Investors focus on sustainability reporting has traditionally been strongest in the E (environmental) and G (governance) aspects of ESG. There have been some impressive gains in these areas, particularly regarding the environment due to the urgency of action highlighted in numerous Intergovernmental Panel on Climate Change (IPCC) reports. Investor involvement has helped shift business and government on environment and governance, and it can do the same with social issues.
The S in ESG typically refers to social values including human rights, community engagement, diversity and inclusion, supply chain management and preventing modern slavery. While each organisation defines their social impact differently, we as human beings are the common denominator and an organisation’s social values should consider the impact to people connected in some way to the organisation, and people that are not. To read more about the rise of the S in ESG reporting, click here.
With the introduction of a Modern Slavery Act in Australia (and in other countries), investors, property asset owners and managers, and tenants are increasingly aware of the high risk of slavery and exploitation present in contracted property services. This is evidenced in Australia by the frequent compliance investigations undertaken by the government regulator, the Fair Work Ombudsman (FWO) into cleaning and security and the fact that cleaning is almost consistently one of their top priorities. FWO reports revealed that in some sections of the cleaning industry, their investigations have identified that nearly 100% of businesses inspected were non-compliant with employment laws.
Some will be familiar with the continuum of worker exploitation, which spans from decent work to situations of modern slavery.
Workers in the cleaning industry are particularly vulnerable to labour exploitation and modern slavery due to key industry and workforce features, including:
- complex supply chain structures
- opaque and negligent contracting practices
- insufficient resources to monitor and enforce compliance
- dangerous work
- low barriers to entry
- high proportion of temporary migrant workers whose immigration status is precarious
- workers with low English language competency, lack of social networks, lack of knowledge about workplace rights, and very little power to obtain redress when they experience exploitation at work.
The ultimate goal of any due diligence effort should be to provide and maintain decent work conditions in a business’s operations and supply chain. Decent work conditions exist when the work is safe, secure, freely chosen and undertaken with dignity. It requires workers to participate meaningfully, to be heard, and for their voice to matter. Implementing and maintaining decent work can be difficult in supply chains, where responsibility for employment conditions has been outsourced to a second, third, or even a fourth party.
Leading property owners and investors in Australia such as AustralianSuper, AMP Capital, Cbus Property, Charter Hall, the GPT Group, ISPT, Lendlease, QIC and Vicinity Centres, have partnered with the Cleaning Accountability Framework (CAF) to fundamentally change the industry. These organisations understand that responsibility for upholding human and labour rights does not sit with any one tier of a supply chain, and they are committed to taking a collaborative approach to respecting the rights of the most vulnerable workers in their operations and supply chain.
Working with the entire cleaning supply chain, the process of CAF Certification addresses modern slavery and other labour exploitation risks by facilitating ongoing due diligence from the point of procurement and throughout the life of the contract, using a worker-centric approach. CAF Certification which goes on to assess not only contractor practices, but also those of the procurer and any other supply chain stakeholder. CAF worker engagement is supported by the United Workers Union, the union representing cleaners, and involves cleaners themselves in the assessment and ongoing compliance process and focuses on raising awareness and confidence among particularly vulnerable workers. By placing cleaners at the heart of due diligence, worker engagement is proving to be more robust and effective than methods such as traditional desk-based social auditing alone.
In a recent analysis of compliance findings uncovered through CAF Certification, around 70% of all compliance issues were identified through worker engagement as opposed to a desk-based audit. In addition, the most egregious forms of exploitation such as bullying, harassment and discrimination, were only identified through worker engagement.
Some examples of what CAF uncovers through worker engagement include:
- Unpaid overtime: Despite the fact that most buildings have biometric sign-in systems designed to minimise the risk of underpayment, we find that cleaners are sometimes asked to sign-out on time but then return to the floor to continue working past the end of their shift. Moreover, these sign-in systems are intentionally rarely synced up with the payroll system, so unpaid overtime continues to be commonplace. It is only through talking to cleaners that these issues ever come to light.
- Bullying and harassment: Most medium to large cleaning companies will have a range of employment policies and whistleblower mechanisms in place to address issues such as bullying and harassment in the cleaning industry, particularly with the advent of the Modern Slavery Act, the Property Council’s supplier database and various forms of supply chain due diligence mechanisms. In CAF’s experience, these policies and procedures are often wholly ineffective insofar as bullying and harassment is rife in this industry, and that when cleaners do use the official channels to report it, they find themselves with a target on their back which has a chilling effect on reporting. CAF, in conjunction with United Workers Union, provide support to cleaners who report such issues to us and we are able to identify and address the contributing factors which may be fuelling the bullying and harassment, such as under-resourced contracts, inadequate training, and unaccountable management structures.
We are still discovering the language when it comes to the S in ESG, and there is a danger that we may fall into the same greenwashing trap that has beleaguered environmental and climate change initiatives. However, we are at a pivotal moment to craft the narrative around a genuine human rights centred approach to due diligence so our efforts in terms of social impact are meaningful to those they are targeting.
This article was written by Poonam Datar, Chief Executive Officer, Cleaning Accountability Framework (CAF)
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