Living Wage Accounting Model and Progress Tool

Ensuring a living wage is one of the most impactful actions a company can take to respect human rights and help tackle social inequality.

Shift, the Capitals Coalition and Forvis Mazars are launching a free downloadable Progress Tool for companies to account for their progress towards implementing living wages. The Progress Tool  has been developed to enable standardized, meaningful, and comparable reporting on progress towards living wages made by companies in their workforce and first tier supply chain. 

Companies can enter wage data, use whichever recognized living wage estimate they prefer, and receive clear metrics that can be disaggregated to facility, region or country level or aggregated globally. The results can be used to track progress over time and identify hotspots requiring priority attention. 

About the Progress Tool

The Progress Tool provides the most accurate insights when companies can input actual wage data, as they are able to do for their own employees. Companies that have signed up to UN Global Compact’s Living Wage Target to achieve 100% of employees earning a living wage by 2030 can use the Progress Tool to meet their reporting obligations. 

Two additional versions of the Progress Tool will enable companies to measure living wage progress where they do not have access to full wage data, for example for first tier supply chain workers. These will be available by mid-2025.

By using the Progress Tool, companies can understand for themselves, and demonstrate publicly, the extent to which they are helping the lowest-paid workers that contribute to their financial success achieve a living wage. Furthermore, it supports companies to meet the growing demands of investors, due diligence legislation and reporting standards. 

The three-year project to develop the Living Wage Accounting Model, on which the Progress Tool is based, involved extensive consultation with, and learning from companies, investors, standard-setters, living wage initiatives and accounting experts.

Generous funding from Porticus and the Tipping Point Fund have made the project and development of the Progress Tool possible.

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Background

Efforts to tackle growing levels of inequality and poverty around the world are increasingly focused on the payment of a living wage. That’s because realizing the human right to a living wage is essential to raising the living standards of the most vulnerable workers and their families – and to fulfilling a range of other human rights, including rights to food, water, health, adequate housing, education, family life, and fair working hours.

The wider impact on society is also clear. Studies have shown that reductions in poverty and inequality can lead to greater social cohesion, as well as benefits to business. Paying a living wage can deliver not only a more motivated and productive workforce, with lower staff turnover, but also improved revenues and profits and increased value chain resilience and performance.

Until now, there has not been a generally agreed, straightforward and measurable way for companies to reflect their work to achieve living wages in their public reporting. As a result, investors, civil society and other interested stakeholders have not been able to access the information they need to compare companies’ progress, assess which are contributing to the solution and push those sitting on the sidelines to play their part.

The Accounting for a Living Wage project created a model that helps paint a picture of the scale and scope of the living wage deficits experienced by workers, as well as progress towards living wages over time. Having a shared and simple methodology to track and report on progress has proven key to the success of similar efforts to embed sustainability goals in business decision-making.

The Living Wage Accounting Model can be used to:

• Deliver greater transparency regarding the payment of Living Wages
• Inform new standards around Living Wages
• Create incentives for improving wages and reducing inequalities.

It has been designed to support the work of:

• Investors and CSOs – who can use the information disclosed by companies to make assessments and incentivize better performance

• Businesses – who can use the model and Progress Tool to measure and disclose their progress on living wages in a standardized way

• Standard setters – who can embed the model in their standards to ensure that companies provide valuable, comparable information

PROGRESS TOOL DEVELOPED WITH

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The Living Wage Accounting Model