Creating transparency on living wages: The urgent need to improve EU reporting standards

September 15, 2025

By
Ruben Zandvliet, Director for Standards and member of the EFRAG Sustainability Reporting Board & Jonathan Milläng, Senior Advisor

____

Global debates on poverty reduction and inequality are increasingly centered on the concept of a living wage. Upholding this human right is essential, as it raises the standard of living for vulnerable workers and creates the conditions for other key rights to be realized – including access to food, water, health, housing, education, family life, and fair working hours

Given its huge implications for millions around the world, it is critical that EFRAG — the European body advising the European Commission on reporting standards — gets the balance on living wages right in the revision of the European Sustainability Reporting Standards (ESRS).

The revision of the ESRS is part of the EU’s broader “Omnibus” initiative to simplify sustainability reporting and due diligence requirements, alongside proposed changes to the Corporate Sustainability Reporting Directive (CSRD) and the Corporate Sustainability Due Diligence Directive (CSDDD).

A critical step in advancing living wages is greater corporate transparency. For this reason, the ESRS must include strong disclosure requirements on “adequate wages”— the EU’s term for what is more widely known as a living or fair wage. When the ESRS were first adopted in 2023, few companies reported on living wages and the International Labour Organization (ILO) had not yet adopted its Principles for the Estimation of Living Wages. The ongoing revision of the ESRS under the EU’s Omnibus Simplification Package therefore provides an important opportunity to strengthen the relevant disclosure requirement. Unfortunately, the current Exposure Draft falls short of this expectation.

EFRAG is accepting comments on the draft until 29 September. This is a crucial moment to push for meaningful transparency on living wages.

The problem: A discriminatory and confusing standard

Under the revised draft ESRS, companies are still instructed to apply the “adequate wage” standard only for employees in the EU while relying on legal minimum wages as the benchmark for those outside the EU. This approach is deeply flawed:

  1. Minimum ≠ Adequate: In most countries, legal minimum wages fall well below what is needed for a decent standard of living. According to WageIndicator, only 29 of 178 countries have minimum wages that exceed living wage levels.
  2. Discriminatory: Employees outside the EU are measured against a weaker standard than their EU counterparts, creating a two-tier system that is unfair to workers, contrary to EU values, and misleading for investors and others who rely on companies’ reporting.

The draft further complicates matters by pushing the responsibility onto companies to determine whether local wage benchmarks align with ILO principles. While the ILO principles should indeed be the global reference point, expecting companies to make these technical determinations themselves is unrealistic. You can read our full analysis of the proposal here.

The consequence: Misleading disclosures and eroded trust

In the first year of ESRS reporting, many companies claimed to pay “adequate wages” to employees outside the EU simply because they met local minimum wage requirements. This undermines the credibility of disclosures and makes it impossible for investors, workers, and other stakeholders to compare practices across companies and geographies.

The opportunity: A fairer, smarter approach

The consultation on the revised ESRS runs until 29 September. This is a chance to correct the flaws in the Disclosure Requirement on adequate wages (S1-9) and ensure the standard lives up to its potential. We urge companies, investors, trade unions, civil society organizations, and living wage experts to contribute to the consultation. 

The ESRS framework has the potential to be a powerful driver of transparency and accountability. But without the right reference points and methodologies that reflect the actual meaning of disclosures, much of that potential will be lost. Now is the time to get the details right.

👉 We encourage all stakeholders to engage in the process through the Public Consultation Survey. For those responding, Question 28: ESRS S1 – Calculation approach to adequate wages outside the EU – is the place to register concerns with the proposed approach. Our analysis offers perspectives that may help in shaping a response.

For further reading: See our full analysis Making ESRS disclosures on adequate wages (S1-9) fair and workable here.

The John Ruggie Fellowship Program

John Ruggie was a preeminent scholar-practitioner in the field of international affairs, whose work as a political scientist focused on the impact of globalization on international rule-making. He was, among other roles, the UN Secretary-General’s Special Representative on business and human rights, the author of the UN Guiding Principles on Business and Human Rights (UNGPs) and the founding chair of Shift, the nonprofit, mission-driven organization dedicated to implementing the UNGPs. 

Since then, the UNGPs have become the foundation for a shared set of expectations regarding companies’ impacts on people, and have been increasingly integrated into international standards, industry commitments, guidance, and national and regional laws and policies.

Throughout his career, John was a tireless champion of both students and practitioners in the fields in which he worked. He consistently sought out, consulted and supported individuals from all backgrounds and perspectives, to grow and enrich the community of people working to turn the vision of the UNGPs into a reality. 

To carry forward his spirit of mentorship and opportunity, in 2022, together with John Ruggie’s family, Shift announced the establishment of the John Ruggie Fellowship Program to honor John’s life and legacy and enable talented business and human rights students to advance their careers and contribution to the field. It particularly seeks to support students who may otherwise lack access to such opportunities.

Each year, Shift will partner with a small number of organizations across a spectrum of actors in the business and human rights field to support the placement of individual Fellows. Shift is pleased to announce that the host organizations for the 2025 John Ruggie Fellowship Program are:

  • Accountability Counsel, a nonprofit organization that amplifies the voices of communities around the world to protect their human rights and environment. As advocates for people harmed by internationally financed projects, they employ community-driven and policy-level strategies to enable access to justice.
  • PepsiCo, a global food and beverage company that recognizes they have a clear responsibility to respect human rights throughout their business and broader value chain. To help ensure that they are in the best position to prevent, identify, and address potential impacts across their value chain, they have established a global human rights management approach that is guided by the UNGPs.
  • Verité, a nonprofit organization that illuminates and addresses serious human rights and labor rights violations in factories, farms, and other workplaces around the world. They work with private and public sector clients by building their understanding of labor rights problems in global supply chains and developing their abilities to solve those problems.

The organizations are reflective of the diversity of actors in the business and human rights field, and share a demonstrated commitment to the implementation of the UNGPs. They all have considerable experience running fellowship and internship programs and are committed to delivering a high-value immersive experience for the Fellows.

We are confident that each of these host organizations will provide a rich learning experience for individual Fellows looking to gain practical experience and access to ideas and networks that will support their growth in the field of business and human rights. We look forward to working with them to ensure the ongoing success of the John Ruggie Fellowship Program.

Caroline Rees & Rachel Davis, Shift co-founders

Application Process:

Each host organization will provide detail on their John Ruggie Fellowship Program opportunity and application process. Interested individuals should follow the host organization’s guidance.

To learn more about the program, please contact: Suba.Jayasekaran@shiftproject.org


For more information on the John Ruggie Legacy Fund, please visit the webpage.