Making the Case for Corporate Human Rights Management: Connecting Human Rights and Financial Performance

As an increasing number of companies grapple with integrating human rights considerations into their everyday business operations, the question that I hear time and time again is, “What is the business case for corporate human rights management?” Values to Valuation, an ambitious new academic research…

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November 18, 2016
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As an increasing number of companies grapple with integrating human rights considerations into their everyday business operations, the question that I hear time and time again is, “What is the business case for corporate human rights management?” Values to Valuation, an ambitious new academic research project, seeks to provide a clear answer.

The question often comes from senior sustainability leaders who need to make the case to their CEOs, but also from supply chain and sourcing managers, compliance officers, human resource directors, and beyond. In short, internal leaders want to know why they should be investing their time and resources in activities that to their eye, show no tangible bottom line benefit.

While respecting human rights is a basic responsibility and moral imperative for companies, one of the first places to look for an answer to the business case question is within the investor community. Some investors are increasingly using human rights and sustainability ratings and rankings, such as KnowTheChain Benchmark Reports, the Carbon Disclosure Project, and the forthcoming Corporate Human Rights Benchmark, to inform their investment decision-making. This is because, as Investing the Rights Way: A Guide for Investors on Business & Human Rights points out, there is “growing evidence that, in addition to avoiding or diminishing certain risks, companies benefit financially when they uphold human rights.”

Closely examining this evidence is then key to answering the business case question. A new and ambitious academic research initiative, entitled Values to Valuation, is looking to do just that. Led by the Center for Responsible Business at UC Berkeley Haas School of Business, the Center for Law, Business, and the Economy at UC Berkeley School of Law, Alliance Manchester Business School – University of Manchester, and the UN-supported Principles for Responsible Investment, Values to Valuation seeks to produce a comprehensive, incisive, and credible academic study exploring financial risks and investment materiality related to human rights.

The study aims to take into account the impacts of corporate human rights policies and due diligence processes, as well as external human rights-related issues and events, on company valuations as well as on a range of quantitative and qualitative factors that could influence investment decisions and outcomes.

The initiative is in its beginning stages, currently drawing on investor, company, human rights, and NGO communities for input into the research methodology and data sources. At a recent stakeholder roundtable discussion at UC Berkeley, participants raised key questions regarding, for example, which industries to include in the research’s scope, the importance of distinguishing between the different types and levels of materiality, as well as the need to differentiate between company and share performance.

The results of the Values to Valuation project have the potential to answer the business case question distinctly and affirmatively. Many of us in the sustainability and human rights fields already understand that what is good for people is good for business in the long term, and empirical evidence should lay the groundwork for turning this hypothesis into common knowledge.

 


Marissa Saretsky co-leads the Human Rights & Business Initiative for the Center for Responsible Business at UC Berkeley’s Haas School of Business. She has spent the past decade promoting and advising on human rights and sustainability management for companies, governments, and multilateral organizations in the U.S and Europe. Previously, Marissa held the role of Manager in Business & Human Rights at Gap Inc. where she developed strategies and programs to mitigate human rights risks across the company, most notably in the supply chain.