John Morrison, chief executive of the Institute for Human Rights and Business on why the CHRB is not another reporting initiative
A baby was born in London this Monday. After three years of work across eight organizations, the Corporate Human Rights Benchmark (www.corporatebenchmark.org) was launched.
For me personally, it is the first step towards answering an age old question – which companies are best at human rights? Easy to ask, much harder to answer. On Monday, we began to answer that question for nearly 100 of the Global 500 largest publicly listed companies. Each year from now on, as we rank more and more of the 500, we will get better and better at answering the question.
Why does it matter? Well human rights have not disappeared in today’s world – in fact they are more important, more contested, more vulnerable than ever. In an age of increasing populism, nationalism and short-term expediency, corporate responsibility really matters and it matters particularly when minorities and groups are neglected or even targeted by their national governments. The “social license” of business and its activities is becoming increasingly material to investors, governments and consumers themselves.
The UN Guiding Principles on Business and Human Rights have become the de facto governance framework for all responsible business conduct within bodies such as the UN, OECD and the EU, and in this way human rights implementation has become a central to any legitimate analysis of business’ role in society.
The CHRB is not another reporting initiative. It measures companies on what they are doing – whether or not they are reporting through sustainability or annual reports. Having said that, transparency really matters. Being based solely on public information, it is an objective unto itself that CHRB drives much greater corporate transparency on human rights. There are some companies in the initial ranking who have scored low not because they are not necessarily engaged in human rights, but because they have yet to communicate effectively around this. This might seem unfair, but the UN Guiding Principles themselves require companies to “know and show” and it is hard to build a platform for greater investor and consumer behavior that is not premised on publicly available information. Reporting frameworks that have strong human rights content, such as the UNGPRF and GRI should stand companies in good stead when it comes to CHRB ranking, but they are also not pre-requisites.
So where are we going? Firstly, there is a wealth of data now available on these first 98 companies approaches to human rights. We released an initial analysis of their performance on our website and a Key Findings report, but there is much more analysis possible to draw out the fine grained examples of leading practice and gaps to fill, and we will aim to be producing those throughout the coming weeks and months. In the meantime, we invite the world to explore the data themselves.
Moving forward, we will be collecting the feedback from this initial ranking of three industries: apparel, extractives and agricultural products. There will be a lot of learning about how effectively the scoring system has captured overall performance and in particular the issues that differentiate strongly performing companies from the laggards. Some aspects of CHRB will require careful ongoing explanation, that in our Pilot Methodology we have not considered the secondary impacts on human rights (through climate change or tax evasion for example), and also that we have awarded companies for how they have responded to serious allegations, some of which are of course contentious.
At a minimum, the three existing industries will be ranked again in 2018, but we need to do more than resources allow. This means looking at, at least, one additional industry to grow our coverage toward the 500.
We are particularly interested to examine how CHRB influences the behavior of investors themselves and the leverage and incentives this might start to build within companies. Government itself is an economic actor, and we hope that CHRB is a tool embraced by those looking at how human rights can be best integrated into public procurement or export credit decision-making. Finally, last but not least, is the ultimate incentive of all, informing consumer choice – known for its fickleness but potentially a huge driver for change. We hope that consumer groups will start to use CHRB to produce materials and tools that will allow consumers to reward companies directly, through their wallets and purses.