HUMAN RIGHTS REPORT EXECUTIVE SUMMARY

BHP Billiton

Newcrest 70-79% 60-69% Fortescue Metals 50-59%

Ansell Woodside Figure 3 Overall Scores ABOUT THE 40-49% REPORT *The Australian Average excluding AUSTRALIAN AVERAGE* BHP and Rio Tinto is 28.12%. Understanding how AGL Energy The Australian average includes companies identify and Coca-Cola Amatil 30-39% BHP and Rio Tinto is 31.91%. address human rights CSL risks in their value chains may provide investors with insights into broader Treasury Wine Estate cultural, governance and BlueScope steel 20-29% Santos strategic issues within Woolworths a company. Caltex 10-19% This report demonstrates, Resmed with few exceptions, a low 0-9% level of understanding Graincorp of human rights risk Cochlear and engagement with leading practices on risk management, across the Australian companies surveyed. It is quite possible, if not highly likely, that at METHODOLOGY least some of the companies The report draws upon the work undertaken researched for this report. The remaining surveyed have human rights by the Corporate Human Rights Benchmark 20 ASX-listed companies targeted were controversies lurking in their (CHRB) in their pilot benchmark published researched by CAER. value chains of which they in March 2017. The research process included a mail out to are simply unaware. The research commissioned by ACCR evaluates companies offering the opportunity to provide This report aims to a set of 23 large, listed Australian companies feedback to the assessment and provide further develop investors’ against internationally-accepted human rights additional material. The process also included understanding of human indicators, based on the UN Guiding Principles quality checks to ensure the outputs are closely rights issues for Australian on Business and Human Rights1 (UNGPs), as aligned with the methodology of the CHRB. companies, and increase well as other relevant norms and initiatives Out of the 20 companies researched for their appetite for positive depending on the sector. The CHRB method­ the ACCR, 14 responded to our mail out and stewardship through results- ology offers the advantage of comparability feedback process, three companies responded driven engagements with with a larger, inter­national data set allowing with a decision to not participate in the companies on human rights. company-to-company, business size, sector survey, and three companies were and geographical comparisons to be made. non-responsive to our requests to engage. Of the Australian companies identified, three The scores of 13 companies were revised and companies – Woolworths, Rio Tinto and BHP adjusted as companies provided additional Billiton – were assessed in March 2017 as part information and clarifications during the of the CHRB pilot study. These were not newly engagement process.

1  John Ruggie, ‘UN Guiding Principles on Business and Human Rights: Implementing the United Nations “Protect, Respect and Remedy” Framework’. www.accr.org.au 1 HUMAN RIGHTS REPORT EXECUTIVE SUMMARY

KEY FINDINGS Overall, Australian companies perform roughly OTHER KEY FINDINGS in line with their global counterparts. The highest – Australian companies assessed under scoring company (in both ACCR and CHRB the agricultural sector methodology are reports) was BHP Billiton at 77%; the lowest the worst performers by sector. Australian company was Cochlear at 2%. –  outperforms their global sector Reflecting the pattern in the global CHRB peers for the extractive and agriculture dataset, responses of the Australian extractives industry. sector to human rights risks are well-developed compared to other sectors, due in no small part – The Australian medical equipment sector to the serious risks of adverse human rights companies slightly underperform when ABOUT THE compared to the global apparel sector AUTHORS impacts inherent in large-scale multinational, extractives operations, and significant recent companies. ACCR controversies in that sector. – On the issue of remedy for human rights The Australasian Centre for Australian companies covered by this research negative impacts identified in a company’s Corporate Responsibility perform better than the global average in relation value chain, however, Australian companies (ACCR) is a not-for-profit to the establishment of grievance mechanisms received low scores, in line with the global association that promotes through which concerns can be raised about data set. responsible investment the impact of operations on human rights. On – Australian companies scored poorly through undertaking and the issue of remedy for human rights abuses with regards to indicators relating to the publishing research to identified in a company’s value chain, however, implementation of a Living Wage across evaluate and improve the Australian companies received low scores, in both own operations and throughout their performance of Australian line with the global dataset. business relationships. listed companies on Still, a significant number of large listed Australian environmental, social and companies lag far behind their peers in their governance (ESG) issues. response to human rights issues. We have a small portfolio of shares that we hold for the purpose of engaging with companies on ESG issues, including through the filing of shareholder resolutions. We encourage other investors to use our research RECOMMENDATIONS to engage with companies in FOR ASX-LISTED COMPANIES AND INVESTORS ADDITIONAL RECOMMENDATIONS their portfolio. FOR INVESTORS 1. Make a public commitment to respecting human CAER rights, endorsed at board level; 6. Encourage companies to adopt the elements outlined in recommendations CAER is a leading provider 2. Build capacity on human rights issues, including 1–5 above; of independent research and through appropriate internal resourcing and services relating to the ESG engagement of human rights expertise; 7. Incorporate human rights concerns into and ethical performance of investment due diligence practices, screening 3. Put in place comprehensive human rights due companies and investment tools, and corporate engagement and diligence processes in respect of the company’s portfolios. CAER is one monitoring processes; of the oldest and most own operations, products and services, as well experienced ESG research its business relationships; 8. Publish data on engagements on human rights issues, including voting records on houses in Australia. 4. Communicate regularly and in detail with human rights issues, and publicise specific www.caer.com.au stakeholders in respect of human rights risks; engagements where possible; 5. Commit to provide for or cooperate in 9. Consider exiting business relationships remedying adverse human rights impacts where adverse impacts are severe and which the company has caused or to which unable to be mitigated though the it has contributed, including through the exercise of leverage. establishment of operational level grievance mechanisms. www.accr.org.au 2