The Methodist Church has adopted a new investment policy encouraging the companies it invests in to promote human rights in the areas where they operate.

The policy relates especially to companies operating in areas affected by conflict and is designed to ensure that they do not do anything that either exacerbates levels of conflict or involves them in human rights abuses.

The Church's investment portfolio totals £1m and while it acknowledges that governments hold ultimate responsibility for upholding the human rights of citizens, it states that companies have obligations in this respect too, including making sure that their own suppliers and business partners are respecting human rights.

The new policy has been drawn up by the Central Finance Board of the Methodist Church, which says there is a growing need to strengthen human rights protections as capital investment expands into global markets where current levels of protection are "inadequate".

The policy expects that the companies invested in by the Methodist Church publish their human rights policies and an assessment of risk in areas of poor human rights. Companies having an adverse impact on conflict or at risk of being "too closely identified" with human rights abuses should be prepared to suspend operations. They are also expected to have policies in place that seek to remedy human rights abuses.

The board's chief executive Bill Seddon said the new policy would help the Church "engage with companies operating in areas where human rights are being ignored, often due to armed conflict".

"It will help us structure our ongoing human rights engagement with companies," he added.

Senior Fund Manager Stephen Beer added: "Companies have responsibilities, not only to shareholders but also to their employees and people in the societies in which they operate. Companies can often face difficult dilemmas, which we recognise when we talk to them.

"Nevertheless, they should abide by clear standards and business practice. Our new policy covers just one aspect of our work to integrate human rights concerns with our investment approach. For example, we also engage with companies on labour rights and health and safety issues."

Steve Hucklesby, Policy Adviser for the Methodist Church, said: "In many parts of the world, local communities feel that they have no control over the immense power of big corporations. Meanwhile, companies often tend to think of their responsibility to local communities only in terms of charitable giving.

"You can still ask questions of senior executives about their responsibility for human rights beyond the workforce and be met with a blank stare. However, this is changing as people are increasingly aware that a company's operations can have both negative and positive impacts on human rights and conflict."