The quest to maximise profit still pits corporations against rights and sustainability



Labour has been a supporter of the Global Reporting Initiative (GRI) from the outset.

Our representatives have worked hard over the years: in the GRI Governance Bodies – the Board, the Technical Advisory Committee and the Stakeholder Council – as well as in the G4 Working Groups.

Notwithstanding the legitimacy of the GRI and the improvements made in the new “G4” to deliver more strategic sustainability reports that are focused on those impacts that matter most to people and the planet, the reality is that the short-term quest to maximise profit pits corporations against rights and sustainability.

Despite the risk of climate catastrophe, the corporate opposition to a price on carbon or industry policy-based subsidies for start-ups in new energy – let alone the major fossil fuel giants fight against a comprehensive climate agreement – is without moral or sustainability virtue.

Yet many of the same major companies file their sustainability reports without conscience. And their approach to the workers whose labour fuels their profits is criminal.

Ask any CEO if they would like their sons or daughters to work in the textile factories in Pakistan, the mines in the Congo, manufacturing plants in Central America, or as beer women in Cambodia, and they shudder.

But at the same time they allow the willful perpetuation of these horrors in the supply chains of their corporations.

The model is neither humane nor sustainable.

Yet many corporations promote their practice as responsible. Just check the sustainability reports of the retailers that sourced from Rana Plaza in Bangladesh.

There can be no more excuses, no more deaths from fire, occupational injuries or disease, no more work-related poverty and no more denial of human and labour rights.

It is time to move beyond volunteerism to compliance. If corporations don’t integrate labour rights and environmental standards into their core business model, then the rule of law must be effective enough to ensure compliance.

Globalisation in the manufacturing and service industries began to accelerate sharply in the 1980s as advances in communications and transport technology enabled companies to begin exploiting the vast global workforce on a scale which was previously impossible.

Firms adopted business models based on locating production in countries where labour laws are weak, virtually non-existent or poorly enforced, and thus workers are effectively blocked from organising unions and engaging in collective bargaining with employers.

The global supply chain has become the means by which international brands maximise their revenues by continuously seeking an edge on their competitors by driving production costs ever lower.

While the globalised business model continues to provide vast profits for companies, it comes at a tremendous cost to working people and to the economies of many of the poorest nations.

The backwash of low-wage competitiveness can now be seen in the attacks on rights and collective bargaining in Europe, and along with the anti-union orthodoxy in the US, is not just morally wrong but counterproductive to sustainability.

Multinational companies, forced to find new ways to protect their business model, turned to nascent corporate social responsibility initiatives to absorb and deflect public concern, without making any fundamental change to their way of organising production.

The failure of governments to protect workers’ rights in the global economy has left a yawning gap of regulation and has helped spawn an $80 billion dollar industry in corporate social responsibility (CSR) and social auditing.

The vast evidence from this industry shows that CSR has protected business and failed workers and sustainable economies.

The most effective protection for workers is freedom of association, the right to join a union and to bargain collectively for fair wages and safe and reasonable conditions.

Where those rights are enshrined in law with strong grievance procedures, workers can fend for themselves.

Yet the experience of the last two decades of the “privatised regulation of ’CSR’ ” has eerie parallels with the financial self-regulation that brought our economies close to the brink of collapse in 2007, plunging the world into recession.

The reality is all too stark for the families of the workers who have lost their lives in factory fires and building collapses in Pakistan, Bangladesh and Cambodia.

In 2012, a fire at the Ali Enterprise garment Factory in Karachi killed 300 workers.

This factory was certified as safe only three weeks earlier, by a private inspection agency using SAI standards.

In Bangladesh, the recent disaster has seen the death toll rise to more than 1200 to date.

It’s tragic that it took the loss of these workers’ lives to motivate companies to negotiate and sign a Fire Safety Agreement with the Global Unions IndustriALL and UNI. Even then, companies like GAP – which promotes itself as responsible – lobbied European companies not to sign up. As for Walmart - enough said!!

These tragedies, or similar, exist in too many countries at the hands of too many companies.


There are, however, some shifts, but the jury is out on the corporate will to heed such or of timid governments to ensure compliance.

- The endorsement by the United Nations Human Rights Council in 2011 of the “UN Guiding Principles on Business and Human Rights” establishing that all companies have a responsibility to respect human rights and to conduct human rights due diligence, including in the global supply chain. This responsibility is not voluntary. Nor is it limited by legal ownership or the company’s “sphere of influence”. Rather, a company’s responsibility is determined by its impacts throughout its activities and relationships.

- The 2011 Update of the OECD Guidelines for Multinational Enterprises similarly extended the scope of responsibility to companies’ impacts in their global supply chains and business relationships, bringing millions of workers without direct employment contracts, under the protection of the Guidelines.


On business transparency :

- In the US:

- The Dodd-Frank Act requires companies registered with the SEC (Securities and Exchange Commission) to report publicly on how much they pay governments for access to oil, gas and minerals – a valuable tool for citizens as well as investors.

- The US Sustainability Accounting Standards Board is developing new reporting standards for the US market.

- The European Commission has published proposals to strengthen business transparency of companies with over 500 employees on social and environmental issues, including boardroom diversity. While this is positive, the thresh-hold is far too high and the reporting requirements too general - - another concession to corporate lobbying. Five hundred employees is double the size of the standard EC definition of a large company. But there is still time to change this!

- The European Commission, the European Parliament and the Council of the European Union have also agreed to toughen disclosure requirements for EU-listed and large unlisted companies in extractives, following the example of Dodd-Frank.

- And the trade review panel convened by Pascal Lamy recognises inequality and thus distribution deficits as a real risks with reference to application of labour rights in supply chains. We can only hope.


But finally on Integrated Reporting:

The International Integrated Reporting Council has published its Draft International IR Framework.

Unlike at the GRI, trade unions have not been at the table and we have some concerns:

We fear that a focus on investors is likely to result in reports that identify risks to the company – not the risks of the company’s activities to people and the planet – even over the long-term; and we are concerned how an approach based on “human capital” might allow avoidance of the fundamental requirement for an approach based on “human rights”.

For companies in some countries, such as South Africa, integrated reporting is, of course, already mandatory.

The new G4 reflects many of these shifts – companies are required to report on those impacts that matter the most, including in the global supply chain, and are required to disclose more on governance and how companies are managing their sustainability challenges, and to shine more light on wage inequality – a major contributor to our increasingly divided societies.

We would hope that reporting under the G4 will drive the change in business behaviour so that companies integrate labour rights, union collective agreements and environmental standards into their core business model – that sustainability reporting will actually make a difference to the working conditions of workers, including in global supply chains.

But we’re no longer optimistic about voluntary efforts.

A necessary step forward would be for all governments to make non-financial reporting mandatory, including on labour rights and standards.

The central challenge remains a global floor of human and labour rights with fair wages and safe work, a social protection floor and a serious transition to a low carbon economy.