Managing the “S” in ESG: How asset managers disclose and consider human rights

Abstract

Objective: The purpose of the research was to evaluate the commitment and due diligence measures directed at human rights in a sample of the largest international and European asset management companies, under OECD guidelines. Theoretical Framework: According to the OECD, companies can impact most internationally recognised human rights. However, there is a lack of studies that directly assess the human rights due diligence in investment companies. Method: A documentary and qualitative analysis of 45 investment companies was applied. Five key performance indicators were created to measure human rights commitment and due diligence practices such as disclosure of human rights policies, cascading of compliance/obligations to investees, due diligence before and during the investment and collaboration with industry and non-industry initiatives. All companies were classified and rated according to these criteria. Results and Discussion: This research reveals that there is a dichotomy between recommendations of human rights integration in investment and actual commitment and compliance, indicating that only a minority of companies were compliant and committed to considering human rights in their investment. Research Implications: The results provide an initial benchmark of the state of the commitment towards human rights in the investment sector, allowing for further investigations to be conducted to assess the development of this dimension of ESG and CSR, particularly in this sector Originality/Value: The analysis consisted of accessing and evaluating the public information of the larger investment firms from an individual investor perspective, which provides an innovative view of human rights awareness and compliance in the investment sector.