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Unilever to publish human rights report based on new framework

Unilever to publish human rights report based on new framework

25-11-2015 | Insight

Human rights reporting has historically been the weakest part of corporate ESG reporting. Many reports remain anecdotal and until recently there was no clarity on what the standard should look like. Robeco is a strong supporter of the UN Guiding Principles Reporting Framework launched earlier this year to help companies manage and report on human rights risks within their operations. Robeco joined a collaboration of over 90 other investors with close to $5 trillion in assets supporting the development, roll out, adoption and implementation of the new UN Guiding Principles Reporting Framework. Unilever is the first company to publish a stand-alone human rights report based on this framework. The report was well received by investors.

  • Daniëlle Essink
    Daniëlle
    Essink
    Senior engagement specialist

Unilever first adopter

As part of their commitment to the framework, Unilever organized a roundtable with expert stakeholders in May to define what a credible Human Rights report should look like. We attended this meeting and expressed our support for the ‘UN Guiding Principles for Human Rights Reporting Framework’ and stressed the importance of this framework supporting internal discussions and progress. This would add value for Unilever’s reporting effort. We also highlighted the importance of linking human rights issues to the business case.

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Engaging internally and externally

Following the issue of its first Human Rights Report on the basis of the ‘UN Guiding Principles for Human Rights Reporting Framework’, Unilever held an investor conference call on July 23rd to get feedback on their first report. During the call Unilever emphasized the need for every employee and supplier to have an appropriate understanding about the information reported and its interaction with Reporting Framework’s principles. Unilever communicates the main findings of the report across its procurement teams as well as throughout its supply chain. In doing this, they intend to open a two-way dialogue where people can feed back on the report both, internally and externally.

Link to the business

Unilever explained that they have analyzed country-specific risks on a systematic basis. Having identified the degree of human rights risks per country, the company looked at their relation with the business case. Secondly, in order to discern the salience of issues, the company put together a cross-functional team which approached this matter from the rights holder’s perspective and tried to identify the value proposition for each issue. The salient human rights issues identified by Unilever are Discrimination, Fair wages, Forced Labour, Freedom of association, Harassment, Health & safety, Land rights and Working hours. Unilever has introduced a part of its sustainability reporting framework into investor relations presentations, which are not necessarily targeted at SRI.

Collaboration is essential

Unilever is interested in developing collective frameworks that would allow addressing human rights issues pre-emptively. Overall, Unilever seeks for industry and civil collaboration in order to reach the collective goal of ‘doing good’ instead of ‘do not do bad’.

Robeco continues to engage with companies on human rights

We would like to see other companies follow Unilevers lead and fully embrace this new framework. We will be discussing the framework with the companies which we engage with on Human Rights under the Global Compact breaches theme, the Data privacy theme and the Social issues in the Food & Agri supply chain theme.

The Internet of Things (IoT) has the potential to create a more connected world, where ‘dumb’ objects from our homes, workplaces, and environment become ‘smart’ by connecting to the internet and improving their functionality. Software and Big Data analytics are used to analyze the input data from the objects and generate actionable insights. Technology analysts expect tens of billions of devices, including cars, fridges, industrial sensors, and light bulbs, to connect to the internet for the first time by the end of this decade. We especially see investment opportunities in the industrial Internet of Things, where the technology delivers tangible benefits to enterprises. The consumer IoT, which includes the ‘Smart’ Home and Car concepts, is in an earlier stage of development. 

The idea of the industrial Internet of Things has been talked about for a long time but progress has been limited until recently. Industry organizations are now collaborating to set standards and improve interoperability, corporate executives are openly expressing their interest in IoT, and engineers are showcasing new IoT applications. Most importantly, companies from various industries have begun telling success stories about how IoT helps them improve efficiency and serve their customers better. We believe that in the following years we will see increased corporate spending and innovation in industrial IoT, which creates new opportunities for investors.

IoT provides a better understanding of clients’ needs

Industrial IoT has wider implications than helping to boost efficiency. The deployment of sensors in products and the environment allows companies from all sectors of the economy to gain better understanding of their customers’ needs and how their products are being used. Such insights allow companies to move closer to their customers and offer to solve their problems, rather than selling them a tool. This marks a shift from standardized products and services towards more customization and a larger service component in product offerings. Changes in value propositions, such as the move towards provision of solutions, are enabled by data and insights, and can change competitive landscapes. Examining how IoT adoption is influencing sectors of the economy is thus important for identifying potential winners and losers. 

Industrial automation is nothing new. Companies from all industries have been automating processes to improve efficiency and quality since the middle of the twentieth century. The industrial IoT is just the next step in the process, triggered by the spread of the Internet and the falling cost of connectivity and data processing. The IoT is therefore an incremental, rather than disruptive, innovation, which largely benefits existing players in the industrial automation business. The complexity of IoT solutions implies that veteran industrial automation companies and technology consultants are well positioned to use their industry-specific expertise to help customers embrace IoT.

Invest in a basket of companies providing the building blocks of industrial IoT

Our analysis shows that industrial IoT adoption will have positive effects across industries, and create value spillover to consumers. The clearest beneficiaries would be consultants, as well as software and hardware makers which help companies implement industrial IoT. As we are currently in an early stage of IoT adoption, there are few ‘pure play’ industrial IoT companies. As a consequence, we prefer a diversified investment approach in companies enabling IoT, from IoT platforms, through cloud and analytics companies, to makers of sensors and semiconductors. 

A network of connected devices by itself is unusable without the proper set of analytics tools. Valuable actionable insights for companies are generated in the Data Layer, where large amounts of data are pooled and analyzed. We expect much of the value of IoT to be captured by companies providing these analytics services, and this is where we see the best investment opportunities. Companies providing digital security also stand to benefit from the move of the physical world into the digital realm. Companies manufacturing sensors, analog and digital semiconductors, and networking equipment, are also well positioned to benefit from the accelerating adoption of the Internet of Things.

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