Human Rights

Every day, through our Sustainable Investment Strategies, we aim to manage participant and institutional client funds in ways that add financial value and positively impact the environment and society.

The United Methodist Church (UMC) has affirmed that “all persons [are] equally valuable in the sight of God,” and, therefore, calls for “the recognition, protection, and implementation of the principles of The Universal Declaration of Human Rights so that communities and individuals may claim and enjoy their universal, indivisible, and inalienable rights.” (The Social Principles, ¶162.)

The United Nations (U.N.) Guiding Principles on Business and Human Rights (Guiding Principles) provide the foundation for many of our activities.

Across the investments we manage, we seek to promote and protect human rights while helping our participants and clients meet their investment goals. Our framework of Avoid—Engage—Invest guides us in carrying out these efforts.


Avoid
—Excluding investments related to the UMC’s ethical exclusions or because of sustainability-related financial risk.

  • Ethical Exclusions—Since 1908, Wespath has aspired to reflect the values of the UMC in achieving our investment objectives. Wespath’s Ethical Exclusion policy restricts investing in the securities of certain companies based on long-standing United Methodist social concerns.
  • Sustainability-related Financial Risk Exclusions—To assist in identifying and managing environmental, social and governance (ESG)-related risk, Wespath’s board of directors adopted a policy on the Management of Excessive Sustainability Risk (MESR) in 2014. It recognizes that there may be instances when a particular issue, set of companies or industries expose investors to high levels of risk. In such instances, the board may adopt an investment guideline that will apply additional limits regarding company securities eligible for purchase. Under the policy, Wespath adopted an associated investment guideline related to human rights, with a specific focus on high-risk operating areas. For details on how Wespath implements the human rights guideline, click here.

Additional exclusions-related resources:

Engage—Encouraging sustainable business practices and policies

We engage companies to promote and protect human rights, recognizing that businesses particularly face risks when operating in areas of political instability, with weak rule of law and/or conflict, or where human rights violations have been documented.

Companies that operate in these areas face many business risks including:

  • Compromised security and safety of workers and local populations
  • Project delays and cost overruns related to community concerns
  • Disputes over land and/or water rights
  • Associations with bribery and corruption

We firmly believe managing human rights risks is an important element of creating sustainable business practices and investments. Our human rights engagements span the globe. Recent activities include:

Engagement Activity Outcome
Newmont Mining Corporation—Wespath partnered with German fund manager Union-Investment to lead a collaborative engagement regarding Newmont’s implementation of the Guiding Principles. Wespath also visited two gold mines in rural Peru owned by Newmont to learn first-hand how the company was implementing the Guiding Principles. The company faced real struggles despite its best efforts to faithfully implement the principles.

Newmont established a plan to evaluate complaints and grievance mechanisms—a core component of a robust human rights program—and a three-year plan to track the effectiveness of its security training in relation to human rights.

Following our visit to Newmont’s Peruvian mine, we published a detailed case study, which helps investors understand how global companies are addressing human rights-related issues.

Caterpillar Incorporated—During our longstanding engagement with Caterpillar, Wespath has urged the company to address human rights risks particularly relating to customer use of its products in conflict areas. During 2015 and 2016, in response to Wespath’s engagement, Caterpillar strengthened and improved disclosure relating to its human rights policy, including conducting human rights impact assessments in alignment with the Guiding Principles. Notably, the policy applies beyond the company’s direct operations to include its suppliers and dealers. Read more in our 2015-2016 Sustainable Investment Report.
Dakota Access Pipeline (DAPL)— Construction of the DAPL raised significant concerns about its impact on the treaty territory of the Standing Rock Sioux Tribe. Wespath collaborated with other investors to engage the companies involved in the project by asking that they conduct meaningful consultation with affected groups (predominantly Native American communities) and address human rights-related risks aligned with the Guiding Principles. We did this through letter writing, in-person meetings, and by filing shareholder resolutions. A number of the shareholder resolutions Wespath filed and supported received strong overall investor support. A full list of Wespath’s activities relating to DAPL can be found here.
Worker safety in Bangladesh—In April 2013, more than 1,000 garment workers in Bangladesh lost their lives when the Rana Plaza factory building in which they were working collapsed. Wespath co-signed a letter encouraging 27 companies to participate in the Accord on Fire and Building Safety in Bangladesh, which details how contractors can make industrial buildings safer, and co-led engagements with European retailers, Adidas and Inditex. Both Adidas and Inditex agreed to sign the Accord. Signatories to the Accord commit to independent facility inspections and fire safety training. As of July 2017, more than 2,000 factories had been inspected in Bangladesh under the Accord, although ongoing progress is required to achieve the objective of ensuring a safe working environment in the Bangladeshi garment industry. Progress of the Accord can be tracked here.


Invest
—Seeking companies that will generate market returns, and positive impact

Positive Impact Investments
Wespath’s Positive Impact Investments reflect the intent that our global investment activities have a positive impact on society and the environment. Since 1990, our Positive Social Purpose (PSP) Lending Program has supported affordable housing and community development across the U.S. The program takes a holistic view of community investment, going beyond housing loans to foster commercial and social development and a positive environment. We invest in community facilities that provide services to low- and moderate-income people, including homeless shelters, health care centers, community centers and charter schools.

Evaluating External Asset Managers on ESG Integration
Wespath also aims to partner with external investment managers adept at integrating ESG issues, including human rights, into their investment analysis and decision-making processes, as we believe this is essential for long-term value creation. Since 2014, we have developed and refined a methodology that helps us understand how ESG integration filters down from organizational policies, to everyday investment decision-making. Our resulting annual ESG Appraisal allows us to evaluate and benchmark our managers on ESG integration, and to provide practical feedback that encourages progress year-over-year. This is an element of the ongoing performance and retention assessment of our managers.

We have released two thought leadership pieces about ESG integration: Evaluating and Monitoring External Asset Management Performance and ESG Integration in External Asset Manager Selection.

Additional Resources

Addressing Human Rights—Israel and the Palestinian Territories
Case Study: Shareholder Engagement—Identifying Human Rights Risks
Engagement Actions: Promoting and Protecting Human Rights
Human Rights Guideline—Full Text
 

 

 
©2018 Wespath Investment Management, a division of Wespath Benefits and Investments, a general agency of The United Methodist Church. All Right Reserved.