Magdalena Kettis, from the Investment Stewardship team comments on how we push for better human rights reporting.
In our work as active owners, meaning asset managers, we see how timely and adequate information in regards to material ESG (environmental, social and governance) risks is key for a responsible investor. We also join forces with others to push for change.
When information is not available, we will try to address the lack of transparency through active ownership. Our active ownership tools include engaging with companies through individual or collaborative dialogue and using our voting rights. We can also conduct field visits to company sites or areas of operation or commission on-the-ground research from expert organisations. We often work with other stakeholders and initiate or join thematic initiatives.
One such initiative is the multi-stakeholder initiative Corporate Human Rights Benchmark (CHRB), which Nordea joined in 2016. Back then the availability of information on how companies managed human rights was very limited and comparable data practically non-existing. To address the lack of data and disclosure, the CHRB was developed as a public good for all stakeholders and provide investors with comparative data collected in a systematic manner.
Today there are regulatory requirements on corporate human rights due diligence that will help improve the availability and quality of human rights data. The CHRB, however, still stands as the best standard on corporate human rights performance and is used by investors, as well as many other stakeholders, including governments.
Nordea played an important role in this development – as a major funder and also steering committee member. During this time the CHRB produced five analysis of in-depth data on corporate human rights practices in five high-risk sectors – food and agricultural products, ICT and automotive manufacturing, apparel and extractives – and 244 of the world’s largest companies from 2018 to 2023. The indicators of the CHRB are grounded in the UN Guiding principles on Business and Human Rights (UNGPs) and other international human rights standards. In 2020 the CHRB was integrated with the World Benchmarking Alliance and its core human rights indictors are now integrated in WBA Social Benchmark covering 2000 companies.
In the fall of 2024, after seven years and five iterations of benchmarks, a comprehensive review of the Corporate Human Rights Benchmark was conducted. The review showed that although progress among sectors and topics is uneven, 64% of companies have progressed on their human rights performance in five years.
Engaging companies in high risk sectors on human rights
Nordea has also been a lead investor of a collaborative engagement targeting companies with very poor performance within human rights due diligence and who score zero on human rights due diligence in the CHRB assessments. This engagement has been coordinated by the Investor Alliance for Human Rights (IAHR), with more than 200 participating investors. Improvements have been more noticeable for the companies that were actively engaged by investors and in the automotive sector and the ICT sector.
The 2023 CHRB assessment ranked 110 of the world’s largest apparel and extractives companies on their corporate human rights performance. For many of these companies it was the fifth time being benchmarked. One of the main findings was that many companies have made significant improvements on their human rights disclosure and practices, 70% of the companies are making progress and 12 companies have made major improvements.
IAHR also coordinates other important engagements that we are part of, such as the Technology and Human Rights engagement. Within this group we focus on Digital rights risk, which includes privacy, freedom of expression, democracy and security, worker’s rights and child safety online. 175 investors (representing over $9 trillion in assets) have set out their expectations for technology companies to respect the human rights of their users online, including accounting for harms that stem from algorithms and targeted advertising. Child online safety is also the focus of a Swedish investor engagement we are involved in, targeting Swedish companies, with the support of UNICEF.
