Core labour rights, as defined by the International Labour Organization, cover five principles: freedom of association and effective right to collective bargaining, elimination of all forms of forced or compulsory labour, effective abolition of child labour, elimination of discrimination in respect of employment and occupation and occupational health and safety.
There is a sharp contrast between (i) the fairly robust and comprehensive normative framework at the international level (ILO Declaration, UN Charter, UN & OECD Principles, SDGs, SFDR) and (ii) the lack of ownership by companies and institutional investors of the mechanisms necessary for its implementation.
This is all the more striking when compared to the many initiatives related to the environment, climate and more recently biodiversity.
Using the European two-tier definition of sustainable investment – “contribute to” a given development objective and “do no harm” to any other development objective – core labour rights are poorly treated with regard to the first level, that of effective “contribution”. In Europe, the absence of a social taxonomy, equivalent to the environmental taxonomy in force, considerably reduces opportunities for that to happen.
The only perspective is that of the “do no harm” approach, that is the minimalist one, aiming at identifying companies that do not comply with the basics. And even so, it would still be necessary to work on a homogeneous and comprehensive approach for “determination” and what actually amounts to a violation or non-compliance.
In terms of substance and the way forward, the following can help build a more robust labour rights agenda within responsible investment frameworks:
- Full accountability of boards, both those of institutional investors and of the companies invested;
- Evidence on implementation mechanisms, at all levels of management (within the perimeter of the firm), in supply chains and, upstream in the investment chain, shareholder activism and asset manager – asset owner relationships.
- A consistent, universal and transparent process for determination of non-compliance with the UN and/or OECD Principles.
- Performance indicators on the quality of social dialogue and industrial relations that are fit for purpose and adapted to national context. The very wide diversity of national systems, particularly between common law countries and civil law countries, does not make the task any easier.