Rudolph Peterson, a 1925 UC Berkeley graduate,  former CEO of Bank of America and Administrator of the United Nations Development Programme.
Rudolph Peterson, a 1925 UC Berkeley graduate, former CEO of Bank of America, and Administrator of the United Nations Development Programme, pictured in 1970.

By Kate Alper, CRB Program Manager

The Peterson Series at the Berkeley-Haas Center for Responsible Business continues to initiate important conversations about business that extend well beyond the Berkeley campus. In February, we expanded upon topics featured in our fall and spring series at the Dialogue on the U.S. Government National Action Plan on Responsible Business Conduct at UC Berkeley.

This spring we turned our focus to the role of multinational corporations in improving human rights. Human rights and workers’ rights are viewed as top priorities by sustainability leaders and those working in corporate social responsibility (CSR), according to the 2014 annual State of Sustainable Business Survey released by Globescan and Business for Social Responsibility (BSR). During the most recent Peterson series discussions, we learned about three cutting-edge trends in CSR that are changing the way companies approach worker well-being:

  1. Companies leading in CSR have implemented programs that support a living wage for workers.
  2. Investors play a growing role in mitigating human rights and labor rights risks for the companies that they own.
  3. Apparel industry brands are monitoring worker well-being further up the supply chain.

We gained new insight into how companies can have a positive impact on human rights from executives at Levi Strauss & Co., Calvert Investments, PACT, IKEA, and Fair Trade USA, as well as thought leaders from BSR and the Sustainable Apparel Coalition.

Companies are Implementing Living Wage Programs 

A move on Capitol Hill in April 2015 to raise the minimum wage to $12 by 2020 brought attention to the increasing demand for U.S. multinational corporations to boost hourly wages. Wal-Mart, McDonald’s, TJX Cos., and Aetna made headlines in 2015 by pledging to increase hourly wages for their employees. These initiatives are a big step towards supporting worker well-being, but are they enough? “The minimum wage is supposed to be a living wage that allows people to live a reasonable life, even if that’s not the case for application of minimum wage around the world,” observed Roger McElrath of BSR. “The responsibility of a living wage can fall on the government initially due to a government mandated minimum wage.” While a living wage for individuals and their families is a goal that many employers still fall short of, both in the United States and internationally, a growing number of companies are beginning to tackle this challenge.

Several CSR leaders, including IKEA, Novartis, Nestle, and H&M, are going beyond raising the minimum wage for workers and implementing programs that support a true living wage. Last year IKEA announced a new living wage policy for its U.S. employees based on a living wage calculator developed at MIT. Beginning in 2005, Novartis led the development of a global living wage for the workers it employs directly, although this policy does not flow through its entire supply chain for factory workers employed by third parties. Currently, all eyes are on H&M, which recently implemented an aggressive plan with a stated goal to achieve a “fair living wage” for 850,000 textile works by 2018. Those within the apparel industry are closely watching to see how H&M succeeds within its highly complex supply chain, which is supported by third party contractors.

Paul Rice speaks about Fair Trade USA, which ensures a decent living wage to workers, and how leading minds are promoting transparent supply chains.

Corporate Support for Worker Well-Being Impacts Investors

As standards and frameworks to address human rights risks become widely available, investors are increasingly using them to assess risks to their portfolios as part of their investment decisions. The Corporate Human Rights Benchmark (CHRB), which met for the first time in Geneva last December, is developing methodologies to evaluate and rank up to 500 global companies on their human rights performance, including policies, programs and impacts. Investors are already intervening in corporate human rights performance, persuading Wal-Mart to make a public commitment to raise worker’s wages in the U.S. and applying pressure behind the scenes with McDonald’s lobbyists acting against minimum wage increases. Companies can expect investors to play an even larger role in influencing the mitigation of material human rights risks, as more assessment tools become available.

Bennett Freeman addresses the materiality of human rights risks and how the impact from responsible investment is being measured.

Shifting from an Attitude of Compliance to Improving Worker’s Lives

Although specific incidents continue to raise the issue of factory compliance, including last week’s fire killing 72 workers in the Philippines, the apparel industry has made much progress in this past twenty years to address worker well-being. Brands and retailers launched an aggressive compliance mindset in reaction to revelations of child labor issues in the late 1990’s, and companies in partnership with civil society organizations and industry collectives began changing working conditions. Today, responsibilities for many companies now go beyond first tier suppliers and corporate sustainability teams are accountable for issues further up the supply chain. Michael Kobori of Levi Strauss and Co. cited the example in April of cotton fields in Uzbek, where Levi’s is now involved. The apparel industry now has collective experience in addressing human rights concerns within a supply chain, and industry leaders such as Patagonia and PACT continue to drive improvement, but all acknowledge there is more to be done.

Hear from Marianne Barner, Social Impact Fellow at Berkeley-Haas, about championing child labor issues at IKEA.

Stay Tuned 

The United Nation’s Universal Declaration on Human Rights states that, “everyone who works has the right to just and favorable remuneration ensuring… an existence worthy of human dignity.” While more companies are promoting policies and practices that safeguard human rights, and their work can be emulated, we are far from achieving a global living wage or a minimum wage that promotes worker well-being. Companies and investors can do more to address human rights concerns and move towards proactive programs that improve workers’ lives. Please join us, beginning in September, for our fall Peterson Series as we engage with new topics in sustainable and responsible business. Check the Center for Responsible Business website for more details.