By Charlotte Lush, Research Manager, Workforce Disclosure Initiative
As we slowly adjust to the ‘new normal’ of life shaped by Covid-19, companies are facing unparalleled scrutiny over their workforce practices.
Never before has the critical role of the workforce been exposed so clearly. And the devastating impact Covid-19 has had on the workforce has only further heightened both investor and consumer focus on this area.
Those companies that have put measures in place to support and protect their workforce during the crisis have been lauded.
In the US alone, 86 per cent of consumers say they would base future purchasing decisions on how companies’ treat their workers during the pandemic.
Companies are being left with no choice but to respond.
The missing S in ESG
Despite significant advances in non-financial reporting in recent years, the ‘S’ in ESG has remained woefully unexplored to date.
The company’s reputation is now in tatters, its share price plunged, and investors have been quick to divest from the company, including Aberdeen Standard Investments who sold off £27 million shares.
This should act as a warning to others: a lack of rigorous and standardised workforce data has wide-reaching consequences.
The case for transparency
Without transparency, investors cannot gain vital insights into practices that can have a huge impact on the value of their investments. Companies are unable to identify and address practices that may be negatively impacting a key source of value for the company. Finally, workers continue to face poor quality, unsafe and unfair jobs that are incompatible with the desire to ‘build back better’.
The Workforce Disclosure Initiative (WDI) addresses the challenges caused by this lack of data.
Backed by 50 investors with $6.5 trillion in assets under management, the WDI provides companies with a framework to increase the quality and comprehensiveness of their workforce reporting.
Companies can demonstrate their commitment to their workers, and to workforce transparency more broadly, by sharing data on their workforce practices across their direct operations and supply chains, covering topics such as freedom of association, human rights due diligence, diversity and pay ratios.
Why should companies disclose through the Workforce Disclosure Initiative?
Companies that participate in the WDI are given disclosure ‘scorecards’, helping them to understand the completeness of their disclosures compared to their peers.
These scorecards show companies where they are leading the way on transparency and where gaps may exist. We know that this information makes a real difference to companies’ understanding of their workforce.
In 2019, companies that participated in the WDI for the third time disclosed 25% more data than those submitting for the first time.
Participating companies can elect to have the majority of their responses only be accessible to investor signatories. However, investors, customers and workers are increasingly expecting greater transparency from corporations, so publicly disclosing can be a key way for a company to demonstrate its commitment to being open and honest about its workforce.
What’s new to the WDI for 2020?
This year, the WDI survey has been revised and refined to make the process as easy as possible for companies who take part.
The survey has been streamlined, and the number of questions has been reduced by 18 per cent.
Additionally, companies that have taken part in the WDI before can pre-populate their submission with their responses from the previous year, saving them time resubmitting information that hasn’t changed.
The WDI has also been moved later in the year and is now open from 1 September to 16 November, giving companies a more helpful window of time to take part.
To help reduce the reporting burden on companies, the WDI reflects the existing universe of workforce indicators and organisations by referencing them throughout the WDI survey where there is obvious overlap in the data being requested.
This cross-referencing shows how different reporting requests integrate and alerts companies to data points they may have reported elsewhere.
There is also a programme of support available to companies to help them participate in the WDI.
A comprehensive guidance document is available to guide companies when submitting, as well as a webinar outlining the content of the WDI and process for taking part. The WDI team are also on hand to provide personal support to companies throughout the disclosure period.
The changes adopted in this year’s disclosure cycle make it easier than ever for companies to demonstrate that they are taking their responsibilities to their workforce seriously.
More and more companies are taking advantage of this. However, it is only when workforce transparency becomes the norm that meaningful progress can be made towards a fairer, more sustainable and more open way of doing business.
This year’s disclosure cycle is now open – and remains open until 16 November.
New to WDI? Please get in touch with any questions or to register to disclose at email@example.com.
For company-focused WDI resources visit: https://shareaction.org/wdi-companyresources/.