'A decade of the Ruggie Principles: World events and looming legislation are forcing investors to step up on human rights', 24 June 2021

June marks 10 years since the UN Human Rights Council unanimously endorsed the Guiding Principles on Business and Human Rights (UNGPs), known by many as the ‘Ruggie Principles’ - in honour of Harvard academic John Ruggie, who oversaw their creation.

The UNGPs... have provided a centre of gravity for investor discussion on human rights over the past decade, and are due to underpin a number of major new rules being developed across Europe. 

The EU’s Sustainable Corporate Governance Directive, for example, looks set to introduce mandatory human rights and environmental due diligence requirements across the bloc... European Parliament has approved plans to roll them out to all corporations operating in the EU internal market, including banks and investors...

While France has expected companies to address human rights violations in their supply chains since 2017 through a Duty of Vigilance Law, last month saw Germany’s parliament adopt a Supply Chain Act... The Netherlands’ Bill for Responsible and Sustainable International Business Conduct... aims to include administrative, civil and criminal liability and enforcement...

Two sets of research this month by the Working Group on Business and Human Rights concluded that... “the rise of mandatory measures [by policymakers] will undoubtedly accelerate both uptake and progress”.

The studies... call on governments to “integrate respect for human rights into the mandate, operations and investment activities of institutions involved in the issuance and management of State pension funds, sovereign wealth bonds and development finance”. Institutional investors should also require their boards of directors to commit to honouring the UNGPs...

While this level of commitment is still rare, investors are becoming more vocal about human rights... Just last week, UK pension funds and finance bodies started pushing for the creation of a “TCFD for social risks”. The calls came as members of the £7tn Find It, Fix It, Prevent It investor initiative... began lobbying data providers to incorporate modern slavery into ESG ratings...

This AGM season has seen a number of proposals at major banks and investors on racial equity and the treatment of workers during the pandemic...

...Nearly 60 institutional investors are seeking to address “egregious human rights risks” in their portfolios from potential ties to... Xinjiang... [F]ollowing February’s military coup in Myanmar, 77 investors - led by Norway’s Storebrand Asset Management, US-based Domini Impact Investments and advocacy group Heartland Initiative - asked firms to outline their business activities in the country and address any potential human rights impacts. 

Millions of dollars have been pulled out of companies linked to human rights issues in China, Belarus, Myanmar and Israel, too...

See also: UN Guiding Principles are showing new path to stakeholder capitalism, argues John Ruggie