The world’s largest companies have an outsize impact on the lives of people across the world. The conditions they create through the way they recruit, develop, and treat workers can ensure decent and fulfilling jobs that support individual wellbeing and prosperity. They can also affect firms’ economic success.
But workers around the world face exploitation by unscrupulous companies, harming the workers themselves and creating risks for investors, from human rights abuses to inequality.
The UK’s Trades Union Congress estimates that the proportion of people in insecure work—such as food delivery riders and cleaners on zero-hour contracts—grew from 10.7 per cent to 11.8 per cent between 2011 and 2022. Anti-Slavery International calculates that 49.6 million people live in modern slavery, in sectors like agriculture and fashion. Analysis by the International Labour Organisation in 2022 found that, across the global economy, women earn on average about 20 per cent less than men.
Closing the data gap for the S of ESG
Responsible investors take any negative impact of their investments on people and planet as seriously as financial return. These impacts are often thought of in terms of ESG – environmental, social and governance issues. If they’re to take effective action on ‘the S in ESG’, it’s vital that investors understand social impacts such as how workers are affected.
In 2016 ShareAction created the Workforce Disclosure Initiative to help kickstart corporate disclosure on issues related to workers. We sought to generate high quality, comparable and transparent data about how businesses treat their workers. The aim was to provide shareholders in those companies with the information they need to inform investment decisions or push for improvements.
To date, the Workforce Disclosure Initiative (WDI) has succeeded in getting 230 of the world’s largest companies to respond to its annual survey. The transparency that WDI enables helps expand decent work across the world. Last year alone, the disclosures covered 13 million direct employees—and many times more throughout supply chains. Companies who complete the WDI survey make available two and a half times as much data than those who don’t, giving a much fuller picture to investors.
WDI data also provides insights on global trends. For instance, one consistent finding is that companies have a limited understanding of their impact on marginalised workers. Less than half (41 per cent) provided the number of “non-employee workers” in their direct operations, such as third party contracted cleaners and security guards, and just 34 per cent the number of "non-guaranteed hours employees" such as those on zero hours contracts.
In addition, the WDI has been working to influence global regulation, making recommendations to help set the bar for companies across the world. The European Union, U.S. Securities and Exchange Commission and International Sustainability Standards Board are among regulators considering or implementing due diligence requirements and sustainability reporting standards on human rights and managing workforces.
Maximising the impact of disclosure
After incubating WDI for seven years, from 1 February 2024 ShareAction is proud to transfer it to a new host. The Thomson Reuters Foundation (TRF) is an independent, global non-profit which works to strengthen free, fair and informed societies by fostering inclusive economies, promoting media freedom and advancing human rights.
TRF and the WDI forge a powerful partnership, united in a mission to uphold human rights, reduce inequality, and drive positive social change. The Foundation’s capabilities and resources will enable the WDI to leverage their expertise and networks around the world. The WDI will become a core component of TRF’s inclusive economies portfolio, which focuses on the social component of ESG.
Continuing to champion decent work
ShareAction will continue its efforts to transform the way the investment system works in order to build societies that are more fair, just and equitable.
For more than a decade, the Good Work Coalition has been challenging big employers in the UK to pay the Real Living Wage. When we started our work, two of the FTSE 100 biggest companies were accredited living wage employers. Today that number is 53.
More recently, we’ve been working in partnership with the Runnymede Trust and others to tackle racial discrimination in the workplace by asking firms to publish their ethnicity pay gap (EPG) and advocating for mandatory reporting by large companies in the UK.
Our research and rankings about powerful investors’ policies and practices highlight their impact on workers. Our 2023 survey of 77 of the world’s largest asset managers found that only six per cent exclude companies knowingly in breach of human rights standards across all their investments.
Our latest proxy voting analysis shows that as the biggest US passive managers decrease their support across the board, shareholder resolutions on critical workforce issues such as freedom of association at Amazon and supply chain due diligence at TJX companies, are less likely to succeed.
Our work is far from done. We’re redoubling our efforts to help investors understand that human rights abuses, low pay and inequality are not just unfair. They pose systemic risks investors cannot afford to ignore.
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