UK: Extractives Companies' Human Rights Records Ranked In Benchmark Study

Last Updated: 26 May 2017
Article by Catherine Gilfedder

Developments continue apace in human rights responsibilities for businesses. We are seeing persistent implementation of new reporting requirements across EU jurisdictions and beyond, judgments of national courts and international tribunals holding corporations to ever stricter account for their responsibilities in this area and UN negotiations continuing for a global treaty imposing binding international law obligations on businesses. Staying ahead of the field in this area is crucial.

While the responsibilities imposed by the UN Guiding Principles on Business and Human Rights (the UNGPs) are not in themselves legally binding, governments' expectations that companies will step up in this area have been made clear through National Action Plans, parliamentary enquiries and the introduction of "hard" legal requirements, such as under the Modern Slavery Act in the UK.

Now, the Corporate Human Rights Benchmark (CHRB) has ranked 98 of the largest publicly traded companies globally on 100 human rights indicators, focusing on the Extractives, Agricultural and Apparel industries. These areas were specifically selected because of the high human rights risks they carry, the extent of previous work on the issue, and global economic significance. 41 Extractives companies featured.

The CHRB is a collaboration between investors and a number of business and human rights NGOs. It has emphasised this is a pilot assessment and welcomes input on the methodology used. The study was compiled from publicly available information, with the selected companies also having the opportunity to submit information to the CHRB. Companies were given scores for the measures they are taking across six themes, grounded in the framework of the UNGPs:

  • Governance and policy commitments.
  • Embedding respect and human rights due diligence.
  • Remedies and grievance mechanisms.
  • Performance: Company human rights practices.
  • Performance: Responses to serious allegations.
  • Transparency.

The selected companies were then banded according to their overall percentage score. The performance-related criteria carried greater weight than the policy-based heads, with "Embedding respect and human rights due diligence" and "Company human rights practices" counting for 25% and 20% respectively.

Results skew significantly to the lower bands

There was a wide spread in the participants' performance, with a small number of clear leaders emerging. No company scored above the 60-69% band, with only three companies falling within that band. A further three scored 50-59% and 12 scored 40-49%. 48 companies fell within the 20-29% band.

Of the companies in the top band, two were in the Extractives sector; a further six Extractives companies fell within the 40-49% band; 19 scored 20-29% and five were found to trail at less than 19%.

The generally low scores across the three industries may be explained by the fact that the impact of some businesses' human rights processes may still be filtering through. We should expect that in future years the authors of the survey will adopt a more stringent approach and subject low-scoring businesses to greater criticism.

Gap between policies and performance

On the whole, companies tended to perform more strongly on policy commitments, high-level governance arrangements and the early stages of due diligence. They performed less well on actions such as tracking responses to risks, assessing the effectiveness of their actions, remedying harms and undertaking specific practices linked to key industry risks. There is often a mismatch between board level measures and their granular implementation, as well as between public responses to serious allegations and taking appropriate action.

Of the Extractives companies surveyed, only six companies scored were given a zero score for their policy commitments, whereas this was the case for 17 companies for "Embedding respect and human rights due diligence" and nine for "Company human rights practices".

On the policy side, some Extractives companies scored points for emerging practices such as regular discussion at board level of the company's human rights commitments, linking at least one board member's incentives to aspects of the human rights policy, and committing not to interfere with activities of human rights defenders, even where their campaigns target the company.

In terms of implementation, some participants explained how human rights risks are integrated into their broader risk management systems, how they monitored their commitments across their global operations and business relationships, and how they had systems in place for identifying and engaging with those potentially affected by their operations.

Companies were also scored for their practices in relation to selected human rights specific to each industry. Those in which the Extractives participants featured included freedom of association and collective bargaining, health and safety, land acquisition, water and sanitation and the rights of indigenous people.

Conclusion

The significant interest in the CHRB since it began its work is unsurprising given it provides an opportunity to demonstrate commitment and progress in this area vis-à-vis competitors. The pilot methodology will be refined and ultimately the CHRB will be produced on an annual basis for the top 500 companies globally. We expect it to contribute to the continued drive of companies across all sectors to proactively manage human rights risks in their own operations and through their expectations of their business partners.

Dentons is the world's first polycentric global law firm. A top 20 firm on the Acritas 2015 Global Elite Brand Index, the Firm is committed to challenging the status quo in delivering consistent and uncompromising quality and value in new and inventive ways. Driven to provide clients a competitive edge, and connected to the communities where its clients want to do business, Dentons knows that understanding local cultures is crucial to successfully completing a deal, resolving a dispute or solving a business challenge. Now the world's largest law firm, Dentons' global team builds agile, tailored solutions to meet the local, national and global needs of private and public clients of any size in more than 125 locations serving 50-plus countries. www.dentons.com.

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