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Addressing Human Rights and Labor Rights in Companies using ESG Investment Strategies and Disclosure

17:30 – 19:00 (Bangkok time, GMT+7), 31 May 2021

Organised by Fair Finance India, cKinetics and ILO DWT for South Asia and Country Office for India.

 

Session goal

ESG information from corporates is becoming more widely available due to an increasing number of

investors using ESG information; and CSOs pressing companies to be more transparent. From an

investor standpoint, Human Rights and Labor Rights are amongst the key concerns due to the

reputational risk as well as the downside risk to the valuation of the companies.

A recent study done by cKinetics and Oxfam studied 35 large listed companies to understand their

disclosure and actions on human rights and labor rights. The study extended to the supply chain as well.

The session will share the findings of the study and use them as a back-drop of conversation between

investors, companies, CSOs and policy makers.

The session will touch upon the following themes:

1. Why are human rights and labor rights in companies relevant to investors?

2. What kinds of information do listed companies make available to investors with regards to

human/ labor rights?

3. What are the present drivers for companies to report?

4. What are the gaps and how to address them?

5. What is the role for CSOs in being an enabler for the above?

Moderator

Pawan Mehra: Managing Director, cKinetics

Speakers

  • Pradeep Narayanan: Director, Partners in Change & Praxis Institute for Participatory Practices

  • Namit Agarwal: Asia Policy Lead, World Benchmarking Alliance

  • Sachin Joshi: Sustainability Researcher and Consultant

  • Arindom Dutta: Executive Director, Rural & Development Banking/Advisory, Rabobank

  • Bharti Birla: Project Manager (CTA) - Sustainable Global Supply Chains

Study findings to be shared and deliberated

35 large listed companies have been examined which have a market capitalization of more than INR

40,000 billion, with aggregate investment of institutional shareholders being INR 4,853 billion.

Some of the key takeaways, that are relevant to investors and CSOs, are:

  • More than 50 per cent of the shortlisted companies explicitly commit to respect to human rights such as rights of all workers for freedom of association and collective bargaining. However, the enforcement or procedure for compliance to back the commitments are neither mandated in the reporting requirements and therefore are not clearly laid out.

  • The public commitments in most cases are silent on the management of impacts/risks i.e. the corrective action company would take a supplier is found in violation of the indicators.

  • Currently, there are few disclosure requirements of human rights indicators for the supply chain.

  • There are no evident linkages between foreign investment across sectors and the human rights performance.

Despite some gaps in the disclosure requirements and actual reporting, there are a handful of

companies, which provide additional information pertaining to risk assessment of human rights issues,

minimum wages, enforcement mechanisms of child labour in supply chain, amongst others.

Comparing corporate disclosure with on-the-ground information from select sectors

The ground realities paint a contrasting picture for human rights scenario, especially in the food,

beverages and personal care segment. The analysis contrasts information from studies commissioned by

Oxfam and outlines areas of disconnect. These could be areas of risk for investors.

Investors exposed most to the inadvertent risk of modern slavery in their investments

There are 57 domestic investors with a total investment of INR 3,766 billion (USD 53 billion) and 47

foreign investments with a total investment of INR 1,086 billion (USD 15 billion). Some of the prominent

investors include LIC, which is the biggest institutional investor both in terms of value as well as number

of companies invested in. Key domestic investors include ICICI Prudential mutual fund, SBI Mutual Fund,

UTI Mutual Fund whereas Europacific Growth Fund, Government of Singapore, Arisaig, and Vanguard

are amongst the prominent foreign investors.

How to address these Human Rights and Labor Rights gaps

A few areas that we hope, emerge from the session are:

1. Addressing gaps in disclosure requirements

2. Need for harmonization of data

3. Need for accountability for investors to manage their exposure/ risk

Contact
For questions, please contact unrbhrforum@undp.org