11/12/25How ESG investment strategies could protect global human rights

Preventing human rights abuses from occurring within their investment portfolio is often a priority for ESG investors.

ESG investing involves considering environmental, social, and governance issues alongside financial ones when you make investment decisions. While there’s often a focus on green issues, like taking steps to reduce the effects of climate change, it’s far broader.

Protecting human rights falls within the social pillar of ESG investing and might cover important issues like forced labour, discrimination, community rights, and privacy.

According to PwC’s Global Investor Survey 2024 (4 December 2024), 17% of all investors care about human rights when evaluating a company. Read on to find out more about the risks to businesses with a poor human rights record, and how ESG investing could encourage change.

Investing, human rights abuses, and the financial risks they present

When you invest, it can be easy to overlook the effect your investment might have. However, investment flows can have a direct effect on communities, supply chains, and labour conditions.

With the world more connected than ever, it’s easier for a company’s human rights abuses – including those within its supply chain – to be exposed. Not only can this present a reputational risk to the business, but it can also have an immediate financial impact.

For example, in 2020, fashion retailer Boohoo was the subject of an investigation into how fast-fashion garments were made.

According to a Guardian article (6 July 2020), the brand was found to be using suppliers that were paying workers in its Leicester garment factory less than minimum wage. The backlash led to more than £1 billion being wiped off Boohoo’s value.

From a financial perspective, investing in a company that doesn’t have a strong human rights record could expose your investment to regulatory penalties, lawsuits, consumer reputational damage, and more.

So, while investment returns cannot be guaranteed and numerous other factors affect a company’s share value, a company that promotes human rights could be more resilient than those that do not.

How ESG investors can protect human rights

There are several ways that investors might incorporate human rights issues into their investment strategy.

First, a screening and exclusion approach would mean you avoid investing in companies that have been linked to poor human rights practices, including within their supply chain.

Second, you might review human rights metrics when assessing if an investment opportunity is right for you. This might mean evaluating worker protections or assessing how transparent the company is about its supply chain. This method could help you identify which companies are taking an active approach to improving human rights within their business.

Third, as an investor, you might choose to embrace impact investing, where you invest in companies that generate a positive, measurable impact alongside a financial return. For example, you might invest in companies building healthcare infrastructure, or in fair trade businesses that pay suppliers fairly.

Finally, you could consider active ownership. Investors taking this approach use their shareholder power to encourage businesses to improve their standards. It’s an option that’s most suitable for large investors, such as pension funds, but investors can band together to try to enact change.

So, there are several ways you might change your investment strategy to protect human rights around the world.

However, there are challenges around incorporating ESG factors, including human rights, into your portfolio. For instance, human rights standards vary substantially around the globe, and it can be difficult to check conditions within supply chains.

Choosing an appropriate investment fund with robust human rights criteria may offer a practical way to reflect your values. The fund will undertake the work of assessing which companies align with its criteria, so you can take a hands-off approach.

Remember, it’s still important to assess your financial circumstances and risk profile when investing, even if you’re focused on ESG issues.

Contact us to talk about ESG investing

If you’d like to learn more about ESG investing and how it could fit into your investment strategy, please get in touch. We can arrange a meeting to discuss your values and financial goals.

Please note: This blog is for general information only and does not constitute financial advice, which should be based on your individual circumstances. The information is aimed at retail clients only.

The value of your investments (and any income from them) can go down as well as up, and you may not get back the full amount you invested. Past performance is not a reliable indicator of future performance.

Investments should be considered over the longer term and should fit in with your overall attitude to risk and financial circumstances.