In 2017 ACCR identified human rights as a key issue for research. Together with the Centre for Australian Ethical Research (CAER), ACCR has produced a detailed benchmark report examining the performance of Australian listed companies with regards to how they manage human rights risks.
About the Report
Understanding how companies identify and address human rights risks in their value chains may provide investors with insights into broader cultural, governance and strategic issues within a company. This report demonstrates, with few exceptions, a low level of understanding of human rights risk and engagement with leading practices on risk management, across the Australian companies surveyed. It is quite possible, if not highly likely, that at least some of the companies surveyed have human rights controversies lurking in their value chains of which they are simply unaware. This report aims to further develop investors’ understanding of human rights issues for Australian companies, and increase their appetite for positive stewardship through results-driven engagements with companies on human rights.
Part 1 of this report was researched and written by Howard Pender, Research Director, and Brynn O’Brien, Executive Director, of ACCR. Part 2 was researched and written by Nina Haysler, Research Project Manager, and Julia Leske, CEO, of CAER on behalf of ACCR. ACCR acknowledges the work of Emma Batchelor and Veda FitzSimons on this report.
ACCR extends its gratitude to the Corporate Human Rights Benchmark Ltd. (CHRB) for their agreement to license the use of the CHRB methodology as a basis for this research and for their contribution and cooperation. Any errors or oversights are the responsibility of ACCR, and not of CHRB.
The report draws upon the work undertaken by the Corporate Human Rights Benchmark (CHRB) in their pilot benchmark published in March 2017.
The research commissioned by ACCR evaluates a set of 23 large, listed Australian companies against internationally-accepted human rights indicators, based on the UN Guiding Principles on Business and Human Rights1 (UNGPs), as well as other relevant norms and initiatives depending on the sector. The CHRB method-ology offers the advantage of comparability with a larger, inter national data set allowing company-to-company, business size, sector and geographical comparisons to be made.
Of the Australian companies identified, three companies – Woolworths, Rio Tinto and BHP Billiton – were assessed in March 2017 as part of the CHRB pilot study. These were not newly researched for this report. The remaining 20 ASX-listed companies targeted were researched by CAER.
The research process included a mail out to companies offering the opportunity to provide feedback to the assessment and provide additional material. The process also included quality checks to ensure the outputs are closely aligned with the methodology of the CHRB.
Out of the 20 companies researched for the ACCR, 14 responded to our mail out and feedback process, three companies responded with a decision to not participate in the survey, and three companies were non-responsive to our requests to engage.
The scores of 13 companies were revised and adjusted as companies provided additional information and clarifications during the engagement process.
Overall, Australian companies perform roughly in line with their global counterparts. The highest scoring company (in both ACCR and CHRB reports) was BHP Billiton at 77%; the lowest Australian company was Cochlear at 2%.
Reflecting the pattern in the global CHRB dataset, responses of the Australian extractives sector to human rights risks are well-developed compared to other sectors, due in no small part to the serious risks of adverse human rights impacts inherent in large-scale multinational, extractives operations, and significant recent controversies in that sector.
Australian companies covered by this research perform better than the global average in relation to the establishment of grievance mechanisms through which concerns can be raised about the impact of operations on human rights. On the issue of remedy for human rights abuses identified in a company’s value chain, however, Australian companies received low scores, in line with the global dataset.
Still, a significant number of large listed Australian companies lag far behind their peers in their response to human rights issues.
*The Australian Average excluding BHP and Rio Tinto is 28.12%. The Australian average including BHP and Rio Tinto is 31.91%.
- Australian companies assessed under the agricultural sector methodology are the worst performers by sector.
- Australia outperforms their global sector peers for the extractive and agriculture industry.
- The Australian medical equipment sector companies slightly underperform when compared to the global apparel sector companies.
- On the issue of remedy for human rights negative impacts identified in a company’s value chain, however, Australian companies received low scores, in line with the global data set.
- Australian companies scored poorly
with regards to indicators relating to the implementation of a Living Wage across both own operations and throughout their business relationships.
For ASX-listed companies and investors
- Make a public commitment to respecting human rights, endorsed at board level;
- Build capacity on human rights issues, including through appropriate internal resourcing and engagement of human rights expertise;
- Put in place comprehensive human rights due diligence processes in respect of the company’s own operations, products and services, as well its business relationships;
- Communicate regularly and in detail with stakeholders in respect of human rights risks;
- Commit to provide for or cooperate in remedying adverse human rights impacts which the company has caused or to which it has contributed, including through the establishment of operational level grievance
Additional recommendations for investors
- Encourage companies to adopt the elements outlined recommendations 1-5 above;
- Incorporate human rights concerns into investment due diligence practices, screening tools, and corporate engagement and monitoring processes;
- Publish data on engagements on human rights issues, including voting records on human rights issues, and publicise specific engagements where possible;
- Consider exiting business relationships where adverse impacts are severe and unable to be mitigated though the exercise of