Register for the Panel Discussion: How can finance and business progress decent work and the living wage? on 19 November 2021
10 August 2021 – Lucy Auden, Senior Programme Manager and Anna Barford, Prince of Wales Fellow at CISL reflect on inequalities in society and the labour market that have been highlighted and exacerbated by the COVID-19 pandemic and consider how investors can progress decent work for all.
The COVID-19 pandemic has highlighted and exacerbated many pre-existing inequalities in society. This was the stark reminder from the Sustainable Development Goals 2021 report, which highlighted the devastating impacts of the COVID-19 pandemic including: massive job losses, particularly among youth and women; lack of a social safety for informal workers and an increase in young people who are not employed, in school or in training. Mass underemployment and job insecurity are projected to continue even as vaccines are rolled out – the UN predicts that during the pandemic, 1.6 billion workers in the informal economy risk losing their livelihoods.
The provision and access to decent jobs is recognised as foundational to the success of the SDGs, which state that “poverty eradication is only possible through stable and well-paid jobs”. The goals also set the target of “full and productive employment and decent work for all” by 2030. Working to the same 2030 deadline, and making a significant contribution to the decent work agenda, earlier this year Unilever announced their commitment to paying living wages to their suppliers of goods and services (direct employees are already paid living wages). This type of bold step needs to be replicated many times over. Alongside job quality, serious attention is needed to job quantity, or put differently, stimulating labour market demand so that decent work is available to all.
The term decent work was first introduced by the International Labour Organisation in 1999. Since then it has received increasing attention from policymakers and academics. The notion of decent work can be understood as having two dimensions: the number of jobs supported, and the meaningful characteristics of those jobs. It is commonplace for companies to report the number of jobs supported or created – either directly or indirectly through products or services - via their corporate annual reporting. But decent work extends beyond merely the number of jobs supported by a company. We must also consider the meaningful characteristics of those jobs – for example contract type informing job security, provision of living wage, or working conditions such as whether workers are free of discrimination and working environments are safe. Whilst it is relatively straightforward for investors to understand and measure the number of jobs created, a lack of corporate data on these more qualitative, meaningful characteristics creates a significant challenge for investors trying to understand the quality of work their investments are supporting.
Investors clearly have a role to play in furthering the goals set by the SDGs, by ensuring they understand the types of jobs created by their investment activities to enable capital allocation or engagement strategies that support decent work. Even before the COVID-19 pandemic, the question of how investments impact people was rising up the agenda. Investment managers have received increasing pressure from clients to report the social performance of assets. This has even been translated into the broadening of the definition of ‘sustainable’ investment, to include and extend beyond the delivery of a low carbon future.
Research commissioned by the Investment Leaders Group, convened by the University of Cambridge Institute for Sustainability Leadership, shows that when people have information about the sustainability of their holdings they make more sustainable investments. When shown information on how they are supporting decent work (alongside other social and environmental factors), individuals are more likely to choose products that avoid harming people or the planet. They would even choose more sustainable funds if it meant sacrificing 2-3% financial returns.
Investment can play a critical role in accelerating progress towards SDG8, decent work for all. Since COVID-19 has wrought havoc with already fragile livelihoods, it is ever more urgent that this is prioritised by investors and companies. As such, as part of an ongoing programme of work to measure investment impact, the Investment Leaders Group is exploring the key factors required to effectively measure and improve their impact on decent work, and to inform their clients about the labour conditions and number of jobs their money supports. Alongside the investment community’s exploration and pursuit of better ways to measure and report their impact on decent work, it is crucial that companies also disclose this information to enable good investment and positive social outcomes.
