Katie Burton talks to ShareAction’s Clare Richards about the Workforce Disclosure Initiative, supported by over 100 investors, which is pushing for meaningful data on how workers are treated in global supply chains
More than 100 institutional investors, which together manage $12trn in assets, have sent a survey to 500 companies demanding that they disclose detailed information on how they manage their global workforces.
The investors, including Schroders, AXA Investment Managers, Legal and General IM and UBS, have put their names to ShareAction’s Workforce Disclosure Initiative, a 42-page survey that asks detailed questions about the management of employees both in companies’ own operations and in their supply chains. Companies have until 22 October to respond. The initiative ultimately aims to improve the quality of jobs and contribute towards Sustainable Development Goal eight, on decent work for all.
Clare Richards, who is managing the Workforce Disclosure Initiative (WDI) for responsible investment charity ShareAction, says reporting of workplace management to date has been patchy, with most companies reporting on the things that are easiest to quantify, or which they are legally obliged to reveal, while avoiding more challenging issues.
“Investors were increasingly expressing a bit of exasperation that they didn't have access to information in public reports that actually enabled them to have meaningful conversations with companies – to be able to distinguish what ‘good’ actually looks like,” says Richards.
There would be more reporting of the obvious things ... but less on who is accessing training opportunities
“There would be more reporting of the obvious things, like occupational health and safety, because there are particular legal requirements there,” Richards says. “But less on who is accessing training opportunities, who has been recruited and who is progressing within the organization or how they're managing things to do with health and wellbeing. A particular blind spot was connected to mental health.”
ShareAction, which aims to create an investment industry that is a force for good, employs a range of techniques, mobilizing the ordinary saver as well as large institutional investors.
Richards explains that 500 companies were chosen to receive the survey on the basis of their market capitalization and their significance within their sector. Overall, 11 sectors were covered across 30 countries. Companies include Amazon, Adidas, Facebook, General Motors, McDonalds’s, Nike, Sky and Tesla.
Questions include contract terms and amendments, contingent workers, gender and diversity policies, wage levels, pay ratios, training opportunities, occupational health and wellbeing programmes. They cover both internal operations and supply chain structures.
Richards says the WDI hopes that bringing all these questions within one request for information will prevent “reporting fatigue” and encourage response. The pilot version of the WDI, carried out in 2017, was sent to 76 multinational companies and received a 45% response rate.
Most companies pointed to policies related to the workforce but few relayed any actual actions taken
This year, ShareAction has taken on feedback from the pilot and introduced new features, including a tiered disclosure system in which companies can choose to disclose a full set of answers or a more limited version. The charity hopes that these extra options will encourage companies that aren’t yet at the top level in terms of non-financial reporting.
ShareAction recorded a number of findings from the pilot, one of which was that disclosing companies provided more workforce data to the WDI than they routinely provide in their public reports, suggesting that the initiative could prove a useful source of additional information.
Less positively, the majority of responses indicated a lack of senior governance and oversight of workforce issues. Supply chain disclosure was also weak, partly because many companies outsource workplace monitoring. The pilot summary also notes that, perhaps predictably, most companies pointed to policies and commitments related to the workforce but few relayed any actual actions taken to implement those policies.
The future of the WDI is yet to be decided. For now, ShareAction is aiming to collect a large set of data so that investors are able to make comparisons between sectors and between jurisdictions. “That will really be when the WDI matures and can be translated into the kind of investment decisions that give due credit to the companies that are making greater efforts on these things,” says Richards.
More widely, the charity hopes that the survey will encourage companies to be more proactive about workers’ rights, rather than simply react to changes in the law. “It should be about looking at risks holistically and asking where we can enhance what we're doing to maximize the benefits we bring to the business and to the people working in those supply chains, in the factories and on shop floors.”
The biggest challenge going forward will be translating the data into action. As ShareAction’s summary of the pilot notes: “In the coming years, a key measure of success will be in companies not just disclosing more data but in showing an evolution in their approach to workforce management and improved outcomes as a result.”