This post was contributed by Sudeep Chakravarti, an Indian writer and journalist. The post was first published on Livemint.com.
Some weeks ago, I wrote about corporate human rights benchmarks being works in progress, in a column that also speculated about a somewhat extreme fallout: eventual trading in human rights credits. While I continue to stick my neck out on that, let’s take a look at what’s going on with one such project: the Corporate Human Rights Benchmark, or CHRB.
CHRB seeks to initially rank global businesses in agriculture – including food and beverages – the extractives industry and apparel. The businesses are to be judged for “their human rights policy, process and performance, harnessing the competitive nature of the markets to drive better human rights performance”.
If it passes muster, CHRB will undeniably be the next big thing in human rights tracking.
The project brings together two big names in the human rights space – the Institute for Human Rights and Business and the Business and Human Rights Resource Centre. These UK-based organizations are joined by Calvert Investments Inc., Aviva Investors, VBDO (The Dutch Association of Investors for Sustainable Development) and EIRIS. The last two focus on advising responsible investment. Representatives from these organizations form CHRB’s steering committee, with Aviva Investors chairing.
The initiative was formally launched in 2013, the process of consultations took place the next year and shaping of draft parameters began this past June, and ended early October. A communication from the steering committee dated 2 November expects an “amended methodology” to be published in “early 2016”. Then it will be time for the first “pilot ranking”.
It’s an impressive effort. CHRB claims that more than 400 organizations and individuals were consulted across the world through meetings, webinars and online submissions. Companies and “civil society” made up about a quarter each of those consulted, 16% were investors, a tenth were business and trade associates and human rights specialists accounted for a little less than a tenth.
They put their heads together to refine an approach that has five broad themes for measurement: leadership, governance and reporting are each given 10% weight; management systems 30%; and performance 40%. ‘Governance’ is subdivided into two sub-themes: policy commitments; and board-level accountability. ‘Management systems’ has three sub-heads: embedding policy; human rights due diligence; and remedies and grievance mechanisms. ‘Performance’ has two: key performance indicators and sector-specific practices; and adverse events – which can literally remake or break a business.
CHRB’s movers maintain they were motivated by a recent survey by the Economist Intelligence Unit in which 39% of “CEO respondents felt benchmarking companies on their human rights performance would make the biggest difference on the issue”. If the benchmarking exercise goes the credible distance, there is little doubt.
As CHRB correctly claims, it will provide information to investors and civil society and media alike to track the human rights performance of such businesses, for policymakers and lawmakers to fine-tune regulation, and urge businesses to shape up. “They will be more likely to demonstrate ‘learning’,” CHRB hopes, “resulting in greater preventive measures as well as adequate remedies for victims”.
This is all for the good of corporate accountability in some sectors of business that today witness the worst human rights and environmental depredations. A weakness may be embedded, though, in CHRB’s excited hope that human rights benchmarking will “introduce a positive competitive environment, encouraging companies to race to the top of the annual ranking”.
It is no secret that races to the top of do-good, feel-good rankings are sometimes helped along by massive public relations output: glossy photo-opportunities, self-serving corporate documentaries and media manipulation. Glib corporate outreach has saved more than one company—even entire industries—from perception and financial ruin.
CHRB hopes to guard against this by what it terms the “annual life-cycle” of each company’s benchmarking. It will begin with checking of methodology, then allow a company its window of disclosure, scrutiny of that disclosure with independent research and analysis, dialoguing with the company on such analysis and finally publishing that benchmark. The so-called run to the top.
By June 2016, CHRB hopes to issue a pilot benchmark of 100 companies using its initial benchmark. By June 2017, the intention is to extend the reach to finance and engineering industries. By June 2018, the methodology is expected to be tweaked—CHRB mentors term it Methodology 2.0—with pharmaceuticals and the information and communication technology sectors added to the list. By then, the ranking is expected to reach 500 companies across several sectors.
I’m waiting for next June. One step at a time.
Sudeep Chakravarti is an Indian author, journalist and speaker. His latest book is Clear. Hold. Build: Hard Lessons of Business and Human Rights in India. His previous books include Red Sun: Travels in Naxalite Country and Highway 39: Journeys Through a Fractured Land.