The 2023-2024 Annual Report from the Platform Living Wage Financials (PLWF) has taken a look at progress when it comes to living wages and incomes in the garment and footwear sector. Thirty-three companies were assessed, among them Adidas, Asics, Esprit, Fast Retailing, H&M, Hugo Boss, Inditex, Kering, LVMH, Marks & Spencer, Nike, Primark, Puma and Zalando.

The main finding was that while many brands in this sector have committed to multistakeholder initiatives addressing living wages, there remains limited evidence of real-world impact. In view of only five years remaining to reach the 2030 Sustainable Development Goals (SDGs) deadline, the report stresses the urgency for companies to move beyond policy commitments to measurable actions.

Garment and footwear sector: policies without impact

 On the progress side, the report found that nearly three quarters of assessed companies disclosed the names and locations of their tier 1 suppliers, indicating progress in supply chain transparency. However, they should also start mapping and disclosing their supply chain beyond tier 1 suppliers.

Similarly, while more than 80 percent of companies provided evidence of a responsible purchasing policy and a third of those provided strong examples of implementation, more narrative is needed on how responsible purchasing practices have been implemented in practice.

“Your clothes should cost more than your coffee." Credits: Poster at Made in Bangladesh Week. Image: Sumit Suryawanshi for FashionUnited

Most brands are also active participants in multistakeholder initiatives, such as ACT and the Fair Wear Foundation, which are aimed at advancing living wages. “However, only a few companies have demonstrated measurable impact. For instance, while responsible purchasing policies are increasingly common, there is limited disclosure on whether these efforts have translated into meaningful wage increases for workers,” finds the report. Thus, PLWF calls for more disclosure on engagement with suppliers and workers on living wages via multistakeholder initiatives to demonstrate the impact made by collaborative action.

Although some progress has been made on remediation efforts, this remains a “core area” according to the report for improvement in terms of disclosures. In addition, evidence is needed that grievances are being monitored and grievance categories need to be disclosed.

There is also limited evidence of efforts to track the effectiveness of living wage strategies. Here, the report advises to disclose the qualitative and quantitative indicators used to assess the closure of living wage gaps.

Last but not least, companies must also work towards firming up their living wage policy and public commitments to meet international standards on living wages and relevant reporting regulations as small gaps have been noted between company policy and commitments on living wages and recent updates in global standards like the ILO definition of living wage, EU CSDDD, EU CSRD and the UN Global Compact Forward Faster Initiative.

“We see the progress made on policy commitments – but want to help companies report more transparently on actual wages paid and supply chain location data. Through a change in the PLWF methodology, we have been more specific about our asks concerning real world impact. This enables us as investors to evaluate which companies are on track to closing the living wage gap, and which are lagging. Without reliable data and combined efforts from a range of stakeholders, millions of workers will continue to earn poverty wages,” comments Petter Forslund, engagement manager at AP2, in a press release.

Company assessment

This year, company scores increased the most across the Assessing Impacts, Integrating Findings, Remedy and Transparency pillars of the working group’s assessment methodology, due to a change in criteria to allow for a more specific, evidence-based assessment and partly to improved efforts by brands to effectively integrate responsible buying practices within their sourcing and procurement functions.

Overall, the 33 garment and footwear companies were divided into five categories based on their assessment: Leading (Puma), Advanced (Adidas, H&M, Primark), Maturing (Asos, Fast Retailing, Gildan, Hanesbrands, Hugo Boss, Inditex, Marks & Spencer, PVH, Ralph Lauren, Lojas Renner), Developing (Asics, Burberry, Coats Group, Kering, Moncler, Next, Nike, Richemont, VF Corporation, Zalando) and Embryonic (Anta, Boohoo, Gap, LVMH, Prada, Shenzou, TJX).

“While only two companies (Marks & Spencer and Primark) advanced in their category placement this year, a third of the assessed companies made progress within their existing band and nearly two thirds of the assessed companies are now categorised as Maturing or above,” states the report.

Call to action

PLWF and its members call on companies to take urgent action by setting time-bound targets to close living wage and income gaps, publishing detailed roadmaps and regularly disclosing progress. The Platform Living Wage Financials also collaborates with different stakeholders and organisations to further enhance the progress on living wages.

“With the Corporate Sustainability Due Diligence Directive (CSDDD) taking effect, companies will soon be legally required to address human rights risks, including living wages, in their supply chains. This legislation presents an opportunity to hold businesses accountable for their impact on workers and communities,” said Maarten Busch, RI & Sustainability Manager at VBDO.

PLWF’s complete annual report 2023-2024 can be downloaded from the website (livingwage.nl).