We used Intrinio’s alternative data, powered by our proprietary Answers API, to discover what human rights challenges companies are facing. Here are the top 10 human rights challenges among S&P 500 companies, as reported in their SEC filings.
As companies become increasingly multinational, they are more vulnerable to the social and political environments of these countries, and are subject to changing laws, consumer sentiment, and ethical standards, especially in more volatile regions. This includes threats to their reputation, supply chain, and logistical presence in those regions. Kroger and Amcor PLC are just a few of the firms to express this challenge in their SEC filings.
Countries such as Saudi Arabia, Qatar, and the UAE are cited by a number of firms as lacking legal protections for women, LGBTQ+ individuals, and members of religious minorities. Firms- such as Gap Inc.-operating in these countries are faced with the ethical challenge of somewhat condoning these governments’ discrimination by investing there.
Numerous firms cited concerns about possible negative effects of investment, both domestically and abroad. For example, Northrop Grumman Corp noted “business relationships with... governments whose activities may be linked to human rights violations” pose a significant risk to their operations. Mastercard is a second example of this, facing backlash for processing payments to white supremacist groups, as noted in an April 2019 report, as well as citing concern with its operations in countries with significant human rights abuses.
Large companies often have hundreds of suppliers for their products, and companies such as Xerox have identified the challenge of ensuring that the suppliers maintain just labor conditions, even for workers who are not direct employees. Kroger, Tyson, and Phillip Morris have all noted similar challenges and/or received low scores from agencies and independent research centers conducting studies on labor conditions.
Similarly, many large companies employ both blue-collar and white-collar workers, and each group poses a unique labor challenge. Firms must ensure that blue-collar workers face safe conditions, are not overworked physically, and receive an adequate wage, as many live at or below the poverty line. For white-collar workers, the challenge comes in maintaining positive and motivating company cultures, and ensuring salaried workers are not exploited. Netflix, for example, raised the concern that many tech companies are “hostile” to “right of center” political thought.
Alphabet (parent company of Google) and Franklin Resources Inc are examples of S&P 500 companies that have raised this concern, as our world becomes more and more digitally focused. Further, some states have implemented new laws and regulations – for example, the California Consumer Privacy Act, which gives consumers discretion over the resale and deletion of data collected about them.
With the effects of climate change, an increasingly volatile political environment, and the consequences of COVID-19, S&P 500 firms have noted that workers are demanding more in these trying times. Chevron, for example, noted this challenge in following through on employment promises in a 2020 report. A report addressed to Tesla expressed a greater concern with their labor conditions in light of COVID-19.
There is a rising need for better standardized, firm-wide policies dictating equal employment opportunities, anti-discrimination policies, fair compensation and benefit protocol, and protection for vulnerable labor populations such as migrant workers. Kraft Heinz has acknowledged the need for this, as it received a score of 23% on a test of risk assessment and minimization for vulnerable labor populations. Another example is the sponsorship by Exxon Mobil of the Masters Golf Tournament hosted at Augusta National Golf Club which excluded women from membership until 2012.
Juniper Networks noted that certain industries are “characterized by the persistent and pervasive underrepresentation of minorities and women, particularly in senior positions.” Interpublic Group of Companies, Inc noted a similar challenge. Ebay reported this in regard to gender diversity issues. Diversity and equal opportunity matter hugely from a human rights perspective, but also from a financial perspective: “Diversity Wins – How Inclusion Matters,” a 2020 report by McKinsey, found inclusive and diverse companies are more likely to outperform less diverse peers, and by a significant amount.
Companies are reporting that claims of harassment are affecting their business operations. Fox Corp reported claims of “sexual harassment and discrimination on the basis of sex and race” in their February 2021 10-Q. Tesla is another example, facing allegations of sexual harassment and racial discrimination. Delta Air Lines, Inc noted that “sexual harassment... is perceived as evidence of a problematic corporate culture” and that companies “whose corporate culture tolerates sexual harassment tend to have higher turnover and less productive employees,” both of which are serious threats to a company's share value.
These are serious challenges that S&P 500 companies are facing, and they certainly highlight several key areas for growth: transparency in sourcing, just labor conditions, and creation of fair, standardized policies for equal employment, diversity, and harassment reporting. While the moral case should be enough, research shows that firms who act with a high level of integrity, encourage diversity and inclusion, and create a culture of respect consistently perform higher financially. If you’re involved in ESG research and investing, Intrinio’s Answers API provides an opportunity to recognize those firms faster and more easily than ever before.
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