Good for business

Increase worker retention, reduce risk, innovate.

A Tufts University study of Better Work Vietnam found that better working conditions are linked to higher levels of worker productivity.

One estimate found that workers reach daily production targets nearly 40 minutes faster in these working environments compared with workers in factories with worse conditions. The impact assessment also found the reduction of verbal and sexual abuse also resulted in higher levels of productivity and better business performance.

Better working conditions not only helps workers, it also improves productivity and company performance.

Credit: Manan Vatsyayana

Credit: Manan Vatsyayana.

Ethical recruitment practices increase worker loyalty and retention.

An assessment by Stern of a contracting and construction company in Qatar, QDVC, indicates a number of benefits associated with responsible recruitment. QDVC has demonstrated a greater retention of workers evident in the fact that the company has not had to undertake any additional recruitment since the 2015-16 recruitment drive.

Interviews with QDVC workers indicate strong loyalty to the company, largely due to the recruitment experience that was unmirrored in the experiences of their peers with other companies. The report finds that 94 per cent of workers would recommend QDVC to friends or relatives.

“Forced labour is illegal in almost all circumstances. Therefore, those seeking to continue this practice generally engage in other illegal activity, such as bribery, or the use of force, to protect their interest.”

Kevin Bales

Professor of Contemporary Slavery,

University of Nottingham

Credit: VCG

Ethical and transparent practices avoid inefficient allocation of capital.

An ethical chocolate company, Tony’s Chocolonely, found that increasing the cocoa farm gate price to producers resulted in higher yields. This is because the higher payments made to cocoa farmers are then invested, via a co-operative supported by Tony’s Chocolonely, in better equipment, warehousing, fertiliser and training for labourers as well as community projects. Labour is better organised and more professional.

The higher-skilled employees coupled with better equipment (i.e. capital) and more direct relationships with farmers has led to higher productivity. This had a profound impact on families who could now send children to school while maintaining those yields.

Credit: Cristina Aldehuela

Credit: Cristina Aldehuela.

Reduce risk, save costs and differentiate.

According to Stern’s Sustainable Procurement Barometer, more than half of respondents (58 per cent) said that they are better able to mitigate risks thanks to their sustainable procurement program. Thirty per cent have been able to save costs. A quarter of respondents found that their sustainable procurement programs contributed to innovation and enabled access to new categories and price premiums from differentiation.

Transparency is critical for companies to build supply chain resilience – the ability to reduce the impact and recover from risk events. Without visibility into supply chains, a company may be exposed to risks that they are not aware of, leading to legal, financial, and reputational consequences. (Deloitte’s Path to Supply Chain Transparency)

Furthermore, the existence of forced labour can encourage criminal and corrupt activities. Those seeking to continue this practice generally engage in other illegal activities, such as bribery or the use of force, to protect their interests. Eliminating forced labour is likely to be associated with a reduction in corrupt practices.