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The “S” in ESG and international labour standards

The “S” in ESG and international labour standards The paper examines the importance of international labour standards for ESG reporting. Keywords ESG · International labour standards · ILO Introduction rights, with the rights of workers playing an essential role. However, there seems to be less clarity about what specific Environmental, Social, and Corporate Governance (ESG) requirements should follow from this. refers to the three central factors in measuring the sustain- This paper aims to contribute to the discussion by taking a ability and societal impact of an investment in a company. closer look at the social responsibility of companies towards The topic is anything but new, but has recently gained sig- workers. Based on the assumption that social standards on nificant momentum. This is due not least to the trend toward the one hand and the protection of workers´ rights under basing investment decisions more strongly on ethical guide- international law on the other hand are closely interrelated, lines and sustainability. As a result, investment analysis is the international framework will be presented first (II.). This now more focused on ESG criteria than ever before. In an framework consists to a large extent of the so-called Inter- effort to more accurately capture the position on ESG, vari- national Labour Standards (ILS), i.e. the legal instruments ous ESG rating systems have emerged. There is no shortage elaborated within the International Labour Organisation of standards, indeed there is rather a certain abundance. (ILO) that lay down fundamental principles and rights at ESG rating systems rank companies based on ESG crite- work. Next, some of the standards that exist in the social ria and assess their performance on a sustainability scale. domain are presented (III.). Due to their widespread use and However, this is a tricky task. The dic ffi ulties that arise have practical importance, standards of the Global Reporting Ini- numerous causes. One is the sheer breadth of issues to be tiative (GRI) have been selected as examples, namely those addressed. Another is the fact that it is extremely challenging that relate to collective labour law issues. These standards to define objective criteria for the performance of companies are then discussed in more detail against the background (and even more difficult to measure it). This is particularly of the existing international legal framework in this regard true for social criteria, which at the same time seem to be (IV.). The paper ends with a short conclusion (V.). coming more and more into focus. There seems to be some consensus that many of the issues addressed by the crite- rion revolve around the observance of international human The international legal framework The International labour organisation Bernd Waas is a member of the Committee of Experts on the Application of Conventions and Recommendations (CEACR) of The International Labour Organisation (ILO) is a specialised the ILO. agency of the United Nations. Its headquarters are in Geneva. The ILO owes its existence to the Treaty of Versailles. Its * Bernd Waas Constitution forms Part XIII of that Treaty. The basic purpose Chair of Labour Law and Civil Law, Institute of Civil of the ILO is set out in the Preamble to the Constitution. Its and Commercial Law, Faculty of Law, Goethe University Frankfurt, Campus Westend, RuW, Theodor-W.-Adorno-Platz 4, 60629 Frankfurt am Main, See the Economist, Oct 3rd 2020: “In the soup—The proliferation Germany of sustainability accounting standards comes with costs”. Vol.:(0123456789) 404 B. Waas first sentence reads: “World peace can be built in the long run Conventions have legal effect after ratification by a member only on social justice”. A certain reorientation of the ILO’s state. There are currently 190 Conventions in force. Eight objectives then took place, under the impression of World conventions stand out because of their fundamental impor- War II, with the Philadelphia Declaration of 1944, whose tance: Convention No. 29 on Forced Labour; Convention much-quoted first principle reads: “Labour is not a com- No. 87 on Freedom of Association and Protection of the modity”. The ILO Declaration on Fundamental Principles Right to Organise, 1948; Convention No. 98 on the Right and Rights at Work, adopted in 1998, underlines the impor- to Organise and to Bargain Collectively, 1949; Convention tance of the so-called core labour standards and recognises No. 100 on Equal Remuneration, 1951; Convention No. 105 them as universal human rights in that “all Members, even on the Abolition of Forced Labour, 1957; Convention No. if they have not ratified the Conventions in question, have an 138 on Minimum Age, 1973; Convention No. 182 on Worst obligation arising from the very fact of membership in the Forms of Child Labour, 1999; and Convention No. 111 on Organization, to respect, to promote and to realize, in good Discrimination (Employment and Occupation), 1958. In faith and in accordance with the Constitution, the principles addition to these so-called fundamental conventions, there concerning the fundamental rights which are the subject of are four so-called governance conventions. Convention those Conventions”. With the Decent Work Agenda of 1999, No. 81 on Labour Inspection in Industry and Commerce the ILO focused its work on four strategic objectives, the first of 1947, in particular, is one of them. The remainder of the being the implementation of core labour standards. The so- Conventions is currently made up of the so-called technical called ILO Declaration on Social Justice for a Fair Globaliza- conventions. tion, adopted in 2008, specifies the ILO’s goals and takes into In addition to these standards, other ILO activities are account the particular challenges of globalisation. also relevant in the present context. Particular mention The main task of the ILO is to formulate and enforce should be made of the Tripartite declaration of principles international labour standards. The special feature of the concerning multinational enterprises and social policy organisation, apart from this specific purpose, lies in its tri- (MNE Declaration) which provides direct guidance to partite organisation. According to Art. 1(2) of the Constitu- enterprises on social policy and inclusive, responsible and tion of the ILO, members of the ILO are the states that were sustainable workplace practices and addresses multinational members of the organisation on 1 November 1945 and all enterprises, governments and employers´ and workers´ other states that joined later. However, within the ILO, work- organisations. This instrument was elaborated and adopted ers´ and employers´ representatives participate on an equal by governments, employers and workers from around the footing. This applies first of all to the work of the Interna- world. It is firmly rooted in principles contained in interna- tional Labour Conference (ILC), the highest organ of the tional labour standards, and on obligations that States have ILO, which meets once a year in Geneva. Each member state through their ILO membership and following their ratifica- has four delegates in the ILC, two of whom are government tion of ILO Conventions. representatives, while workers´ and employers´organisations each have one delegate. The primary task of the ILC is to Monitoring of standards formulate legal acts. The Governing Body is the executive body of the ILO and is composed of 56 representatives (28 With regard to the monitoring of compliance with ILO government representatives, 14 representatives each from standards by the member states, there is a sophisticated and the social partners). This body also appoints the Director it must be said relatively complicated mechanism involving General. The International Labour Office acts as the per - various actors. It will not be discussed in detail here, since a manent secretariat of the ILO. few basic facts should suffice in the present context. The Committee on Freedom of Association (CFA) is International labour standards responsible for complaints about alleged violations of freedom of association. To date, the Committee has issued ILO conventions and recommendations opinions on approximately 3,200 cases. The Committee has a tripartite structure. The Chairman of the Committee ILO standards are divided into conventions and recom- is independent. In addition to this and some other specific mendations: Recommendations are not open to ratification, mechanisms, there is regular machinery for supervising the but give guidance as to policy, legislation and practice. observance of obligations deriving from Conventions and Recommendations. Here, monitoring is based on reports which the members of the ILO have to submit at regular Art. 3(1) of the Constitution. Art. 7(1) of the Constitution. Art. 8(1) of the Constitution. See the ILO conventions and recommendations listed in Annex I of Art. 10 of the Constitution. the instrument. The “S” in ESG and international labour standards 405 intervals. It is important to note that the Member States are system the Committee of Experts alone is called upon to obliged to communicate their reports to the representative legally assess the law and practice of the Member States, is organisations of employers and employees in their coun- not in dispute among the parties involved. Quite apart from try. Where observations from those organisations on the this, another point is of importance in the present context, application of ratified Conventions are received by a govern- namely that the observations of the Committee of Experts ment, full details should be sent in the government’s report, have been taken up by numerous national and also by 9 14 together with the government’s response, if any. Regular international courts in questions of legal interpretation, supervision of standards is carried out, on the one hand, by which shows that they carry great weight, even if they are the Committee of Experts on the Application of Conventions not legally binding as such. and Recommendations (CEACR) and, on the other, by the Conference Committee on the Application of Standards (CAS). The Committee of Experts consists of independent GRI social standards experts. Its task is to provide an exclusively legal assessment on the basis of reports of Governments (and observations of As already mentioned in the introduction, only a fraction of the representative organisations of employers and employees the existing social standards can be discussed here. Instead, from the relevant country). It is then task of the CAS to con- only the standards of the Global Reporting Initiative will be sider individual cases relating to the application of ratified examined, and only those that address issues of collective Conventions. These cases, however, are selected and treated labour law. These standards can be found in the Consoli- 11 16 on the basis of the findings of the Committee of Experts. dated Set of GRI Sustainability Reporting Standards 2020. It is clear from the above that the reports of the Com- Generally speaking, there are two types of standards: On mittee of Experts are of paramount importance for under- the one hand, the so-called universal standards that apply standing ILO standards. This is true despite the fact that to every organisation preparing a sustainability report and the Committee—unlike, for example, the European Court of which aim primarily at contextual information about an Human Rights, which monitors compliance with the Euro- organization (GRI 102) as well as the management approach pean Convention on Human Rights—is not a court and that for each material topic (GRI 103), and on the other hand the its observations are not legally binding. And this is also true so-called topic-specific standards. With regard to the latter, despite the fact that the mandate of the Committee is not a distinction is made between three areas, so that there are undisputed among the constituents of the ILO, a dispute economic, environmental and social standards. Obviously, it that is only superficially about the international legal guar - is the latter set of standards that are the focus of interest here. antee of the right to strike (which the Committee affirms), but which might go deeper. This is because the core of the mandate, namely that within the standards monitoring From the Supreme Court of Canada, for example, or the Constitu- tional Court of South Africa. Art. 22(1) of the Constitution. Particularly noteworthy in this respect is the European Court of Art. 22(2) of the Constitution. Human Rights, which in its decisions relatively often refers to find- ings of the CEACR (and of those of the CFA). Employers’ and workers’ organizations may also send observations directly to the Office. See ILO, Handbook of procedures relating to See also the description of its mandate by the Committee itself international labour Conventions and Recommendations, Centenary in the Report of the Committee of Experts on the Application of Edition 2019, para. 40. Conventions and Recommendations, International Labour Confer- See ILO (footnote 9), para. 60: “The Committee’s fundamental ence, 109th Session 2020, para 36: “(…) The Committee of Experts principles are those of independence, impartiality and objectivity in undertakes an impartial and technical analysis of how the Conven- noting the extent to which the position in each State appears to con- tions are applied in law and practice by member States, while cog- form to the terms of the Conventions and the obligations accepted nizant of different national realities and legal systems. In doing so, under the ILO Constitution”. it must determine the legal scope, content and meaning of the provi- sions of the Conventions. Its opinions and recommendations are non- See ILO (footnote 9), para 66: “Following the independent, techni- binding, being intended to guide the actions of national authorities. cal examination of documentation carried out by the Committee of They derive their persuasive value from the legitimacy and rational- Experts, the proceedings of the Conference Committee present an ity of the Committee’s work based on its impartiality, experience and opportunity for representatives of governments, employers and work- expertise. The Committee’s technical role and moral authority is well ers to meet and review the manner in which States are discharging recognized, particularly as it has been engaged in its supervisory task their obligations under and relating to Conventions and Recommen- for more than 90  years, by virtue of its composition, independence dations. Governments are able to amplify information previously sup- and its working methods built on continuing dialogue with govern- plied; indicate further measures proposed; draw attention to difficul- ments taking into account information provided by employers´ and ties met with in the discharge of obligations; and seek guidance as to workers´ organizations. This has been reflected in the incorporation how to overcome such difficulties”. of the Committee’s opinions and recommendations in national legis- See, for instance, La Hovary, A Challenging Ménage à Trois? lation, international instruments and court decisions”. Tripartism in the International Labour Organization, International Organizations Law Review, 12 2015 pp. 204–236. https:// www. globa lrepo rting. org. 406 B. Waas more detailed examination. However, this cannot be done Overview of existing standards here for all standards related to the position of workers. Instead, GRI 402 on “labour-management relations” and The social standards contain quite a few criteria that aim at the position of workers. The following standards are worth GRI 407 on “freedom of association and collective bargain- ing” will be discussed here by way of example, as they deal mentioning: 401, which deals with “employment” ; GRI 402 on “labour-management relations”; GRI 403 on “occu- with highly significant issues, also in practical terms, and are closely interrelated, as will be shown in a moment. pational health and safety”; GRI 404 on “training and educa- tion”; GRI 405 on “diversity and equal opportunity”; 406 on Management approach disclosures “non-discrimination”; GRI 407 on “freedom of association and collective bargaining”; GRI 408 on “child labor”, 409 As already mentioned, all GRI standards first require infor - on “forced or compulsory labor”. A few standards somehow relate to the position of staff. This applies to GRI 410 on mation on the management approach that companies pursue with regard to certain problem areas. This also applies to “security practices”; GRI 411 on the “rights of indigenous people “; GRI 412 on “human rights assessment”, and, GRI 402-1 and 407-1. The benchmarks for this are derived from the general standard GRI 103. Without being able to finally, GRI 414 on “supplier social assessment”. All these standards are, in a sense, two-part. Firstly, go into detail here, the companies must provide information on the extent to which they come into contact with a cer- there is, in general terms, the obligation to report on how an organization manages a certain issue. What is required in tain topic through their actions or what effects their actions have in these areas (GRI 103-1). More importantly, they this respect is “a narrative explanation of how an organiza- tion manages a material topic, the associated impacts, and must provide information on their specific management approach. This requires, above all, information on policies stakeholders’ reasonable expectations and interests”. These so-called management approach disclosures are then joined commitments, goals and targets, responsibilities, resources; grievance mechanisms, and specific actions, such as pro- by so-called topic-specific disclosures. Most of the standards mentioned are presented after an introduction. Moreover, cesses, projects, programs and initiatives (GRI 103-2 lit. c). Finally, the company must provide an explanation of how so-called reporting requirements and so-called reporting 20 21 recommendations as well as short guidance notes are the organization evaluates its management approach, includ- ing: the mechanisms for evaluating the effectiveness of the formulated for each standard or each subgroup of standards. Each standard is then followed by a glossary and a list of management approach; the results of the evaluation of the management approach; and any related adjustments to the references. management approach. (GRI 102-3). According to the rel- evant guidance note, mechanisms for monitoring the effec- A closer look at GRI 402 and 407 tiveness of the management approach can include: internal or external auditing or verification (type, system, scope); A serious evaluation of the GRI standards from the perspec- tive of international labour law would obviously require a measurement systems; external performance ratings; bench- marking; stakeholder feedback; and grievance mechanisms. Topic‑specific disclosures In the so-called background context which forms part of the “Introduction” to the standard, it is explained that GRI GRI 402 contains only one sub-standard. GRI 402-1 on 401 “addresses the topic of employment” which “includes an “disclosure” requires the reporting organisation to “report organization´s approach to employment or job creation, that is, an the following information: a. Minimum number of weeks’ organizations approach to hiring, recruitment, retention and related practices, and the working conditions it provides”. It is further notice typically provided to employees and their repre- explained that the standard “also covers the employment and working sentatives prior to the implementation of significant opera- conditions in an organization’s supply chain”. tional changes that could substantially affect them. b. For Details can be found in GRI 103. organisations with collective bargaining agreements, report These are „mandatory instructions”. Requirements “are to be read whether the notice period and provisions for consultation in the context of recommendations and guidance; however, an organi- and negotiation are specified in collective agreement”. The zation is not required to comply with recommendations or guidance in order to claim that a report has been prepared in accordance with “background context” which forms part of the introduction the Standards”. reads as follows: “GRI 402 addresses the topic of labor/ Recommendations relate to “cases where a particular course of management relations. This covers an organisation’s con- action is encouraged, but not required”. sultative practices with employees and their representatives, The relevant sections “include background information, expla- including its approach to communicating significant opera- nations and examples to help organizations better understand the tional changes. An organisation’s consultation practices are requirements”. The “S” in ESG and international labour standards 407 expected to be aligned with relevant international norms and collective agreements, which in turn are far more likely than standards. Collective bargaining can play an important role the individual employment contract to lead to fair work- in an organisation’s consultation practices. Collective bar- ing conditions. Whereas GRI 407 directly addresses these gaining refers to all negotiations which take place between issues, GRI 402 relates to them insofar as—with regard to one or more employers or employers´ organisations, on the the possibility of having a say in significant operational one hand, and one or more workers´ organizations (trade changes—it refers on the one hand to corresponding provi- unions), on the other, for determining working conditions sions in collective agreements (GRI 407-1 lit. b) and on the and terms of employment or for regulating relations between other (GRI 407-1 lit. a) to the obligation to notify employee employers and workers”. representatives (or the employees directly). With regard to GRI 407 on “freedom of association and collective bar- the involvement of “representatives”, the connection to free- gaining” also contains only one substandard. Under Standard dom of association then follows from the fact that these rep- 407-1 “the reporting organisation shall report the following resentatives can only be “trade union representatives” unless information: a. Operations and suppliers in which work- they are, which is also possible, employee representatives ers’ rights to exercise freedom of association or collective elected directly by the workforce (e.g. works councils). If bargaining may be violated or at significant risk either in one considers all this, it also becomes clear that both stand- terms of: i. type of operation (such as manufacturing plant) ards are closely connected. At the same time, they are the and supplier; ii. countries or geographic areas with opera- only standards that deal exclusively (GRI 407) or at least tions and suppliers considered at risk. b. Measures taken predominantly (GRI 402) with issues that labour lawyers by the organization in the reporting period intended to sup- classify as belonging to collective labour law. port rights to exercise freedom of association and collective bargaining”. In the Guidance it is further explained that this “ disclosure concerns an organization´s due diligence with Evaluation of standards respect to any adverse impacts its activities have had on the human rights of workers to form or join trade unions and Some general observations to bargain collectively. This can include policies and pro- cesses with respect to the organization’s business relation- Link with international labour standards ships, including its suppliers. It can also include the due diligence process to identify operations and suppliers where Looking at the GRI standards mentioned above as a whole, these rights are at risk. It also aims to reveal actions that it is noticeable that they are linked to a large extent to inter- have been taken to support these rights across an organiza- national labour standards. This is the case, for example, tion’s range of operations. This disclosure does not require with GRI 401 on “employment”. There, not only reference the organization to express a specific opinion on the quality is made to “key instruments of the International Labour of national legal systems”. As far as collective agreements Organisation” in the introduction, but the list of references are concerned, it is further explained that these “can be at the also contains numerous ILO Conventions. Also worth men- level of the organization; at the industry level, in countries tioning is GRI 402 on “labour-management relations” where where that is the practice; or at both”. In this context, the it is explicitly set out in the relevant Glossary that the defi- Guidance further reads: “Collective agreements can cover nition of “collective bargaining” is based on ILO Conven- specific groups of workers; for example, those performing a tion No. 154. The relevant list of reference encompasses specific activity or working at a specific location. An organi- ILO Conventions No. 87 on Freedom of Association and zation is expected to respect the rights of workers to exercise Protection of the Right to Organise, No. 98 on the Right freedom of association and collective bargaining. It is also to Organise and Collective Bargaining, No. 135 on “Work- expected to not benefit from or contribute to such violations ers’ Representatives”, No. 154 on Collective Bargaining and through its business relationships (e.g. suppliers)”. No. 158 on Termination of Employment. References to ILO Conventions can also be found in GRI 403 on “occupation Importance of standards and their inter‑relatedness health and safety”, GRI 404 on “training and education”, GRI 405 on “diversity and equal opportunity”; GRI 406 on The relevance of these two standards is primarily due to “non-discrimination”; GRI 407 on “freedom of association the paramount importance of freedom of association and and collective bargaining”; GRI 408 on “child labor”, and collective bargaining for the protection of workers: As the GRI 409 on “forced or compulsory labor”. In one case, there individual workers are typically the weaker party, it is pre- In this context, there are numerous references not only to ILO cisely the possibility of forming or joining trade unions and conventions, but also to other instruments such as the ILO code of thus of building countervailing power as guaranteed by free- practice on recording and notification of occupational accidents and dom of association, that opens up the prospect of concluding diseases or the ILO list of occupational diseases. 408 B. Waas is also a reference to the ILO monitoring system: In relation standards necessarily implies a clarification of their content, to freedom of association, GRI 407–1 expressly refers to and one that applies equally to all. In other words, the inter- “the various outcomes of the ILO Supervisory bodies and pretation of standards is a necessary component of the moni- the recommendations of the ILO Committee of Freedom of toring of standards. This means, however, that there is a uni- Association”. versally valid interpretation for all international standards, which can also be followed in the case of ECG criteria (and Importance of international labour standards also should be followed, if one does not want to break the link between them and International Labour Standards). It is That ESG rating systems should be linked to International the very existence of such “case law” which is an invaluable Labour Standards seems almost to be obvious. There are advantage because, for example, one does not have to worry substantive reasons for allowing the latter standards to shape about what the protection of freedom of association means in the former. First and foremost, International Labour Stand- concrete terms, but can simply follow the relevant findings ards express, almost by definition, a consensus on the work - of the ILO supervisory bodies in clarifying this question. ing conditions to be observed. The fact that it is a global con- sensus gives International Labour Standards an advantage Range and depth of international labour standards over standards such as the European Convention on Human Rights or the European Social Charter, whose scope is If, however, one considers International Labour Standards regionally limited; of course, this is not to diminish the fun- to be significant in the present context, then one should damental importance of these instruments, especially from also take them seriously. International Labour Standards a European perspective. A comparison with the Council of now cover (almost) the entire range of issues that arise with Europe, within whose framework the European Convention regard to the protection of workers. However, not all of the on Human Rights as well as the European Social Charter issues regulated in the corresponding ILO Conventions are was concluded, stresses another important feature of the reflected in the GRI Standards. This applies, to name just a ILO. This lies in the fact that it is a tripartite organization, few examples, to rights to time off, protection of workers´ so that not only the states, as is usually the case, but also pay claims, sickness pay, numerous questions of atypical the social partners, i.e. employers’ associations and trade employment or the protection of special groups of work- unions, are involved in setting standards. The consensus on ers. There is also an extensive gap in the protection against standards is thus not only a consensus between governments dismissal, which is particularly painful in view of its fun- (and parliaments), but a consensus that includes the organ- damental importance for the overall protection of workers. ised representatives of employers and workers. In addition, it is important to realise that many interna- On the other hand, one might perhaps consider that inter- tional legal guarantees are much more rich in substance national labour standards do not go far enough, precisely (as well as complex) than one may perhaps think at first because they are based on and presuppose a global consen- glance. Freedom of association is a good example. In reality, sus. However, the fact that International Labour Standards it contains a whole range of guarantees, from the freedom are global does not necessarily mean that they are not ambi- of individuals to form and join trade unions to the freedom tious. There are two main reasons why they are: First, the of associations to organise their own affairs and their right underlying standards are often quite challenging even from to collective bargaining. A closer look at these contents the perspective of Western industrialised countries; that can also help to weed out issues that are not relevant in the being one of the reasons why even countries with devel- present context. For example, it is obvious that freedom of oped labour law systems sometimes shy away from ratify- association is to a large extent directed exclusively at the ing certain conventions or have difficulties implementing state (which, for example, must provide a legal framework them into their national law after ratification. Irrespective for the conclusion of collective agreements), while, vis-à- of this, it should be noted that the ILO standards—which vis employers, freedom of association primarily contains a are inevitably broadly framed—are always further fleshed prohibition of obstruction and discrimination. out by the relevant supervisory bodies. For this reason, too, the International Labour Standards must be taken seriously. Specific considerations The fact that a comprehensive standards monitoring system exists within the ILO is also interesting for another Management approach disclosures reason. This is because the monitoring of compliance with As already stated above, under the GRI standards each company needs to provide information on its management 23 approach to a particular issue. Undoubtedly, the relevant The relevant list of references provides a link to the statements of information can be extremely useful precisely because it is this Committee. The “S” in ESG and international labour standards 409 capable of providing interested parties with a more compre- GRI 402-1 also raises some questions in other respects. For hensive picture of how a company approaches a particular example, the standard only deals with the company´s obliga- issue. Answering the question of what the “corporate phi- tions towards workers and their representatives. However, losophy” is on a particular issue is certainly of great value. the guideline talks about much more than that when express- However, there is always the danger that reports contain too ing the expectation that companies “provide reasonable little tangible information. In must be added in this regard notice of significant operational changes to employees and that much of the information to be provided is future-ori- their representatives, as well as to appropriate government ented: it is not least about “policies”, “commitments” and authorities”. The importance of informing public authori- “goals and targets”. In addition, it is noteworthy that while ties about upcoming operational changes is beyond doubt. there are references to "international standards," once in But one should expect this to be reflected in the text of the terms of policies and once in terms of commitments, these standard itself. are only recommendations and not requirements. Though GRI 407-1 also leaves room for doubts. It is obvious that it remains true that general information is certainly useful, the standard raises very different questions. With regard to the question arises whether the relevant general duties are GRI 407-1 lit. a), insofar as the standard is aimed at “opera- usefully supplemented by more specific information duties. tions”, it seems to be concerned with identifying possible This draws attention to the topic-specific disclosures. violations of freedom of association or certain risks to this in the company itself. As far as suppliers are mentioned, Topic‑specific disclosures it is about violations/risks that can be attributed to third party companies. GRI 407-1 lit. b), however, then deals If one examines GRI 402-1 in more detail, a number of ques- with something completely different, since the focus is not tions arise: This is already the case when reading the text on operations or third-party companies anymore, but on of the standard itself. For example, it is unclear why only “countries or geographical regions” in which freedom of GRI 402-1 lit lit. a) refers to minimum notice periods for association is at risk. Even more serious, however, is the significant operational changes, whereas GRI 402-1 lit. b) fact that much of the content remains unclear: Why should takes a much broader view by also asking whether collective a company have to report on possible violations/risks as far agreements contain “provisions for consultation and nego- as its own operations are concerned? And what is meant tiation”. Moreover, GRI 402-1 lit. b) does not seem to take by such possible violations/risks in the first place? It may into account that there are also agreements not qualifying well be that freedom of association is exposed to risks in as collective agreements as employees are represented by certain countries and regions according to law and practice; a works council. It also seems doubtful that GRI 402-1 lit. a circumstance that may be derived from the opinions of a), taken literally, only requires information on which mini- the ILO monitoring bodies, to which the Guidance indeed mum notification periods were "typically" observed by the makes explicit reference. However, it is not clear where the reporting organization, as this opens up the possibility for added value of such information should lie. In any case, companies to disregard cases in their report in which signifi - an overall anti-union climate says little about “how social” cant operational changes were only communicated with very a particular company is. And there should certainly be no short advance notice or not at all because they were consid- incentives for companies to avoid countries with an anti- ered particularly urgent and thus “atypical”. The standard union environment from the outset, even if their own policies thus seems to leave a considerable loophole for companies. in this regard are beyond reproach. On the contrary, it seems Finally, doubts arise about the standard because GRI 402- desirable for companies with a strong social conscience to 1(a), according to its wording, measures compliance with the lead the way, even and especially in a thorny environment. notice period by the “implementation” of the decision on the Neither can such an environment excuse anti-union behav- operational change. This seems problematic because it links iour, nor can a legal framework (and practice) that is in line the obligation to give notice to a point in time when the deci- with applicable international guarantees absolve companies sion on the operational change itself has already been taken of their own obligation to respect freedom of association. (and only its practical implementation is still pending). In Accordingly, only one question seems to make sense, namely that case, an obligation to give notice can scarcely be seen as whether a company was obliged by national regulations to serving the purpose of giving employees or their representa- tives an opportunity to have their say ; a circumstance that also seems hardly consistent with the fact that according to See also the Guidance where it is indicated that minimum notice the Guidance, the standard is about the company´s willing- periods “ultimately serve the purpose of maintaining “employee satis- ness to ensure “timely discussion of significant operational faction and motivation”. changes” and to engage “with its employees and their rep- 25 The Guidance also talks about „timely and meaningful consulta- resentatives to negotiate and implement these changes”. tion”. 410 B. Waas the article’s Creative Commons licence and your intended use is not take certain anti-union measures, so that its corresponding permitted by statutory regulation or exceeds the permitted use, you will conduct may not be held against it. need to obtain permission directly from the copyright holder. To view a copy of this licence, visit http://cr eativ ecommons. or g/licen ses/ b y/4.0/ . Conclusion References As already indicated, international labour standards exist for almost all working conditions. There are many reasons General Reporting Initiative, GRI-Standsrds. https:// www. globa lrepo rting. org/ stand ards why ESG criteria should refer to them. At the same time, General Reporting Initiative, GRI-Standards. https:// www. globa lrepo however, references to international standards could be rting. org/ stand ards deepened. In this way, a set of specific requirements could Hovary, La. 2015. Claire, A Challenging Ménage à Trois? Tripartism be developed that are missing today. This, however, would in the International Labour Organization. International Organiza- tions Law Review 12: 204–236. require a closer look at international labour standards. In ILO, Handbook of procedures relating to international labour Conven- particular, the interpretive practices of ILO supervisory bod- tions and Recommendations, Centenary Edition 2019. ies should be examined more closely. Going down this path ILO, Report of the Committee of Experts on the Application of Con- promises to be beneficial for all concerned: Filling the “S” ventions and Recommendations, International Labour Conference, 109th Session 2020. of the ESG criteria further with life would create more trans- parency and encourage companies to assume more social Publisher’s Note Springer Nature remains neutral with regard to responsibility. It could also contribute to the enforcement jurisdictional claims in published maps and institutional affiliations. of international human rights. Funding Open Access funding enabled and organized by Projekt DEAL. 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The “S” in ESG and international labour standards

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Springer Journals
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10.1057/s41310-021-00121-5
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Abstract

The paper examines the importance of international labour standards for ESG reporting. Keywords ESG · International labour standards · ILO Introduction rights, with the rights of workers playing an essential role. However, there seems to be less clarity about what specific Environmental, Social, and Corporate Governance (ESG) requirements should follow from this. refers to the three central factors in measuring the sustain- This paper aims to contribute to the discussion by taking a ability and societal impact of an investment in a company. closer look at the social responsibility of companies towards The topic is anything but new, but has recently gained sig- workers. Based on the assumption that social standards on nificant momentum. This is due not least to the trend toward the one hand and the protection of workers´ rights under basing investment decisions more strongly on ethical guide- international law on the other hand are closely interrelated, lines and sustainability. As a result, investment analysis is the international framework will be presented first (II.). This now more focused on ESG criteria than ever before. In an framework consists to a large extent of the so-called Inter- effort to more accurately capture the position on ESG, vari- national Labour Standards (ILS), i.e. the legal instruments ous ESG rating systems have emerged. There is no shortage elaborated within the International Labour Organisation of standards, indeed there is rather a certain abundance. (ILO) that lay down fundamental principles and rights at ESG rating systems rank companies based on ESG crite- work. Next, some of the standards that exist in the social ria and assess their performance on a sustainability scale. domain are presented (III.). Due to their widespread use and However, this is a tricky task. The dic ffi ulties that arise have practical importance, standards of the Global Reporting Ini- numerous causes. One is the sheer breadth of issues to be tiative (GRI) have been selected as examples, namely those addressed. Another is the fact that it is extremely challenging that relate to collective labour law issues. These standards to define objective criteria for the performance of companies are then discussed in more detail against the background (and even more difficult to measure it). This is particularly of the existing international legal framework in this regard true for social criteria, which at the same time seem to be (IV.). The paper ends with a short conclusion (V.). coming more and more into focus. There seems to be some consensus that many of the issues addressed by the crite- rion revolve around the observance of international human The international legal framework The International labour organisation Bernd Waas is a member of the Committee of Experts on the Application of Conventions and Recommendations (CEACR) of The International Labour Organisation (ILO) is a specialised the ILO. agency of the United Nations. Its headquarters are in Geneva. The ILO owes its existence to the Treaty of Versailles. Its * Bernd Waas Constitution forms Part XIII of that Treaty. The basic purpose Chair of Labour Law and Civil Law, Institute of Civil of the ILO is set out in the Preamble to the Constitution. Its and Commercial Law, Faculty of Law, Goethe University Frankfurt, Campus Westend, RuW, Theodor-W.-Adorno-Platz 4, 60629 Frankfurt am Main, See the Economist, Oct 3rd 2020: “In the soup—The proliferation Germany of sustainability accounting standards comes with costs”. Vol.:(0123456789) 404 B. Waas first sentence reads: “World peace can be built in the long run Conventions have legal effect after ratification by a member only on social justice”. A certain reorientation of the ILO’s state. There are currently 190 Conventions in force. Eight objectives then took place, under the impression of World conventions stand out because of their fundamental impor- War II, with the Philadelphia Declaration of 1944, whose tance: Convention No. 29 on Forced Labour; Convention much-quoted first principle reads: “Labour is not a com- No. 87 on Freedom of Association and Protection of the modity”. The ILO Declaration on Fundamental Principles Right to Organise, 1948; Convention No. 98 on the Right and Rights at Work, adopted in 1998, underlines the impor- to Organise and to Bargain Collectively, 1949; Convention tance of the so-called core labour standards and recognises No. 100 on Equal Remuneration, 1951; Convention No. 105 them as universal human rights in that “all Members, even on the Abolition of Forced Labour, 1957; Convention No. if they have not ratified the Conventions in question, have an 138 on Minimum Age, 1973; Convention No. 182 on Worst obligation arising from the very fact of membership in the Forms of Child Labour, 1999; and Convention No. 111 on Organization, to respect, to promote and to realize, in good Discrimination (Employment and Occupation), 1958. In faith and in accordance with the Constitution, the principles addition to these so-called fundamental conventions, there concerning the fundamental rights which are the subject of are four so-called governance conventions. Convention those Conventions”. With the Decent Work Agenda of 1999, No. 81 on Labour Inspection in Industry and Commerce the ILO focused its work on four strategic objectives, the first of 1947, in particular, is one of them. The remainder of the being the implementation of core labour standards. The so- Conventions is currently made up of the so-called technical called ILO Declaration on Social Justice for a Fair Globaliza- conventions. tion, adopted in 2008, specifies the ILO’s goals and takes into In addition to these standards, other ILO activities are account the particular challenges of globalisation. also relevant in the present context. Particular mention The main task of the ILO is to formulate and enforce should be made of the Tripartite declaration of principles international labour standards. The special feature of the concerning multinational enterprises and social policy organisation, apart from this specific purpose, lies in its tri- (MNE Declaration) which provides direct guidance to partite organisation. According to Art. 1(2) of the Constitu- enterprises on social policy and inclusive, responsible and tion of the ILO, members of the ILO are the states that were sustainable workplace practices and addresses multinational members of the organisation on 1 November 1945 and all enterprises, governments and employers´ and workers´ other states that joined later. However, within the ILO, work- organisations. This instrument was elaborated and adopted ers´ and employers´ representatives participate on an equal by governments, employers and workers from around the footing. This applies first of all to the work of the Interna- world. It is firmly rooted in principles contained in interna- tional Labour Conference (ILC), the highest organ of the tional labour standards, and on obligations that States have ILO, which meets once a year in Geneva. Each member state through their ILO membership and following their ratifica- has four delegates in the ILC, two of whom are government tion of ILO Conventions. representatives, while workers´ and employers´organisations each have one delegate. The primary task of the ILC is to Monitoring of standards formulate legal acts. The Governing Body is the executive body of the ILO and is composed of 56 representatives (28 With regard to the monitoring of compliance with ILO government representatives, 14 representatives each from standards by the member states, there is a sophisticated and the social partners). This body also appoints the Director it must be said relatively complicated mechanism involving General. The International Labour Office acts as the per - various actors. It will not be discussed in detail here, since a manent secretariat of the ILO. few basic facts should suffice in the present context. The Committee on Freedom of Association (CFA) is International labour standards responsible for complaints about alleged violations of freedom of association. To date, the Committee has issued ILO conventions and recommendations opinions on approximately 3,200 cases. The Committee has a tripartite structure. The Chairman of the Committee ILO standards are divided into conventions and recom- is independent. In addition to this and some other specific mendations: Recommendations are not open to ratification, mechanisms, there is regular machinery for supervising the but give guidance as to policy, legislation and practice. observance of obligations deriving from Conventions and Recommendations. Here, monitoring is based on reports which the members of the ILO have to submit at regular Art. 3(1) of the Constitution. Art. 7(1) of the Constitution. Art. 8(1) of the Constitution. See the ILO conventions and recommendations listed in Annex I of Art. 10 of the Constitution. the instrument. The “S” in ESG and international labour standards 405 intervals. It is important to note that the Member States are system the Committee of Experts alone is called upon to obliged to communicate their reports to the representative legally assess the law and practice of the Member States, is organisations of employers and employees in their coun- not in dispute among the parties involved. Quite apart from try. Where observations from those organisations on the this, another point is of importance in the present context, application of ratified Conventions are received by a govern- namely that the observations of the Committee of Experts ment, full details should be sent in the government’s report, have been taken up by numerous national and also by 9 14 together with the government’s response, if any. Regular international courts in questions of legal interpretation, supervision of standards is carried out, on the one hand, by which shows that they carry great weight, even if they are the Committee of Experts on the Application of Conventions not legally binding as such. and Recommendations (CEACR) and, on the other, by the Conference Committee on the Application of Standards (CAS). The Committee of Experts consists of independent GRI social standards experts. Its task is to provide an exclusively legal assessment on the basis of reports of Governments (and observations of As already mentioned in the introduction, only a fraction of the representative organisations of employers and employees the existing social standards can be discussed here. Instead, from the relevant country). It is then task of the CAS to con- only the standards of the Global Reporting Initiative will be sider individual cases relating to the application of ratified examined, and only those that address issues of collective Conventions. These cases, however, are selected and treated labour law. These standards can be found in the Consoli- 11 16 on the basis of the findings of the Committee of Experts. dated Set of GRI Sustainability Reporting Standards 2020. It is clear from the above that the reports of the Com- Generally speaking, there are two types of standards: On mittee of Experts are of paramount importance for under- the one hand, the so-called universal standards that apply standing ILO standards. This is true despite the fact that to every organisation preparing a sustainability report and the Committee—unlike, for example, the European Court of which aim primarily at contextual information about an Human Rights, which monitors compliance with the Euro- organization (GRI 102) as well as the management approach pean Convention on Human Rights—is not a court and that for each material topic (GRI 103), and on the other hand the its observations are not legally binding. And this is also true so-called topic-specific standards. With regard to the latter, despite the fact that the mandate of the Committee is not a distinction is made between three areas, so that there are undisputed among the constituents of the ILO, a dispute economic, environmental and social standards. Obviously, it that is only superficially about the international legal guar - is the latter set of standards that are the focus of interest here. antee of the right to strike (which the Committee affirms), but which might go deeper. This is because the core of the mandate, namely that within the standards monitoring From the Supreme Court of Canada, for example, or the Constitu- tional Court of South Africa. Art. 22(1) of the Constitution. Particularly noteworthy in this respect is the European Court of Art. 22(2) of the Constitution. Human Rights, which in its decisions relatively often refers to find- ings of the CEACR (and of those of the CFA). Employers’ and workers’ organizations may also send observations directly to the Office. See ILO, Handbook of procedures relating to See also the description of its mandate by the Committee itself international labour Conventions and Recommendations, Centenary in the Report of the Committee of Experts on the Application of Edition 2019, para. 40. Conventions and Recommendations, International Labour Confer- See ILO (footnote 9), para. 60: “The Committee’s fundamental ence, 109th Session 2020, para 36: “(…) The Committee of Experts principles are those of independence, impartiality and objectivity in undertakes an impartial and technical analysis of how the Conven- noting the extent to which the position in each State appears to con- tions are applied in law and practice by member States, while cog- form to the terms of the Conventions and the obligations accepted nizant of different national realities and legal systems. In doing so, under the ILO Constitution”. it must determine the legal scope, content and meaning of the provi- sions of the Conventions. Its opinions and recommendations are non- See ILO (footnote 9), para 66: “Following the independent, techni- binding, being intended to guide the actions of national authorities. cal examination of documentation carried out by the Committee of They derive their persuasive value from the legitimacy and rational- Experts, the proceedings of the Conference Committee present an ity of the Committee’s work based on its impartiality, experience and opportunity for representatives of governments, employers and work- expertise. The Committee’s technical role and moral authority is well ers to meet and review the manner in which States are discharging recognized, particularly as it has been engaged in its supervisory task their obligations under and relating to Conventions and Recommen- for more than 90  years, by virtue of its composition, independence dations. Governments are able to amplify information previously sup- and its working methods built on continuing dialogue with govern- plied; indicate further measures proposed; draw attention to difficul- ments taking into account information provided by employers´ and ties met with in the discharge of obligations; and seek guidance as to workers´ organizations. This has been reflected in the incorporation how to overcome such difficulties”. of the Committee’s opinions and recommendations in national legis- See, for instance, La Hovary, A Challenging Ménage à Trois? lation, international instruments and court decisions”. Tripartism in the International Labour Organization, International Organizations Law Review, 12 2015 pp. 204–236. https:// www. globa lrepo rting. org. 406 B. Waas more detailed examination. However, this cannot be done Overview of existing standards here for all standards related to the position of workers. Instead, GRI 402 on “labour-management relations” and The social standards contain quite a few criteria that aim at the position of workers. The following standards are worth GRI 407 on “freedom of association and collective bargain- ing” will be discussed here by way of example, as they deal mentioning: 401, which deals with “employment” ; GRI 402 on “labour-management relations”; GRI 403 on “occu- with highly significant issues, also in practical terms, and are closely interrelated, as will be shown in a moment. pational health and safety”; GRI 404 on “training and educa- tion”; GRI 405 on “diversity and equal opportunity”; 406 on Management approach disclosures “non-discrimination”; GRI 407 on “freedom of association and collective bargaining”; GRI 408 on “child labor”, 409 As already mentioned, all GRI standards first require infor - on “forced or compulsory labor”. A few standards somehow relate to the position of staff. This applies to GRI 410 on mation on the management approach that companies pursue with regard to certain problem areas. This also applies to “security practices”; GRI 411 on the “rights of indigenous people “; GRI 412 on “human rights assessment”, and, GRI 402-1 and 407-1. The benchmarks for this are derived from the general standard GRI 103. Without being able to finally, GRI 414 on “supplier social assessment”. All these standards are, in a sense, two-part. Firstly, go into detail here, the companies must provide information on the extent to which they come into contact with a cer- there is, in general terms, the obligation to report on how an organization manages a certain issue. What is required in tain topic through their actions or what effects their actions have in these areas (GRI 103-1). More importantly, they this respect is “a narrative explanation of how an organiza- tion manages a material topic, the associated impacts, and must provide information on their specific management approach. This requires, above all, information on policies stakeholders’ reasonable expectations and interests”. These so-called management approach disclosures are then joined commitments, goals and targets, responsibilities, resources; grievance mechanisms, and specific actions, such as pro- by so-called topic-specific disclosures. Most of the standards mentioned are presented after an introduction. Moreover, cesses, projects, programs and initiatives (GRI 103-2 lit. c). Finally, the company must provide an explanation of how so-called reporting requirements and so-called reporting 20 21 recommendations as well as short guidance notes are the organization evaluates its management approach, includ- ing: the mechanisms for evaluating the effectiveness of the formulated for each standard or each subgroup of standards. Each standard is then followed by a glossary and a list of management approach; the results of the evaluation of the management approach; and any related adjustments to the references. management approach. (GRI 102-3). According to the rel- evant guidance note, mechanisms for monitoring the effec- A closer look at GRI 402 and 407 tiveness of the management approach can include: internal or external auditing or verification (type, system, scope); A serious evaluation of the GRI standards from the perspec- tive of international labour law would obviously require a measurement systems; external performance ratings; bench- marking; stakeholder feedback; and grievance mechanisms. Topic‑specific disclosures In the so-called background context which forms part of the “Introduction” to the standard, it is explained that GRI GRI 402 contains only one sub-standard. GRI 402-1 on 401 “addresses the topic of employment” which “includes an “disclosure” requires the reporting organisation to “report organization´s approach to employment or job creation, that is, an the following information: a. Minimum number of weeks’ organizations approach to hiring, recruitment, retention and related practices, and the working conditions it provides”. It is further notice typically provided to employees and their repre- explained that the standard “also covers the employment and working sentatives prior to the implementation of significant opera- conditions in an organization’s supply chain”. tional changes that could substantially affect them. b. For Details can be found in GRI 103. organisations with collective bargaining agreements, report These are „mandatory instructions”. Requirements “are to be read whether the notice period and provisions for consultation in the context of recommendations and guidance; however, an organi- and negotiation are specified in collective agreement”. The zation is not required to comply with recommendations or guidance in order to claim that a report has been prepared in accordance with “background context” which forms part of the introduction the Standards”. reads as follows: “GRI 402 addresses the topic of labor/ Recommendations relate to “cases where a particular course of management relations. This covers an organisation’s con- action is encouraged, but not required”. sultative practices with employees and their representatives, The relevant sections “include background information, expla- including its approach to communicating significant opera- nations and examples to help organizations better understand the tional changes. An organisation’s consultation practices are requirements”. The “S” in ESG and international labour standards 407 expected to be aligned with relevant international norms and collective agreements, which in turn are far more likely than standards. Collective bargaining can play an important role the individual employment contract to lead to fair work- in an organisation’s consultation practices. Collective bar- ing conditions. Whereas GRI 407 directly addresses these gaining refers to all negotiations which take place between issues, GRI 402 relates to them insofar as—with regard to one or more employers or employers´ organisations, on the the possibility of having a say in significant operational one hand, and one or more workers´ organizations (trade changes—it refers on the one hand to corresponding provi- unions), on the other, for determining working conditions sions in collective agreements (GRI 407-1 lit. b) and on the and terms of employment or for regulating relations between other (GRI 407-1 lit. a) to the obligation to notify employee employers and workers”. representatives (or the employees directly). With regard to GRI 407 on “freedom of association and collective bar- the involvement of “representatives”, the connection to free- gaining” also contains only one substandard. Under Standard dom of association then follows from the fact that these rep- 407-1 “the reporting organisation shall report the following resentatives can only be “trade union representatives” unless information: a. Operations and suppliers in which work- they are, which is also possible, employee representatives ers’ rights to exercise freedom of association or collective elected directly by the workforce (e.g. works councils). If bargaining may be violated or at significant risk either in one considers all this, it also becomes clear that both stand- terms of: i. type of operation (such as manufacturing plant) ards are closely connected. At the same time, they are the and supplier; ii. countries or geographic areas with opera- only standards that deal exclusively (GRI 407) or at least tions and suppliers considered at risk. b. Measures taken predominantly (GRI 402) with issues that labour lawyers by the organization in the reporting period intended to sup- classify as belonging to collective labour law. port rights to exercise freedom of association and collective bargaining”. In the Guidance it is further explained that this “ disclosure concerns an organization´s due diligence with Evaluation of standards respect to any adverse impacts its activities have had on the human rights of workers to form or join trade unions and Some general observations to bargain collectively. This can include policies and pro- cesses with respect to the organization’s business relation- Link with international labour standards ships, including its suppliers. It can also include the due diligence process to identify operations and suppliers where Looking at the GRI standards mentioned above as a whole, these rights are at risk. It also aims to reveal actions that it is noticeable that they are linked to a large extent to inter- have been taken to support these rights across an organiza- national labour standards. This is the case, for example, tion’s range of operations. This disclosure does not require with GRI 401 on “employment”. There, not only reference the organization to express a specific opinion on the quality is made to “key instruments of the International Labour of national legal systems”. As far as collective agreements Organisation” in the introduction, but the list of references are concerned, it is further explained that these “can be at the also contains numerous ILO Conventions. Also worth men- level of the organization; at the industry level, in countries tioning is GRI 402 on “labour-management relations” where where that is the practice; or at both”. In this context, the it is explicitly set out in the relevant Glossary that the defi- Guidance further reads: “Collective agreements can cover nition of “collective bargaining” is based on ILO Conven- specific groups of workers; for example, those performing a tion No. 154. The relevant list of reference encompasses specific activity or working at a specific location. An organi- ILO Conventions No. 87 on Freedom of Association and zation is expected to respect the rights of workers to exercise Protection of the Right to Organise, No. 98 on the Right freedom of association and collective bargaining. It is also to Organise and Collective Bargaining, No. 135 on “Work- expected to not benefit from or contribute to such violations ers’ Representatives”, No. 154 on Collective Bargaining and through its business relationships (e.g. suppliers)”. No. 158 on Termination of Employment. References to ILO Conventions can also be found in GRI 403 on “occupation Importance of standards and their inter‑relatedness health and safety”, GRI 404 on “training and education”, GRI 405 on “diversity and equal opportunity”; GRI 406 on The relevance of these two standards is primarily due to “non-discrimination”; GRI 407 on “freedom of association the paramount importance of freedom of association and and collective bargaining”; GRI 408 on “child labor”, and collective bargaining for the protection of workers: As the GRI 409 on “forced or compulsory labor”. In one case, there individual workers are typically the weaker party, it is pre- In this context, there are numerous references not only to ILO cisely the possibility of forming or joining trade unions and conventions, but also to other instruments such as the ILO code of thus of building countervailing power as guaranteed by free- practice on recording and notification of occupational accidents and dom of association, that opens up the prospect of concluding diseases or the ILO list of occupational diseases. 408 B. Waas is also a reference to the ILO monitoring system: In relation standards necessarily implies a clarification of their content, to freedom of association, GRI 407–1 expressly refers to and one that applies equally to all. In other words, the inter- “the various outcomes of the ILO Supervisory bodies and pretation of standards is a necessary component of the moni- the recommendations of the ILO Committee of Freedom of toring of standards. This means, however, that there is a uni- Association”. versally valid interpretation for all international standards, which can also be followed in the case of ECG criteria (and Importance of international labour standards also should be followed, if one does not want to break the link between them and International Labour Standards). It is That ESG rating systems should be linked to International the very existence of such “case law” which is an invaluable Labour Standards seems almost to be obvious. There are advantage because, for example, one does not have to worry substantive reasons for allowing the latter standards to shape about what the protection of freedom of association means in the former. First and foremost, International Labour Stand- concrete terms, but can simply follow the relevant findings ards express, almost by definition, a consensus on the work - of the ILO supervisory bodies in clarifying this question. ing conditions to be observed. The fact that it is a global con- sensus gives International Labour Standards an advantage Range and depth of international labour standards over standards such as the European Convention on Human Rights or the European Social Charter, whose scope is If, however, one considers International Labour Standards regionally limited; of course, this is not to diminish the fun- to be significant in the present context, then one should damental importance of these instruments, especially from also take them seriously. International Labour Standards a European perspective. A comparison with the Council of now cover (almost) the entire range of issues that arise with Europe, within whose framework the European Convention regard to the protection of workers. However, not all of the on Human Rights as well as the European Social Charter issues regulated in the corresponding ILO Conventions are was concluded, stresses another important feature of the reflected in the GRI Standards. This applies, to name just a ILO. This lies in the fact that it is a tripartite organization, few examples, to rights to time off, protection of workers´ so that not only the states, as is usually the case, but also pay claims, sickness pay, numerous questions of atypical the social partners, i.e. employers’ associations and trade employment or the protection of special groups of work- unions, are involved in setting standards. The consensus on ers. There is also an extensive gap in the protection against standards is thus not only a consensus between governments dismissal, which is particularly painful in view of its fun- (and parliaments), but a consensus that includes the organ- damental importance for the overall protection of workers. ised representatives of employers and workers. In addition, it is important to realise that many interna- On the other hand, one might perhaps consider that inter- tional legal guarantees are much more rich in substance national labour standards do not go far enough, precisely (as well as complex) than one may perhaps think at first because they are based on and presuppose a global consen- glance. Freedom of association is a good example. In reality, sus. However, the fact that International Labour Standards it contains a whole range of guarantees, from the freedom are global does not necessarily mean that they are not ambi- of individuals to form and join trade unions to the freedom tious. There are two main reasons why they are: First, the of associations to organise their own affairs and their right underlying standards are often quite challenging even from to collective bargaining. A closer look at these contents the perspective of Western industrialised countries; that can also help to weed out issues that are not relevant in the being one of the reasons why even countries with devel- present context. For example, it is obvious that freedom of oped labour law systems sometimes shy away from ratify- association is to a large extent directed exclusively at the ing certain conventions or have difficulties implementing state (which, for example, must provide a legal framework them into their national law after ratification. Irrespective for the conclusion of collective agreements), while, vis-à- of this, it should be noted that the ILO standards—which vis employers, freedom of association primarily contains a are inevitably broadly framed—are always further fleshed prohibition of obstruction and discrimination. out by the relevant supervisory bodies. For this reason, too, the International Labour Standards must be taken seriously. Specific considerations The fact that a comprehensive standards monitoring system exists within the ILO is also interesting for another Management approach disclosures reason. This is because the monitoring of compliance with As already stated above, under the GRI standards each company needs to provide information on its management 23 approach to a particular issue. Undoubtedly, the relevant The relevant list of references provides a link to the statements of information can be extremely useful precisely because it is this Committee. The “S” in ESG and international labour standards 409 capable of providing interested parties with a more compre- GRI 402-1 also raises some questions in other respects. For hensive picture of how a company approaches a particular example, the standard only deals with the company´s obliga- issue. Answering the question of what the “corporate phi- tions towards workers and their representatives. However, losophy” is on a particular issue is certainly of great value. the guideline talks about much more than that when express- However, there is always the danger that reports contain too ing the expectation that companies “provide reasonable little tangible information. In must be added in this regard notice of significant operational changes to employees and that much of the information to be provided is future-ori- their representatives, as well as to appropriate government ented: it is not least about “policies”, “commitments” and authorities”. The importance of informing public authori- “goals and targets”. In addition, it is noteworthy that while ties about upcoming operational changes is beyond doubt. there are references to "international standards," once in But one should expect this to be reflected in the text of the terms of policies and once in terms of commitments, these standard itself. are only recommendations and not requirements. Though GRI 407-1 also leaves room for doubts. It is obvious that it remains true that general information is certainly useful, the standard raises very different questions. With regard to the question arises whether the relevant general duties are GRI 407-1 lit. a), insofar as the standard is aimed at “opera- usefully supplemented by more specific information duties. tions”, it seems to be concerned with identifying possible This draws attention to the topic-specific disclosures. violations of freedom of association or certain risks to this in the company itself. As far as suppliers are mentioned, Topic‑specific disclosures it is about violations/risks that can be attributed to third party companies. GRI 407-1 lit. b), however, then deals If one examines GRI 402-1 in more detail, a number of ques- with something completely different, since the focus is not tions arise: This is already the case when reading the text on operations or third-party companies anymore, but on of the standard itself. For example, it is unclear why only “countries or geographical regions” in which freedom of GRI 402-1 lit lit. a) refers to minimum notice periods for association is at risk. Even more serious, however, is the significant operational changes, whereas GRI 402-1 lit. b) fact that much of the content remains unclear: Why should takes a much broader view by also asking whether collective a company have to report on possible violations/risks as far agreements contain “provisions for consultation and nego- as its own operations are concerned? And what is meant tiation”. Moreover, GRI 402-1 lit. b) does not seem to take by such possible violations/risks in the first place? It may into account that there are also agreements not qualifying well be that freedom of association is exposed to risks in as collective agreements as employees are represented by certain countries and regions according to law and practice; a works council. It also seems doubtful that GRI 402-1 lit. a circumstance that may be derived from the opinions of a), taken literally, only requires information on which mini- the ILO monitoring bodies, to which the Guidance indeed mum notification periods were "typically" observed by the makes explicit reference. However, it is not clear where the reporting organization, as this opens up the possibility for added value of such information should lie. In any case, companies to disregard cases in their report in which signifi - an overall anti-union climate says little about “how social” cant operational changes were only communicated with very a particular company is. And there should certainly be no short advance notice or not at all because they were consid- incentives for companies to avoid countries with an anti- ered particularly urgent and thus “atypical”. The standard union environment from the outset, even if their own policies thus seems to leave a considerable loophole for companies. in this regard are beyond reproach. On the contrary, it seems Finally, doubts arise about the standard because GRI 402- desirable for companies with a strong social conscience to 1(a), according to its wording, measures compliance with the lead the way, even and especially in a thorny environment. notice period by the “implementation” of the decision on the Neither can such an environment excuse anti-union behav- operational change. This seems problematic because it links iour, nor can a legal framework (and practice) that is in line the obligation to give notice to a point in time when the deci- with applicable international guarantees absolve companies sion on the operational change itself has already been taken of their own obligation to respect freedom of association. (and only its practical implementation is still pending). In Accordingly, only one question seems to make sense, namely that case, an obligation to give notice can scarcely be seen as whether a company was obliged by national regulations to serving the purpose of giving employees or their representa- tives an opportunity to have their say ; a circumstance that also seems hardly consistent with the fact that according to See also the Guidance where it is indicated that minimum notice the Guidance, the standard is about the company´s willing- periods “ultimately serve the purpose of maintaining “employee satis- ness to ensure “timely discussion of significant operational faction and motivation”. changes” and to engage “with its employees and their rep- 25 The Guidance also talks about „timely and meaningful consulta- resentatives to negotiate and implement these changes”. tion”. 410 B. Waas the article’s Creative Commons licence and your intended use is not take certain anti-union measures, so that its corresponding permitted by statutory regulation or exceeds the permitted use, you will conduct may not be held against it. need to obtain permission directly from the copyright holder. To view a copy of this licence, visit http://cr eativ ecommons. or g/licen ses/ b y/4.0/ . Conclusion References As already indicated, international labour standards exist for almost all working conditions. There are many reasons General Reporting Initiative, GRI-Standsrds. https:// www. globa lrepo rting. org/ stand ards why ESG criteria should refer to them. At the same time, General Reporting Initiative, GRI-Standards. https:// www. globa lrepo however, references to international standards could be rting. org/ stand ards deepened. In this way, a set of specific requirements could Hovary, La. 2015. Claire, A Challenging Ménage à Trois? Tripartism be developed that are missing today. This, however, would in the International Labour Organization. International Organiza- tions Law Review 12: 204–236. require a closer look at international labour standards. In ILO, Handbook of procedures relating to international labour Conven- particular, the interpretive practices of ILO supervisory bod- tions and Recommendations, Centenary Edition 2019. ies should be examined more closely. Going down this path ILO, Report of the Committee of Experts on the Application of Con- promises to be beneficial for all concerned: Filling the “S” ventions and Recommendations, International Labour Conference, 109th Session 2020. of the ESG criteria further with life would create more trans- parency and encourage companies to assume more social Publisher’s Note Springer Nature remains neutral with regard to responsibility. It could also contribute to the enforcement jurisdictional claims in published maps and institutional affiliations. of international human rights. Funding Open Access funding enabled and organized by Projekt DEAL. Open Access This article is licensed under a Creative Commons Attri- bution 4.0 International License, which permits use, sharing, adapta- tion, distribution and reproduction in any medium or format, as long as you give appropriate credit to the original author(s) and the source, provide a link to the Creative Commons licence, and indicate if changes were made. The images or other third party material in this article are included in the article’s Creative Commons licence, unless indicated otherwise in a credit line to the material. If material is not included in

Journal

International Journal of Disclosure and Governance – Springer Journals

Published: Dec 1, 2021

Keywords: ESG; International labour standards; ILO

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