Investors Find Mediocre Progress on Living Wage  

Platform for Living Wage Financials’ five-year progress report says work needed on engagement with unions and evidence base of action.  

The challenge of moving towards a fair living wage is huge, but some progress is happening, according to Johanna Schmidt, Sustainability Researcher at Triodos, a founding member of the Platform for Living Wage Financials (PLWF), an alliance of investors that engages with companies on enabling living wages in global supply chains.  

PLWF held an event in the Netherlands this week to mark its five-year anniversary and released a report assessing its progress with investee companies towards facilitating living wages and living income in their global supply chains.  

Schmidt said the initiative had seen success in achieving a strong network. “We’re now a platform of 20 investors with €6.6 trillion under management. And what I’m most happy about is the network. We are really collaborating as investors in knowledge sharing and discussions, but also with friends of the platform so that we get a lot of direct access to expertise.”  

But Schmidt said there was still a way ago until  companies were making tangible progress on fair living wages.  

In its assessment report, PLWF found that while garment and footwear sector companies were stepping up efforts to assess the impact of non-payment of living wages, remediation is still a core area for improvement and there is limited evidence of efforts to track the effectiveness of living wage strategies.  

Dialogue with unions  

There is also a lack of emphasis by investee companies on the importance of union dialogue at the supplier level. Schmidt said: “The distance between us investors and workers on the ground is very far so we want to create, and see evidence of, a better dialogue. This includes with the unions.” 

She noted that just this week Levi’s and H&M suffered production halts in Bangladesh after thousands of workers went on strike with unions demanding higher wages. According to More Perfect Union, the workers’ minimum wage is US$75 a month or around U$2 a day, and they are demanding it rise to U$208. With management only offering U$90, more than 300 factories have been shut down so far. 

“If brands say they respect freedom of association, which is in the central part of the assessment [of companies], we need to see it on the ground too. And this dialogue with unions needs to go down to supply chains,” said Schmidt.   

The assessment also found that in the garment and footwear sector 50% of companies provided evidence of responsible purchasing practices, and that in both the food and agriculture and food retail sectors most companies commit to responsible purchasing practices, but only a few commit to paying higher farmgate prices.  

Schmidt said responsible purchasing practices included ringfencing labour costs – meaning that they are isolated from negotiations between suppliers and companies – or developing longstanding relationships with suppliers to help ensure fair living wages.  

PLWF has also developed optional questions for engagement, beyond its current assessment framework related to core expertise, power or budget allocations in the company and disclosure of data on metrics such as the number of workers at productions sites and full transparency and traceability of the supply chain.  

The PLWF report was supported by Dr Bärbel Kofler, Parliamentary State Secretary and Governor for Germany, who said in its preface “receiving a living wage for your work is a universal human right”. Kofler noted that women and other marginalised groups were especially affected by low wages and precarious working and called for a concerted effort by all stakeholders to ensure living wages.  

Schmidt said collaboration on the issue of decent living wages way key, alongside pressure from different actors including governments. “We’ve seen it in many ways, for example, the UN special rapporteur on human rights urging governments to make a living wage law,” she said.  

The practical information hub for asset owners looking to invest successfully and sustainably for the long term. As best practice evolves, we will share the news, insights and data to guide asset owners on their individual journey to ESG integration.

Copyright © 2024 ESG Investor Ltd. Company No. 12893343. ESG Investor Ltd, Fox Court, 14 Grays Inn Road, London, WC1X 8HN

To Top
Share via
Copy link
Powered by Social Snap