Putting money where it matters

Richard Jones CFIOSH discusses how the EU’s Social Taxonomy will make socially responsible investments to create ‘decent work’ for all.

In these turbulent times, tackling poverty, hunger, illness and exploitation need investments that support humanity and the UN Sustainable Development Goals (see Figure 1). The proposed EU Social Taxonomy offers much promise, potentially helping up to two billion people via ‘capital flows to investments that improve living and working conditions’ (Platform on Sustainable Finance, 2022). This includes excellent OSH and social dialogue – the focus of the International Labour Organization’s 2022 World Day for Safety and Health – together with a living wage. 

Figure 1

Examples of relevant SDGs, based on Shift (2018)

Just how would the Social Taxonomy, which aims to set social criteria for sustainable finance (as already exist for the environment), help influence decisions? As well as being a classification and screening tool for companies, capital markets and policymakers, it would also require disclosures, boosting transparency for investors and end-users, with three main objectives:

• Decent work (including value-chain workers)
• Adequate living standards and wellbeing for end-users 
• Inclusive and sustainable communities and societies.

Ensuring levels of worker pay are set in a predictable and transparent way is identified as part of ‘decent work’ provision. It’s easy to see the OSH relevance of this and how poor pay and insecurity can adversely affect worker wellbeing, causing anxiety and leading vulnerable workers to work excessive hours or in dangerous conditions, increasing risk of injury or illness and their associated costs. 

On the other hand, socially responsible investment can direct funds towards organisations and activities that provide decent pay (or at least a ‘living wage’), in turn helping reduce stress, prevent fatigue, discourage risk-taking, improve morale and lessen the need for state social support. Employers, as well as benefiting from investment, should know that positive feelings about work have been linked to higher productivity, profitability and customer and worker loyalty.

Concerningly, over the last four years, it's reported that nearly one quarter (24%) of the EU working age population found themselves below the ‘at-risk-of-poverty’ threshold at some point (Platform on Sustainable Finance, 2022). While importantly, it’s estimated that ensuring a living wage across the value chain (encompassing the full lifecycle of products or services) could benefit many millions of workers and their families, helping up to quarter of the world’s population. 

Factors contributing to ‘decent work’ are outlined in Figure 2 and also briefly summarised below.

Figure 2

Decent work sub-objectives, based on the Social Taxonomy Final Report

• Social dialogue – freedom of association and collective bargaining for setting wages and working conditions, upholding labour standards along value chains.
• Living wage – predictable and transparent pay levels that ensure decent lives and working hours.
• Secure work – avoiding precarious working conditions, such as unclear employment duration and relationship and poor pay.
• Excellent OSH – effective OSH risk management for all, with high levels of worker representation on joint committees.
• Life-long learning – workers involved in developing extensive skills / learning programmes. 
• Social protection – including pensions, occupational welfare and childcare arrangements.
• No exploitation – no forced labour, and protection of migrant workers and action on child labour.
• Equal opportunities – decent job creation for target populations, such as women and disadvantaged groups, and living incomes for farmers.
• Risk-based due diligence – respecting human rights and workers’ rights across the value chain. 

OSH professionals have key roles in supporting the development of this new investment tool, ensuring that OSH is properly valued, adequately invested in and well-delivered across value chains worldwide. The European Commission will now decide whether and how to proceed with the Social Taxonomy and will publish its own report on any next steps in due course. For more information, see the panel below, as well as IOSH magazine's online article World Health Day: a date with due diligence (April 2022), and IOSH’s social sustainability campaign Catch the Wave.  

Image credit | iStock