AFSCME and the Conflict Risk Network are urging companies to move from compliance on human rights to proactive strategies.
By Amol Mehra, Esq. and Stephen Winstanley
Shareholder activism is on the rise, and human rights issues are emerging as a common theme. Proposals by mainstream investment funds are shifting the conversation on corporate human rights responsibilities from policy to action.
Shareholder proposals brought by the American Federation of State, County and Municipal Employees Pension Plan (AFSCME Plan) would require targeted companies to comply with a key element of the UN Guiding Principles on Business and Human Rights by conducting what is known as human rights due diligence to preventatively asses the risks related to their business activities.
AFSCME Targets Human Rights Risk in Sudan, Elsewhere
The proposals by the AFSCME Plan have been raised for upcoming meetings of Caterpillar, Halliburton and McDonald’s shareholders. In response, Halliburton has urged shareholders to vote against the measure in its 2013 proxy statement. Caterpillar has deflected the demand after the SEC ruled in March that the company could exclude the proposal since it was duplicative of another proposal calling for human rights policies to be developed.
The company also attempted to exclude a proposal by the New York State Common Retirement Fund that would require the company to take steps to ensure that its products are not sold to the Government of Sudan. However, another SEC decision in March decided that this proposal could not be excluded from consideration.
The Sudan proposal is supported by the Conflict Risk Network, a coalition of nearly 100 institutional investors including the NY Retirement Fund, that have come together to use the investment power of more than $3 trillion in assets to combat corporate behavior that might enable human rights abuses leading to genocide or mass atrocities.
UN Guiding Principles Providing Framework For Shareholder Activism
These proposals represent a new kind of shareholder activism on human rights: directing companies to live up to UN Guiding Principles, the increasingly normative framework that was universally endorsed by the United Nations.
In the past, typical human rights proposals by shareholders have called for companies to create or amend their policies to comply with international human rights and humanitarian standards, and have elicited company codes of conduct stating broad corporate goals to respect human rights.
Now, the AFSCME Plan and Conflict Risk Network proposals request that companies take action to pro-actively consider the impacts of their business activities on human rights, assess the risks that their operations will enable human rights abuses, and change their practices where business activities adversely affect human rights.
Shareholders are moving the dial from policy to practice.
The AFSCME Plan and Conflict Risk Network
It is important that companies, other shareholders, and the SEC recognize and understand this fundamental difference. The UN Guiding Principles were unanimously adopted by the Human Rights Council in 2011, after Harvard Professor and UN Special Representative to the Secretary-General John Ruggie spent over 10 years developing them through wide-spread consultation with corporations, governments and interested stakeholders.
They outline the responsibility of businesses to respect and protect human rights throughout their operations and to recognize the importance of providing remedies for abuses where they occur.
While they are not a perfect solution to address the impacts of corporate activity on human rights, they do help reinforce a baseline standard for corporate responsibility and provide operational guidance on how companies can live up to the evolving social expectation and growing legal framework to which they are beholden.
The AFSCME Plan and Conflict Risk Network proposals recognize that business can be part of the solution by exercising human rights due diligence, including risk assessments, or by refusing to engage with repressive regimes that perpetrate human rights abuses. They demonstrate that shareholders are ready to engage management to incorporate human rights into existing risk management to ensure that companies are not complicit in human rights abuses.
These shareholders seek more than words; they believe corporate action and respect for human rights will best protect their long-term investments. In essence, they see the value in valuing human rights – and they want management to do the same.
About the Authors:
Amol Mehra is an international human rights lawyer focusing on corporate accountability for human rights violations and corporate social responsibility (CSR). He is the director of the International Corporate Accountability Roundtable (ICAR). Mehra has worked to build accountability frameworks in both domestic and international arenas, including over private military and security companies, around supply chains and extractives industries, and has worked to strengthen measures related to non-financial disclosure, anti-corruption and due diligence regimes. In addition to his work at ICAR, Amol is a Board Member of Human Rights Advocates, a Coordinating Member and Thematic Specialist for Amnesty International USA. Follow Amol on twitter: @amolmehra.
Stephen Winstanley is currently a Legal and Policy Fellow at the International Corporate Accountability Roundtable (ICAR). He holds a J.D. and Certificate of Transnational Legal Studies from Georgetown University Law Center, and has experience working on conflict-free minerals frameworks and international human rights.