Scottish Widows, the Church Commissioners for England and Aviva Investors have launched an initiative to push data providers and proxy advisers for better information on human rights.
The new collaborative engagement programme, known as II-HRD, will address what its members describe as a lack of decent data on human rights that “undermines the ability of investors to identify and manage investment risks and opportunities in their portfolios”.
Asset owners and investment managers are increasingly obliged to demonstrate that they consider the human rights impacts of their portfolio companies as part of regulatory requirements such as the EU Sustainable Finance Disclosure Regulation and the UK’s Sustainability Disclosure Requirements.
Earlier this month, EU lawmakers confirmed that the finance sector would not be held accountable for human rights abuses linked to portfolio companies as part of the Corporate Sustainability Due Diligence Directive (CSDDD), which is in the final stages of being signed into law. However, it is possible that some member states could add the industry back in when they transpose the Directive into national law.
Regardless, II-HRD’s terms of reference, published yesterday, called on investee companies to “demonstrate their respect for human rights across their operations and value chain” and claimed more data was needed to carry out effective stewardship in the area.
“As clients of the major data providers and proxy advisers, we agree to use our collective influence to ensure service providers meet our need for high quality human rights data at scale in order for us to effectively manage investments in the long-term interests of our clients and beneficiaries,” the document stated.
Scottish Widows, the Church Commissioners and Aviva first began working on the topic in 2022, via the World Benchmarking Alliance. Last year, they joined forces with a dozen other investors including Fidelity International, CCLA, Sarasin & Partners, Cardano, Nordea and the Church of England Pensions Board, to write to data providers urging them to step up on human rights.
The trio will now form the steering group for II-HRD.
MSCI, Morningstar-Sustainalytics, ISS, Glass Lewis, Moody’s, Refinitiv, Bloomberg and RepRisk are all identified as “target companies” for engagement by the investors.
The group is inviting others to sign up by the end of April.
“Members will preferably be public about their membership of the Initiative and will add their AUM to the collective AUM,” said the group. “However, members who wish to remain anonymous, or who agree to be named but do not wish to ‘add’ their AUM, will be accommodated.”
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