Companies generally fear NGO reports and complaints because they can spark public backlash and consumer boycotts. Even though NGOs aren’t always correct or unbiased in their attacks, companies tend to tread lightly when responding to such reports. Last week, Swiss financial giant UBS took the bold step of fighting back. According to this from Responsible Investor, the Swiss National Contact Point (NCP) office, a branch of the Secretariat for Economic Affairs (SECO), “accepted a human rights complaint against passive investments made by UBS in US for-profit prison companies CoreCivic and GEO Group.” The company was notified last week that “it would be asked to respond to a complaint filed through a national grievance mechanism which assesses alleged breaches of the OECD Guidelines for Multinational Enterprises.”
The article said
“UBS has denied that a ‘direct link’ between its products and the alleged impacts exists, a condition for an NCP complaint to be upheld. The Swiss manager said that ‘an overly expansive interpretation of the OECD Guidelines’ which would consider passive investors to be directly linked to the adverse human rights impacts of their exposures would ‘result in unmanageable responsibilities of financial institutions’.
UBS also said it has ‘limited leverage’ over the conduct of constituents in its funds, has no say over which companies are selected by index providers, and is legally committed to replicate the tracked indices as closely as possible. The asset manager added that it had engaged with index providers on human rights, including a market consultation led by the Principles for Responsible Investment (PRI), and had applied ‘controversial behaviour’ exclusions to actively managed products.”
Sustainability staff, leaders and advisors: pushing back against NGO reports can be tricky but is a reasonable tactic in some cases. In evaluating whether this approach is appropriate for your company/client and situation, it is crucial to first objectively assess
- the basis of your argument – legal and otherwise,
- strength of the evidence presented by the NGO and what you propose using to argue your side, and
- how regulators, the public and consumers view the trustworthiness/credibility of your company (in other words, your reputation).
If you aren’t confident or comfortable in these three points, the downside risk of pushing back is high and it is probably better to take a light touch in responding to NGO accusations.
Our members can learn more about human rights in supply chains here.
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