Living wage commitments: how are leading companies progressing?

New ISEAL research shares insights from 14 global companies on the actions they are taking to ensure workers receive a living wage, the challenges they face, and how sustainability systems can help.

Over the last decade, the concept of a living wage has attracted growing attention. There’s been a big increase in the number of companies making commitments or taking action to ensure workers can afford a decent standard of living. But while paying all workers a living wage may seem like a simple goal, achieving it is anything but: from the complexity of global supply chains to the need for reliable data and the pressures of inflation, companies face multiple barriers on their living wage journey.

To better understand how businesses are approaching the topic of living wages, the challenges they face and the progress they are making, ISEAL spoke to 14 leading global companies that are active in this area. The insights we gleaned are collected in a briefing note, Understanding lead company engagements on living wages: a quick review. These interviews were part of a larger project we’re running with IDH to help sustainability standards and similar systems support credible supply chain action on living wages.

Commitments, claims and collaboration

All of the companies we spoke to are clearly passionate and ambitious about tackling living wage issues, though their approaches vary. While half had made a public commitments, others were focusing on internal strategies.

This is partly influenced by their position in the supply chain. Retailers are more interested in making public claims about their living wage commitments which can enhance their reputation. For upstream companies, however, public commitments may be more of a risk as they deal with variable costs and price pressures. This underlines the need for collaboration across the supply chain: no one actor should be responsible for all the costs of increasing wages, nor should they take the credit for a collective effort.

Similarly, there’s a need for collaboration between companies across sectors to level the playing field and develop systemic solutions. Many of the companies we spoke to are involved in industry collaborations, and found it rewarding to work as equals with companies usually considered competitors. This kind of pre-competitive collaboration can help tackle some of the practical challenges, such as the need for publicly available data on living wage benchmarks in different countries. Companies also highlighted the need for more streamlined, reliable assessment and verification of wages and wage gaps, and the need to raise awareness on living wage principles while also tackling sustainability issues holistically.

The role of sustainability systems

There was a shared appetite for collaboration with sustainability systems, although expectations vary depending on the scope of a company’s commitments. While paying a living wage to employees and direct suppliers may be relatively straightforward, some companies are dealing with tens of thousands of suppliers across multiple countries. Here, sustainability systems can play an important role in helping companies to deliver their commitments.

Companies are involved in working with sustainability systems on a range of living wage pilot projects. Partnerships between companies and sustainability systems on living wage issues are most developed in sectors such as apparel and certain agri-food commodities, notably tea, bananas and flowers.

Downstream companies we spoke to were keen for sustainability standards to provide more support on assurance, claims-making, measurement and reporting, and wanted to see more detail on wage issues in audits. They relied on sustainability systems for on-the-ground support with transparency and data collection. Producers, meanwhile, highlighted the role of sustainability systems in providing guidance and advice on dealing with customer expectations.

Our conversations with companies confirm that sustainability systems have an important part to play in enabling retailers, brands, supply chain companies and producers to achieve their living wage commitments. At ISEAL, we’re keen to support further innovation and collaboration to ensure all workers receive a living wage.