UN PRI Aims To Incorporate Human Rights Into Reporting By 2025
What’s happening? The United Nations Principles for Responsible Investment (PRI) is developing a five-year programme for its members to ensure their investment processes incorporate human rights. This will eventually include compulsory reporting on human rights, building on the PRI’s existing disclosure framework. The programme consultation states that if an investor is unable to prevent or mitigate a human rights violation, divestment should be considered. The programme will be supported by the UN Guiding Principles on Business and Human Rights (UNGP). August has seen increasing investor activism around human rights, with 40 investors writing to firms about safeguarding migrant workers from debt bondage.
Why does this matter? Human rights risks are becoming more prominent, both within corporate strategy and across supply chains. In tandem there are growing collaborations between multilateral entities such as the UN, governments and the private sector on the issue.
Nevertheless, there is still significant ground to be covered. The incorporation of human rights by investors for instance, has been described as “far from the norm” by PRI chief Fiona Reynolds.
More broadly speaking, a US Government Accountability Office report found human rights was the least disclosed ESG topic by companies. This challenge is exacerbated by gaps and inconsistencies, which make it hard to draw comparisons across firms’ performance in addressing human rights and social risks.
Lateral thought from Curation – It’s been noted recently how many ESG-focused investment funds have a notable weighting towards technology stocks. This may prove problematic from a human rights perspective. Already, some funds have excluded names such as Apple over working conditions in factories in China.
Tracking human rights issues is particularly challenging in a globalised world – given the increased fragmentation, interdependence and complexity of supply chains. Many technology companies source components from factories in multiple geographies – Apple has suppliers across 43 countries and six continents.
Other issues have only come to light recently. In the fashion and electronics industries, for example, we are only starting to hear about forced labour of China’s Uighur ethnic minority.
Nick Finegold is Founder & CEO of Curation Corp, an emerging and peripheral risks monitoring service.
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