Working to Ensure Justice for Workers

Above: One Fair Wage demonstration in NYC, courtesy of One Fair Wage

Faith-based investors have a long history of corporate engagements seeking to advance rights for workers both here in the U.S. and in global supply chains. For decades, ongoing engagements led by faith-based investors with companies in at-risk sectors including apparel and footwear, food and agriculture, and electronics have centered on the risks of human trafficking and forced labor, the importance of paying a living wage, and the need to respect unionization efforts. Many of these engagements, begun in the 1980s, continue to this day led by investors representing multiple faith traditions.

Out-of-Sight Workers are too Often Out-of-Mind

The prevailing global purchasing practices model is built upon a power imbalance between global brands and retailers on the one hand, and suppliers and workers on the other, a disparity highlighted during the COVID-19 pandemic when apparel brands unilaterally, and for the most part legally, canceled over $3 billion in orders, instantly jeopardizing millions of garment workers’ jobs. Major retailers such as Amazon, Walmart, and others, source products from all over the world with the lowest price and speed of delivery often outweighing all other considerations in contract negotiations. This outdated model puts workers, especially those at the bottom of the supply chain, at great risk. It is critical that brands have full visibility into their supplier’s treatment of their workers beginning at the time of recruitment when human trafficking and debt labor risks are heightened, and support suppliers in preventing human rights abuses. We press companies to conduct comprehensive human rights due diligence, in line with the UN Guiding Principles for Business and Human Rights, and to adopt risk prevention, mitigation, and remediation practices to safeguard workers. Faith-based and other investors have filed numerous shareholder proposals requesting human rights impact assessments and supplier due diligence measures to ensure workers’ rights are protected. Integrating responsible contracting principles into buyer and supplier contracts can transform supply chains by requiring shared responsibility for human rights into contract language.

Another game-changer is the advent of Worker-Driven Social Responsibility (WSR) programs that include legally binding agreements between workers and companies. Successful examples of the WSR model include the Bangladesh Accord, created in the wake of the tragic collapse of the Rana Plaza apparel factory in 2013, as well as the Coalition for Immokalee Workers’ Fair Food Program led by farmworkers in protest of inhumane working conditions and poverty wages in Florida’s agricultural sector. Faith investors were early and constant supporters of these models because they empower workers and their communities to participate in the creation of a safe and dignified workplace.

Regulations banning the importation of goods made with forced labor are also a key ingredient in combatting severe human and labor rights abuses in global supply chains. Investors have voiced support for several laws and regulatory actions seeking to eradicate the specter of forced labor from supply chains including the California Supply Chain Transparency Act, the UK Modern Slavery Act and, more recently, the Uyghur Forced Labor Prevention Act. Enforcement of the U.S. prohibition on the import of goods made with forced labor under the 1930 Tariff Act should also increase the pressure on companies that import into the U.S. to understand and mitigate their supply chain risks.

Not in my Backyard? Think Again

While it is perhaps easier to think of worker rights violations as only occurring in far-flung countries with weak rule of law, the hard truth is that workers are exploited right here in the U.S. every day. Through shareholder resolutions and dialogues, faith-based investors and their allies are calling on companies to adopt and meaningfully implement policies and practices that support workers’ right to a living wage, paid sick leave, freedom of association, and workplace health and safety.

Multiple international treaties and frameworks recognize the concept of a living wage as a human right but in the United States, the federal minimum wage has remained stagnant at $7.25 an hour since 2009. Workers in traditionally low-wage retail, restaurant, hospitality, and gig sectors are most likely to earn below the living wage and are forced to work multiple jobs to make ends meet. Corporations have long said that their employees are their most important asset yet too often their actions belie these statements. Businesses that fail to proactively address compensation issues not only risk worker strikes but also miss the opportunity to cultivate a positive employment culture, a key bellwether of success in the modern marketplace. Engagements seeking the adoption of a living wage are being held at multiple companies across several low-wage sectors.

Nearly 28 million people working in the private sector in the U.S. have no access to earned sick time, or “paid sick leave” for short-term health needs and preventive care. These workers face an impossible choice when they are sick: to stay home and risk financial instability or go to work and risk their own and the public’s, health. Seven in ten workers in low-wage sectors do not have paid sick days to care for their own health. Moreover, lack of access to paid sick days disproportionately affects Black and LatinX workers. Proposals calling for paid sick leave policies are being filed at numerous companies, many receiving strong shareholder support.

The devastating impacts of the COVID-19 pandemic on frontline workers and the resulting “Great Resignation” contributed to a boom in worker organizing to ensure that worker voices are central to corporate decision-making. While many corporations have publicly signaled their support for their employees as key stakeholders, they continue to impede worker organizing and interfere in union elections, going against both labor laws and international human rights standards. Companies such as Amazon and Starbucks have been called out for anti-union activities with a not insignificant reputational impact. Faith investors are engaging relevant portfolio companies calling on them to adopt and meaningfully implement policies that respect the rights of workers to Freedom of Association including maintaining neutrality in union elections and enforcing zero-tolerance policies for retaliation against worker organizers.

In June 2022, the right to a safe and healthy working environment was added to the International Labour Organization’s (ILO) Fundamental Principles and Rights at Work, and employers in the U.S. have long had a clear responsibility to provide a safe workplace under the Occupational Safety and Health Act (OSHA) of 1970. Companies that go beyond minimum compliance to make meaningful investments in worker health and safety see measurable business benefits, while those that knowingly violate these labor standards and put workers’ lives at risk face increased labor costs, fines, and penalties. 

A 2023 proposal at Dollar General led by Domini Impact Investments and co-filed by the Presbyterian Church, (U.S.A.), United Church Funds, and other faith-based investors called for a third-party audit on the impact of company policies on the safety and well-being of workers. Dollar General’s history of repeat workplace safety violations poses significant risks to workers, and OSHA inspections found more than 300 violations, most commonly for blocked exit routes, fire extinguishers, and electrical panels. The proposal received an impressive 68% support from Dollar General shareholders at the company’s annual meeting on May 31, 2023.

The pendulum is clearly shifting toward workers. Advocacy efforts, including shareholder engagements, in support of worker rights are notching win after win and it is far better for companies and their investors to be seen as proponents of these efforts. Companies that do will be rewarded by a healthier, more loyal, and more productive workforce.

Article by Matthew Illian of United Church Funds and Katie Carter of Presbyterian Church U.S.A.

Katie Carter, Director of Faith-Based Investing and Shareholder Engagement at the Presbyterian Church, U.S.A., joined the office as the Associate for Research, Policy and Information in February 2017. She leads shareholder research and engagement efforts and encourages companies to adopt policies and practices aligned with PUCSA values. Previously, she was Director of Research, Education, and Public Policy at National Safe Place Network for two years, where she coordinated training opportunities and services for youth and family-serving agencies. She also spent five years at Kentucky Youth Advocates, leading efforts on improving child health and family economic security. She holds a Masters of Public Affairs from Indiana University’s School of Public and Environmental Affairs and BA in English and Politics from Earlham College. Originally from Iowa, she now lives in Louisville, Kentucky, with her husband, Chris, and two young daughters, Eloise and Gillian. Katie also serves on the Board of Directors of Americana World Community Center, a nonprofit serving refugee and immigrant populations in Louisville.

 Matthew Illian is Director of Responsible Investing at United Church Funds which is a financial ministry related to the United Church of Christ. In this position Matthew oversees social and environmental shareholder advocacy work, proxy voting and investment screens. He also supports the investment team to ensure UCF’s values, including manager diversity, are being applied by over a dozen external investment managers. Matthew did his undergraduate work at the University of Virginia and received a Master’s degree in Finance from the Johns Hopkins Carey Business School. Matthew serves on the ICCR Advancing Worker’s Justice leadership team and the PRI Asset Owner Technical Advisory Committee.