The world’s largest asset managers have yet to take meaningful steps to tackle human rights
Anna Triponel
May 11, 2020
UK-based responsible investment charity ShareAction has assessed the performance of 75 of the world’s largest asset managers on human rights. In its recently released report “Point of No Returns: Part II – Human Rights. An assessment of asset managers’ approaches to human and labour rights”, ShareAction finds that the asset management 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.”
As a backdrop, ShareAction finds that the asset management industry holds a “huge amount of influence over corporate behaviour.” The three biggest asset management firms in the world, BlackRock, Vanguard, and State Street, together constitute the largest shareholders in 88 per cent of the S&P 500 firms. The 75 asset managers in this assessment manage more money than the GDP of the US, China and the European Union combined.
Here are some of the key findings from the report:
Three-quarters of the world’s largest asset managers make reference to human rights issues in their environmental, social and governance policies. However, few are taking meaningful steps to tackle these issues through their votes at annual meetings, exclusions, discussions with companies or adherence to international frameworks
A large number of asset managers’ policies do not have commitments to influencecorporate 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
Less than ten per cent (9 per cent) of the world’s largest asset managers have a strong approach to human rights. 61 per cent of the world’s largest asset managers have a weak or non-existent approach to engagement on human rights, while an additional 20 per cent take a reactive approach. Reactive engagement takes place after a human rights abuse has occurred, focusing mostly on the material – i.e the financial risk – to business. (Where asset managers are engaging with the companies they mostly focus on supply chain due diligence, followed by gender, workforce conditions and wages)
84 per cent of the world’s largest asset managers have no public policy against purchasing sovereign bonds from countries under international sanction for human rights abuses. Almost half of the world’s largest asset managers (representing a combined US$45 trillion in assets under management) do not have policies to exclude controversial weapons companies from their investments
US managers such as Fidelity, Vanguard and JPMorgan Asset Management ranked among the worst performers on human rights, while European asset managers such as Robeco, BNP Paribas Asset Management and Legal and General Investment Management received A grades. BlackRock, the world’s largest asset manager, ranked towards the bottom of the list
(You can find the ranking of these 75 asset managers based on their approach to responsible investment, governance, human rights, climate change, and biodiversity in Part I of the series.)
“The world’s largest asset managers are largely failing to hold the companies in their portfolios to account for human and labour rights abuses. As the Covid-19 pandemic shines a brighter light on the reality of labour market inequalities and imbalances in access to basic services, it also marks a critical opportunity for asset managers to step up and play their part in ensuring that human and labour rights are protected.”
