Report
Point of No Returns 2023 Part III: Social
Globally, companies are failing to comprehensively protect human and labour rights and avoid damaging public health. Asset managers direct a vast amount of global wealth and are stewards of many influential corporations. This means that their investment policies and practices impact workers and communities across the world, on issues such as unsafe working conditions, widening inequalities, and the proliferation of weapons.
In this report, we assess 77 of the world's largest asset managers' approach to human rights, labour rights, and public health. We found that most asset managers fail to exclude companies with negative social impacts across all their investments and rarely use their influence to tackle issues such as indigenous rights and life-limiting public health problems.
Only six per cent of asset managers are excluding investments in human rights-abusing companies across every fund in their portfolio.
We recommend that asset managers have policies in place to scrutinise the human rights impacts of all the companies they invest in. We found that only 6% exclude companies knowingly in breach of human rights standards across all their investments. Under half (43%) of asset managers apply this exclusion to their ESG funds only. Asset owners must step up and insist that human rights are applied consistently across all their managers’ funds.
Only ten asset managers have investment commitments in place that incorporate the UN’s principle of Free, Prior and Informed Consent.
The UN’s principle of Free, Prior and Informed Consent (FPIC) gives Indigenous people and local communities a say on projects that affect them or their territories. Only 10 asset managers have commitments to take the FPIC principle into consideration in investment decisions; and only three of the assessed asset managers gave real-world examples of when this principle had been followed. Companies around the world are failing to factor in the rights of Indigenous and local people, including taking their land, forcing them to resettle and polluting the ecosystems they rely on to survive. Asset managers must use their influence to help change the damaging way these companies are currently doing business.
Asset managers are still failing to use their influence to tackle life-limiting public health issues.
Worldwide too many people are still unable to access affordable and safe medication. Asset managers continue to invest in coal and oil; research from Harvard and UCL[1] indicates emissions from these fossil fuels are estimated to be responsible for one in five deaths globally. Asset managers should use their influence to improve the quality of life and increase life expectancy.
Asset managers are excusing themselves for not acting on human and health issues by blaming a lack of adequate or sufficient data.
We know asset managers are not taking the most obvious steps to address this. For example, only six per cent of managers prioritised engaging with companies to release social data. Additionally, 40 per cent admitted that they were not asking companies to release data about their social impacts.
Authors: Marina Zorila, Danielle Vrublevskis
Contributing Authors: Abhijay Sood, Dr Claudia Gray, Felix Nagrawala, Katie Stewart, Isabelle Monnickendam and Dr Jonathan Middleton
Contact: research.secretariat@shareaction.org
ShareAction does not provide investment advice - read our disclaimer here.
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Point of No Returns series
Alongside this report we have done a top level overview of asset manager approaches to environmental and social issues and a more in-depth look into how they are engaging companies through stewardship and governance.
References
1 Vohra, K. et al. (2021). Fossil fuel air pollution responsible for 1 in 5 deaths worldwide. Harvard T.H. Chan School of Public Health. Available online at: https://www.hsph.harvard.edu/c-change/news/fossil-fuel-air-pollution-responsible-for-1-in-5-deaths-worldwide/ [Accessed 4 May 2023]