Rankings / Surveys
Workforce Disclosure in 2021: Trends and Insights
Workforce reporting continues to rise. In 2021, more companies provided more data to the Workforce Disclosure Initiative (WDI) than ever before. Here we examine key trends and insights from the reporting season. We found that:
- Companies that engage in workforce reporting for longer demonstrate better workforce practices;
- Many companies take a top-down approach, failing to match disclosure with worker engagement;
- Companies’ ability to identify human rights risks is improving, but this information is of little value unless companies use it to take meaningful action;
- Organisations with a better understanding of diversity were more inclusive;
- Despite the risks that inequality poses, companies lack the basic data needed to tackle it; and
- When companies understand their supply chains, conditions for workers are more likely to be improved;
In the wake of the Covid-19 pandemic, the vital role that workers around the world play in ensuring society can function is increasingly clear – but often they are still undervalued. Workforce reporting is more important than ever.
Generating a large volume of high-quality data on how companies treat their workers presents investors with a clear picture on which they can base their corporate engagement, and drive improvements in companies’ workforce practices.
Workforce reporting continues to rise - in 2021, more companies provided more data than ever before
But our research shows responding companies are still more transparent than those who do not disclose. In fact, companies that complete the WDI survey are making two and a half times as much data available as those that don’t complete the survey.
Companies that engage in workforce reporting for longer demonstrate better workforce practices
It’s important to examine whether gathering more data from companies actually has an influence on how they act. Our 2021 survey data shows that not only does consistent responding lead to higher levels of disclosure, but it is also linked to improved workforce practices.
The risk of some of the most severe violations of workers’ rights is often most pressing in supply chains. Here, longer-term disclosure helps too: twice the proportion of fifth-time responders reported identifying instances of forced labour, modern slavery, and human trafficking in their supply chains (16 per cent) than first-time responders (eight per cent).
Many companies take a top-down approach, failing to match disclosure with worker engagement
Supporting worker engagement like the fundamental rights of collective bargaining and freedom of association is an essential (and often legal) requirement of a responsible employer – and it also helps effective management.
Companies’ ability to identify human rights risks is improving, but this information is of little value unless companies use it to take meaningful action
When companies do provide mechanisms to support the remedy of human rights risks, they are not yet taking sufficient steps to monitor their effectiveness. Just 69 per cent of companies reported on this in 2021. Meanwhile, a quarter of companies that conduct human rights due diligence didn’t explain how the company has monitored the effectiveness of the actions taken, calling into question the effectiveness of these companies’ due diligence processes.
Organisations with a better understanding of diversity were more inclusive
We need to increase diversity in companies to help repair the historic marginalisation of many groups. But unless companies take steps to become genuinely inclusive, structural inequalities and systematic biases will continue to be reproduced, making these efforts at best tokenistic or at worst actively harmful. Companies can’t make meaningful progress on diversity and inclusion unless they understand who is in their workforce and how they are being treated.
The gaps are most significant when it comes to ethnicity: less than half as many companies provided the percentage of their direct workers in leadership positions by race or ethnicity (39 per cent) compared to gender (97 per cent).
Every company that didn’t provide data on the gender pay gap also didn’t provide data on the ethnicity pay gap, suggesting that companies only move on to address ethnicity when they have first considered gender. This strong link suggests pay disparities should be tackled holistically.
There appears to be a correlation between greater diversity and lower levels of discrimination and harassment. For example companies with over 30 per cent female representation on the board saw on average 79 per cent of discrimination and harassment incidents resolved - compared to 55 per cent where the board had less than 30 per cent female representation. Similarly, companies with internal hire rates for women of over 50 per cent had less than half the average number of reported incidents of discrimination and harassment (29.5 incidents on average) than those with rates below 50 per cent (61.4 incidents on average).
Despite the risks that inequality poses, companies lack the basic data needed to tackle it
When workers suffer from low pay and precarious employment, companies also miss out on greater productivity and innovation, and have to contend with destabilised supply chains, constrained consumer spending and broader political instability.
In the 2021 survey, the average company CEO to median worker pay ratio, at 106:1, remains high. This is despite the adverse impact high pay ratios have on employee morale, company performance and consumer preferences, and little evidence that they have a positive impact on performance or shareholder returns. US companies
had by far the highest average CEO to median worker pay ratios, at 315:1.
When companies understand their supply chains, conditions for workers are more likely to be improved
Understanding the structure and constitution of the supply chain is a necessary first step for any company looking to improve working conditions in the supply chain. However, less than half of WDI responders provided the number of first-tier suppliers in the company’s top 10 sourcing locations.
But those companies that did explain their efforts to map their supply chain also provided significantly more data on how they are improving supply chain working conditions. For example, those companies who’d mapped their supply chain structure were four times more likely to explain how they are promoting freedom of association and collective bargaining within it.
Find out more about the Workforce Disclosure Initiative
Since its establishment in 2016, the WDI has worked with institutional investors to improve corporate workforce transparency. Investor support has been vital in generating new workforce data, encouraging wider engagement with companies, and promoting a greater understanding of the workforce topics covered in the annual WDI survey.