The Platform Living Wage Financials (PLWF) Annual Report 2023-2024 has examined progress in living wages and incomes in the clothing and footwear sector. Thirty-three companies were assessed, including Adidas, Asics, Esprit, Fast Retailing, H&M, Hugo Boss, Inditex, Kering, LVMH, Marks & Spencer, Nike, Primark, Puma and Zalando.
The finding showed that while many brands in the sector have committed to multi-stakeholder initiatives addressing living wages, there remains limited evidence of actual implementation. With five years remaining until the 2030 Sustainable Development Goals (SDGs) deadline, the report highlights the urgency for companies to move beyond political commitments and take measurable action.
Clothing and footwear sector: policy without effect
On the progress side, the report found that nearly three-quarters of assessed companies disclosed the names and locations of their Tier 1 supply operations, indicating progress in supply chain transparency. However, they should also start mapping and disclosing their supply chain beyond Tier 1 delivery operations.
It is similar to the fact that more than 80 percent of companies have provided evidence of a responsible purchasing policy and a third of these provided good examples of implementation. However, you will need to specifically explain how responsible purchasing practices have been put into practice.
Most brands also actively participate in multi-stakeholder initiatives such as ACT and the Fair Wear Foundation, which aim to promote living wages. “However, few companies have demonstrated measurable impact. For example, while responsible purchasing policies are becoming more common, there is limited information on whether these efforts have resulted in meaningful wage increases for workers,” the report says. Therefore, PLWF calls for greater transparency in working with suppliers and workers on living wages beyond multi-stakeholder initiatives to demonstrate the impact of joint action.
Although some progress has been made in remediation efforts, this remains a “key area” for improvement in terms of disclosure, according to the report. In addition, evidence is required that complaints are monitored and complaint categories must be disclosed.
There is also limited evidence of efforts to track the effectiveness of living wage policies. Here the report recommends disclosing the qualitative and quantitative indicators used to assess the closing of living wage gaps.
Last but not least, companies must also work to strengthen their living wage policies and public commitments to meet international living wage standards and relevant reporting requirements, as small gaps exist between company living wage policies and commitments and recent updates to global standards such as the ILO definition of the living wage, the EU-CSDDD, the EU-CSRD and the UN Global Compact Forward Faster Initiative.
“We see progress in the political commitments – but we want to help companies report more transparently on the wages actually paid and the location data of the supply chain. By changing the PLWF methodology, we have made our requirements more specific in terms of actual impacts. This allows us as investors to evaluate which companies are on the right track to closing the living wage gap and which are lagging behind. Without reliable data and joint efforts from various stakeholders, millions of workers will continue to earn poverty wages,” comments Petter Forslund, Engagement Manager at AP2, in a press release.
Company valuation
This year, business ratings increased the most in the areas of impact assessment, integration of results, remediation and transparency of the working group’s assessment methodology, reflecting a change in criteria that allows for more specific, evidence-based assessment and, in part, improved efforts by the Brands to effectively integrate responsible purchasing practices into their sourcing and purchasing functions.
In total, the 33 clothing and footwear companies were divided into five categories based on their rating: Leading (Puma), Advanced (Adidas, H&M, Primark), Maturing (Asos, Fast Retailing, Gildan, Hanesbrands, Hugo Boss, Inditex, Marks & Spencer). , PVH, Ralph Lauren, Lojas Renner), Devoloping (Asics, Burberry, Coats Group, Kering, Moncler, Next, Nike, Richemont, VF Corporation, Zalando) and Embryonic (Anta, Boohoo, Gap, LVMH, Prada, Shenzou, TJX).
“While only two companies (Marks & Spencer and Primark) have moved up in their category rankings this year, a third of the companies assessed have made progress within their existing group and almost two thirds of the companies assessed are now rated at Maturing or above,” says the report.
Call to action
PLWF and its members call on companies to take urgent action by setting time-bound goals to close wage and income gaps, publishing detailed roadmaps and regularly reporting on their progress. The Living Wage Financials platform also works with various stakeholders and organizations to further improve living wage progress.
“With the entry into force of the Corporate Sustainability Due Diligence Directive (CSDDD), companies will soon have a legal obligation to address human rights risks, including living wages, in their supply chains. This legislation provides an opportunity to hold companies accountable for their impact on workers and communities,” said Maarten Busch, RI & Sustainability Manager at VBDO.
The full PLWF annual report 2023-2024 can be downloaded from the website (livingwage.nl).