With only 10 years left to achieve the SDGs, it is more pressing than ever that companies in all sectors take the necessary urgent action. The asset management industry has a vital role to play in meeting these goals. Through their policies, investment decisions, and stewardship practices, they have the ability to change companies’ behaviour and therefore their impact on human and labour rights.
ShareAction’s assessment looks at 75 of the world’s largest asset managers and their performance on responsible investment, with one of the three areas of focus being on human rights (alongside climate change and biodiversity). ShareAction's assessment finds that the industry’s money is overwhelmingly being used in a way that at best neglects human and labour rights abuses and at worst contributes to them. While the majority of asset managers’ policies broadly refer to human and labour rights, relatively few make firm and specific policy commitments. Particularly alarming is the number of asset managers’ policies without commitments to influence corporate behaviour on salient human rights impacts (the most severe impacts a business has the potential to cause) in line with international frameworks. Only 28 per cent of asset managers surveyed have made a commitment to engage or exclude companies who fail to act in line with United Nations (UN) or International Labour Organisation (ILO) frameworks. At the same time, 47 per cent of the world’s largest asset managers, with over US$45 trillion in assets under management, lack policies to exclude controversial weapons companies from their investments, essentially bypassing international treaties to allow them to invest in weapons that cause excessive and indiscriminate harm. In conjunction with poor policy commitments, few managers have adequate approaches to engagement with companies on salient human rights impacts.
Summary findings include:
FINDING 1 – Despite three quarters of asset managers stating they have human rights policies covering all assets under management, relatively few make firm human rights commitments.
FINDING 2 – Asset managers are addressing human rights issues only where they have identified financial risk, while failing to account for salient human rights impacts.
FINDING 3 – The majority of asset managers treat human rights-related engagement as a reactive exercise, with few having proactive approaches to engaging on salient human rights issues.
FINDING 4 – The majority of asset managers lack commitments on human rights in their voting policies.
FINDING 5 – Asset managers generally rely on third party data providers, with few adopting indicators for proprietary assessment.