Through our reporting program we engage with companies, governments, investors and others about how reporting can be a driver of improved business respect for human rights.
PARTNERS: Mazars, Boston Common Asset Management, Clinique internationale de défense des droits humains de l’Université de Québec à Montréal, EY, Hermes Investment Management, Walden Asset Management
Also see: Our May 2017 report assessing the human rights reporting of 74 global companies
When companies have to publicly report on something, they tend to manage those issues better. In other words, reporting can be a very powerful driver of improved management. At Shift we also see that this catalytic power can get lost when reporting becomes an end in itself. We need to move away from “reporting for reporting’s sake” to re-establish a vision of “reporting that drives improved outcomes for people.”
We need to move away from “reporting for reporting’s sake” to re-establish a vision of “reporting that drives improved outcomes on the ground.”
Since 2012, our goal has been to identify a way for companies to report on how they manage human rights risks connected to their operations and value chains, that supports not only transparency and accountability, but also leads to better management of those risks.
In 2012, together with the international accountancy firm Mazars we created the Human Rights Reporting and Assurance Frameworks Initiative to answer precisely this question – “what would good reporting look like, that improves both disclosure and performance?”. Through a two-year, consultative process, we explored this question with multiple stakeholder groups across six continents. This process led to the 2015 UN Guiding Principles Reporting Framework, the world’s first comprehensive guidance for companies to report on how they respect human rights.
An investor coalition representing 87 investors with over $5.3 trillion assets under management back the UNGP Reporting Framework. Lauren Compere,Managing Director at Boston Common Asset Management, says, “The UN Guiding Principles Reporting Framework provides smart and comprehensive guidance that means investors can more effectively identify and understand human rights risks in their portfolio.”
The UNGP Reporting Framework is being used by numerous companies and has been referenced and recommended by governments, stock exchanges, lawyers and others. According to companies that use the Reporting Framework, its utility lies not only in its principled and pragmatic approach to reporting on human rights, but also its power as an internal management tool.
Our reporting program, begun in 2016, focuses on two key areas:
The UNGP Reporting Framework has proven to be a useful catalyst not only for corporate reporting on human rights, but also on the “doing” itself – including for companies just getting started with human rights and human rights due diligence. These are often companies in industries that tend to be less exposed to public critique, and those operating in emerging and developing economies, including small and medium sized companies. Many of these companies have fewer resources and less external pressure on their human rights performance – but they play a critical role in global value chains.
In both developed and emerging market economies, we are able to use the UNGP Reporting Framework to support conversations about the importance of transparency, and to provide a practical tool for implementing the UN Guiding Principles.
This element of our reporting program includes two general activity areas: awareness raising and outreach; and capacity building.
Companies have been reporting on “sustainability” and, to a lesser degree, human rights, for years. But how can a reader know if these reports tell us what we need to know?
In March 2016, Shift launched the UN Guiding Principles Reporting Database, which is designed to help companies’ stakeholders – investors, financiers, business customers, regulators and civil society – more easily digest and assess the quality of companies’ human rights reporting. With more clarity about what companies say they do to manage their human rights risks, readers of these reports can then reward companies with strong reports, and press poor reporters to do better.
The Reporting Database makes it clear what to look for, and how – or if – a company in the database is working to manage human rights issues.
The ability to easily see what companies say they do to manage human rights, in a well organized and standardized format, is particularly important for investors. An increasing number of investors around the world are looking at companies’ management of human rights as a factor in their investment management.
“The UNGP Reporting Database helps investors assess the material impact of human rights on companies’ performance… Shift has created an agile tool where investors are able to download the disclosed data for customized analysis, facilitating ESG integration in investment decision making. We are excited by the opportunity this database presents in our engagements with companies.” - Professor Christine Chow, Associate Director and Team Lead on human and labour rights, Hermes EOS of Hermes Investment Management
Our discussions with investors have shown us that even socially responsible investors who engage proactively with companies struggle to make sense of corporate disclosure that is often spread across many documents on a company’s website, and not presented clearly within a given document. Still other investors sometimes don’t know what to look for in the first place – some have commented to us that they “just don’t know what questions to ask."
The Reporting Database makes it clear what to look for, and gives important insights into how – or if – a company in the Database is working to manage human rights issues.
By providing these insights, the Reporting Database equips markets to recognize, incentivize and reward good performance. It help investors ask targeted questions in their engagements with companies, inserting human rights into their time-constrained quarterly conversations with CEOs and investor relations teams. As investors and others start basing more decisions on this disclosure, companies’ CFOs and COOs will be increasingly vested in understanding and improving their companies’ human rights performance. These dynamics will help make human rights considerations an ever more integral part of broader business decision making.
“This is terrific. It will help a great deal in [our industry association], where we can now move beyond theoretical discussions about reporting since no one can any longer hide behind a curtain.” – company in UNGP Reporting Database
The Reporting Database also provides a valuable tool for companies. It enables companies to compare themselves to other companies, identify areas for improvement and find examples from other companies that can help them progress. The fact of inclusion in the Reporting Database can galvanize internal attention on human rights, including amongst senior management, because their actions and reporting on human rights are now so readily comparable to that of their peers.
As part of our reporting program, we are expanding the Reporting Database, and the team of analysts that work on it. Not only are we increasing the number and variety of companies in the Reporting Database, but also we are sharing more insights about trends we're seeing across companies' reporting -- and, in turn, their performance. Those insights are available on our running online trends and insights series, as well as in our May 2017 report Human Rights Reporting: Are Companies Telling Investors What They Need to Know?, which is an assessment of the maturity of human rights reporting of 74 global companies from seven sectors.
Questions about activities or guidance related to our reporting program? Please contact our program lead directly. Thank you!
The work carried out through this program is generously funded by the UK Department for International Development and the UK Foreign and Commonwealth Office.