Part 4 of 4, Moving the Market to Support Human Rights

In Parts Two and Three of this series, Paul discussed how BlackRock and State Street’s January 2020 letters to issuers, by committing to forcing disclosure on sustainability to discipline bad corporate behavior, mark a serious turn towards corporate responsibility. One set of standards has become their preferred instrument: those developed by the Sustainability Accounting Standards Board (SASB). In response to demands from large investment advisors, companies have proven willing to disclose their compliance with SASB standards. These developments show that SASB disclosure can be used as a new tool for civil society to hold corporations accountable for human rights.

As explained in Part One of this series, the reason mainstream investors have turned to SASB disclosure standards is that they accord with the prevailing legal definition of fiduciary duty in that they are financially material, as determined by SASB’s rigorous research. SASB takes an evidence-based approach to assessing whether sustainability topics are likely to: 1) be of interest to the “reasonable investor,” and 2) have material impacts on the financial condition or operating performance of the company.

In this post, we outline three ways that civil society can use SASB standards themselves to hold corporations accountable for their human rights impacts.

First, civil society organizations can work with shareholders to file shareholder resolutions. In 2018, Rights CoLab embarked on a collaboration with the non-profit shareholder advocacy group As You Sow, funded in part by the Open Society Foundations, to test the power of SASB in creating more corporate transparency on environmental, social, and governance (ESG) issues. We filed shareholder resolutions using SASB standards on topics ranging from climate-related water risk and sourcing of conflict minerals to diversity, inclusion, and fair labor practices.

Since then, we filed a total of sixteen resolutions. Two were excluded by the Securities and Exchange Commission (SEC), one was withdrawn on a technicality, but eight were settled to our satisfaction.[1] Five resolutions have either gone to a vote or will soon. The 2019 Fastenal Company resolution received 41% support even though BlackRock and Vanguard, the two largest holders, didn’t vote for it. The resolution for Sanderson Farms – the first opportunity to test a SASB-based proposal since the January BlackRock and State Street letters calling upon companies to disclose according to SASB – resulted in the company’s commitment to produce a complete SASB report in 2020, despite having received a meagre 11% support.

By any measure, this is a very high rate of success for shareholder engagement, especially for a new topic like SASB-based disclosure. Even the company where we withdrew our proposal on a technicality later informed us that they would be embarking on a SASB-compliant disclosure project anyway. No doubt our explicit reference to the financial materiality of SASB standards along with the respect companies have for As You Sow is behind this result. It is also likely that large investors who support SASB may have been engaging behind the scenes. Together these factors caused companies to take our resolutions more seriously than they typically do.

Human rights advocates can build on these successes by conducting their own SASB campaigns. Start by choosing a few current SASB standards that are rarely reported on but would benefit from wide dissemination. For example, in its retail sector standards, SASB calls for disclosure of voluntary and involuntary turnover of in-store employees – a metric few companies disclose because it can reflect workforce dissatisfaction with low wages or mistreatment. Then use the selected standards to write a model resolution that could be filed by shareholders of a wide range of companies. The Center for Political Accountability and AFSCME have developed model resolutions for political contributions and lobbying, which they have used to great effect.

Second, of course, if your organization owns stock, you can file your own SASB-based shareholder resolutions.

Third, human rights advocates can take action to contribute to strengthening SASB standards. The current standards are the result of research conducted manually between 2011 and 2015. The advent of Big Data analytics, such as machine learning and natural language processing, makes it possible to demonstrate the financial materiality of many more issues. Since financial materiality is evolving to encompass more environmental and social issues, these practices can find their way into the ongoing standard revisions.

Seizing this opportunity, last fall Rights CoLab partnered with Columbia University’s Data Science Institute and SASB to use big data to boost SASB’s Human Capital Management project relating to treatment of direct employees as well as workers in supply chains. Our collaboration aims to assist this effort by identifying stronger relationships between modern slavery and associated labor rights abuses and financial materiality.

Alongside the data science work, Rights CoLab is establishing a civil society advisory group. The aim is to ensure that any new relationships discovered between labor rights abuses and financial materiality are incorporated into SASB standards in ways that best reflect risks to workers and are free of unintended consequences for them. (To learn more about this project, please visit our dedicated project page.)

A new ShareAction report released this month raises a critical point: that to meet today’s global challenges and move towards a more sustainable world, requires “an overhaul of how investors approach responsible investment.” Moreover, asset management needs to undergo “a conceptual shift from taking into account ESG factors because they pose financially material risks to portfolios, towards consideration of the real-world impact of investments on the environment and society.” We agree with this assessment. SASB alone will not overhaul the system, but it is an opportunity to address the low hanging fruit of ESG disclosure in one fell swoop, which can have important knock on effects.

SASB stands out for its ability to define standards of materiality that will require firms to disclose supply chain conditions, which will in turn affect the decisions of investors and, through publicity, the decisions of consumers, business partners, and other corporate stakeholders as well. With the backing of the world’s largest institutional investors, SASB standards can be a powerful lever for advocates to push companies to address human rights, inequality, and the climate crisis.

Join us in the effort to help move large investment advisors to become “ESG shadow regulators” by improving in SASB standards. In the coming days, we will announce a webinar to introduce this work and describe how to get involved.[2]


[1] All resolutions and withdrawal letters are published on the As You Sow resolution tracker website. For 2019: Advance Auto Parts, Inc.; Autozone, Inc.; CarMax, Inc.; Essex Property Trust, Inc.; Fastenal Company, PACCAR, Inc.; and Western Digital Corp. For 2020: Advance Auto Parts resubmission, Fastenal resubmission, Genuine Parts Company; O’Reilly Automotive, Inc.; Sanderson Farms, Inc.; Skyworks Solutions, Inc.; and Ulta Beauty, Inc. Two resolutions filed personally by Paul were also settled to our satisfaction and withdrawn.

[2] This webinar took place on April 2. Replay and slides from the webinar can be accessed at this link.


This is Part 4 of 4 part series Moving the Market to Support Human Rights. Read other parts here:

Part 1 of 4: Improving Corporate Transparency with New Materiality Standards

Part 2 of 4: Is BlackRock’s New Messaging on Climate Change a Big Deal? Yes.

Part 3 of 4: BlackRock and the Curious Case of the Poultry Farmer


AP Photo/Mark Lennihan