Human rights: Lost in the “S” of ESG?

Human rights are losing their prominence in the "S" of ESG, despite having clear rules for protection since 2011. The UN Guiding Principles on Business and Human Rights hold every company accountable for respecting human rights and mitigating harm caused by their operations. Human rights encompass basic protections like safe work conditions, fair pay, freedom from forced labor, and community consent over land use.

However, many companies prioritize donations, wellness programs, and diversity initiatives over the people directly affected by their activities. A 2024 assessment of the 2,000 most influential companies found that over 90% fail to address human rights issues, supply chain risks, and ethical concerns adequately. Only one in five companies scrutinizes their suppliers for human rights risks, and only 4% pledge to pay a living wage.

Southeast Asia stands out for its proactive approach in protecting workers and communities, often ahead of any legal mandates. Gig workers, communities displaced by corporate projects, and those engaged in hazardous industrial work in the green economy are particularly vulnerable. Ride-hailing and delivery apps often exploit drivers as independent contractors, evading crucial labor protections.

Fairwork's scoring of Philippine platforms in the GrabCar app revealed that none paid minimum wage after expenses, with one driver earning only PHP 460 after substantial costs. Grab initiated free personal accident insurance for drivers and passengers in 2016, prior to any legal requirement, and was the only platform to adequately protect workers from job-related risks.

In Indonesia, several multinational corporations suspended operations with an Indonesian palm oil producer after local farmers protested the seizure of their land and faced criminal charges for opposing the project. Renewable energy companies in Southeast Asia have also fallen short in addressing human rights, with only four out of 12 surveyed companies demonstrating substantial commitments.

B.Grimm Power in Thailand and ACEN in the Philippines were among the few companies that comprehensively assessed human rights risks across their operations and supply chains. The nickel industry in Indonesia highlights the human cost of environmental damage, with a furnace explosion at a Morowali smelter in 2023 claiming 21 lives and injuring 38 others.

The overlap between climate change and human rights abuses disproportionately impacts vulnerable populations in Asia, such as outdoor workers and those involved in the green economy. Ignoring human rights in favor of short-term profits undermines the very purpose of ESG, which seeks to hold businesses accountable for their societal impacts.