The Problem with How we Measure Business Respect for Human Rights

We analyzed the metrics and indicators currently reported by companies and used by investors and others who seek to evaluate business respect for human rights. We reviewed over 1,200 questions in 8 major Environmental,Social and Governance (ESG) rankings, ratings and indices, including 400 that focus on the ‘S’component. These are our findings.

The Current Use of Metrics in Company Human Rights Reporting in Southeast Asia

To better understand what is working and what is not, Valuing Respect analyzed metrics and human rights reporting currently being used by companies and available to investors in three geographical regions. This paper summarizes our findings in South East Asia.

The research was conducted in collaboration with the ASEAN CSR Network from mid 2018 to early 2019.


A Quick Look at Our Findings

We did a breakdown of the types of indicators that are being used in the region. Similar to what we found in the general research, metrics in South East Asia were mostly focused on inputs, outputs and activities.

Approximately only 1 in 5 indicators measure the outcomes that activities have for the business and less than 1 in 10 measure outcomes that activities have on people’s rights.

  • Inputs: In Malaysia and Singapore companies regularly cite exact contribution amounts to charities or philanthropic efforts. In Thailand, it is common to find information about new task forces or teams that may have human rights as part of their mandate. For example: “[The company] has since doubled its sustainability team and developed further social projects with NGOs, local authorities and the International Labor Organization (ILO).”
  • Activities: Evidence of activities in the form of occupational health and safety (OHS) training is prevalent in all three countries. Evidence of human rights training and impact assessments uniquely featured in Thailand. For example: “Trainings on human rights policies and procedures were provided to 10 employees and 136 hours were invested”
  • Outputs: Board diversity figures and OHS statistics feature in Malaysia and Singapore. In all countries one finds claims citing zero human rights complaints or violations. An outlier is that Thailand cites specific data from human rights impact assessments.
  • Practices and Behaviors: It is very rare to find indicators in all three countries. Companies sometimes report on worker and community satisfaction which could be seen as an indicator of good company practices. A few companies report on new protocols of management or conduct related to human rights, but do not provide evidence of those new requirements being followed.
  • Outcomes for People: it is very rare for indicators about outcomes for people to be reported. Where they are, the focus is on data regarding improved incomes, livelihoods, wellbeing, and job satisfaction. There is some information on remediation which can hint at better outcomes for people.
  • Outcomes for Business: Compared to practices and behaviors and outcomes for people, outcomes for the business is an area of emphasis and more thorough reporting. Awards appear to be a popular data point in all three countries.

The Use of Metrics in Human Rights Reporting in the Food and Beverage Sector

To better understand what is working and what is not, Valuing Respect analyzed metrics and human rights reporting currently being used by companies and available to investors across three sectors. This paper summarizes our findings in the Food and Beverage sector.

The research was conducted from mid-2018 to early 2019. It has informed the direction and focus of the Valuing Respect project.


A Quick Look at our Findings

After reviewing fourteen food and beverage companies in the database, the analysis revealed that activities were the most frequently reported type of indicator with companies often disclosing information about training programs, audits and assessments. Additionally, the reports disclosed a fair amount of information about the outputs of activities (e.g., plans for further investigations, resolutions and initiatives). A lot of the information provided was focused on road safety and vehicle accidents. No data was provided on outcomes for business.

The full breakdown can be seen below:

Observations

  1. A small number of companies reported data on the resources invested (inputs) into human rights issues. This generally focused on designated teams, committees and personnel.
  2. Nearly every company disclosed information related to audits and assessments, focusing on both internal audits and third-party audits. Reporting often included information about the audits, such as where the audits were located, who was audited, what operation was audited and the audits’ length.
  3. Data about training focuses on the number of employees trained, the number of hours of training and the training topics addressed.
  4. For human rights issues that have been a spotlight focus for the sector such as child labor and warehouse and road safety, evidence provided is more spread across the full pathway of indicators. This tends to happen when companies are reporting on specific examples in specific locations or operations.
  5. Some data is provided about grievance mechanisms and complaints received. Only one reviewed company provided information on output.

For the detailed explanation of each observation please download the full document below.

The Current Use of Metrics in Company Human Rights Reporting South Africa

We did a breakdown of the types of indicators that are being used in the region. This report summarizes findings from research into the current use of metrics by South African companies in their human rights related reporting.

The research was conducted from mid 2018 to early 2019, and has informed the direction and focus of the Valuing Respect project.

A Quick Look at Our Findings

  1. Companies mainly provide evidence for the fact that activities (e.g., such as training, assessments and audits) have been conducted and that outputs (e.g., new products or knowledge) have been achieved. Activity and Output indicators make up 50% of all of the indicators identified in the research. Even then, much of the information is reported without reference to the effect of activities and outputs on business practices/behaviors or outcomes. This pattern was consistent across all of the industries analyzed.
  2. 70% of all indicators and evidence provided in human rights-related disclosures uses quantitative measures of things it is relatively easy to count. There is a focus on coverage data for activities (i.e., numbers of actions or people reached), or numbers of problems/issues identified (e.g., numbers of complaints or number of non-compliances found).
  3. The lack of evidence and supporting narrative across the causal pathway – from input to activity to output and all the way to outcomes – is common even for areas where one assumes there might be relatively mature practice (e.g., on health and safety, black economic empowerment, diversity, child labor and freedom of association.)
  4. There are some interesting positive outlier examples where indicators and information beyond inputs, activities and outputs are reported. These tend to be in case study form and narrate the full pathway to include outcomes for people and for the business. The outliers pertain to a) company/community relationships at specific operations, health and safety; b) relocation and resettlement data or c) data about compensation by the mining industry for historical human rights harms. It is possible that this more innovative and complete approach to tracking reflects a close tie between positive outcomes for people and positive social license benefits for business.

The Use of Metrics in Human Rights Disclosure in the Extractives and Oil Equipment Sector

This fact sheet summarizes findings from research by the University of Fordham Law Clinic into the current use of metrics in the human rights reporting of 25 companies in the extractives and oil equipment sector included in the UN Guiding Principles Reporting Database.

The research was conducted form mid 2018 to early 2019, and has informed the direction and focus of the Valuing Respect project.


A QUICK LOOK AT OUR FINDINGS

After reviewing the disclosure of 25 extractives and oil equipment companies in the UNGP Reporting Database, we found that the majority of metrics and data provided by the group fell within the categories of activity and outcomes for people in the areas of fatality and injury rates, internal and external audits and grievance mechanisms.

Further, while nearly all of the companies in these sectors provide data that indicates outcomes for people -such as reporting on safety performance metrics- it was not always clear how these metrics were linked to the companies’ inputs, activities and outputs. Few companies provided any data indicating practices and outcomes for the business.

OBSERVATIONS
  1. The majority of the companies reviewed reported various input indicators about the allocation of human resources to address human rights issues.
  2. Metrics on training are mainly activity indicators (i.e. the number of training hours/employees trained, with a focus on health, safety and human rights)
  3. Reporting about audits and assessments is dominated by indicators of activities having taken place, with some signals about the results of the activities.
  4. Companies provide data about workforce gender diversity, unionization and participation in LGBT programs. This tends to be in the form of activities and outputs, though they might be excellent leading indicators of improved outcomes for people that flow from company interventions.
  5. In the area of health and safety, companies do provide (almost always downward) trend data about fatalities and injuries (outcomes for people) and related outcomes for the business, such as lost-time injuries.
  6. Reporting on community engagement is provided, and focuses on resources and actions (inputs and activities) to gather and consider community feedback. Some positive outlier examples describe practices/behaviors, though they still lack supporting data.
  7. Information on the disruption and displacement of local communities is occasionally provided, with a focus on business practices of relocating, resettling or compensating communities and some reference to the numbers of people/beneficiaries of such efforts that reflect outcomes for people.

For the extended description of each finding, please download the full report below.

The Use of Metrics in Company Human Rights Disclosure in the ICT Sector

This fact-sheet summarizes findings from research conducted by the University of Fordham Law Clinic into the current use of metrics in the human rights reporting of 12 companies in the Internet and Communications (ICT) sector included in the UN Guiding Principles Reporting Database.

The research was conducted from mid-2018 to early 2019. It has informed the direction and focus of the Valuing Respect project.


A QUICK LOOK AT OUR FINDINGS

After reviewing the disclosures of 12 ICT companies in the database, the analysis revealed that inputs, activities, and outputs were the most frequently reported types of indicators. This was the case in a number of areas such as employee training on social responsibility, information security as well as supplier audit results for code of conduct compliance.

Some information was disclosed to provide insight into practices and behaviors, such as responses to copyright and government information requests. Other information addressed outcomes for people, usually derived from employee surveys. Outcomes for business was the least reported indicator type among the companies reviewed. 

observations
  1. Reporting about training on social responsibility and related issues is dominated by indicators of activities that took place and not the results of those activities. 
  2. A small number of the reviewed companies reported data around government requests or demands for privacy information. 
  3. Data is provided on the requests received from copyright owners to remove content. 
  4. Reporting on supplier audits tends to use output indicators, with little disclosure on the impact of such audits’ insight. 
  5. One ICT company reported about its sanction mechanism for noncompliance with its standards and policies. This reporting was around input, activity, and output indicators, with some examples of practice. 
  6. One company disclosed the number of companies that it was able to galvanize to take collective action. These are outputs from an activity not often reported. 

To read the extended version of these observations, please download the full report below.

The Use of Metrics in Company Human Rights Reporting in Poland

This report summarizes findings from research into the current use of metrics by Polish companies in their human rights related reporting. The research is a contribution to the Valuing Respect project research stream, to build empirical evidence for how businesses currently track the progress and effectiveness of their efforts to respect human rights.

The research was conducted in collaboration with the Polish Institute for Human Rights and Business, from mid 2018 to early 2019, and has informed the direction and focus of the Valuing Respect project.


A QUICK LOOK AT OUR FINDINGS

OBSERVATIONS

  • Company reporting is focused on input, activity and output data with 78.8% of all information falling into these indicator categories. Even then, detailed information about inputs and activities is rarely provided. This holds true across all the industries analyzed; across areas that could be said to be more mature (such as diversity and health and safety); and company reporting that one might assume is more mature (for example, because they follow an international reporting standard). At the same time, it is important not to discount reporting on these issues as they might ultimately be leading indicators of better business practices and good outcomes. 
  • With regard to the dominant category of outputs, about 80% of these are reported in numerical form, and often presented as a snap-shot for the reporting period, without a narrative of what the company concluded or did as a result of that data. PIHRB considers that this might reflect that data included in monitoring and reporting is driven more by external requirements and pressures than by its perceived value for business decisions.
  • The most complete disclosures are those that show the connection across the pathway from inputs to activities all the way through to outcomes for people and business. This is not common but a few positive exceptions were found in the research. 
  • Some companies share data about outcomes for business that seem to relate to human rights outcomes for people, but they rarely make this relationship explicit or address the nature and quality of outcomes for people.

For a detailed description of our findings, please download the full report below.