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.
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?
Pawan Mehra: Managing Director, cKinetics
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