Social is a hot topic in 2018. While attempts to focus on the S of ESG may previously have caused a run on the snooze button, over recent months it’s become apparent that we’re waking up to the topic. That momentum continued apace with the PRI in Person conference this September. CEO Fiona Reynolds summed it up by saying that there’s not an expectation that investors should solve all of society’s ills, but that we all do need to play our part.
A key issue that sits within the social space are considerations of the workforce. From the Board down to the hotel lobby, how a company’s personnel are recruited, retained and rewarded has become subject to increased scrutiny. With inequality spiralling and younger entrants to the job market losing faith in the prospect of working their way up, governments have moved in to demand greater attention and responsibility. While there has been pushback over perceptions of excessive red tape, the introduction of additional workforce legislation in multiple jurisdictions – related to issues ranging from diversity to pay ratios – would tend to indicate that companies were napping on the job. And the investment community is also asking searching questions of its own role in enabling this to happen.
At PRI in Person, even when one might have thought the clamour from around the corner at GCAS could have otherwise drowned it out, the issue of what makes for decent work elbowed its way to centre stage. Key to this was the voice of workers on the receiving end of poor quality working conditions. From Marvin the warehouse worker experiencing precarious contracts and uncertain hours, to Consuelo the long-term hotel employee who was sexually assaulted on the job and told by her boss to keep quiet about it, first-hand testimonies punctured the otherwise comfortable proceedings of the PRI conference. Both the workers, the unions that support them, and those who gave them the space to speak up should be applauded. As should any investors who go on to turn these confronting accounts into action, by engaging with companies on securing better working conditions.
The lead role of investors in driving up workforce standards was woven through numerous other conference sessions and speeches. From Unilever’s Paul Polman to Priya Mathur from CalPERS to Anna Snider from Bank of America Merrill Lynch, the challenge to investors was clear: speak up, apply the six principles for responsible investment, and use your leverage to deliver on the promise of the SDGs including #8: Decent Work for all.
This is not just a matter of social good but of fiduciary duty, for unaddressed poor quality jobs will lead to demoralised and demotivated workers, with an impact on productivity – and also reputation. Ultimately, where companies don’t deliver on their end of the bargain the result is the last-resort of strike action; the ripple of which ran alongside the PRI conference as Marriott hotel workers voted by a huge majority to walk out in order to secure better conditions.I spoke to one hotel worker who was proudly wearing Unite Here!’s ‘One job should be enough’ campaign pin badge, who said she has to travel 40 miles to get to work as she can’t afford to live anywhere near her place of work. Meanwhile at other points during the conference, the focus was on securing a ‘just transition’, in which workers are listened to and partnered with as part of the move towards a lower-carbon and more sustainable economy.
As Chicago Treasurer Kurt Summers said in closing the PRI conference, “the choice between impact and economic returns is not binary.” A good starting point in driving progress towards better quality jobs and sustainable profits is to ask your investee companies exactly how they go about managing their workforce. That’s not just the token good-news stories that make it into corporate sustainability reports – welcome as they are – but really digging into the detail to see how that company is making sure that their workforce is diverse, supported to succeed, and motivated. This is the information that all companies should be able to access on their employees – including by setting standards and monitoring what’s happening in their supply chain – and which they should be prepared to share with stakeholders. Or if they’re not there now, it’s something to work towards.
The reality is that there is a huge data shortfall on employment and supply chain data, which is why the Workforce Disclosure Initiative is pushing for greater transparency. Investor support for such disclosure has grown by more than one-third over the past year, with WDI signatories now topping 110 institutions and $13 trillion of assets. They want to understand how companies are recruiting, rewarding and retaining their workforce, and they understand that they need to play an active role in engaging investee companies to promote this as a priority. For example, it might be that within a workforce the proportion of contract workers is growing, but if that’s the case the company should be able to make clear how this links to their strategy for stability and success. Similarly, we’re finding that companies are curious as to how their workforce data measurement compares with peers, and whether others are facing similar challenges. A common theme at PRI in Person was the power of collaboration and engagement, and we’d invite you to follow through on that call to action by joining the Workforce Disclosure Initiative and driving improvements on social metrics.
Clare Richards manages the Workforce Disclosure Initiative (WDI) as part of ShareAction’s Good Work programme. The WDI is funded by UK aid from the UK government and is run in collaboration with Oxfam, SHARE and RIAA. The initiative’s ultimate aim is to improve working conditions in companies’ operations and supply chains.