The Saliency Materiality Nexus

Description

This paper introduces the “saliency–materiality nexus” as a practical, rights-based framework to help investors identify and manage the most severe human rights risks and their associated financial impacts. It explains how corporate proximity to human rights harms—particularly in conflict-affected and high-risk areas (CAHRA)—can translate into material risks for companies and shareholders, including legal, regulatory, operational, and reputational losses.

Drawing on real-world case studies, the paper demonstrates how failures to address salient human rights risks have resulted in more than billion in financial losses for companies operating in or linked to CAHRA. It also outlines the challenges investors face in these contexts, such as limited data and resource constraints, and shows how the saliency–materiality nexus can strengthen human rights due diligence (HRDD). Through examples from Heartland Initiative, Wespath, and Schroders, the resource illustrates how investors can apply this framework to meet fiduciary duties, align with the UN Guiding Principles on Business and Human Rights, and better protect both shareholders and affected communities