• The Corporate Human Rights Benchmark (CHRB) was launched in March last year to get investors thinking far more about the human rights impacts of their investments.
  • One year on and the report has seen a growing commitment from companies to address gaps in reporting and transparency.
  • However, it also found a lack of meaningful engagement from firms including Macy's, Kohl's and Under Armour.
Gaps remain in apparel reporting and transparency of human rights

Gaps remain in apparel reporting and transparency of human rights

A ranking of corporate performance on human rights has found that while there is a growing commitment from apparel companies to address gaps in reporting and transparency, there is also a lack of meaningful engagement from firms including Macy's, Kohl's and Under Armour.

The Corporate Human Rights Benchmark (CHRB) was launched in March last year as a pilot led by investors and non-profit groups. Companies are scored on 100 indicators, focusing on policies, governance, processes, practices and transparency, as well as how they respond to serious allegations.

The aim is to get investors thinking far more about the human rights impacts of their investments and reward companies that are more transparent about their policies and practices.

Also ranking agriculture and extractives companies, the benchmark revealed that corporate management of human rights is showing signs of improvement – with benchmarks, civil society and investor pressure helping to create a "race to the top."

UK retailer Marks & Spencer appeared second on the list with a score of 64, while Adidas was fifth with a score of 57 and Hennes & Mauritz (H&M) scored 48. Gap Inc and Nike also appeared on the list with scores of 45 and 40, respectively.

These companies were quoted in the CHRB report as reviewing and positively evolving their programmes and policies to manage and report on human rights.

Linked to new legislation and civil-society led reporting frameworks, CHRB authors say they have seen a growth in human rights reporting and commitment to transparency since the launch of the pilot benchmark in 2017, with over 5,000 companies now having reported on their public commitments to avoid modern slavery in their supply chain.

Yet the report also names 28 companies that have "not meaningfully engaged" with the CHRB, including Macy's, Hermes and Prada, which had some of the lowest scores in the benchmark, "indicating a lack of transparency and public commitment to managing human rights risks and impacts."

"Five years on from Rana Plaza and one year on from the first Corporate Human Rights Benchmark, this report indicates that benchmarking is beginning to drive a race to the top on business and human rights," says Steve Waygood, chair of the CHRB board. "That is good news. However, we should all be concerned by the lack of engagement from around a quarter of companies, particularly as they are in priority sectors concerning serious human rights impacts. Issues such as modern day slavery, worker safety and freedom of association can be material to the financial performance of these companies and they may risk restricted access to capital due to reputational damage and regulatory backlash."

Featuring at the bottom of the list, Macy's scored 5 out of 100, while Kohl's scored 7 and Under Armour 17.

In a bid to improve reporting and transparency and ensure long-term impact, CHRB has set out five core objectives.

  • Make corporate human rights performance easier to see and simpler to understand. By creating a detailed methodology broken down into themes, and by producing a public ranking of companies in the pilot, CHRB believes it is helping improve the understanding of human rights performance.
  • Introduce a positive competitive environment for companies to race to the top of the annual rankings. This is being partially achieved. CHRB believes the desire to be scored well in future benchmarks is definitely creating activity in some companies.
  • Equip civil society, workers, regulators and consumers with information to challenge poor performing companies. CHRB has produced the first freely available ranking of company human rights performance. This has provided a wealth of information to third parties wishing to identify and challenge poor performing companies. However, CHRB recognises the format and accessibility of the data could be improved to make it simpler for stakeholders to export only the data relevant to them.
  • Enable investors to incorporate 'social costs' into investment decisions. Only a year after the pilot, it is too soon to expect to demonstrate sweeping change in the investor community as a result of the CHRB, particularly regarding capital allocation decisions. CHRB will investigate approaches to extend an assessment or proxy for human rights performance to a much wider group of companies in 2018 and 2019, to support this objective.
  • Acknowledge companies putting human rights at the core of their business and point the way to improved performance. Publishing the pilot benchmark ranking clearly demonstrates how CHRB is acknowledging those companies who are leading the field compared to their peers. The methodology can be seen as a guide to improving performance and CHRB has seen how companies both inside and outside of the benchmark are using the methodology to support gap analyses and subsequent improvement plans.

In 2018, CHRB says its members, working with existing and emerging investor coalitions, will push for greater corporate transparency and engagement, with revised results to be published in November.

Neither Under Armour, Kohl's, nor Macy's returned a request for comment at the time of going to press.

The research mirrors a report from Boston-based sustainability non-profit Ceres analysing the performance of US companies on a range of sustainability criteria – which found footwear and apparel firms are lagging behind in terms of investor engagement on sustainability.