Week of 24 January 2022
Can companies cure their dismal results on social performance?
Our key takeaway: The World Benchmarking Alliance finds that the most influential 1,000 companies are performing poorly on human rights due diligence, decent work and ethical conduct. This seems like a half-empty glass, but WBA believes it should spur all of us to action: “[F]or each step needed there are companies displaying good practices, showing that this transformation is not just necessary, but also possible.”
The World Benchmarking Alliance’s (WBA) Social Transformation Baseline Assessment provides “a global state of play focused on three themes of respect for human rights, decent work and ethical conduct, looking at 1,000 key companies across more than 60 countries”:
- Only 1% of companies meet fundamental expectations: Of the 1,000 companies assessed across sectors, only 1% are meeting the majority of the fundamental expectations on human rights, decent work and ethical conduct, scoring above 15 points out of 20. Conversely, around half of all the scored companies received scores between 0 and 5 points out of 20. WBA states that there is still some optimism among the results: “Each of the CSI [core social indicator] requirements was met by at least one company in full. This means that for each one of these fundamental expectations, we found companies that demonstrate examples of good practice.”
- On human rights, voluntary approaches are not cutting it: 78% of companies across 68 countries and 26 industries scored 0 on all of WBA’s indicators for human rights due diligence (measuring companies’ policy commitments and processes to identify and assess human rights risks, integrate and act on these risks, engage with stakeholders, ensure access to remedy and establish grievance mechanisms). 7% met all requirements. 55% of companies have public-facing human rights policy commitments, but many are lacking in scope. For example, only 33% of companies commit to respect all ILO fundamental rights at work and 27% of companies have a commitment to respect freedom of association and collective bargaining. Meanwhile, a limited number of companies describe their human rights risk assessment processes in their own operations and in their value chain, and even fewer companies provide details on how they integrate and act on findings of their assessments and which stakeholders they engage with (and how). That said, 66% of companies have at least one channel for workers to raise concerns, and 55% have a channel for those outside the company to raise concerns. Per WBA, these findings show that the “limits of market-based and non-legislative approaches to improve corporate respect for human rights are clear, and mandatory HRDD is necessary to close the accountability gap.”
- Living wage remains one of the biggest gaps in ensuring decent work: Companies only met around 20% of the total requirements for the decent work indicators (including living wage, health and safety, working hours, collective bargaining, diversity disclosure and gender equality). WBA highlights the failure of companies to pay living wages: “only 4% of companies had targets, or claimed to pay workers a living wage already. In addition, only 4% of companies limited working hours, and only 4% of companies showed they understood pay inequalities by disclosing gender pay gaps for employee categories. No company did all of these things.” This is a particularly concerning finding because living wages are “critical to decent work, an enabler for multiple SDGs and a key issue for companies that want to help address the systemic risk of social inequality.”