A decade ago, more than 1,100 people died when the Rana Plaza, an 8-story factory in Bangledesh, collapsed. Workers, noticing cracks in the structure for weeks, begged management not to be sent inside the building, but to no avail. Once it started to fail, it took less than 90 seconds for the building to collapse.
The incident, which union leaders called a “mass industrial homicide”, raised questions about fair labor practice and has been the impetus for a series of changes in the retail space. Global organizations have taken steps to create safer work patterns. Now, service location resolutions frequently appear in retailers’ environmental, social and governance reports, which are becoming increasingly important to investors and other stakeholders.
More and more consumers and investors are starting to see the policies of some retailers as at odds with much of their ESG-based rhetoric, such as collective bargaining, especially when their workers try to form a union. This phenomenon occurred to the detriment of the high unemployment rate, the flexibilization of labor laws such as the adoption of the reform, and the increase in non-formal contracts, which do not provide for the benefits offered by the CLT.
Despite these economic factors, what many experts are calling new union activism hits another important key in a service environment: safety. In this matter, on the one hand, we see that with the pandemic, a good part of the workers in stores and warehouses were labeled as “essential”, especially during their peak. However, in another perspective, many have criticized the security measures and the lack of transparency in their places of activity.
It is important to understand that salaries alone are no longer at the heart of the problem. Professionals want – and need quality of life, all of which are highlighted with emphasis on the pandemic. Freedom of association and collective bargaining is one of the pillars of basic human rights and, more than that, for leaders an excellent feedback on how their companies are in relation to the social part of an ESG policy.
In addition, there is growing shareholder interest in these issues not only out of concern for human rights, but also out of a widespread feeling that organized labor presents an opportunity to stabilize the business. This is already true for European investors, where unions are more common and collective bargaining is routine.
In light of that old maxim that your employees are your first customers, the formalized agreement with work can be an essential topic to raise the social level of any industry to another level. Looking at it from another angle, it should be a potential way to build on sustainability, not necessarily investing in research and data, but just listening to your own stakeholders who are impacted, whether in your own operations or your supply chains.
In addition, social issues are also important to consumers, especially Gen Z. According to McKinsey’s Consumer Pulse report, more than two-thirds of young consumers said at least one ESG issue is important to them, even in a time when inflation is invading household budgets. They see it as vital to how, where and by whom their products are being purchased, selecting them for personal values despite the financial factor.
Following this trend, Barclays recently issued a note to its customers indicating that consumer attitudes towards ESG are becoming truly multifaceted. In doing so, they reaffirmed the need for retailers to need to think hard about ESG as it is affecting their business widely.
So far, most have focused heavily on environmental considerations, however, more recently, it is imperative to increasingly cover social and governance aspects. So it is certainly much better for retailers to make the choice to incorporate ESG into their culture rather than waiting to be beaten and risking their future relevance.
In other words, corporations will likely have to work harder to match their ESG goals with their internal reality. There is a certainty that the rise of employee voice will not go away. Companies can choose to fight this movement tooth and nail, or they can embrace it and try to work successfully in this new world. It’s time for retailers to choose whether to opt for the blue pill or the red pill.
Adriano da Silva Santos is a journalist and writer, graduated from Universidade Nove de Julho (UNINOVE).