AMP, Magellan, the big four banks and IOOF are among 22 ASX-listed financial firms that have scored poorly on a new human rights benchmark.
The finding has come from research by the University of Sydney, which has ruled that despite talk of human rights awareness and company policies among ASX-listed investors, there is no accountability for human rights breaches at the board level.
The 2020 Financial Services Human Rights Benchmark Report has assessed the performance of 22 companies against six human rights categories: privacy and information; discrimination; economic security; health and safety; voice and participation; and right to remedy.
The firms’ performance across retail, commercial lending investment and services; employees; suppliers and supply chain; and society in the 2019 financial year were ranked.
Researchers David Kinley and Kym Sheehan found all 22 companies were deficient.
“There are no winners or losers in this research: all of the companies can make considerable improvements,” commented Mr Kinley, also a human rights lawyer.
The full list of companies is as follows:
Bank of Queensland
Bendigo and Adelaide Bank
Pinnacle Investment Management
Platinum Asset Management
Westpac Banking Corporation
A lack of board accountability around human rights was one example of systemic failure.
“This absence of board accountability and responsibility has significant implications for human rights. It is the principal reason why our traffic light system scores no green results in any of the five areas,” Dr Sheehan said.
“Yet our findings are of little surprise; the financial sector has been dogged by human rights-related incidents and issues in recent times. Poor treatment of retail customers, money laundering and other illicit fund uses, investments without due consideration to human rights impacts, and sexual harassment in the workplace are just some of the key issues.”
He referred to the Westpac scandal last year, where the bank had facilitated payments to a child sex trafficker.
NAB was also criticised for only completing its ESG risk assessments on “Tier 1” contracts, excluding “evergreen” mandates.
Further, none of the companies had identified human rights as a key source of non-financial risk – making them unlikely to allocate resources to minimise the risk, Mr Kinley added.
“Having fewer or no adverse human rights impacts would decrease corporate risk,” Dr Sheehan said.
“It would improve the standing of financial services companies in the eyes of their employees, suppliers, customers and broader society. It would also save billions of dollars in customer remediation costs and regulator fines.”
There are potential opportunities to address the risks, the report suggested, including through technology and staff training.
“These kinds of companies spend big on tech – and tech can contribute to human rights breaches,” Dr Sheehan said.
“For example, payment of remediation to wronged customers could be delayed due to outdated or unsuitable software. If companies adopt a human rights focus, IT systems can be prioritised to this end.”
But to bring about change, management must have an interest in handling human rights risk, she added.
“During the worst of COVID-19, financial companies proved that they are willing and able to speedily adapt to changing societal demands,” Mr Kinley concluded.
“With human rights, the real challenge is persuading these companies to recognise that they are material – not marginal – to their core business interests.”
Sarah Simpkins is a journalist at Momentum Media, reporting primarily on banking, financial services and wealth.
Prior to joining the team in 2018, Sarah worked in trade media and produced stories for a current affairs program on community radio.
You can contact her on [email protected].