Sustainability is more than just climate change – it’s also about protecting the social fabric of society. And that means companies should go further than meeting a legal minimum wage and embrace the concept of fair wages, says Professor Daniel Whitehead-Vaughan.
Professor Daniel Vaughan-Whitehead
Founder and co-chair of the Fair Wage Network
Sustainable investing means looking at the environmental, social and governance (ESG) credentials of companies. Much of the focus in recent years has been on the E, as the world battles global warming, and the G, as investors demand more sustainable governance at companies and countries.
There has been less attention paid to the S, and particularly the social consequences of low pay, says Professor Whitehead-Vaughan. He is the founder and co-chair of the Fair Wage Network, a non-profit organization focused on sharing, aligning and promoting wage-related research, methodologies and best practices. The Geneva-based group also engages in direct consulting with corporations and their supply chains worldwide.
“Fair wages are those that cover the real cost of an employee’s basic needs while also respecting the economic constraints of employers,” says Professor Whitehead-Vaughan, writing as a guest author in the RobecoSAM Yearbook 2019. “Moreover, for many industries, this involves not only evaluating their own wage practices but also being a ‘fair-wage’ champion and resource for the companies within their supply chains.”
Using case study evidence, he demonstrates why addressing compensation using a fair wage approach is beneficial for employee well-being. It also improves company profits and helps respective supply chain partner achieve more sustainable outcomes. Investors can also contribute in their role as active owners, he says.
“Investors, concerned about protecting not only the Earth’s natural resources but also its human resources, should push global companies for more accountability, transparency and action when it comes to fair wages and compensation for employees and their dependents,” he says.
Professor Whitehead-Vaughan presents some ‘startling statistics’ to back up his case. He says the number of people in ‘vulnerable employment’ – defined as those lacking formal work arrangements, having inadequate earnings or difficult working conditions – is an incredible 42% of the total global workforce. This now affects 1.4 billion people, a figure that is growing at a rate of 11 million a year.
Half of these are the ‘working poor’, defined as those earning below US 3.10 a day in terms of purchasing power parity, mainly in emerging and developing countries. Legislated minimum wages have improved things in some countries, but there remains a gap with real living costs, he says.
“The main problem is that [minimum wages] are not fixed systematically at the living wage threshold, but are rather a threshold borne out of political compromise between governments, trade unions and employer organizations, based on prevailing ‘economic and social considerations’,” he says.
“As a result, the minimum wage is often much lower than the living wage. The gap between what workers earn as a minimum wage and what they actually require to support the basic needs of themselves and their families is stark. Unsurprisingly, the gap is higher in regions with weak labor institutions; among these, Africa, the Middle East and Russia stand out.”
To address the imbalance, the Fair Wage Network has established a methodology to calculate what it should be. “Transparent thresholds and standardized benchmarks can be established which can be used to compare wages of companies, for instance, along a supply chain,” says Whitehead-Vaughan. “The importance of common standards, unified methodologies and analyses tools have also been recognized by other groups seeking progress and equality within worldwide wages.”
The contents of this document have not been reviewed by the Securities and Futures Commission ("SFC") in Hong Kong. If you are in any doubt about any of the contents of this document, you should obtain independent professional advice. This document has been distributed by Robeco Hong Kong Limited (‘Robeco’). Robeco is regulated by the SFC in Hong Kong.
This document has been prepared on a confidential basis solely for the recipient and is for information purposes only. Any reproduction or distribution of this documentation, in whole or in part, or the disclosure of its contents, without the prior written consent of Robeco, is prohibited. By accepting this documentation, the recipient agrees to the foregoing
This document is intended to provide the reader with information on Robeco’s specific capabilities, but does not constitute a recommendation to buy or sell certain securities or investment products. Investment decisions should only be based on the relevant prospectus and on thorough financial, fiscal and legal advice. Please refer to the relevant offering documents for details including the risk factors before making any investment decisions.
The contents of this document are based upon sources of information believed to be reliable. This document is not intended for distribution to or use by any person or entity in any jurisdiction or country where such distribution or use would be contrary to local law or regulation.
Investment Involves risks. Historical returns are provided for illustrative purposes only and do not necessarily reflect Robeco’s expectations for the future. The value of your investments may fluctuate. Past performance is no indication of current or future performance.
Please read this information carefully.
This website is prepared and issued by Robeco Hong Kong Limited ("Robeco"), which is a corporation licensed by the Securities and Futures Commission in Hong Kong to engage in Type 1 (dealing in securities); Type 4 (advising in securities) and Type 9 (asset management) regulated activities. This website has not been reviewed by the Securities and Futures Commission or any regulatory authority in Hong Kong.
2. Important risk disclosures
Robeco Capital Growth Funds (“the Funds”) are distinguished by their respective specific investment policies or any other specific features. Please read carefully for the risks of the Funds:
3. Local legal and sales restrictions
The information contained in the Website is being provided for information purposes.
Neither information nor any opinion expressed on the Website constitutes a solicitation, an offer or a recommendation to buy, sell or dispose of any investment, to engage in any other transaction or to provide any investment advice or service. The information contained in the Website does not constitute investment advice or a recommendation and was prepared without regard to the specific objectives, financial situation or needs of any particular person who may receive it. An investment in a Robeco product should only be made after reading the related legal documents such as management regulations, prospectuses, most recent annual and semi-annual reports, which can be all be obtained free of charge at www.robeco.com/hk/en and at the Robeco Hong Kong office.
4. Use of the Website
The information is based on certain assumptions, information and conditions applicable at a certain time and may be subject to change at any time without notice. Robeco aims to provide accurate, complete and up-to-date information, obtained from sources of information believed to be reliable. Persons accessing the Website are responsible for their choice and use of the information.
5. Investment performance
No assurance can be given that the investment objective of any investment products will be achieved. No representation or promise as to the performance of any investment products or the return on an investment is made. The value of your investments may fluctuate. The value of the assets of Robeco investment products may also fluctuate as a result of the investment policy and/or the developments on the financial markets. Results obtained in the past are no guarantee for the future. Past performance, projection, or forecast included in this Website should not be taken as an indication or guarantee of future performance, and no representation or warranty, express or implied, is made regarding future performance. Fund performance figures are based on the month-end trading prices and are calculated on a total return basis with dividends reinvested. Return figures versus the benchmark show the investment management result before management and/or performance fees; the fund returns are with dividends reinvested and based on net asset values with prices and exchange rates of the valuation moment of the benchmark.
Investments involve risks. Past performance is not a guide to future performance. Potential investors should read the terms and conditions contained in the relevant offering documents and in particular the investment policies and the risk factors before any investment decision is made. Investors should ensure they fully understand the risks associated with the fund and should also consider their own investment objective and risk tolerance level. Investors are reminded that the value and income (if any) from shares of the fund may be volatile and could change substantially within a short period of time, and investors may not get back the amount they have invested in the fund. If in doubt, please seek independent financial and professional advice.
6. Third party websites
Following links to any other off-site pages or websites of third parties shall be at the own risk of the person following such link. Robeco has not reviewed any of the websites linked to or referred to by the Website and does not endorse or accept any responsibility for their content nor the products, services or other items offered through them. Robeco shall have no liability for any losses or damages arising from the use of or reliance on the information contained on websites of third parties, including, without limitation, any loss of profit or any other direct or indirect damage.
7. Limitation of liability
Robeco as well as (possible) other suppliers of information to the Website accept no responsibility for the contents of the Website or the information or recommendations contained herein, which moreover may be changed without notice.
Robeco assumes no responsibility for ensuring, and makes no warranty, that the functioning of the Website will be uninterrupted or error-free. Robeco assumes no responsibility for the consequences of e-mail messages regarding a Robeco (transaction) service, which either cannot be received or sent, are damaged, received or sent incorrectly, or not received or sent on time.
Neither will Robeco be liable for any loss or damage that may result from access to and use of the Website.
8. Intellectual property
All copyrights, patents, intellectual and other property, and licenses regarding the information on the Website are held and obtained by Robeco. These rights will not be passed to persons accessing this information.
10. Applicable law
The Website shall be governed by and construed in accordance with the laws of Hong Kong. All disputes arising out of or in connection with the Website shall be submitted to the exclusive jurisdiction of the courts of Hong Kong.