Aug 214 min read

An A-Z of Sustainability: L is for Labour Rights

We’re back to the social side of the sustainability agenda for this week’s article, looking at the topic of labour rights. This is an area that external stakeholders will consider as part of your sustainability agenda, but internally it is likely to be very much the domain of HR, although it does extend into the supply chain, so procurement teams should also have an interest to.

So, what do we mean by “labour rights”? It’s all the people-related aspects in your business: working conditions, equal treatment and opportunities, as well as aspects such as child labour, forced labour and privacy. We’ve covered some of these topics in previous articles, notably “D is for Diversity, Equity and Inclusion” and “H is for Health and Safety” so won’t go back into details on those, but I’ll highlight a few of the areas not yet touched on and some specific pieces of legislation that are increasing focus on this area further.

With regards to working conditions, this breaks down into areas such as security of employment, working hours, adequate wages, employee engagement, freedom of association, collective bargaining, work-life balance and health and safety. You should have policies in all these areas and take steps to ensure the reality matches the policy intent with key metrics able to be reported to demonstrate this. Often this is where the gap is. Policies have been written and signed off at the top level in the organisation, but if you don’t monitor and take corrective action as needed then they are not really worth the paper they are written on. Managers need to be trained on the policies and what it expected of them to abide by them. Employees similarly should know what their expectations should be of the organisation in these areas.

Whether you are just doing the minimum, e.g. paying the minimum wage, or whether you go further, such as paying a living wage, will depend on what you see the risks are to your business and how you see the different issues. It’s tempting to think that this is all obvious stuff and not needing to be managed, but the reason that legislation exists in these areas is because historically employees have been unfairly treated, some would even say exploited. This also crosses over into the business culture, particularly when thinking about work-life balance and working hours. Your policy may say state that you pay attention to work life balance, but is the day-to-day experience in line with that? Do your managers regularly send emails at weekends and in the evening? Do they expect a reply or praise those that do?

One particular focus currently of regulators in the UK is sexual harassment in the workplace. In October 2024 the Worker Protection Act will come into force, amending the 2010 Equalities Act with regard to sexual harassment. It was estimated in 2018 by the Equality and Human Rights Commission that 2 in 5 women and 1 in 5 men have been the subject of workplace sexual harassment and it is suggested that things have not improved since then. One important aspect of the new legislation is that companies will have to take “reasonable steps” to prevent sexual harassment, it will not be enough to deal with it if it happens. This includes developing comprehensive policies distinct from general discrimination policies, defining sexual harassment clearly, and leaving no room for ambiguity. The approach is expected to be tailored to the organisation with risk assessments to identify roles and situations that may be more susceptible and specific measures to address these risks implemented. Regular training of new and existing employees in this area is expected. Failure to take reasonable steps at prevention will result in higher compensation awards in successful employment tribunals.

Another piece of legislation that has increased focus on the labour rights topic is the EU Corporate Sustainability Reporting Directive (CSRD) which has come into force this year. You can read more about the CSRD in previous articles on our Insights page, but amongst other things it sets out an expectation to report more fully on labour rights topics where they are deemed material issues for the business. There are a series of European Sustainability Reporting Standards that have been designed to help companies meet the CSRD and ESRS S1 is all about those aspects that affect your own workers. CSRD requirements also require you to examine risks with your suppliers and ESRS S2 details these requirements in more detail.

Even if you are not affected by the EU CSRD, the two reporting standards are worth looking at as they provide a good checklist of areas to consider, reflecting what external stakeholders want to see in disclosures in this area. This trend towards understanding better the risks in your supply chain is increasing and is something I’ll come back to in a later article. Your procurement team will need to become more knowledgeable in this area and it is something that you as a sustainability lead will need to pay more attention to and support them.

Whilst your HR team are likely to be leading on all the internal people aspects, you need to be aware of what reporting is required and understand those aspects that investors and rating agencies will be interested in as part of your overall sustainability reporting. The folks at CEN Group can help you assess where any gaps are in your current disclosures and help guide you through the evolving regulatory requirements and increasing expectations in this area.

About the Author

Chris is a senior strategic leader with over 25 years’ commercial experience including sales, marketing, strategic planning and major business change initiatives at AkzoNobel and ICI. He has a wide knowledge of sustainability and how to integrate this into business having held senior sustainability roles at AkzoNobel for 12 years, including as Global Sustainability Director Decorative Paints and AkzoNobel Planet Possible Programme Manager. Chris is now an independent sustainability consultant and a pension trustee director.