Supply Chain Organizational Governance

10 Global Companies Take Action Towards Living Wages

Aldi, Fairphone, L’Oréal, Unilever and more are taking action towards ensuring living wages for workers throughout their supply chains — and calling on others to do the same.

Published 3 years ago | About a 4 minute read

Image: Pat Whelen/Pexels

IDH: The Sustainable Trade Initiative has joined forces with 10 global companies taking action towards ensuring living wages for workers throughout their supply chains — and calling on others to do the same.

In the Call to Action: Better Business through Better Wages, the participating companies — Aldi Nord, Aldi Sud, Eosta, Fyffes, Fairphone, L’Oréal, Schijvens, Superunie, Taylors of Harrogate and Unilever — assert that while old business models looked to low wages as a profitability driver, the new model sees well-paid workers as an integral part of a profitable, sustainable and resilient business.

A living income means sufficient funds to afford a decent standard of living for all household members in a farmer’s family — including a nutritious diet, clean water, decent housing, education, healthcare and other essential needs; plus a little extra to enable them to take care of their businesses, their communities, and the environment — once farm costs are covered.

“To eradicate poverty, a living wage is the first step,” says Daan Wensing, CEO of IDH. “Helping workers achieve a living wage is a shared responsibility across the entire supply chain, but the business community must be a driving force. We are proud that 10 companies already will work together towards living wages and encourage other businesses to join the call to action and do the same.”

Pervasive social inequality harms prosperity of economies and societies, and the past year has undoubtedly widened the social divide. Now, businesses have an opportunity to change the way their business models operate to benefit wider society — driving business growth while breaking the cycle of poverty and strengthening the foundations of the global economy.

“We have committed that by 2030, everyone who directly provides goods and services to Unilever will earn at least a living wage or a living income. Because without a healthy society, there cannot be a healthy business,” says Marc Engel, Chief Supply Chain Officer at Unilever.

“In the current difficult global context, companies, more than ever, can and must take action to alleviate poverty. One way we can help mitigate inequality is by applying a Living Wage policy — naturally, within our companies, but also by extending it throughout our supply chains,” says Alexandra Palt, EVP and Chief Corporate Responsibility Officer at L’Oréal. “This is our commitment at L’Oréal: By 2030, all our strategic suppliers’ employees will be paid at least a living wage. This is a challenging target, but we are optimistic to achieve it with the support of our suppliers. We need to do this collectively in order to have a significant impact.”

The IDH Roadmap on Living Wages

The IDH Roadmap on Living Wages develops and scales solutions for workers in the global supply chain for a living wage. The companies that joined the Call to Action will work with the Roadmap to develop and scale solutions for workers in global supply chains with the ultimate goal of achieving a living wage. The 10 action steps on the roadmap include:

Identifying living wage gaps in their own operations and supply chains.
Building awareness and understanding among consumers of how they contribute to better livelihoods.
Implementing practical solutions to remove barriers and close living wage gaps and share costs in an equitable way.
Ensuring that value created actually reaches workers.
Transparently reporting on progress towards a living wage.
Sharing learnings, challenges and solutions to inform and elevate all efforts as they find new pathways for reaching living wages.

Since 2013, Fairphone has been working to create a more ethical electronics industry through the design of its product and its conscious approach to materials sourcing. In 2016, it achieved traceable supply chains for all four conflict minerals; and last month, the startup announced a shortlist of 14 materials that offer the greatest potential for achieving a fair circular economy. In 2020, Fairphone shared a case study detailing how, through a series of calculations, it was able to achieve a living wage for workers at one of its first-tier suppliers in China by raising the price of its phone a mere €1.50. As the report asserts: “So, by increasing the product price by 1.50 EUR, we can achieve a living wage for all workers on our production line. If all of the factory’s customers made the same calculation, all of the factory workers would get a full living wage.”

Read more about the 10 action steps on the Roadmap on Living Wages; and join IDH’s Call to Action here.