How WBA is contributing to changing companies’ policies and practices
Our benchmarks guide and incentivise companies to improve their impacts to help ensure a sustainable future. They also enable companies to compare their progress over time and against their peers, to identify policies and practices for improvement and to determine where urgent action is needed to deliver on the SDGs.
We have noted an increase in company engagement through our Collective Impact Coalitions (CIC), which are pushing companies to change their policies. In addition, our methodologies and benchmarks are being used to push internally for changes in practices and to guide company disclosures on topics such as human rights, free, prior and informed consent, living wages, sustainable supply chains and biodiversity. Furthermore, they are used to inform and improve supplier surveys, to inform updates on corporate sustainability strategies and to develop action plans to strengthen corporate social and environmental programmes. In this blog post, we look at some of the ways WBA is contributing to changing company behaviour, and how companies are responding.
Targeted engagement is pushing companies to improve
2023 made clear the impact of a more targeted approach to engagement. Thanks to our investor engagements through the CIC for Ethical AI, some digital technology companies assessed under our Digital Inclusion Benchmark that did not have publicly available ethical AI principles published principles for the first time. These companies include VMWare, Baidu, KPN, Infineon, Palantir and Twilio. US Telecommunications giant Verizon shared information on this topic for the first time by including a new section on responsible AI in its 2022 ESG report. Palantir, a software platforms company, shared that they had updated their ethical Artificial Intelligence (AI) principles. The company now also has in place a more explicit commitment to follow those principles. This change came at a time when the benchmark was re-assessing companies on ethical AI, which is the focus of the CIC for Ethical AI.
How our Corporate Human Rights Benchmark is compelling better business practices
We published a case study in the third quarter of 2023 seeking to understand some of the mechanisms through which the Corporate Human Rights Benchmark (CHRB) is helping companies improve their business practices. Through in-depth interviews with companies – including Renault, Nissan and Mahindra & Mahindra – we learnt that the CHRB contributes by prompting companies to improve disclosures and practices, incentivising them to improve internal accountability and management structures related to human rights and serving as a roadmap for existing and upcoming regulation.
Companies in the Oil and Gas Benchmark are acknowledging the need to reduce the emissions caused by their operations
In 2023, we published a new iteration of the Oil and Gas Benchmark. Since the 2021 assessment, the number of companies that have set scope 1 and 2 reduction targets has increased to 75%, while for scope 3 it has increased to 28%. Although it is encouraging to see an increased acknowledgement from companies of the need to reduce the emissions caused by their operations, 80% of them score negative on the forward-looking indicators that assess how the company is expected to contribute to reducing emissions in the future. This is because actual performance on emissions reduction fails to live up to the targets set. There is a lack of full and credible transition planning that includes a time-bound target for the phase-out of fossil fuels from company operations. To reach the goals set by the Paris Agreement, stronger leadership is needed from within the sector, as are more investments in low-carbon solutions and greater transparency on these investments. These are all necessary if we are to scale the vast ambition and performance gap that exists in the sector.
Based on our evaluation, we find that most companies have improved their performance in our benchmarks since we first began ranking them. Improvements range from 70% for the Corporate Human Rights Benchmark to 98% for the Electric Utilities Benchmark. This story is an excerpt from our 2023 Annual Report.