11 February, 2022
Every single business should pay its employees enough for them to live by. This is the most fundamental responsibility of business, and the lynchpin of creating a fair society. If a business is only profitable if it pays employees poverty-level wages, its business model isn’t viable.
To us, these are simple and obvious truths that should be the foundations of the modern economy, and a sine qua non for any company making claims around responsible business. Yet at the moment, this is a hole in the foundations of the progressive corporate agenda.
Analysis by the Social Market Foundation found that companies are 64 times more likely to address environmental issues than to discuss poverty in their statements about Environmental, Social and Governance. And while companies have a statutory requirement to disclose the pay of top executives and pay ratios, this is normally buried in annual reports, and doesn’t make it into the ESG agenda or communication.
Meanwhile, in-work poverty for full time workers is steadily rising. In London the proportion of households who are in poverty where at least one adult works full time has increased 50% in a decade.
The reality of the climate crisis has, rightly, spurred businesses to take action on the environment. Companies don’t just proclaim their commitment to managing their environmental impact. They measure and report on their carbon emissions, and those that want to be taken seriously sign up to science-based reduction targets and net zero goals.
It’s time to apply the same approach to poverty and the cost-of-living crisis, and pay is the best place to start. We think it should become the social equivalent of carbon.
We’re advocating for a new pay protocol which maps three ‘scopes’ of necessary action on pay. You’ll find it, and more of our thoughts on the societal and business benefits of stepping up, here.
By Larissa Persons