How does Mindful Money identify companies who have breached Human Rights?

How does Mindful Money identify companies who have breached Human Rights?

Mindful Money’s philosophy for Human Rights focuses on the scale of harm to people.  This aligns with our mission to make money a force for good.  Financial risk is a supporting consideration.  Our philosophy means Mindful Money may identify more companies than some fund managers who focus on the financial perspective. 

Mindful Money aims to make consistent decisions and has a structured framework supported by data from Sustainalytics, a global screening service (covering 30,000 global companies).   This service gathers public  data from media and NGOs about events involving a company that have caused harm to human rights.  

A company may have caused a single event with a large negative impact e.g. a pollution accident affecting the people’s health in a large area.  Or it has a pattern of events, which indicates a culture of poor practices e.g. on worker health and safety.

Sustainalytics builds an overall company score from specific sub-categories.   Mindful Money’s threshold for consideration for inclusion on the list is any company with an overall rating of “High” or “Severe” or where there are multiple “Significant” scores.   If a company improves its practices the rating will improve, and Mindful Money will remove the company from the list.

Mindful Money also reviews decisions from major global responsible investors such as the NZ Super Fund and the Norwegian pension fund (NBIM).  

Mindful Money has an investment committee which makes decisions for the Human Rights Category.   Some questions are complex.  For instance Myanmar has a large garment manufacturing industry supplying global retailers and employing tens of thousands.  The Mynamar democratic government (overthrown by the military) has given guidelines that companies can retain suppliers where “the good outweighs the harm” and if the military is not profiting from the activity.

Further information on Mindful Money's overall methodology can be found here.

Should I be as concerned about Human Rights as the Environment?

Environmental harm and human rights are integrally linked.  On 28 July 2022, the UN General Assembly adopted a historic resolution, declaring access to a clean, healthy and sustainable environment, a universal human right.   This highlights the risks to human health and habitable land areas from climate change, unsustainable management and use of natural resources, pollution of air, land and water, poor waste practices and the resulting loss in biodiversity. 

Our environment is defended by humans and especially by the indigenous people who live in important habitats for climate stability.   In June 2022, Indigenous expert Bruno Pereira and journalist Dom Phillips were murdered while investigating harm in an Amazon region of Brazil.  A region which is home to the greatest concentration of uncontacted peoples on earth and which is under severe threat from illegal activities which threaten the livelihoods of the indigenous people.  

The question of Just Transition is also important.  Communities who rely on high carbon intense industries (e.g. coal mining) could suffer severe economic hardship, unless mine operators and governments can support access to new opportunities.  Green technologies also have risks of human rights issues  e.g. child labour in lithium mining. 

You can find out more about funds that don't invest in companies which have breached Human Rights here.

Why is Mindful Money concerned about Governance and Business Ethics?

Governance covers how a business is managed by its board of directors and senior leaders.  These leaders create the strategy and culture for the business through targets, rewards, supported by good oversight of operations and risks.   Governance failures can lead to major corporate failures and harm to the societies in which they operate.   An example of is the Opioid crisis in the US, which caused large scale addiction and deaths in marginalized US communities.  Boards and CEOs of large pharmaceutical companies drove the aggressive promotion of opioid painkillers due to the attractive profits and dismissed evidence of the scale of harm.  In 2022, 6 companies agreed to settle $22bn in claims brought by a group of US States, Cities and Counties. 

Major Human Rights Themes Identified by Mindful Money:

The following examples bring to life the types of harm that Mindful Money investigates:

Labour Rights; harms due to poor treatment of workers, child and forced labour.

Uber Technologies: Uber, a ride share and food delivery platform, has faced allegations of prioritising revenue growth over driver welfare and user safety. The company's classification of drivers as contractors in most jurisdictions limits their employee rights to the minimum wage and other benefits, effectively allowing Uber to circumvent the labour standards typically expected from traditional taxi companies.

Situations of War and Conflict; harms due to violations of the Geneva Convention 

Ashtrom Group Ltd (Occupied Palestinian Territories):  This Israeli property company lets commercial and industrial premises in Israeli settlements in the West Bank.  This is serious infringements of the rights of the individual in situations of war or conflict.  The area of the properties in the West Bank area is outside the agreed borders of Israel and has been occupied since 1967 under the civilian and military authority of Israel.  Under Geneva Convention a state should not transfer parts of its population to occupied territory.  The settlements cause substantial harm to the Palestinian population, resulting in loss of property, access to resources and restrictions on movement.

Mindful Money recognises the United Nations (UN) Human Rights Council’s database as a resource for business enterprises involved in illegal Israeli settlements in occupied Palestinian territories, where those with significant involvement or impact, such as Ashtrom Group, are included in our Human Rights list. Further information on the UN database and other companies linked to human rights violations in illegally occupied Palestine can be found here.

Adani Ports (Myanmar): Myanmar has suffered decades of repressive military rule, widespread poverty, civil war and ethnic cleansing against the minority Rohingya people.  In February 2021, the military ousted the democratic government and continues to violently repress protest.  Adani, an Indian port development company, signed a deal with a military-owned conglomerate to develop a Port Terminal in Myanmar.  The UN advise that any business partnership with the military regime constitutes a high risk of contributing to human rights violations and the violation of international law.   Adani have announced an intention to withdraw, but have not provided a target date.

Business Ethics; harms due to poor culture, governance and oversight or bribery and corruption

Credit Suisse:  The Swiss bank has been subject to international criminal investigations over suspected tax evasion, market manipulation and money laundering.   The bank paid a penalty of $2.6bn in 2014 for tax related violations.  Failures of governance and risk assessment have been cited in relation to failure to identify fraud and mismanagement of loans to UK company Greensill which collapsed in 2021 and left Credit Suisse with large losses.  The UK Guardian also reported on a leak of data which revealed the secret owners of £80bn of funds including from “clients involved in torture, drug trafficking, money laundering, corruption and other serious crimes”.

Public Safety; failure to take sufficient care with product design or in response to issues

Mattel:  Different models of Fisher Price rockers have been implicated in the death of infants.  On 5 April 2019, the US Consumer Product Safety Commission (CPSC) and FP jointly issued a warning to consumers regarding the company’s Rock ‘n Play sleeper, linked to at least 50 infant deaths and over 700 injuries since 2009.  A US House Committee found that FP “failed to ensure the Rock ‘n Play was safe, ignored warnings that it was dangerous, and marketed it for overnight use despite clear evidence of its risks” . In 2022, newer models have been implicated in 13 infant deaths, leading to new product safety warnings by U.S. Consumer Product Safety Commission.  The impacts are very large for Mattel across financial, operational (due to product recalls) and reputation.