Opinion | What some PSUs are doing wrong on human rights

Business and human rights can be like oxygen for a better world as well as an oxymoron of the most cynical kind. This column has tracked both realities for several years, including the Corporate Human Rights Benchmark, or CHRB, that seeks to raise the oxy from the oxymoron, as it were. The group’s 2019 global ranking for 195 businesses is just out. Two Indian companies, Coal India Ltd and Oil and Natural Gas Corp. Ltd, feature in the list that has over the year added ICT Manufacturing to its bouquet of Agricultural Products, Extractives and Apparels.

In the 2017 pilot ranking, Coal India and ONGC came in at the lowest score band of below 10% across all parameters among 98 publicly traded companies around the world in agricultural products, apparels and extractives, the sectors that account for some of the worst human rights offences and offenders.

In 2018, with more publicly traded businesses ranked, Coal India scored in the 20-30% band while ONGC remained in the 0-10% band. In the 2019 rankings, Coal India has retained the band, and ONGC has moved up to the 10-20% band. Coal India’s band-mates include ArcelorMittal, McDonald’s, LafargeHolcim, Nokia, Walmart Inc., Exxon Mobil, and Hugo Boss. ONGC keeps company with other human rights laggards like Macy’s, Siam Cement, Posco, Amazon.com, LVMH, Yum! Brands, Nordstrom and Ralph Lauren. The ranking is available on CHRB’s website.

CHRB is a collaboration that now includes the Institute for Human Rights and Business, the Business and Human Rights Resource Centre (both UK-based), Aviva Investors, VBDO (The Dutch Association of Investors for Sustainable Development), Eiris Foundation (which, like VBDO focuses on advising responsible investment), Stockholm-based Nordea Wealth Management, and the Netherlands’ APG Asset Management. Steve Waygood, Aviva’s chief responsible investment officer, chairs CHRB.

Governance and policy are given a score out of 10, “Embedding Respect and Human Rights Due Diligence” is scored out of 25, remedy and grievance mechanisms top out at 15, the categories of “Performance: Company Human Rights Practices” and “Performance: Responses to Serious Allegations” are both at 20, and transparency is scored on a maximum of 10.

It may not surprise observers of human rights practices that while Coal India commits itself to human rights practice, its delivery lacks. There is abysmal display as to remedy, stakeholder engagement, and “zero tolerance” for attacks on human rights defenders. The company’s Corporate Social Responsibility Policy “is overseen by the Corporate Social Responsibility/Sustainable Development Committee,” notes CHRB. “However, this policy does not specify any human rights.” The aspect of human rights is also publicly absent in relation to the company’s business partners. “Not met,” CHRB continues, to human rights “risks” being “integrated as part of enterprise risk system Score” and “Not met: Audit Ctte [Committee] or independent risk assessment.” Neither are personnel—regular and security—briefed or trained in human rights practices, nor are there indications as to “monitoring” and “corrective actions”, according to CHRB.

Coal India also refrains from identifying human rights risks in its own operations. And, while it offers channels for “grievance mechanisms”, there is little indication of remedy or transparency. “Not met” is a far more frequent comment in the assessment than “Met”.

And ONGC, whose assessment in the CHRB ranking is also publicly available, is in a band lower than Coal India’s, and fully 10 points behind Coal India’s overall score of 27.4%.

It’s hardly a matter of joy that these two businesses have some of the best-known names in the world for company. Indeed, it’s an abysmal picture overall. Of the 57 companies listed under Agricultural Products, only seven score over 50%, and none above 80%. In the Apparels segment, of 54 listed, only seven score above 50%. Extractives have 11 companies out of 56 scoring above 50%. And ICT Manufacturing, the newest segment on the block, none out of 40 score above 50%. More than half the companies in every segment account for the 0-30% band. “The CHRB scores reflect the market failures around human rights where some companies rely on business models and practices that abuse people’s rights and avoid scrutiny and accountability,” Phil Bloomer, executive director of the Business & Human Rights Resource Centre and a board member of CHRB, declared in a statement.

A future column will discuss what businesses that score well seem to be doing right.

This column focuses on conflict situations and the convergence of businesses and human rights and runs on Thursdays.