Study shows major gaps in corporate responsibility among leading companies

Only 4 percent commit to or currently pay their employees a living wage
Study shows major gaps in corporate responsibility among leading companies

The World Benchmarking Alliance (WBA) has published its first Social Benchmark, assessing the world's 2,000 most influential companies on human rights, decent work, and ethical actions, revealing significant gaps and urgent areas for improvement to ensure an equal, inclusive, and just society.

Namit Agarwal, social transformation lead at the WBA, highlighted the significant influence of the SDG2000 companies. These companies possess resources and sway comparable to some of the largest countries, impacting more people than the populations of many nations. Despite their vast capabilities, 90 percent of these companies fail to meet fundamental social expectations, reflecting the private sector's current state.

In a statement, Agarwal emphasized that leadership in promoting equality, inclusivity, and justice could substantially support governments in eliminating poverty, reducing inequality, and ensuring decent work. Regulation, guidance, and external pressure are essential to guide businesses in the right direction.

Commitment to paying a living wage and preventing excessive working hours

WBA notes a discrepancy between what companies disclose about decent work and societal expectations. Over 60 percent of companies have some disclosure on decent wages, and over 45 percent have some on working hours. However, only 4 percent commit to or currently pay their employees a living wage, and just 3 percent have a working hours policy that aligns with International Labour Organization (ILO) standards.

Governments can assist by implementing policies that regularly review and adjust the minimum wage to match living costs. They can also support small and medium enterprises in promoting collective bargaining and implementing social policies to reduce living costs for low-wage workers, particularly in supply chains.

Transparency in lobbying to avoid undue political influence

Only 11 percent of the 2,000 most influential companies have a policy publicly outlining their lobbying and political engagement approach. A mere 5 percent disclose data on their lobbying expenditures. To maintain credibility, companies must ensure that their publicly stated social sustainability strategies align with lobbying activities.

Engaging with Affected Stakeholders

Only 9 percent of companies communicate how they engage with affected stakeholders, including employees, trade unions, suppliers, civil society, and local communities. Companies that engage with affected stakeholders perform better on average across every benchmark indicator, including commitments to respect human rights and provide decent work by respecting worker health and promoting equality.

Regulation and External Pressure

Companies headquartered in countries with human rights legislation score nearly 60 percent higher on human rights due diligence (HRDD) than those without such regulations. However, only 6 percent of companies have fully implemented HRDD indicators. These companies are primarily from regions with strong government guidance and regulatory frameworks on human rights, such as Europe and parts of East Asia. They tend to operate in high-impact sectors subject to greater public scrutiny and are better equipped with detailed HRDD tools and guidelines.

Governments can set minimum legal standards for corporate behaviour on HRDD to prevent and address human rights risks and impacts in line with the UN Guiding Principles on Business and Human Rights. Meanwhile, investors and civil society should continue applying collective pressure on low-scoring companies and advocating for robust due diligence processes.

Sectoral and Regional Insights

Overall, the average performance of all 2,000 companies is low (23 percent). Sectors like apparel and footwear (33 percent), ICT (30 percent), and retail (28 percent) perform relatively better due to their consumer-facing nature, which makes them more susceptible to public scrutiny. The apparel and footwear sector leads in respecting human rights and providing decent work, while the ICT sector excels in acting ethically, influenced by stringent data protection and privacy regulations.

Companies based in the Pacific, Europe, and North America regionally perform better overall. European companies, for instance, show the highest proportion of compliance with ILO standards on working hours (12 percent) and disclosure of tax strategies (47 percent). Companies headquartered within the European Union and the Organisation for Economic Co-operation and Development score higher on average than the overall benchmark.