The author and labour rights activist Helen Keller once said: “Alone we can do so little; together we can do so much.” Nowhere does this adage ring more true than in the effort to tackle precarious working conditions around the world. The global economy is defined by highly complex and fragmented supply chains. Governments, companies, investors, and civil society organisations must all work together to improve the quality of jobs. The good news is that collaboration is under way.
Companies coming together
Multinational companies have a big role to play, responsible as they are for the pay and wellbeing of a huge number of workers in their direct operations and supply chains. Member companies of The Consumer Goods Forum (CGF) directly employ nearly 10 million people, with a further 90 million people working in jobs along the supply chain.
In early 2016, the CGF passed a resolution to tackle one of the most shocking manifestations of precarious work: forced labour in global supply chains. They also produced the Priority Industry Principles, highlighting the three most common employment practices across the world that could lead to cases of forced labour. The CGF aims to counter these practices by working with its members to uphold the priority principles in their own operations.
This CGF commitment is part of a wider trend of the private sector recognising its responsibility to act to improve business practices on working conditions and human rights. It’s a pathway that’s being built on in 2017 through the pilot year of the investor-backed Workforce Disclosure Initiative (WDI).
Regulatory pressure has undoubtedly contributed to the changing landscape. For example, the UK Modern Slavery Act and EU Non-Financial Reporting Directive have focused the minds of companies and investors alike.
Progressive companies are becoming increasingly aware that both they and their workers can benefit from a positive, healthy corporate culture. They recognise that nurturing the talent and motivation of the workforce, and managing risks of poor practice, can be vital to long-term success. Tangible business benefits include improved staff retention, better management of reputational risks, and enhanced financial performance. These firms are moving beyond boilerplate platitudes and becoming more transparent about their achievements and challenges in this area.
The leaders are blazing a trail. But the way many companies manage and develop human capital often remains cloaked in mystery. Better disclosure from companies about how they manage workforce risks and opportunities would represent important progress, not least in helping to deliver on the UN’s Sustainable Development Global Goal 8 which aims to promote “sustained, inclusive and sustainable economic growth, full and productive employment and decent work for all”.
Investors are also now taking note and are sending a strong signal to companies with their support for the recently launched Workforce Disclosure Initiative (WDI).
The Workforce Disclosure Initiative
The WDI brings investors together to call for better workforce disclosure. Its ultimate goal is to improve the quality of jobs in companies' operations and supply chains. Led by ShareAction, the WDI is funded by the UK Department for International Development. It is run in partnership with Oxfam and other stakeholders including Canada’s Shareholder Association for Research and Education (SHARE).
In the summer of 2017, letters were sent to 75 of the world's biggest companies, inviting them to take part in the pilot WDI survey. Investor interest in the WDI is strong. An impressive 88 institutions representing more than $8.6 trillion are backing the initiative. It is now down to companies to show their commitment to improving workforce reporting by disclosing information by the autumn deadline.
The WDI survey seeks information on both direct operations and critical suppliers, and covers issues ranging from organisational structure and board oversight through to workforce composition and development.
Kevin Thomas, Director of Shareholder Engagement at SHARE and panelist at the October 2017 Sustainable Retail Summit, commented: “I was, at first, skeptical of adding another reporting framework to the mix, but the WDI fills an important gap by developing the necessary scope and rigour for social reporting that we need to keep up with the ongoing evolution in environmental and governance reporting. Without it, investors will not have a window into the risks and opportunities related to the workforce.”
Bringing social issues to the forefront
The WDI aims to build on the momentum of initiatives like the Corporate Human Rights Benchmark (CHRB) and KnowTheChain (KTC). All three initiatives share the common aim of increasing company and investor action in this space. Below the surface, they are distinct in their scope and processes, and are intended to be mutually reinforcing.
Through a response to the WDI, companies have the opportunity to communicate to a significant group of investors about their business strategy and how the workforce plays a role in that. Taking part in the WDI also sends a clear signal of leadership by the company.
The process of gathering data to respond to the WDI survey will help companies improve public disclosures on their workforce. This in turn should help them perform better on benchmarks like the CHRB and KTC, which rank companies on publicly available data.
The recent heightened focus on workforce issues reflects increased awareness of the precarious working conditions which are all too common around the world.
Companies have a key role in improving the quality of jobs, and can do so in a way which will bring about competitive advantages. Dedicating capacity to engage with collaborative initiatives like the WDI is an essential step on the path to ensuring decent work and a sustainable business.
This post was written and contributed by:
Project Officer, ShareAction