Monday, December 05, 2022

Investors sign on to stewardship initiative on human rights

By Anne Sherry, J.D.

The Principles for Responsible Investment launched a collaborative initiative on social issues and human rights. More than 220 investors collectively representing $30 trillion in assets under management have signed a public statement recognizing the need to meet their own responsibility to respect human rights and to safeguard human rights as a societal imperative. The first phase of the initiative involves engagement with 40 companies in mining and metals and the renewables sector. Participating investors will carry out the engagements, with a lead investor responsible for setting a company-specific strategy for engagement based on the overarching objectives of the Advance initiative.

For the first time, the PRI is publishing the list of investors engaging each of the focus companies. The investors have agreed to develop their own policies and processes on human rights, to be ready within one year of joining the initiative. The statement the investors signed acknowledges their responsibilities under the UN Guiding Principles on Business and Human Rights—and also acknowledges that stakeholder expectations have only increased since those principles were formally endorsed in 2011.

Under the statement, decisions around proxy voting and other investment powers will continue to be made individually by the participating and endorsing organizations, but the signatories “are nonetheless supportive of the use of ambitious and targeted stewardship activities to drive positive change on urgent and systemic human rights issues.”

In the first phase, investors will lead engagement with 40 companies in the metals-and-mining and renewables sectors. Further engagement with other sectors and with policymakers will follow over the enterprise’s five-year mission. The PRI aims to convene investors to enable direct engagement between investors and affected stakeholders, and is also coordinating with existing initiatives such as those spearheaded by the Investor Alliance for Human Rights. Anita Dorett, Director of the Investor Alliance for Human Rights, praised the collaborative approach, saying that the coordination between the two groups will help achieve the initiatives’ objectives and allow resources to be deployed in a synergistic manner. The PRI also intends to rely on existing public benchmarks rather than develop its own.

The initiative is supported by two advisory groups—a signatory advisory committee and a technical advisory group—and the PRI will continue working closely with these groups.

Nomura Asset Management CIO Yuichi Murao said that Advance “is expected to be a highly effective means of mobilizing investors to encourage corporations to respect human rights and collaboratively work toward addressing social issues.” Nicole Martens, Head of Stewardship at Old Mutual Investment Group, said, “For our business, it is meaningless to achieve ESG impact on paper only, if nothing changes on the ground.” Real change relies on engagement between investors and companies “to make sure that they have appropriately ambitious, yet credible and pragmatic plans to support the elimination of human rights abuses and systemic social issues over time,” Martens added.