Technological innovation can undermine fundamental rights, including through widespread infringements on privacy, ‘algorithmic discrimination,’ and enabling online hate speech and violence. Institutional investors, both asset owners and managers, have unique and systematic influence over how technology companies are governed, make decisions, and act.

Human rights responsibilities of investors

The UN Guiding Principles on Business and Human Rights (UNGPs), which set the expectation that investors have a responsibility to ensure that their investments in the technology industry avoid negative impacts, and have a unique role in shaping responsible company behaviour.

Investor practice and recommendations

Investors have the potential to play a transformative role in encouraging technology companies to respect human rights. Investors should implement human rights policies across all investment activities, using human rights risk management approaches in identifying and addressing harm caused by investments. Investors should pay attention to the most severe impacts on people resulting from their investments and avoid negative impacts.

Investors’ role in corporate governance

Investors have an ability to leverage their influence or control in support of technological development that contributes positively to society rather than undermining the dignity and well-being of people. Investors need to assess whether a company is set up to anticipate risks of negative human rights impacts and look to its governance, engagement with stakeholders, policies, and processes.

Risks and returns of rights-respecting investment

Part of assessing a company’s potential financial performance is recognizing risks and returns. The costs associated with poorly managing human rights risks persist when companies reach maturity, and investors are aware of these risks. Investors representing over $5 trillion of assets under management stated that “where there are the most severe risks to human rights, there are material risks to business.” The UNGPs provide a framework for meaningful and effective company policies and processes, improving comparability of ESG aggregations and strengthening efforts to assess impacts on people.

Recommendations

Investors should:

• Implement human rights policies and use human rights risk management approaches in identifying and addressing harm caused by investments.
• Pay attention to the most severe impacts on people resulting from their investments and avoid negative impacts.
• Assess whether a company is set up to anticipate risks of negative human rights impacts and look to its governance, engagement with stakeholders, policies, and processes.
• Recognize financial implications of human rights considerations.

Conclusion

Seizing on the transformative power of the investment community to drive respect for human rights among digital technology companies will entail further equipping and activating investors at each stage of a company’s growth to promote human rights respect in corporate governance and culture, business models, due diligence, and remedy mechanisms. The report shows that institutional investors’ incorporation of human rights considerations has significant financial implications. Investing in technology with a focus on human rights governance provides the necessary framework for successful investing, promoting the responsible development and use of technology while protecting fundamental human rights.