"STATES UNDER THE SPOTLIGHT - Incorporating Human Rights into Investment Strategies: 2020 Non-Financial Rating of the 27 EU Member States and United Kingdom", 17 February 2021

The International federation for Human Rights is pleased to present the new version of its bi-annual report on the non- financial rating of the European Union (EU) Member States and United Kingdom. The publication of this report marks our continuing commitment to the promotion of responsible business and investment.

Non-financial concerns have become an important element of strategic decision-making for many investors. ESG (Environment, Social and Governance) criteria are becoming increasingly important for many investors. The development and study of ESG criteria has focused primarily on the performance of business enterprises. However, investment portfolios are not exclusively made up of private equity. Sovereign bond markets are also a key component of portfolios. Still, little attention has been paid to the non-financial performance of sovereign states. During 2020, the European Union has debated whether the 2021-27 budget and its COVID recovery plan should be linked to governments’ adherence to the rule of law. Similarly, institutional investors should also consider how to link their own investments on sovereign bonds to non-financial performance of States...

... Since establishing its own ethical mutual fund “Libertés & Solidarité” (now SRI Human Rights fund) with La Banque Postale Assent Management and devising a screening methodology for selecting both bonds and shares in 2001, FIDH has been publishing a non-financial rating of EU member states. The objective of these studies has been to establish a methodology and classification system that allow investors to take into account how states are fulfilling their obligations to respect, protect and promote human rights in their investment decisions. On what criteria should investment decisions be made? How should states rank when it comes to non-financial information? What indicators should be used?

The methodology includes a range of ESG indicators divided per criteria. Some of the chosen criteria are: Gender equality and women’s rights, Non-discrimination, Good governance, Social cohesion/economic and social rights, Freedom of expression and right to information, Promoting corporate social responsibility at home and abroad and Environmental Management...

...In the midst of the Covid 19 pandemic, most of the countries are facing social and economic crises, which add to the ongoing environmental crisis. We hope that through its methodology, data and identification of data deficits, this study will contribute to the development of human rights indicators by states and the inclusion of human rights in investment decisions on state bonds...