Concept Note Day 1: Investors’ perspectives and the evolving external landscape for human rights due diligence

There is a noticeable increase in the importance of – and interest in – positive impact of investments. To date, ESG investing or “sustainable investing”, accounts for more than one quarter of all assets under professional management globally. It is already three times higher for institutional investors. The rapid growth of ESG investing coincides with the generational shift in the investment community, whereby wealth is being transferred to the younger generation – who are twice as likely as previous generations to invest in social impact. Simultaneously, massive wealth is being transferred to women, who, by 2020, are expected to hold $72trn and of whom 85%, according to Morgan Stanley, express interest in ESG investing.

In this context, it is not surprising that more attention is attributed to understanding the social impacts of investments and the role financial institutions have to play in protecting human rights. The OHCHR explicitly acknowledged that investment institutions can indeed contribute to adverse human rights impacts through their investments and that they should implement the UN Guiding Principles for Business and Human Rights (UNGPs). Numerous initiatives, such as the OECD Guidance on Responsible Business Conduct for Institutional Investors, the Equator Principles, the Dutch Banking Sector Agreement, the activities of the Thun Group of Banks or the Liechtenstein Initiative for a Financial Sector Commission on Modern Slavery and Human Trafficking are considering practical questions related to the application of the UNGPs to the financial sector.

At the same time, investors have begun to play a crucial role in raising the bar for the corporate responsibility to respect human rights. The Corporate Human Rights Benchmark is an investor-driven multi-stakeholder initiative which ranks more than 100 of the biggest, globally listed companies on their human rights practices and aims to help investors identify socially responsible companies. But the CHRB is only one of numerous human rights focused frameworks in this space. Other important human rights-focused benchmarks that are available to investors include “Ranking Digital Rights”, “Know the Chain”, “Behind the Brands” and “Workforce Disclosure Initiative”.

The upcoming business and human rights peer learning meeting of the European Global Compact Networks seeks to facilitate an exchange between the Global Compact Networks’ members and representatives of the financial community. In a nutshell, the day will be structured around the following guiding questions:

1. How can banks and investors contribute to raising the standards for human rights due diligence?
2. What are banks’ and investors’ expectations regarding human rights and human rights due diligence? How do they integrate human rights due diligence into financing decisions?
3. What opportunities for collaboration are there between investors and client companies with regard to promoting respect for human rights?

The meeting will include presentations by external speakers and interactive group work. It will be facilitated by the German Global Compact Network and expert consultants from twentyfifty Ltd.