Paper outlines how to improve measurement of companies’ social (labor and other human rights) performance
NEW YORK – Over the past three decades, investor interest in environmental, social, and governance (ESG) factors has moved from niche to mainstream. Many attribute this shift to a rising demand from millennials and women, both groups that are increasingly seeking investments consistent with their values. A vast industry of ratings, research, and reporting services now exists to help identify corporate sustainability leaders. However, a new paper released today by the NYU Stern Center for Business and Human Rights finds that none of these metrics yet capture companies’ performance on labor and other human rights issues.
The report, Putting the ‘S’ in ESG: Measuring Human Rights Performance for Investors, co-authored by Casey O’Connor and Sarah Labowitz, examines 12 leading frameworks for assessing companies’ social practices and impacts. It finds that current measurement is overly deferential to companies to voluntary disclose the efforts they undertake on a wide range of poorly defined “social” activities, rather than measuring their real-world effects.