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Asset Managers Are Not Taking Real Action On Human Rights: Study

What’s happening? Asset managers globally are not taking meaningful action on human rights abuses, with pledges to end modern-day slavery merely "paying lip service" to the issues, according to a study compiled by campaign group ShareAction. Almost half of asset management companies assessed in the study, which represent $45tn in assets, didn't prohibit investing in controversial weapons, despite international treaty bans, and 70% of the largest asset managers globally didn't have screening policies for companies that breached international human rights standards. 

Why does this matter? Amid a global pandemic that is affecting workers around the world, investors have increasingly turned to look at the “S” in ESG, assessing how firms are treating their employees and wider society. 

But, as the report from ShareAction highlights, deeper-seated social issues are quite clearly still being overlooked by fund managers. ShareAction found a mismatch between references to human rights in ESG policy documents and actions to hold companies to account, which were non-existent in the majority of cases. The report also notes 15% of asset managers surveyed made no reference to human rights at all. 

There is a transatlantic divide in engagement with the issue, with the leaders based in Europe and the laggards in the US. The world’s six largest asset managers – BlackRock, Capital Group, Fidelity Investments, JP Morgan Asset Management, State Street Global Advisors and Vanguard Group – are among the poorest performers. ShareAction highlights this is in line with more developed mandatory reporting standards for human rights in Europe compared to the US.

The findings mirror those reported elsewhere on large corporations’ human rights performance, with 50% of firms surveyed by Corporate Human Rights Benchmark scoring zero in six separate human rights metrics. The Covid-19 pandemic could also be exacerbating some of these issues, including labour rights. 

There are positive initiatives, such as the Investor Alliance for Human Rights which now has investor support to the tune of $5tn. But, with figures like the recently revealed 10,000 victims of modern slavery in the UK alone – a figure that is growing – there is much to be done.

Further reading:

UK ban on ethical divestment struck down by Supreme Court, Curation

Point of No Returns Part II – Human Rights, ShareAction

Nick Finegold is Founder & CEO of Curation Corp, an emerging and peripheral risks monitoring service.

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