Conectas participated in the public consultation process to review the 2014/2015 questionnaire for the Corporate Sustainability Index (ISE) of the BM&F Bovespa, Brazil’s stock exchange. The NGO submitted comments and recommendations to improve the questionnaire used to select companies for the index, focusing on its social dimension.
Conectas proposed to the organization responsible for the ISE methodology, the Center for Sustainability Studies (GVCes) of the Getulio Vargas Foundation (FGV), that the 2014/2015 version of the ISE questionnaire ask companies about their formal commitments to human rights and the steps they take to assess their own impacts and the impacts of companies in their supply chain.
Using the Dow Jones Sustainability Index – the corporate sustainability index of the New York Stock Exchange – as an example, Conectas suggested that companies be questioned about their knowledge and adherence to the UN Guiding Principles for Business and Human Rights .
These principles, unanimously approved by the UN Human Rights Council in 2011, set out three duties for companies that want to be recognized for respecting the highest standards of human rights. They are: a formal commitment to respect human rights, the exercise of due diligence in order to measure and mitigate human rights impacts, and the creation of an impartial, transparent and independent mechanism to handle grievances and resolve conflicts.
Conectas recommended that the “Social Dimension” of the ISE questionnaire be expanded to include criteria and indicators other than labor rights. Considering that the activities of the different business sectors represented in the index may impact a broad range of human rights not currently included in the questionnaire, Conectas suggested that the questions related to the social dimension be differentiated by sector, just like with the environmental dimension.
Concerning the management of the value chain and the supply chain, Conectas recommended that the questionnaire’s sustainability criteria reflect the minimum requirements of international standards and Brazilian legislation on the responsibility of companies to prevent and redress human rights violations that are committed by their commercial partners.
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About the ISE
The ISE is a stock index that measures the financial return of a portfolio formed by companies that are committed to corporate sustainability practices. It was created in 2005 and has since become an important analysis tool for investors who are interested in companies with both strong performing stocks and sound social and environmental policies.
The index can be formed by as many as 40 companies that are listed on the BM&F Bovespa. They are selected using pre-defined criteria, such as trading volume, as well as their responses to the questionnaire. The questions address issues of corporate governance, economic efficiency, environmental balance and social justice.
The ISE’s highest governance body is the Board of Governors, which is comprised of 11 organizations representing the private sector, government agencies and multilateral bodies. The methodology of the index is defined by GVces, which is part of the FGV Business Administration School in São Paulo.
Each year, the organizations responsible for the ISE open an online public consultation process to review the questionnaire, so that interested parties and the public in general can submit proposals to improve the instrument used for selecting companies.