Platform for Living Wages Financials encourages and monitors investee companies to enable living wages and incomes in their global supply chains
A living wage or living income is a key driver to lift people out of poverty. Responsible investors should use their leverage to direct investee companies towards holistic wage and income strategies in their own operations and supply chains, says Kirsten Kossen, human rights expert at ASN Bank, a member of the Platform Living Wage Financials (PLWF).
Established in 2018, the platform has evolved from being a group of 8 Dutch financial institutions to become a coalition of 19 financial organisations from across Europe, representing €6.5trn under management.
The platform has has just released its second annual report on investor engagement, which includes assessments of investee companies on living wage and living income, covering 34 publicly-listed garment and footwear brands, 12 food producers, and 6 food retailers.
“As the world struggles with rampant inflation and climate change”, the report states, “the most vulnerable are plausible to pay the price. No matter how difficult the implementation is for investee companies, it is increasingly important to work towards a living wage and living income. Long term engagement is therefore key and the platform needs to keep pushing companies to evolve and make a top priority of the topic.”
Providing a benchmark
In its reports, PLWF tries to provide a benchmark to determine which companies have been leading in terms of living wages and which need to do more, with the view that companies can follow the example of their better-performing peers.
While it is clear that policy commitments and operational understanding of living wages are becoming more robust, the report concludes there is still a lot of work needs to be done. “Transitioning to a living wage poses many challenges, for which PLWF encourages companies to learn from frontrunners.”
“It’s undeniable that there have been some improvements within the assessed garments industry”, according Kossen, who represents ASN Bank at the PLWF. “However, evidence of real results is still hard to find.” Most food, agriculture and retail companies are still further behind.
Lack of proper strategies
ASN Bank was one of the PLWF founders. Kossen adds: “In 2018, we performed a risk analysis to map out the international chains we were involved in and where major human rights issues are at play. Living wages in the clothing industry came out strongly. Because ASN Impact Investors invested in 15 large clothing companies at that time, we had to do something about it. But you can’t change these things on your own, and that’s how the idea for the platform was born.”
The platform’s initial focus was on promoting living wages in the garment and footwear industry, but the scope was soon expanded to cover the agri-food and food retail sectors.
Most of the 50 companies PLWF is now focusing on lack proper strategy, KPIs or complaint and remediation mechanisms, all crucial aspects for enabling the payment of a living wage but often difficult to implement, Kossen explains.
PLWF, therefore, urges companies to build on the experience from frontrunners, including larger companies like Puma and Tesco, and smaller player with experience in implementing living wages like Fairphone and Wakuli Coffee.
Where dialogue with companies is insufficient, the platform is also looking for more assertive steps to achieve its objectives, asking questions during company AGMs and sending letters to company boards. “We are now looking into using other escalation mechanisms to increase our leverage further.”
In the future, a new standard could be developed to ease the job for financial institutions and impact investors to assess their impact on living wage and income, similar to recent initiatives on carbon and biodiversity. “Presently we lack sufficient data to develop such a standard”, Kossen says, “but it would definitely help to raise the bar, as well as deliver the possibility to compare companies.”
In the meantime, platform members have also initiated actions individually. ASN Bank, together with partners such as the Fair Wear Foundation and Fashion Revolution, has launched a European Citizens’ Initiative under the name ‘Good Clothes, Fair Pay‘. It aims to collect 1 million signatures to push for the European Commission to introduce legislation requiring brands and retailers across the garment, textile and footwear sector to conduct specific due diligence in their supply chain to ensure workers are paid living wages.