Within the Platform Living Wage Financials (PLWF), one of the main means of stimulating companies’ progress on living wage and living income is by assessing our investee companies against a robust assessment methodology. 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.
The assessment methodology for the food retail sector can be accessed here. It follows the structure of the garment & footwear methodology that has been developed with accountant Mazars and is aligned with the UN Guiding Principles Reporting Framework.
This section further describes the structure and aims of the methodology.
Why did the PLWF base the methodology on the UNGP Reporting Framework?
The United Nations’ Guiding Principles (UNGPs) and the related Reporting Framework have become the authoritative guidance and best practice for companies to address their respect for human rights on the most salient issues. Given that the PLWF believes that living wage / income constitutes a salient issue for the companies we engage with, we have taken this opportunity to closely align our methodology closely with that of the UNGP Reporting Framework. Parts C1 to C6 of the UNGP Reporting Framework set out a logical process for brands to follow in order to best address and positively impact the facilitation of living wages and incomes.(1)
Why has the PLWF assessment methodology changed over time?
Some aspects of the assessment methodology have become stricter over the years, as best practice continues to evolve. The changes made to the methodology reflect the PLWF’s ambition to raise the bar and encourage further progress in the sector. For example, in 2020 we shifted focus from policy disclosures to showcasing performance and impact on the ground. Methodology upgrades for the garment and footwear methodology are carried out in collaboration with an external accountancy firm to ensure a robust process whilst remaining true to the UNGPs.
Do you ask the companies you engage and assess to follow a particular living wage or living income benchmark?
The PLWF does not stipulate which living wage or living income benchmark companies should follow or what the appropriate wage rate or income per region is. The main objective of our work is to ensure that each company has adequate policies, procedures and processes in place to be able to determine whether its suppliers facilitate a living wage or income and, if they do not, what steps need to be taken to progress toward it.
Do you ask the companies to fill in the assessment methodology for you?
No. It is not our aim to increase the workload of investee companies. Therefore, the assessments are conducted by expert analysts from among the PLWF members based on the information that is available in the public domain as well as any additional insight gained from our direct engagement with the investee companies. Given that living wage / income should be a salient issue (2) for most of the brands under engagement, the information we require should already be publicly reported. However, we recognize that meaningful reporting on human rights is in its infancy. Accordingly, as part of the process for obtaining relevant information to rate these companies, we are contacting the companies on an individual basis to request information that we were unable to find in the public domain. This will help us to gain a better understanding of where these companies stand on their journey to enabling living wages or incomes. If relevant, we also use data supplied by our research providers and there is an ongoing consultation with relevant stakeholders, such as multi-stakeholder initiatives and NGOs.
Does the assessment have any broader objectives, beyond the promotion of living wages and incomes – and related human rights?
We believe that the PLWF assessments contribute to establishing a new standard for evaluating social factors (the ‘S’ of ESG) by measuring companies’ performance and real world effects and eventually creating more relevant data on the ‘S’ in the public domain. As often highlighted, investors are in a unique position to identify and reward companies with strong social performance. When being equipped with reliable, accessible information, they can create incentives for companies across an industry to improve their social performance.
1 See www.UNGPreporting.org, co-authored by Mazars and Shift
2 For a definition of ‘salient’ human rights issues, see www.UNGPreporting.org