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Tuesday, November 29 • 11:40am - 1:00pm
Strengthening Accountability: BHR and Investors

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(Version française ci-jointe)
(Versión en español adjunta)

Interpretation available in English, French and Spanish

Session organized by the UN Working Group on business and human rights in collaboration with BSR

Version en espanol en adjunto/ Version en francais en piece jointe

Brief description of the session:
The growth of sustainable investing and “ESG” signals progress in the financial industry as investors begin to appreciate how environmental, social, and governance (ESG) issues create risks and opportunities. Yet the ESG field has been criticized, for example, for inadequate “greenwashing” strategies or for ignoring the “S”. At the same time, there is often no account taken of the value of business and human rights in developing ESG approaches. As investors and stakeholders navigate these issues and seek to ensure the societal benefits of ESG, it important that a human rights-based approach to ESG investing is considered and that impacts on people are put at the centre of these approaches. This session will shed light on the content and scope of the human rights-based approach to investment and how it contributes to elevating the voice of rights-holders in investment contexts.

Key objectives of the session:
The session aims to:
  • Clarify the key difference between ESG and human rights-based approaches to investment;
  • Demonstrate the real-world impact of investment activities on human rights;
  • Provide some  guidance on how investors can integrate a human rights approach into investment decision-making and stewardship, with a focus on meaningful stakeholder engagement as part of their human rights due diligence (HRDD)and enabling access to remedy;
  • Promote stakeholders' understanding of the different types of leverage that could be used by institutional investors  to promote respect for human rights and enable access to remedy, as a way to strengthen their advocacy role; and
  • Recommend appropriate actions to States in order to incorporate a human rights approach in finance through regulatory frameworks and public policies.
Key discussion questions:
  • What is ESG investing and how is it similar or different from business and human rights?
  • What are the benefits of a human rights-based approach to investment?
  • Does implementing HRDD in investment decisions and stewardship involve integrating this process into ESG analysis or should it be a separate process?
  • What does meaningful stakeholder engagement look like in the case of institutional investors?
  •  What concrete measures can investors take to exercise leverage in portfolio companies and asset managers to promote respect for human rights?
  • What is the role of institutional investors in driving access to remedy for affected rights-holders?
  • What measures have States taken or should they take to ensure ESG investing is aligned with investors’ human rights responsibilities and ensure investors are held accountable?

Background to the discussion:
The Working Group on Business and Human Rights, together with the OHCHR, has on numerous occasions clarified on the applicability and extension of the obligation to respect the UNGPs to actors in the financial sector, reaffirming the obligation of institutional investors and banks to avoid causing or contributing to negative impacts on human rights in their activities or through their business relationships[1]. In its stocktaking on the first decade of the UNGPs, the Working Group has recognized that financial actors "have an unparalleled capacity to influence business and increase progress in the implementation of the Guiding Principles"[2] and acknowledged this issue as a central part of the agenda for the next decade.
Mainstream approaches to ESG follow a common formula: investors identify material risks to business based on a limited set of pre-determined criteria and limited and/or inaccurate data. Social issue assessments can often appear simplistic, “check the box,” and of limited value. Complex issues may be reduced to limited criteria (e.g., diversity statistics), missing the intersection of environmental and governance issues, business models, business relationships and, crucially, real-world impacts of business activities on people. Even when an investor seeks to address risks, the formula often focuses on reducing financial ESG risk rather than on the cause of risk to people. For society, the result of ESG is often that business appear to check the right ESG boxes but their activities still have an adverse effect on the rights of workers, communities, customers, and others.
Additional background documents or relevant links:

[1] Consult the notes of the Working Group addressed to : Centre of Research on Multinational Corporations (SOMO), Grupo de Trabajo de la OCDE sobre Conducta Empresarial Responsable, Thun Group of Banks y BankTrack among others.
[2]  A/HRC/47/39, Guiding Principles on Business and Human Rights at 10: taking stock of the first decade, Report of the Working Group on the issue of human rights and transnational corporations and other business enterprises, p.17.

avatar for Elsa Savourey

Elsa Savourey

Director, Sustainability Outcomes and SDGs, Principles for Responsible Investement
Elsa has over a decade of experience working for the private sector and with stakeholders on corporate sustainability. Her expertise focuses on social/human rights issues and their intersection with legal frameworks and reporting standards on wider ESG/sustainability issues applicable... Read More →

avatar for Paloma Muñoz Quick

Paloma Muñoz Quick

Global Lead, Financial Services and Human Rights, BSR
Paloma leads BSR’s work at the intersection of financial services and human rights. She advises financial institutions on embedding respect for human rights into corporate governance, across products and services, and at each stage of the investment lifecycle.Prior to joining BSR, Paloma was Advisor to the UN Working Group on Business and Human Rights and Senior Consultant of the UN B-Tech Project, where she helped develop an ambitious vision for promoting the uptake of the UN Guiding Principles on Business and Human Rights among investors and led work on responsible investment in digital technologies. Prior to the UN, Paloma launched... Read More →
avatar for Mary Beth Gallagher

Mary Beth Gallagher

Director of Engagement, Domini Impact Investments
Mary Beth Gallagher  is the Director of Engagement at Domini Impact Investments LLC based in New York, NY. Ms. Gallagher is responsible for leading Domini’s engagement efforts with portfolio companies, broader stakeholder groups and policy makers, as well as developing initiatives... Read More →
avatar for Doug McMurdo

Doug McMurdo

Ward Councillor, Bedford Borough Council
I am chair of the Local Authority Pension Fund (LAPFF). LAPFF has 86 LGPS pension funds and six pool company members, with assets under management of over £350 billion. The focus of our work plan is to engage with companies, to understand their approaches to all aspects of Environment... Read More →

Tuesday November 29, 2022 11:40am - 1:00pm CET