Submission to Human Rights Framework Inquiry

July 6, 2023
ESG Insights

Ethical Partners was pleased to make a submission to the recent Parliamentary Inquiry into Australia’s Human Rights Frameworks, calling for the enactment of a Federal Human Rights Act, as also advocated for by the Australian Human Rights Commission.

Please see the full submission linked below.

Ethical Partners remains deeply concerned at the lack of attention to and focus on a broad range of human rights impacts at ASX listed companies, with our recent analysis showing that only approximately 40% of ASX300 companies publicly disclose a broad human rights policy (of varying comprehensiveness). Unfortunately, many companies only address human rights within the terms of the (mandatory) focus on modern slavery, rather than a broad focus across the range of actual and potential positive and negative impacts on human rights that are possible within their operations, value chains and spheres of influence.

Whilst it is positive that many companies now have a commitment to address the human rights violation of modern slavery, Ethical Partners nonetheless strongly believes that ASX companies must focus much wider in their commitments on human rights, both in order to encompass all their other impacts on people, but also to ensure that their responses to modern slavery tackle the key root causes and drivers of the modern slavery itself, which originates from treating people as less than human across a wide range of rights and protections.

This is an issue Ethical Partners identified last year in our collaborative benchmarking report on the integration of Child Rights across the ASX 200 with UNICEF Australia, in which we noted that less than 50% of the ASX listed companies we analyse through our proprietary in-house EPORA ESG screening process disclosed a human rights policy at all, a statistic that has not improved, but in fact worsened this year. This paper also calls strongly for a wider, deeper, and broader consideration of human rights across ASX listed companies’ operations, but also their supply chains and spheres of influence, as well as advocating for a child’s rights lens, something lacking across the vast majority of the ASX. It also delves into many other relevant human rights considerations often overlooked in the broader footprints of ASX companies, such as living wage, health and safety, privacy and marketing, or parental and family support.

Indigenous rights is another key area of human rights that Ethical Partners has deeply advocated for over the past few years, with a focus on not only the obvious indigenous rights violations of the mining sector, but also within our calls for genuine, integrated and meaningful Reconciliation Action Plans across all our portfolio companies, as well as asking portfolio companies to align with the First Nations Clean Energy Principles, integrate indigenous wisdom into their emerging natural capital considerations and in issues such as addressing the intersections of disadvantage between ethnicity, racism, sexual harassment and psychological safety. Other key areas of human rights in which Ethical Partners has undertaken substantial analysis and engagement with ASX listed companies on include living wage, sexual harassment, mental and physical health, just transition, diversity and inclusion and data safety/AI, with detailed information on our stewardship of these concerns in our most recent Stewardship reporting.

It is very clear to us then, that this is an area that needs great improvement and advocacy by investors across the board.

As such, Ethical Partners are therefore very pleased to see the increasing focus on human rights from the OECD, the emerging EU mandatory human rights due diligence frameworks, and from bodies such as the PRI, with their recent publication of a guide for investors in how to identify human rights risks, as well as their initiative Advance, of which Ethical Partners are support investors. We do however remain concerned about the absence of a deep focus on human rights in the emerging ISSB frameworks or Australian government mandatory disclosure consultations, and whilst we understand that the focus on climate first is a practical consideration, we also feel, as above, that the dichotomy between climate and human rights is a false one, and that climate change is indeed, in and of itself a human rights crisis. Additionally, as with modern slavery, we see that human rights violations are both in themselves a driver of climate change and are also often a direct consequence of our actions on decarbonisation (including human rights violations in the transition metal space,  displacement of communities for renewable projects and in the polysilicon solar panel forced labour issues. Ethical Partners therefore continues to engage on this issue in the wider policy and disclosure space, including with providing strong feedback to the ISSB/IFRS Consultation on Agenda Priorities advocating for the urgent development of comparable disclosure standards on human rights, and the importance of highlighting the interconnections between the newly released climate disclosure standards and its effects on and linkages with human rights.

We also note that Ethical Partners has aimed to address all three aspects of an investors three-part responsibility to respect human rights, as called for in the new PRI’s investor guide (linked below), since inception, including through:

- our longstanding policy commitment to addressing human rights in our investments

- our deeply integrated EPORA due diligence process, which identifies actual and potential negative outcomes to people for all companies considered for investment, including, as recommended by the PRI, a detailed country risk assessment (including the screening out of any company in the bottom of the Transparency Corruptions Perception Index within our Ethical Partners Australian Share Fund), a high risk sector assessment, and a detailed bottom-up company specific human rights assessment, which is undertaken on a continual basis for all portfolio companies.

- our direct company engagements and wider advocacy activities, which aim to prevent and mitigate any actual or potential negative outcomes identified.

- our regular communications on this analysis, engagements and advocacy with clients, the public and civil society, including through our Stewardship reporting and our website.

- our commitment to engaging with all investee companies on providing access to remedy for those affected by their human rights impacts wherever required : for example, our deep engagements with BHP over the past year regarding their remedy of the tragic Samarco dam failure, and our deep engagements with portfolio companies on developing best practice remediation policies as part of their modern slavery commitments.

Please read our full submission to parliament on this important issue at the link below, and we look forward to sharing more details of our engagements on these issues with portfolio companies soon.

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