How we're engaging with investee companies on human rights issues

Human rights are inherent to all human beings regardless of identifiers such as nationality, sex, ethnic origin, religion or language.¹ They range from the most fundamental – the right to life – to those essentials for living are such as the rights to food, education, work, health, sanitation and liberty.  

If risks relating to human rights are left unaddressed, investors – even those with minority shares in a company – may be inadvertently connected to adverse impacts of human rights breaches caused by, contributed to, or linked to investee companies as a result of their ownership or management of stakes in those companies. This is not only a reputational risk to investors but also a financial risk.

Our stance on human rights

As a global investor, LGIM is committed to respecting and protecting human rights. We believe this is firmly part of our fiduciary duty of managing our clients’ assets. Furthermore, we believe managing human rights is financially material.

We will use our influence to hold investee companies to account for their human rights performance, aiming to raise standards across markets. We are focusing our engagement efforts on companies identified as being in breach of the United Nations Global Compact human rights principle, and certain sectors where human rights considerations should be elevated in relation to workers and communities in their operations and value chains, such as renewable energy operators, companies in extractive industries (e.g. energy, mining and materials) and also labour-intensive industries (e.g. apparel and textiles).

LGIM has identified a number of salient topics most relevant to businesses and their value chains, and where we believe companies can collectively drive material changes.

Our expectations of investee companies on human rights

We expect all investee companies to respect, assess and address potential human rights issues and impacts. We have outlined our specific expectations related to the following areas in our human rights policy:

• Policy commitments
• Board oversight
• Risk identification such as human rights due diligence
• Remedy access
• Risk prevention and mitigation
• Performance disclosure

Companies should also consider secondary human rights impacts. For example, a company adopting AI technology might result in job losses.

It is important to understand that managing human rights issue is a continuous process. LGIM expects companies to come forward and disclose any issues they have identified. However, meeting the expectations outlined in our policy does not mean a company’s performance is by default good.

It is not enough for companies to have a human rights policy and statement in place; it is about how it is implemented in practice.

For more information, read our human rights policy.

 

1. https://www.un.org/en/global-issues/human-rights