Social

Information about how a business upholds labour standards, protects workers, and provides safe, fair working conditions.

Tools and services to use: Risk assessment (identify and analyse), Self-Assessment Questionnaire (record), SMETA audit (verify), worker voice (record and verify), data platform (analyse and report), Consulting (all steps)

4. Worker demographics

What this is

The people who make the products, materials and services that your company sells, and uses to produce what it sells.

Why capture this

ESG ratings providers recognise that businesses depend on people. Investors and other stakeholders want to see that a company treats people well – as an essential aspect of responsible business conduct, and to maintain a healthy, resilient, skilled workforce.

Understanding the demographics and working situations of the people in your operations and supply chain is powerful knowledge. This information is a critical enabler of various business initiatives, activities, and benefits.

Benefits of capturing worker data

  • More effective planning for, and response to, supply chain disruption
  • Meet legislation on modern slavery and supply chain due diligence
  • Identify and support more vulnerable workers
  • Enables more accurate ESG risk assessment/management

How to capture this

  • Record key information about your employees, including temporary and seasonal workers, at each of your facilities. Start with:

- Number of employees

- Their gender

- Contract types (e.g. permanent or temporary)

- Numbers of new hires and employees who’ve left (to calculate turnover)

  • Ask suppliers to record this data through their work sites' SAQs and update this every six months.

Worker data

The Sedex platform enables members to store and analyse data on over 28 million workers across 86,000 work sites globally.

As of 31 December 2021

5. Gender pay gap

What this is

The difference between the average earnings of women and men.

Why capture this

Women typically earn less than men, among other inequalities5. ESG analysts want to know how a company is addressing this to drive gender equality. Data is essential for understanding and addressing workplace gender inequality.

Many countries have laws requiring businesses above a certain size to report their gender pay gap. Businesses can use the same data to meet both legal and ESG reporting requirements.

Benefits of capturing gender pay gap data

  • Set targets and measure progress to reduce your gender pay gap
  • Meet gender pay gap legislation
  • Demonstrate commitment to gender equality by reducing the gap
  • Be an attractive employer through promoting equal pay
  • Drive business performance - research into gender pay gap reporting across FTSE indexes found that all "no gender pay gap" portfolios outperformed those with gender pay disparities.6

How to capture this

  • Record employee pay rates, including bonuses, alongside numbers of employees and their gender.

  • Ask suppliers to record this data through their sites’ SAQ. Analysing this gender data enables you to measure, act and report on gender equality across your supply chain.
“The average woman earns just 77 cents for every dollar earned by a man."

"What was the lowest wage paid directly to hired workers last month? Please consider each contract type and enter the wage by gender against each contract type used."

Sedex SAQ

5Source: UN Women

6Source: Refinitiv, 2021

6. Freedom of association and collective bargaining

What this is

Work sites covered by an independent trade union or collective bargaining agreement.

Why capture this

Freedom of association and collective bargaining are fundamental labour standards and key enablers of better working conditions.7 ESG analysts will want to see that companies uphold this standard and support workers to have a voice.

Benefits of capturing freedom of association data

  • Enables more accurate ESG risk assessment
  • Show that your business supports freedom of association across the supply chain
  • Evidence your organisation is at a reduced risk of industrial action through comprehensive collective bargaining agreements
  • Be a more attractive workplace by evidencing how workers are engaged in employment processes and decisions

How to capture this

  • Record the number of your company’s facilities with trade union or covered by collective bargaining agreements. You’ll also need the numbers of employees at each site (see data point 4 above).

  • Ask suppliers to record the number of their work sites where there is trade union membership or a collective bargaining agreement. They can record this in the SAQ for each work site.

Use a SMETA audit to verify this information – consider prioritising sites in high-risk areas for restricted freedom of association, and ensure union/worker representatives are present during audits.

"The organisation shall:

  • Report the percentage of total employees covered by collective bargaining agreements

  • For employees not covered by collective bargaining agreements, report whether the organization determines their working conditions and terms of employment based on collective bargaining agreements that cover its other employees or based on collective bargaining agreements from other organisations."

GRI Guidance for Basic Disclosure

SMETA audits identified nearly 8,000 issues regarding freedom of association in 2021.

Sedex analysis of SMETA audit findings

7. Accidents and injuries

What this is

The number of accidents and injuries occurring at work.

Why capture this

Across laws, ESG standards and industry regulations, businesses need to show that they’re protecting employees from harm at work. High accident and injury rates are also a recognised risk to efficient operations.

Some laws require companies to provide information about health and safety issues in their supply chains, while certain industries and activities come with extra safety regulations. Accident and injury data helps companies meet all these requirements.

Benefits of capturing accident and injury data

  • Reduce operating costs by reducing absenteeism and injuries
  • Demonstrate that your company effectively prevents workplace injuries, reducing risks of reputational and financial damage associated with health and safety negligence
  • Meet supply chain legislation, safety regulations and industry requirements
  • Identify opportunities for improving supply chain workers’ health and safety, and show progress made

How to capture this

  • Record the number of accidents and injuries that take place at your company’s facilities or while employees are working.

  • Ask suppliers to record this data in the SAQ for each work site and provide up-to-date health and safety certificates.

SMETA audits are particularly effective at identifying health and safety issues. Conduct these to check that workplaces are clean and safe for employees, and that they’re given the right safety equipment for hazardous tasks.

The estimated total economic burden of work-related illness and injury, according to the International Labour Organization8

Sedex members resolved over 190,000 health, safety and hygiene issues in 2021 identified through SMETA audits.

Sedex analysis of SMETA audit findings

8. Modern slavery

What this is

Instances of modern slavery identified, including forced labour, debt bondage, human trafficking, and the worst forms of child labour.8 Forced labour is the most prevalent form of modern slavery and can occur anywhere in a supply chain.

Why capture this

Modern slavery is illegal and a human rights abuse. ESG ratings providers, investors, consumers and governments expect companies to actively tackle it.

An increasing number of laws around the world require companies to report on how they identify and address modern slavery risks in both their operations and supply chains. Your company may already carry out activities and capture data to meet these.

Reporting on risks identified, alongside actual cases of modern slavery, enables your company to show they’re working to highlight modern slavery concerns and taking action where risks are higher.

Benefits of capturing modern slavery data

  • Helps prioritise where to take action to address and prevent modern slavery
  • Meet modern slavery legislation
  • Demonstrate that your company works to identify and support victims of modern slavery in your operations or supply chain
  • Demonstrate positive impact by addressing and reducing modern slavery risks

How to capture this

Modern slavery and forced labour are extremely difficult to identify. To help manage modern slavery risks, capture and analyse data on the operational circumstances and behaviours that are “indicators” of forced labour. These act as “red flags” – alert signs that there is an increased risk.

  • Record instances of modern slavery in your own operations.

  • Ask your direct suppliers to provide this information.

"The reporting organisation shall report the following:

  • Operations and suppliers considered to have a significant risk for incidents of forced or compulsory labour, either in terms of:

- Type of operation (such as manufacturing plant) and supplier; OR

- Countries or geographic areas with operations and suppliers considered at risk.

  • Measures taken by the organisation in the reporting period intended to contribute to the elimination of all forms of forced or compulsory labour"

GRI Requirements

Capturing data on modern slavery risks

Record information on the indicators of forced labour in your own and suppliers' operations, to identify high-risk areas for modern slavery and forced labour.

You can capture this information in sites' SAQs and through an on-site audit, supported by a worker voice tool to gather anonymous feedback from workers.

These indicators include:

Excessive overtime

Restricting workers' movements

Retaining workers' identity documents

Withholding wages

Analysis of 100,000 social audits found multiple indicators of forced labour at 36% of sites.

Sedex analysis of SMETA audit findings

8See Anti-Slavery International for full details

Make Sedex your ESG partner

Contact us today to discover how we can support your company's ESG goals.

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