Stewardship | ~5 min read
Turning words into action: how investors are pushing for living wages
Enabling a decent standard of living by paying employees fairly is fundamental to human rights and long-term business resilience. For investors, the focus is increasingly on turning this principle into action - including collaborative engagement.
A living wage refers to the pay that can support a decent standard of living for workers and their families, considering their location. It is often higher than a country’s minimum wage. Providing a living wage helps companies mitigate risks such as high employee turnover, supply chain disruption and reputational damage. Conversely, inaction on this issue can erode trust with workers and investors over time.
Wages in labour-intensive sectors like agriculture, retail and apparel often fall short of what is needed for a decent standard of living. We have been engaging with companies to address this gap, incorporating it into our proprietary human rights engagement framework. We are an active member of the Platform Living Wage Financials (PLWF), a collaborative investor initiative supporting fair pay for workers. The PLWF has a common framework for assessing company performance on living wages and brings together asset owners and managers.
Annual general meetings (AGMs) are one of the most visible and effective forums for raising this topic with companies, and we have supported action on living wages through public statements at three AGMs this year:
- Unilever – We supported a PLWF-led investor statement applauding meaningful progress achieved on living wages across the entire value chain. The statement aimed to encourage continuity of its sector-leading standards.
- Next plc – This statement sought to push for clearer targets, stronger governance and improved disclosure, with significant room for improvement to meet investor expectations. We remain concerned that poor standards could translate into operational, reputational and financial risks.
- Zalando – This statement welcomed the company’s participation in multi-stakeholder engagement and encouraged it to build on this with specific, time-bound action plans, to avoid the possible risks from persistent living-wage gaps.
We believe the use of collaborative engagement-led statements provides a useful way to applaud leaders and challenge laggards on material issues in high-risk sectors. These statements also help raise investor awareness of living wages and how they can positively contribute to long-term company performance and resilience. We continue to engage on this particular issue with a number of companies across different sectors.
