Stockholm (NordSIP) – The ‘S’ in ESG keeps gaining prominence in the investment community. A prime example is the work that the Platform Living Wage Financials (PLWF) does to promote living wages and incomes in global supply chains. This week, the investor coalition published their first annual report, ‘The importance of long-term investor engagement on living wage’.
Paying a living wage is instrumental in the battle against poverty reduction globally. Earning a living wage is also a fundamental human right, as recognized by the International Labour Organisation (ILO) and the Organisation for Economic Co-operation and Development (OECD). However, in sectors that depend on manual labour, such as garment, agriculture, food and retail, workers’ wages are often insufficient to cover basic living expenses. Wages in these sectors are often on or below the poverty line, even if there is a legal minimum wage and well-below national living wage estimates.
Investors have a key role to play in breaking this deadlock, and meaningful engagement on the issue is crucial. Boasting 18 members, four supporting parties, 14 friends and over 4,6 trillion assets under management and advice, PLWF is perfectly positioned to use its influence and leverage to engage with their investee companies on living wages and incomes in their own operations as well as in the supply chains.
PLWF has come a long way since its foundation in 2018. It has expanded from 8 to its 18 members: ABN AMRO, Achmea Investment Management, Actiam, Aegon Asset Management, Amundi, AP2, APG, ASN Bank, a.s.r., BMO Global Asset Management, ING, Kempen Capital Management, MN, NN Investment Partners, PGGM, Storebrand, Robeco and Triodos Investment Management. The coalition and its members engage with 33 publicly listed garment and footwear brands, 12 food-producing companies, and nine retail food companies. They aim to reach even more companies within these sectors. “Looking back, the PLWF gave the topic of a living wage the boost it deserved,” reflects Irina van der Sluijs, Co-founder PLWF & Engagement manager at ASN Bank, currently NNIP Senior Responsible Investment specialist.
“Overall, it is our understanding that implementing living wages adds up to a win-win situation for companies and workers. Studies from governmental institutions, academia and civil society point to the benefits of living wages for the companies that have implemented them,” notes Tulia Machado Helland, Senior Legal Advisor ESG at Storebrand Asset Management.
Why, then, have brands been slow to pick up on the benefits of living wages? According to PLWF’s report, only a quarter of the thirty-two companies studied received a higher score in 2021 compared to last year. A total of five companies, PUMA, H&M, Hugo Boss, Ralph Lauren, and VF Corp progressed to a higher category of development.
The lag in action, according to PLWF, is caused by a combination of several factors. Prominent among those are the lack of a fully actionable sustainability strategy at the corporate level within brands, a misalignment on living wage calculations, and a gap in civil sector collaboration to secure government policies that make living wages stick.
“Investors can make corporate executives and boards more accountable for driving living wages in their supply chains,” Machado points out. “And of course, this can unlock huge amounts of value for all stakeholders. That’s why it’s important that this group of committed, responsible investors is collaborating to make a global impact on the issue,” she concludes.
With its long-term engagement on living wage, PLWF seeks to encourage corporate responsibility for supply chains, accountability for actions taken or not taken, and equipping companies with knowledge and tools to enable change. The investor coalition also aims to foster multi-stakeholder cooperation, including governments, to accelerate advancement towards paying living wages.