Fidelity, Vanguard and JPMorgan accused of ignoring human rights
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Fidelity Investments, Vanguard and JPMorgan Asset Management have been accused of paying lip service to human rights in a damning report that claims few of the world’s biggest fund houses are taking action to mitigate abuses such as modern slavery at the companies they invest in.
The report was published as asset managers come under increasing pressure to pay attention to social issues following the coronavirus pandemic, which has put a spotlight on how companies treat employees, their supply chains and other stakeholders.
According to ShareAction, a UK-based responsible investment charity, three-quarters of the world’s largest asset managers make reference to human rights issues in their environmental, social and governance policies. Few, however, are taking meaningful steps to tackle these issues through their votes at annual meetings, exclusions, discussions with companies or adherence to international frameworks, the report said.
Almost half of asset managers examined, with a combined $45tn in assets, do not ban investments in controversial weapons, while 84 per cent of asset managers have no public policy against purchasing sovereign bonds from countries under international sanction for human rights abuses.
Felix Nagrawala, senior analyst at ShareAction, said the world’s largest asset managers were largely failing to hold the companies in their portfolios to account for human and labour rights abuses.
“As the Covid-19 pandemic shines a brighter light on the reality of labour market inequalities and imbalances in access to basic services, it also marks a critical opportunity for asset managers to step up and play their part in ensuring that human and labour rights are protected,” he added.
While US managers such as Fidelity, Vanguard and JPMorgan Asset Management ranked among the worst performers on human rights, European asset managers such as Robeco, BNP Paribas Asset Management and Legal and General Investment Management scored well, receiving A grades.
BlackRock, the world’s largest asset manager, ranked towards the bottom of the list, but did not receive the worst grade of E.
Fidelity said it had not seen the report, but added that it “could not disagree more with this analysis”. It said it engaged with companies to understand how they address human rights concerns. It added that it used frameworks such as the UN guiding principles on human rights as part of its work.
JPMorgan said it took “human rights violations very seriously”. “Any company with alleged or proven violations of [UN Global Compact] principles, including human rights abuses, is scrutinised and may result in either enhanced engagement or removal from a portfolio.”
Vanguard said it used a “structured approach to identify and monitor human rights abuses”, including using third-party research based on the UN Global Compact, discussions with boards and voting measures. “Vanguard will hold company boards to account to ensure they conduct business in a socially responsible way,” it added.
According to ShareAction, just three out of 75 of the asset managers examined had their own dedicated human rights policy. It added that 61 per cent of asset managers have a weak or non-existent approach to discussions on human rights with the companies they invest in, while a fifth engaged with businesses only after human rights violations had already occurred.
Carola van Lamoen, head of active ownership at Robeco, said it was “clear that there’s still a lot of work to be done by the entire industry” when it comes to human rights.
“These rankings are important for driving progress in the industry, and this human rights report shows which asset managers are putting their money where their mouth is,” she added.