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First-of-a-kind benchmark study finds 43 percent of European companies have supply-chain labour and human rights policies, with North America and Asia lagging behind
New York (11 November 2009) – Some 28% of global companies – including nearly half of those with market capitalizations of more than $10 billion – have labour and human rights (LHR) policies covering their global supply chains. However, materially fewer have established follow-up monitoring and enforcement procedures.
Geographically, LHR supply-chain policies are close to the norm among European companies, but North America States and Asia lag behind. These findings are contained in a new benchmarking study of global LHR policies covering more than 2500 global companies. The study was conducted by the Harvard Law School Pensions Project and ASSET4, a global company which claims to have the world’s largest database of transparent, objective and auditable environmental, social and governance (ESG) information. The project was funded by and funded by the not-for-profit Investor Responsibility Research Center (IRRC) Institute.
The 31-page study, “Benchmarking Corporate Policies on Labour and Human Rights In Global Supply Chains,” analyzes corporate policies on labour and human rights as applied to global supply chains. The research made use of ASSET4’s database of more than 85 data points for 2,508 publicly listed companies, including every company comprising the S&P 500, FTSE 350, MSCI World and Dow Jones STOXX 600 stock market indices. The report key findings are as follows:
- A significant minority of all 2,508 companies—28 percent—has LHR policies. Fewer have follow up procedures; only 15 percent have issued a detailed LHR code of conduct for their suppliers.
- Some 45 percent of large companies have issued an LHR policy, and 18 percent of smaller companies. The relatively large proportion of high-market-capitalization companies may indicate that LHR supply-chain policies are starting to become an expected part of corporate behavior, at least among those with extensive supply chains or in some markets or industries.
- About 43 percent of companies based in Europe have LHR policies, while only 23 percent of US companies and 20 percent of Asian firms have such supplier policies.
- European companies are more likely to describe monitoring, improvement targets and enforcement mechanisms for their policies and codes than North American and Asian companies.
- Less that six percent of companies endorse specific labour standards such as the eight core conventions of the International Labour Organization. Only six percent say they monitor suppliers for policy or code compliance or set LHR improvement targets; and only seven percent describe enforcement procedures.
- LHR policies are more likely in sectors of the economy that have been subject to the most exposes of LHR abuse. They are most prevalent in the consumer discretionary or consumer staples sectors, which include industries such as apparel and personal products. Some 49 percent of firms in these sectors have a policy and 32 percent have published a code of conduct. Such policies are found in only 15 percent of financial firms. The energy sector is the least likely to have supply-chain LHR policies, at 14 percent.
- The five industries with the highest prevalence of corporate policies have experienced relatively greater negative LHR supplier publicity. Some 65 percent of household and personal products firms have policies and 55 percent have a code. In three other industries, a majority of companies have policies as well: consumer durables and apparel; retailing; and food staples retailing.
The findings are based public disclosures by companies in documents such as annual reports and corporate responsibility reports. They do not include any external verification or assessment of how well companies implement stated policies and procedures, or whether they adhere to their own self-described policies.
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Benchmarking Corporate Policies on Labour and Human Rights In Global Supply Chains