Under the umbrella of the PLWF, financial institutions come together to encourage, support, assess, and monitor investee companies with regard to their commitment to enable living wages and incomes for workers in their supply chains.
Meaningful engagement
We seek to have a real impact and look for meaningful engagement. We see meaningful engagement as a collaboration between companies and investors. We cannot expect individual companies to solve a systemic issue such as living wage and income on their own, which is why we take a sector-wide approach. We engage with more than 30 listed garment and footwear brands and over 20 food producing and food retail companies, and seek to expand our reach in these sectors even further to promote sector-wide change.
By guiding and assessing companies on living wages and incomes in their direct operations or supply chains and building a ‘benchmark’ to determine which companies have been leading on the issue and which need to do more, we aim to motivate the ‘laggards’ to follow their better-performing peers. We help investee companies to become aware of the issue and put it on their corporate agenda. In addition, we stimulate intra-sectoral and intersectoral learning.
We find it important to educate ourselves on the topic, so that we are well equipped to have constructive dialogues, truly understand underlying challenges and guide companies where needed. We regularly invite external experts to our platform meetings and sector-specific working group meetings to update us on their work, sector developments and so on. In addition, we have active relationships with a group of ‘Friends of the Platform’ consisting of industry experts, multi- stakeholder initiatives, NGOs and other relevant stakeholders. They inform our strategies and we consult them to determine focus areas.
Where dialogue with companies is insufficient, we believe it is important to take more assertive steps to achieve our objectives. We have asked questions during company AGMs and addressed escalation letters to company boards. Five years into the collaboration, we are now looking into using other escalation mechanisms to increase our leverage further. Lastly, we make sustainable investment decisions based on (the lack of) progress subject to individual choices and policy preferences of each Platform member.
Assessing companies
The PLWF members annually review investee companies’ performance on living wages and incomes. This is a core element of our meaningful engagement approach. Measuring and monitoring progress provides us with valuable insights into where companies stand on their journey to implementing living wages and incomes and informs our engagement talks. We recognize that companies are unlikely to implement living wages and incomes in the short term. Closely following the steps that they take allows us to guide and encourage them to implement adequate measures.
Living wage assessment methodology for the garment and footwear sector has been developed with accountant Mazars and is aligned with the UN Guiding Principles Reporting Framework. The methodologies for the agrifood and food retail sectors follow a similar structure.
We do not publicly communicate the exact scores per company, as we do not aim to create another benchmark and believe this does not help the payment of living wage. Instead, we are grouping the companies into five categories based on where we perceive them to be on their journey to implementing living wage. This gives us a good overview of where the sector is as a whole and where we would like it to go. These five categories are ‘embryonic’, ‘developing’, ‘maturing’, ‘advanced’, and ‘leading’. We annually report on key takeaways and aggregate results per sector in our Annual Report.
PLWF benchmark categories
Embryonic: The company barely recognises the importance of living wage / income and has not articulated the benefits for itself or for the people who are committed to making the products for the company.
Developing: The company recognises that the payment of a living wage / income is an issue, but it has no formal process to tackle it within its own manufacturing arms or those within its supply chain, and there is little evidence of improvement.
Maturing: The company recognises that the provision of a living wage / income is a salient issue and has in place formal processes to address it. There is evidence of improvement in high risk areas.
Advanced: The company believes that provision of a living wage / income is a salient issue and is important for its wider strategic intent. It has effective processes in place to ensure progress to a widespread provision of a living wage / income in its own manufacturing arms or those within its supply chains.
Leading: The company acts in the true spirit of the UN guiding principles, namely that living wage / income as a human right risk is being mitigated. The company makes clear what processes need to be adjusted in case chosen actions do not have a mitigating effect. The company is seen as a leader and acts as a catalyst for other businesses that strive to enable the provision of a living wage / income.
Thought leadership
The PLWF wants to contribute to sector-wide progress and lifting the level playing field wherever it can. In addition to directly engaging investee companies, we therefore act as ambassadors for living wages and incomes more broadly. We leverage our leadership to grow awareness among the civil society and help create a critical mass of actors willing to drive change. For example, we encourage our external asset managers to act on this topic, and signed a letter initiated by Fairphone calling on the EU to include living wage and income in the EU Directive in a meaningful way.
External asset managers
Some of the PLWF members’ assets are managed by external asset manager instead of directly by themselves. We hold regular conversations with external asset managers highlighting that living wage and living income are centrally important to the PLWF members and their clients; and encouraging them to act on this topic. See for example this letter from 2019. By doing so, we aim to promote living wage and living income beyond our company engagements and maximize our impact. Over the past years, we have had fruitful discussions with external managers, which in some cases resulted in them committing to the issue and even becoming new members to the Platform.