New engagement programme targets metals and mining initially, but will broaden to include other sectors and policymakers.
Responsible investors are aiming to increase their focus on human rights and other social issues, with a new engagement initiative backed by institutions representing US$30 trillion of assets under management.
Advance has been launched by the UN-supported Principles for Responsible Investment (PRI) and has a membership of 220 investors, of whom 120 will take active roles.
Such roles will include leading or supporting engagement with an initial group of 40 focus companies, concentrated in the metals and mining and the renewables sectors.
“What I suspect we can agree on is that social issues have taken a back seat in responsible investing,” said PRI Chief Executive David Atkin. “We hope to see genuine real-world progress within this initiative.
“We are holding ourselves as investors to account.”
The launch took place at the flagship PRI in Person event in Barcelona. A declaration from the investors involved stated: “We recognise the role that we as investors can play in advancing human rights globally. We endorse this initiative whose objective is to advance human rights and positive outcomes for people through investor stewardship.”
Human rights issues highlighted by the initiative ranged from inequality and discrimination to modern slavery.
All investors involved have signed up to the two main planks of the Advance platform. The first is that the investors accept their own obligations to meet international standards in terms of human rights, and the second is that the safeguarding of human rights is a “societal asset on which investment returns and global prosperity rely”.
Among the focus companies named by PRI are mining giants Anglo American and Rio Tinto, along with German energy group RWE, world number two in offshore wind power and Europe’s third-largest renewable energy supplier.
Advance has a number of commitments, including transparency as to which investors are engaging with which companies. Under the heading ‘walk the talk’, investors involved in engagement have agreed to develop their own human rights policy and human rights due diligence process, if they don’t have one already.
While the first phased is focused on metals and minerals and on renewables, the five-year Advance initiative will see engagement with other sectors and, separately, with policymakers.
The approach taken by investors will vary across sectors regions, but participants will set three high-level expectations for focus companies: implementation of the United Nations Guiding Principles on Business and Human Rights, alignment of political engagement with their responsibility to respect human rights, and progress on the most severe human rights issues in their operations and across their value chains.
A declaration by the participating institutions stated: “We recognise the role that we as investors can play in advancing human rights globally. We endorse this initiative whose objective is to advance human rights and positive outcomes for people through investor stewardship.”
Risks to investors
To avoid duplication of effort, Advance will collaborate with other existing investor initiatives in the social area. Already it has signed an agreement with the Investor Alliance for Human Rights.
Speaking at the launch, PRI board member Wilhelm Mohn, Global Head of Corporate Governance at Norway’s Norges Bank Investment Management, said that last year the sovereign wealth fund had raised human rights issues with companies representing 15% of the value of the portfolio, adding: “But there is still a long way to go.”
From Australia, Jamie Lowe, Chief Executive of the National Native Title Council, said that when business relations with people of first nations were mismanaged, there was an ESG risk to investors. He added: “Australia is a relatively young country. The relationship with first nations’ heritage has not been all it ought to have been.”
Workers’ rights are another focus for those participating in Advance. Lisa Nathan, Senior Investment Engagement Adviser at the international trade union federation UNI Global Union, said she was hopeful that the move towards mandatory due diligence of human rights issues would lead to improvements.
She added: “We are at a nine-year high in terms of violation of labour rights.”
Louise Davidson, Chief Executive of the Australian Council of Superannuation Investors, stressed the importance of public policy advocacy: “Sometimes it is easier to change the rules than to change the behaviour of companies.”