance mechanisms has 15% weight. “Performance" has 40%, shared equally between a company’s human rights practices and “responses to serious allegations".
It’s in this last space and transparency that tweaking will take place for 2018’s formal ranking, which should arrive within months if the initiative is to maintain both momentum and credibility. The tweaking is wordy, but significant. CHRB maintains that “Commitment to non-retaliation over concerns/complaints made" will be incorporated into its Measurement Theme. This will track a company’s stated intent to not go after anyone, physically and legally, who flags human rights violations against the company. CHRB says “further refinements" will be added to “assess a company’s response ranging from hostile to non-responsive to proactive." The system to weigh “multiple serious allegations" will also be changed. Instead of individual pointers, “an average of the scores across all allegations will be made to simplify the scoring." Scoring transparency in supply chains will be brought in line with tracking mechanisms of prominent supply chain risk watchdogs like KnowTheChain.
Such nit-picking is necessary for it to have any measure of success with companies in the current and future lists. It will extend the heft that CHRB, a registered not-for-profit, and a collaborative project which includes several major names, already brings. UK-based Institute for Human Rights and Business and the Business and Human Rights Resource Centre are key elements. They work with the train of Aviva Investors, VBDO (The Dutch Association of Investors for Sustainable Development) and Eiris Foundation—VBDO and Eiris focus on advising responsible investment—Stockholm-based Nordea Wealth Management, and APG Asset Management, which claims environmental- and governance-led investment decisions. Representatives from these organizations form CHRB’s advisory committee. Aviva chairs with Steve Waygood, Aviva’s chief responsible investment officer.
CHRB also lists as “allies" several influential watchdogs. These include The Australian Centre for Corporate Responsibility, the Investor Alliance for Human Rights, the Interfaith Center on Corporate Responsibility, and KnowTheChain.
Even so, the playing field is not yet level, admits CHRB. “The research is based on publicly available data and the scores represent a proxy for ‘actual’ performance in human rights," CHRB cautions. “As such, those companies who have made the effort to make relevant information public are able to score relatively well compared to peers with less appetite for disclosure."
That’s a pitfall. The 2017 pilot ranking had in the 60-69% range two surprises: extractives behemoths BHP Billiton and Rio Tinto. But maybe there’s some truth too. Starbucks Corp. scored what Waygood calls the average—the great bulge of rankings in the 20-29% band. The recent race-relations scandal at Starbucks’ US operations showed that maybe, it deserved the ranking.
Root Cause focuses on conflict situations and the convergence of businesses and human rights and runs on Thursdays.