The World Benchmarking Alliance has released a new 2024 Social Benchmark (July 2024). For the first time ever, the organisation is assessing the world’s 2,000 most influential companies on their social performance in relation to their responsibility to respect human rights, their ability to provide and promote decent work, and their ethical behaviour.
Human Level’s Take: A new Social Benchmark has arrived. As efforts to measure and track companies' environmental performance intensify to enable the urgently needed transition to net-zero, a recurring question has been: how do we measure and compare companies’ social performance? WBA’s social benchmark gives us three answers: (1) respect for human rights through a policy commitment and effective due diligence; (2) providing and promoting decent work via safe, fair working conditions and worker empowerment; and (3) acting ethically, including through lobbying, anti-corruption efforts, and data privacy. What can companies take away from this first benchmark? First, companies that excel in their social performance are doing so by actively engaging with their potentially affected stakeholders and conducting meaningful human rights due diligence. Second, robust regulatory frameworks and voluntary guidance in high-risk sectors lead to improved social performance, underscoring the need for global regulations and collective action. With just 20% of companies within the 2,000 most influential companies conducting some steps of human rights due diligence (HRDD), we have a way to go…
Key points from the benchmark:
- Why we need a social benchmark. Measuring companies' human rights and social performance is crucial for understanding their impact on people's lives and ensuring they are aware of these impacts. These influential companies directly employ 95 million people, impact hundreds of millions more through their supply chains, and generate USD 45 trillion in revenue each year, which is 45% of global GDP. However, most still fall short in their human rights responsibilities and ethical business conduct. Over 30% score between 0 and 2 points (out of 20 possible points), indicating minimal acknowledgement of their societal impact. As the 2030 deadline for achieving the SDGs approaches, the benchmark highlights the need for stronger regulations and collective action to ensure businesses make meaningful contributions to sustainable development.
- Some of the ‘social’ gaps identified? Significant gaps exist in companies' performance on human rights, decent work, and ethical conduct, with 90% of companies not meeting fundamental expectations. For instance, the report find that just 20% of companies conduct some steps of human rights due diligence (HRDD). Yet companies in countries with mandatory HRDD regulations score nearly 60% higher on average, showing the need for mandatory frameworks to minimise negative impacts. In terms of decent work, only 3% of companies were found to meet the ILO’s minimum standards on working hours. Most companies (98%) fail to disclose their gender pay gap, and 95% do not publish health and safety data. Transparency in lobbying is also lacking, with only 11% of companies having a public policy on lobbying and just 5% disclosing their lobbying expenditures. Less than 4% of companies pay or have a target to pay workers a living wage, and under 1% have set targets to do so, missing a key opportunity to reduce inequalities. Finally, only 30% of companies disclose the percentage of employees covered by collective bargaining agreements, and just 1% support these rights in their supply chains.
- What high-performing companies are doing better. Companies found to excel across social metrics, especially the top 10%, actively engage with stakeholders and implement human rights due diligence (70% of them do so). Companies that engage with affected stakeholders, in particular, have better performance across human rights and decent work markers, indicating there is a strong correlation between stakeholder consultation and commitments to health and safety, gender equality, and monitoring suppliers' performance. High-performing companies also adopt commitments to respect human rights (94%) and “make a concerted effort to respect human rights.” Additionally, “two trends emerge among the 6% of companies that fully meet the HRDD indicators.” First, they are based in jurisdictions with government guidance and regulatory frameworks on human rights and human rights due diligence and, second, they operate in high-impact sectors (i.e., energy, mining, agriculture and fashion), scoring over 80% higher than others. These sectors “have been subject to greater public scrutiny and are better equipped with detailed HRDD tools and guidelines.”
