Covid-19 might have shifted our priorities temporarily but now, more than ever, we need to make sure human rights are at the centre of everything we do. In fact, in a recent Federated Hermes workshop, 81% of the audience agreed Covid-19 has made the need for organisations to respect human rights more important; although a worrying 43% could not confirm that their company had a human rights due diligence process in place.
All investors have a responsibility to safeguard human rights. We cannot claim to be socially responsible investors without putting a critical focus on human rights. To do this, we need robust human rights due diligence processes.
Ensuring that an investment strategy aligns with the values of the investor requires ongoing vigilance and due diligence. In this article, we will explore how to implement human rights due diligence processes and look at how new technology can affect human rights risks for investors.
Implementing human rights due diligence
Investors have a duty to respect human rights in line with the UN Guiding Principles on Business in Human Rights. But this can be a tricky task, as the whole supply chain of the investment needs to be screened. This is why robust due diligence is critical.
Lack of understanding on the issue is the main challenge. Most institutional investors want to withhold investment from organisations that breach human rights, either directly or in their supply chains, but don’t have a mature understanding of how human rights tie into a sustainable investment strategy. Human rights due diligence requires not only effective mechanisms to identify and manage the risk of contributing to harm, but also to have a framework in place to prevent and mitigate impacts that the investor is linked to.
Organisations such as the Investor Alliance for Human Rights exist to help investors develop and update their processes to manage human rights risks. Its toolkit, designed for asset owners and managers, provides both a guide and tips for best practice.
Human rights and technology
Many modern technologies offer benefits to protecting human rights: increased connection means increased accountability, encryption and digital security tools help prevent online harassment to some degree, and the UN has begun using big data analysis as a tool to predict human rights crises at an early stage.
However, many new technologies, particularly in the field of artificial intelligence, create new and increased risks. These risks could arise from AI that is programmed with, or develops racial bias, from facial recognition and predictive policing software that can be used to unfairly persecute individuals or groups – usually minorities.
The problem is that technology is advancing rapidly and, as a result, investors often find it hard to relate the UN Guiding Principles on Business in Human Rights to newer technologies that didn’t exist when the principles were published in 2011. This leads to the core of due diligence: as this new technology changes supply chains so rapidly, how can we as investors keep up with the investments that might lead to human rights infringements?
So, what can investors do? The answer is to implement a robust set of processes for assessing human rights risks, that is regularly reviewed to take account of best practice. At Greenbank, we are part of the Investor Alliance for Human Rights and use its toolkit to shape our screening processes.
We also take guidance from the UN B-Tech Project, which aims to advance the implementation of the UN Guiding Principles on Business in Human Rights specifically in the technology sector. This outlines the key steps investors must take to ensure human rights considerations are at the centre of investment decisions.
Ultimately, we need a national human rights due diligence framework that can flex to accommodate and legislate new technologies. However, governments can struggle to develop legislation fast enough to keep up with developments in technology. This means investors need to create and maintain those processes themselves – which is why the Investor Alliance For Human Rights is calling on the government to require companies to undertake mandatory human rights due diligence.
The adoption of a robust and standardised approach to human rights due diligence across the investment industry is one step towards making investment conditional on these risks being remedied and, ultimately, to stop harm occurring in the first place.