Study of FTSE100 reveals a worrying dip as proportion reporting on Human Rights falls from 97% in 2014 to 86% in 2015
Dubai, UAE, December 17, 2016: Research undertaken by CIMA, the Chartered Institute of Management Accountants, reveals that a decade’s worth of progress on human rights reporting across the FTSE100 was reversed this year with a 9% fall in the proportion of firms detailing the human rights actions they have undertaken in their annual reports. This raises worries that firms are failing to recognise the need to engage meaningfully with this issue – increasing risk and jeopardizing future success
The research, released to mark International Human Rights Day, finds the number of companies, talking about human rights had risen from less than a third in 2005, to 97 out of 100 in 2014 but then fell back again in 2015 to 86%.
The study also reveals that progress on reporting remains slow in many sectors, particularly within mobile telecommunications and financial services. It finds that despite a growing desire to “be seen to act correctly”, only half of the mentions are backed with evidence of practical action.
Despite a decline in the proportion of firms detailing practical action on human rights, the overall frequency of the term across the annual reports of FTSE 100 companies continued to climb, increasing ninefold over the last decade. Reporting was most frequent in sectors such as tobacco, food and drink, and mining. While the average number of mentions of human rights in FTSE 100 firms’ annual reports rose to four.
In addition, the study finds that the 2008 financial crisis marked a watershed in the linking of human rights to practical actions, with a slump from 74% of mentions being directly evidenced to just 8% in 2015. This comes despite a significant rise in the use of the terms human rights.
Tanya Barman, head of ethics at CIMA said:
“The lack of detail around practical actions explains why human rights scandals continue to emerge so regularly. Although companies are clearly aware of the importance of being seen to act correctly, there is still a lack of understanding of how this impacts value. Instilling ethical practices across a wider supply chain should be paramount for all businesses, not just those traditionally associated with low-cost overseas labour. The benefit being society prospers from an open and more transparent operating environment and businesses protect arguably two of their greatest intangible assets – their brand and reputation.”
“It is frustrating that we still hear of incidents, such as Rana Plaza or the Syrian refugee child labour scandal implicating major brands. These prove many companies are still not taking effective measures to regularly audit their suppliers and safeguard the labour rights of the employees in their extended labour chain, leading to activities which breach international law. Here in the UK with the Modern Slavery Act now in force for thousands of organisations, regulation along with stakeholder influence will hopefully provide the much needed change in approach, as companies cannot continue to operate business as usual when there is still a human cost at stake.”
CIMA chief executive Andrew Harding said: “Many companies have taken action on human rights issues, publicly reported that action, and succeeded as a result. Unilever, for example, has actually increased their average number of mentions in their annual report, despite also recently introducing a separate human rights report. This is part of a wider sustainability focus, recognising all the interdependencies of their business model, which has seen their business thrive in recent years.
“The case of Unilever proves that Human rights are not a responsibility – they are an opportunity.”