Our human and worker rights exposed
For many investors, the continued growth of ESG in financial services has largely been due to increased awareness of the urgency to address environmental and climate change risks. The ‘S’ in ESG remains arguably the most challenging to assess, analyse and embed in investment strategies, according to a 2019 Global ESG Survey by BNP Paribas6. The United Nations Principles for Responsible Investment shares this sentiment: ‘the social element of ESG issues can be the most difficult for investors to assess. Unlike environmental and governance issues, which are more easily defined, have an established track record of market data, and are often accompanied by robust regulation, social issues are less tangible, with less mature data to show how they can impact a company’s performance. But issues such as human rights, labour standards and gender equality—and the risks and opportunities they present to investors—are starting to gain prominence’7. Due to their complex, qualitative nature, social ‘S’ aspects have tended to receive less attention than ‘E’ and ‘G’ aspects.
The Covid-19 pandemic thrust human and worker rights into the spotlight and exposed the inequalities and structural weaknesses of our economic-, social- and healthcare systems. While the pandemic is primarily a public health emergency, the consequences have shown that it is much more than that, threatening the livelihoods and wellbeing of millions. Poverty, lack of social safety nets, inadequate health care, income inequality, gender based violence, lack of technology and inadequate worker rights protections were just some of the issues Covid-19 exposed. The most vulnerable in society have been the most negatively impacted – including women, children, the elderly, the disabled, migrant and low skilled workers.
‘A human crisis that is fast becoming a human rights crisis’ - UN Secretary General Antonio Guterres, April 2020.
The United Nations estimated 2.2 billion people were unable to wash their hands regularly because of limited access to water in 2020. Furthermore, 1.8 billion people could not properly social distance due to living conditions in overcrowded housing or being homeless on the streets8. Illness and death from Covid-19 has been higher among communities that contend with poverty, unfavorable living and working conditions, discrimination and social exclusion.
According to the World Bank9, more than 100 million people were pushed into extreme poverty because of the pandemic and the International Labour Organization (ILO)10 estimated that the equivalent of 305 million jobs were lost during the second quarter of 2020. In South Africa, the unemployment rate hit an all-time high of 30.8% during the 3rd quarter of 202011. The United Nations Educational, Scientific and Cultural Organization (UNESCO)12reported that over 1.5 billion learners in 165 countries were affected by school closures during the pandemic, with poor learners having inadequate access to data and internet to continue with distance learning.
The pandemic brought a harsh realisation that businesses are not only connected commercially to an economic system. They are also connected through humanity, from workers, to their families and their communities. Business leadership realised that inadequate worker health protection not only endangered direct staff, but wider families and whole communities. As custodians of capital we have a duty to ensure that our investee companies have sustainable business models and that human and worker rights (of customers, employees, health & safety, data security and the communities in which they operate) are adequately assessed, managed and reported on.
Specifically in terms of human and worker rights, OMAI applies the United Nations Guiding Principles on Business and Human Rights, ILO and the International Finance Corporation Performance Standard 2. We encourage all businesses to do the same.