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The State of Social in ESG

Data & Insights:

Human Rights

Introduction

Human rights have been codified by the United Nations for decades and substantial work has been done to map the protection of human rights to business conduct, for example through the UN Guiding Principles for Business and Human Rights. As human rights represent the most fundamental of social issues, we felt it was imperative to include questions about human rights in this survey. This section covers organizational policies and practices related to human rights 

Figures 34 & 35: Human rights policies

34: Does your organization have a human rights policy?

No Data Found

35: Does your human rights policy extend to your supply chain?

No Data Found

The human rights section of our survey started with a question about policy. We asked each participant if their organization has a human rights policy, and if so, does this policy extend to their supply chain? The results are presented in Figures 34 and 35, respectively. Note that the sample for Figure 35 comprises only the 34 (or 48% of) participants who reported that they currently have a human rights policy.   

Approximately half (48%) of participants have adopted a human rights policy, while 18% said they are considering it or working on it. About one-third (34%) of participants do not have a human rights policy and are not presently considering it.  

We note that there is a relatively large proportion of participants (34%) that do not currently have a human rights policy and are not considering it. This may be explained by the fact that the vast majority (79% of this subgroup) are based in Canada or the U.S. with operations primarily in their regions. This may help to explain why such policies are not prioritized amongst this cohort, since procurement is likely taking place within local or regional networks. As a result, these participants may perceive a human rights policy to be less critical relative to organizations with global supply chains.  

Finding:

1/3 of participants do not have a human rights policy.

One explanation:

The vast majority of participants have operations only in North America

Question:

Are human rights policies only essential for organizations with global supply chains?

As shown in Figure 35, among the 34 participants that currently have human rights policies, nearly half (47%) said these policies extend to their supply chains. Approximately one-third of this subgroup (35%) said they are either considering or working on extending their human rights policy to their supply chain, while 18% said the policy does not apply to their supply chain and they are not considering it. Among the 6 (or 18%) of respondents that have a human rights policy but do not extend it to their supply chain and are not considering doing so, 3 are non-profit organizations, 2 are companies operating in North America. There was only one global company with a human rights policy that does not extend to its supply chain.  

Approximately half (48%) of participants have adopted a human rights policy, while 18% said they are considering it or working on it. About one-third (34%) of participants do not have a human rights policy and are not presently considering it.  

We note that there is a relatively large proportion of participants (34%) that do not currently have a human rights policy and are not considering it. This may be explained by the fact that the vast majority (79% of this subgroup) are based in Canada or the U.S. with operations primarily in their regions. This may help to explain why such policies are not prioritized amongst this cohort, since procurement is likely taking place within local or regional networks. As a result, these participants may perceive a human rights policy to be less critical relative to organizations with global supply chain.  

Figure 36: Human rights policies for investors

Investors: Do you have a human rights policy covering your investment process?

No Data Found

No Data Found

Institutional investors are a unique group when it comes to human rights because they typically don’t have large or complex supply chains, but their capital can be deployed in ways that support or conflict with human rights. Therefore, we asked investor participants whether they have a human rights policy covering their investment process.  

 

Note that, although 14 survey participants self-identified as “institutional investors” at the outset of this survey, several participants in the financial services sector have asset management divisions within their organizations, 3 of whom responded to this question alongside 13 participants who formally identified as institutional investors at the outset of the survey.  

As shown in Figure 36, nearly one-third of respondents (31%) have a human rights policy that applies to their investment process, while one-quarter (25%) are considering or working on such a policy. Close to half (44%) do not have a human rights policy covering their investment process and are not presently considering it. 

Combined, 69% of investor respondents to this question do not currently have a human rights policy covering their investment process. These data point to a potential risk among this cohort as their portfolios may be exposed to human rights issues, which can lead to tragic outcomes and serious headline risks as we unfortunately learned from the Rana Plaza factory collapse nearly a decade ago. 

Figure 37: Human rights due diligence

Does your organization follow a formal human rights due diligence process? (e.g. UN Guiding Principles on Business and Human Rights?

No Data Found

We asked each survey participant whether their organization follows a formal human rights due diligence process to ensure the protection of human rights in their business operations and supply chains. As presented in Figure 37, approximately one-quarter of survey participants (24%) follow a formal human rights due diligence process while 20% are considering it or work on it. Most survey participants (56%) do not have a formal human rights due diligence process and are not presently considering it. 

Among the 40 participants (56%) who do not have a formal human rights due diligence process, only 8 operate globally while the others operate primarily in North America. As discussed with respect to the data presented in Figure 37, the fact that 32 out of 40 participants without a human rights due diligence process do not operate globally may help to explain the limited adoption. Essentially, operations and procurement are likely taking place within smaller and more regional networks where there may be less perceived need for such a process.  

With a growing focus on human rights issues at the domestic level, farsighted organizations will contemplate greater human rights due diligence in both domestic and international operations. Internationally, there has been growing momentum towards mandatory human rights due diligence. For example, the European Union (EU) has introduced legislation that would require large companies that are based in or operate in the EU “to identify and, where necessary, prevent, end or mitigate adverse impacts of their activities on human rights, such as child labour and exploitation of workers.”13 The United Kingdom ratified its Modern Slavery Act in 2015, while Canada’s Senate has recently tabled Bill S-211, the Fighting Against Forced Labour and Child Labour in Supply Chains Act 

Within this context of growing human rights legislation, organizations that are not performing due diligence now may find themselves exposed to risks or a larger compliance burden if new laws impact their businesses.

The employee perspective on Human Rights:

A personal priority

The vast majority of U.S. and Canadian employees (83% in both countries) agree that it is personally very or somewhat important to them that their organization protect human rights through its operations, processes and supply chains. Interestingly, employees in both countries, but more so in the US, see human rights as somewhat more important to them personally than to the future success of their organizations.  Human rights is the only category where we see any statistically relevant difference between these two measures:  what matters to me as an employee versus what matters to the success of my organization 

One explanation could be a gap in employee education or communication around the material implications of human rights issues. Employees simply may not be aware of the financial materiality of human rights issues. .   

Figure 38: Importance of human rights to employees personally vs to their organization’s success

Protection of human rights through operations, processes and supply chains

No Data Found

No Data Found

Similar to DEI, a large majority of employees in both Canada and the US give their organizations fairly high marks on human rights performance – but here, too, there is a gap between expectations and performance.   

Consistent with the trend in responses to other survey questions, U.S. employees tend to be more favourable in their assessments of their employers than their Canadian peers. Among U.S. respondents, 73% believe their organization is performing very or somewhat well on human rights, compared with 68% of Canadian respondents.  

Figure 39: US vs Canadian employee perceptions of organizational performance on human rights

How well do you think your organization performs in regard to protecting human rights through its operations, processes and supply chain?

No Data Found

No Data Found

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