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STOCKHOLM – The investment community should be doing more to pressure apparel brands to push for living wages in apparel supply chains, claims a new report. Focused on the Nordic sector, the report outlines the investments of Danske Bank, DNB, Handelsbanken, KLP, Länsförsäkringar, Nordea, SEB, Skandia, Storebrand and Swedbank as well as four savings banks in the Nordic fashion brands H&M, KappAhl, Lindex and MQ. In total, the banks hold shares in H&M to a value of over €1.4bn. “As large owners they have a unique opportunity to influence the company’s goals and strategies concerning living wages,” claim the authors, who add that at present, “none of them are doing enough to push for loving wages in supply chains.”

Handelsbanken, Nordea, SEB and Swedbank are the only banks with substantial holdings in KappAhl. Danske Bank, Handelsbanken and Nordea have holdings in Lindex owner Stockmann. Only Swedbank has substantial investments in MQ.

The researchers, from non-profit Fair Action, point to the United Nations Guiding Principles on business and human rights (UNGPs), which encourages financial institutions to engage with the companies they in invest in regarding human rights and labour rights violations.

“The banks are therefore obliged to engage with companies regarding the right to a living wage,” says the report. “H&M, KappAhl, Lindex and MQ all buy clothes from Bangladesh, where employees in the factories are among the lowest paid in the world. Although the legal minimum wage was raised in December 2018 local trade unions and labour rights activists are worried that suppliers will be unwilling to implement it.

“None of the banks in this study with investments in H&M, KappAhl, Lindex or MQ are doing enough to push for living wages in the companies’ supply chains. The findings in each case show that the banks reviewed have failed to identify, analyse and take sufficient action on poverty wages in the supply chains of the four garment companies. More specifically, the banks are not demanding concrete objectives and timetables for raising the wages. The banks have also failed to demand that the fashion brands share the costs of raising the wages with their suppliers.”

The report singles out investors particularly for not pressing H&M hard after it reneged on its 2013 pledge to implement living wages in supply chains. The researchers add: “It is especially disappointing that the banks have failed to sufficiently hold H&M accountable for the promise made in 2013 concerning living wages. H&M committed to make sure that the company’s strategic suppliers should have pay structures in place to pay a fair living wage to 850 000 workers by 2018.

“The banks have not taken the opportunity to follow up on whether the promise has led to actual wage increases at H&M’s suppliers in countries such as Bangladesh. Swedbank, SEB, Storebrand, DNB and Skandia have had some dialogue with H&M concerning living wages. However, none of the banks have demanded that the company should adapt their purchasing practices. H&M could use extended or larger contracts as well as price premiums to factory owners with higher wages as an incentive for raising wages.”

Full report: https://fairaction.se/wp-content/uploads/2019/01/FairAction-bankrapport_20190131-1.pdf

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