Launched in 2013, the Corporate Human Rights Benchmark (CHRB) operates on a not-for-profit model and claims to be the first publicly available evaluation and ranking of the 100 largest extractive, clothing and agri-food companies in terms of human rights.
Its free-to-download Corporate Human Rights Benchmark Progress Report, aims to trigger a ‘race to the top’ with companies competing against each other on human rights.
By acknowledging firms that put these issues at the core of their business while pointing to those who do not engage, it aims to enable investors to allocate social ‘costs’ into capital allocation decisions, rewarding firms with best practice.
‘An average performance is a poor performance’
The top ten performing companies included four agri-food firms – Marks & Spencer in second place, Nestle in fourth, Unilever in sixth and Kellogg in ninth – while the company with the lowest ranking (five out of 100) was Costco Wholesale.
Other low-ranking food firms included Kraft Heinz, McDonald's, Walmart, Carrefour, PepsiCo and Mondelez.
Companies could score a maximum of 100 percentage points but very few companies managed to get a score of even 50 and the average score bracket of 20 to 29 was “disappointingly low”, said CHRB.
Firms were evaluated according to governance and policies; embedding respect and human rights due diligence; remedies and grievance mechanisms; performance: company human rights practices; performance: responses to serious allegations; and transparency.
Lack of leadership
Chief responsible investment officer at Aviva Investors and CHRB chair Steve Waygood said benchmarking is beginning to drive a race to the top on business and human rights.
"That is good news. However, we should all be concerned by the lack of engagement from around a quarter of companies, particularly as they are in priority sectors concerning serious human rights impacts.
"Issues such as modern day slavery, worker safety and freedom of association can be material to the financial performance of these companies and they may risk restricted access to capital due to reputational damage and regulatory backlash.”
Nestle’s head of investor relations Steffen Kindler and head of public affairs Christian Frutiger sent a joint response in which they acknowledged “there is more work to be done”.
“In an ever-changing business landscape, investors play a critical role in supporting companies to take decisive steps in managing their responsibility to respect human rights. We look forward to continuing our participation in this important initiative.”
Tesco, which scored 43 out of 100, said it would reflect on the benchmark and “evolve” its efforts.
"One of the key areas for improvement identified is implementing meaningful grievance mechanisms further down supply chains,” said responsible sourcing director Giles Bolton. “This is not something that policy alone can tackle. We have learnt that leverage decreases the further away from our business we look in the supply chain so we will focus efforts on collaborative mechanisms."
The CHRB has received the support of the British, Dutch and Swiss governments as well as investors and civil society groups including APG Asset Management, Aviva Investors, Nordea and the Institute for Human Rights and Business, among others.
'A broken system'?
Farming campaign coordinator at non-profit Sustain Vicki Hird said the report showed how “some parts of the food system [were] clearly broken”.
“Agriculture workers are getting sporadic pay and at different rates, and there is too much evidence of criminality and slavery in food processing. The report shows that the growth of complex supply chains - where drive for costs savings lead to abuse – are often to blame. That takes deep rooted changes to how we manage and value the whole food chain alongside changes in enforcement and monitoring of existing rules.”
Since 2015, the UK’s Modern Slavery Act has required all UK and UK-operating retailers and manufacturers with a turnover of more than £36 million (€41 m) to produce an annual report detailing steps they have taken to combat slavery and human trafficking in their supply chain.
Although there have been around 400 active modern slavery investigations conducted in England and Wales by October last year, Sustain said there have been “few prosecutions specifically for these offences”.