Labor & Employee Welfare

How Will Sustainable Labor Practices Shape Crisis Recovery?

In the economic fallout of COVID-19, many investors are turning their attention to sustainable labor practices. Take the Principles for Responsible Investment (PRI), a network of more than 2,000 signatories from over 60 countries, representing an excess of $80 trillion in assets. In a recent report, PRI suggests that any approach to recovery needs to address high levels of economic inequality as well as the instability of work in the gig economy.

PRI and other investor groups like the Interfaith Council on Corporate Responsibility (ICCR) are highlighting the critical importance for companies to make sustainable labor practices crucial elements in their long-term strategy. As ICCR’s investor statement on coronavirus response argues, corporations may benefit from having a well-trained and loyal workforce that can help them hit the ground running when business operations resume. Corporations’ treatment of employees will impact their “social license to operate in the future,” Ray Cameron, head of BlackRock’s investment stewardship team in the Americas, recently told the Wall Street Journal.

Sustainable Labor Practices After COVID-19

With that in mind, investors are calling for a focus on four areas.

1. Providing Stable Incomes and Employment

By ensuring that their workforce receives fair compensation and a modicum of job security, companies do more than help employees maintain their quality of life. They also make sure their workers can continue to buy products they need, thereby supporting the economy as a whole.

2. Ensuring Safe Workplaces

As the pandemic continues to threaten employee health, investor organizations are urging businesses to protect workers through such measures as remote work, rotating shifts, and sanitation. Doing so could also enhance a company’s ongoing reputation and build consumer confidence.

Investor groups are highlighting the critical importance for companies to make sustainable labor practices crucial elements in their long-term strategy.

3. Offering Adequate Access to Paid Sick Leave

Without employee health and wellness policies, it is difficult to implement the social distancing needed for the recovery of both employees and the economy. When they receive paid sick leave, employees can stay home, thereby protecting customers, colleagues, and their community while also maintaining their economic security.

4. Protecting Workers in the Supply Chain

Left unchecked, changes in supply and demand patterns can accentuate existing labor issues. For example, more demand for home delivery runs the risk of worsening working conditions in warehouses and distribution centers.

Investing in Sustainable Labor Practices

How can investors help ensure that businesses focus on sustainable labor practices? First, they can scour company disclosure documents, news articles, and environmental, social, and governance (ESG) data to monitor corporate behavior. In addition, investors are forming coalitions to address the corporate response to the pandemic. For example, in March, a group of 195 investors (now 322) managing more than $4.7 trillion in assets (now $9.2 trillion), led by Domini Impact Investments, the ICCR, and the Office of the New York City Comptroller Scott M. Stringer, signed an open message to public companies, urging them to take such steps as retaining workers and providing paid sick leave.

Investors can also participate in shareholder resolutions focused on labor policies. Corporate governance experts predict a coming wave of such resolutions to be filed later this year.

Want to learn more about how impact investors are responding to COVID-19? Read:

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