The UN Working Group on Business and Human Rights has published a report clarifying how investors can and should align their ESG and sustainability efforts with their responsibilities under its Guiding Principles on Business and Human Rights. The report provided analysis of ESG financial products and services, and of associated standards, frameworks, policies and practices’ performance on human rights. It highlighted emerging trends as well as opportunities for improvement – including undertaking human rights due diligence, calling on portfolio companies to act in accordance with their responsibility to respect such rights, and establishing board oversight of risk management. The guidance covers institutional investors, including asset owners such as pension funds – but not multilateral or national development finance institutions, insurance companies or fintech. The working group, which reports to the Office of the High Commissioner for Human Rights, said the report was published in recognition of the growing use of data, indexes, ratings, benchmarking and funds labelled as ‘ESG’. “A key challenge is that most financial actors fail to connect human rights standards and processes with ESG criteria and investment practices,” the group said. “[This is] because of a prevailing lack of understanding on how human rights issues should be reflected in social criteria, environmental and governance issues.”
