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Issue Brief: Human Rights
Introduction
As globalization widens the presence of multinationals worldwide, an increasing number of corporations operate in, or purchase products from suppliers located in, countries with weak governance and records of human rights abuses. As a result, there has been a growing recognition that some companies have been directly and indirectly complicit in human rights abuses. Calvert strongly believes that companies have human rights responsibilities wherever they operate.
Calvert's analysis has grown more sophisticated in recent years as corporate human rights responsibilities have become more defined, and as a greater emphasis has been placed on global supply chains - as well as on companies operating in proximity to conflict zones and indigenous communities. Therefore, consistent with our belief that multinational companies can contribute to the protection of human rights around the world, we have focused our advocacy on encouraging multinationals to take appropriate steps to support human rights - both in their direct operations and across their supply chains.
Calvert's Approach
As the first mutual fund in the United States to oppose apartheid by refusing to invest in companies doing business in South Africa, Calvert has a long history of supporting human rights through our company analysis and advocacy. We strongly believe that companies must act in ways consistent with international human rights standards.
Calvert scrutinizes the activities of companies operating in nations that are serious violators of fundamental human rights. Calvert's human rights and international operations criteria identify companies that engage in serious and persistent human rights abuses, or support governments in the systematic denial of human rights. We prefer companies that adopt specific human rights standards, policies, and procedures for international operations; promote social and economic justice for all people; enforce more stringent environmental and workplace standards than required by host countries; and directly combat labor and human rights abuses and environmental degradation. We avoid companies with a pattern of engaging in or supporting human rights violations.
Global supply chains: Calvert is particularly concerned about human rights abuses in the apparel and footwear manufacturing industry, which typically produces and sources from developing countries. All too often, companies source from vendors with sweatshop-like and substandard working conditions in their factories. Specific concerns include child labor, forced labor, harassment, suppression of freedom of association, and overtime wage violations. Therefore, Calvert looks for disclosure of information regarding a company's suppliers, and a corporate commitment to improving working conditions for those who make its products, including codes of conduct and monitoring programs for its suppliers. Calvert has widened its focus on human rights issues in global supply chains to encompass the electronics industry as well.
Sudan: Calvert is deeply concerned about the continuing genocide and other abuses in Sudan, especially Darfur. Calvert's long-standing human rights criteria explicitly prohibit investing in companies that have serious and persistent human rights problems or directly support governments that systematically deny human rights. Therefore, Calvert funds do not invest in companies that materially contribute to sustaining the Khartoum regime and the abuses in Darfur, including certain natural resource extraction firms. Should Calvert analysts uncover current investments in companies directly supporting the Sudanese government, Calvert is prepared to take appropriate action through divestment or shareholder activism.
China and the Internet: As China continues to clamp down on freedom of expression and dissent, several major US Internet and information technology companies have come under scrutiny by members of Congress, the media, and in major reports released by Amnesty International and Human Rights Watch. Calvert believes that such companies operating in China must minimize any complicity in human rights abuses, respect individual privacy, and fully disclose the ways in which they are complying with government policy.
Criteria in Practice
Clothing manufacturers have been among the worst human rights offenders, especially when it comes to their overseas vendors. Fortunately, a burgeoning movement that supports codes of conduct, enforcement, and transparency has led some in the industry to produce detailed reports. Among these is Timberland (TBL), a footwear manufacturer. Timberland's code of conduct is based on the Universal Declaration of Human Rights and the International Labour Organization (ILO). To assess human rights practices in the 35 countries in which its products are made, Timberland also has a monitoring program involving annual audits of all vendors and suppliers. In November 2006, the company announced the availability of its first factory-specific sustainability report, which focuses on the company's Dominican Republic factory.
The report addresses three goals: expansion of Timberland's commitment to local accountability; focus on continuous performance improvements at the local level; and establishment of a foundation for stakeholder dialogue involving Timberland, its Dominican Republic factory, and the factory's stakeholders.
Know What You Own®
Calvert's Know What You Own® screening tool for human rights includes securities drawn from a universe of the largest 1000 US companies. The companies that fail Calvert's human rights criteria do so because they:
- Exhibit a pattern of engaging in or supporting human rights violations,
- Provide significant direct aid to repressive governments, or
- Fail to respect minimal international human rights standards.
Advocacy
Calvert will continue to focus on strengthening human rights standards and performance across key industries and companies' global supply chains, and on protecting the rights of local communities. We are also in dialogue with the UN Special Representative on Business and Human Rights, taking specific steps to promote divestment in Sudan, and addressing the emerging issue of freedom of information and expression relating to China and the Internet.
UN Special Representative: In October 2006, Calvert joined 47 members of the Interfaith Center on Corporate Responsibility (ICCR) in sending a letter to Dr. John Ruggie, the UN Special Representative on Business and Human Rights urging him to focus on two key areas in preparation for his final report for release in Spring of 2007: Human Rights Risk Assessments (HRRAs) and Disclosure of Non-Financial Performance. Calvert drafted the section on HRRAs and provided detailed comments to a discussion paper as well. We strongly urged that Dr. Ruggie's final report recommends HRRAs become a standard tool and process in the extraction industry and others where human rights abuses are apparent.
Sudan initiative: Calvert is well-positioned at the nexus of advocacy networks that can move the Sudan divestment campaign forward. Therefore, Calvert has decided to work with the Save Darfur Coalition (SDC) by providing significant support to the Sudan Divestment Task Force (SDTF), with which SDC is closely aligned. As part of this support, Calvert will review and provide guidance on the "targeted divestment" criteria used by the SDTF in its model legislation to evaluate the "suspect" versus "non-suspect" industries (relative to support for the Khartoum regime) and companies warranting greatest scrutiny; evaluate "close call" decisions regarding particular companies identified as problematic by the Sudan Divestment Task Force; and contribute to advocacy initiatives related to Sudan divestment, with a focus on mobilizing support from the SRI community and various Calvert partners.
China and the Internet: We believe that Calvert has an advocacy responsibility to urge Internet companies operating in China to minimize any complicity in human rights abuses and at the same time to be fully transparent with respect to the ways in which they comply with government policy. We have written to several major companies in our portfolio to convey our concerns, offer broad policy suggestions, and propose meetings with each company as the basis for subsequent decisions as to whether to file shareholder resolutions. Calvert is also engaged in a multi-stakeholder dialogue convened by the Center for Democracy and Technology (CDT) involving several leading companies - such as Microsoft, Google, and Yahoo - human rights NGOs, academic experts, and other social investment firms to develop an industry standard addressing these difficult issues, both in China and elsewhere around the world.
One of Calvert's most successful human rights advocacy campaigns involved US clothing retailer Gap, Inc (GPS). Like most large apparel companies, Gap buys the majority of its products from vendors in developing countries, where there is concern about substandard working conditions in supplier factories. Calvert entered into dialogue with Gap in 2000, which led us to co-file a shareholder resolution in 2002 asking Gap to address vendor standards and compliance. In late 2002, Calvert joined with Domini Social Investments, the Interfaith Center on Corporate Responsibility, As You Sow Foundation, and the Center for Reflection, Education, and Action to form the Public Reporting Working Group (PRWG). After two years of negotiating with PRWG, Gap published its first social responsibility report, which detailed labor conditions and violations at the company's 3,000 contract factories following 8,500 factory visits in 2003. The report was widely credited with raising the bar for transparency and disclosure of labor code violations in the apparel industry.
Calvert has been a part of a campaign to pressure companies to sever business ties in Burma that contributed to the military government's rule. In May 2004, Calvert sent international insurance giant Aon (AOC) a letter asking about the company's involvement in Burma. Aon's response was unsatisfactory, and Calvert subsequently dropped Aon from the list of companies approved for investment. Due in part to this and other pressures, Aon management decided to cease all business in Burma. On learning of this welcome development, Calvert reviewed Aon's human rights practices once more and returned the company to our list of those firms approved for investment.
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