The all-important S – and Fair Pay!

5th February, 2024

By Jenny Herrera, CEO of the Good Business Charter.

Many companies talk about being sustainable and when you ask them what they do, they will relay a wonderful list of the different ways they are minimising their impact on the planet – and it is truly amazing to hear of the innovation at work.  We all know time is running out and growth must be environmentally sustainable.

Yet, what about the S in ESG?  Ask a company how they are being socially responsible and the list might shrink a little.  Often it can go into specifics around inclusion or mental health wellbeing – both of which are extremely important and part of the Good Business Charter’s 10 components.

But what about fair pay?

We hear businesses tell us they simply cannot afford to pay the real living wage (even though it is less than £1 an hour more than the national minimum).  Recent high-profile cases have not helped this narrative with Brewdog saying they cannot continue to pay the real living wage and still make a profit, and we were saddened by Capita’s recent decision not to uplift salaries to £12 an hour which meant we had to revoke their accreditation.

This was an immediate decision for us because we have a clear red line here.  Good Business Charter accreditation requires payment of the real living wage to all employees in line with the Living Wage Foundation’s criteria.  Ask some of the nation’s most sustainable, ‘purpose-led’ companies if they are committed to the real living wage and you may be surprised at the answer you get.  Companies that are applauded for their ethical stance are not necessarily paying the real living wage.

Why does this matter?

For me it is a question of your starting point.   We start not with the business but with the individual people, especially young people who are so often the ones on low pay and insecure work.  54% of people in poverty are in a household where at least one adult is in work.  A staggering 71% of children in poverty live in a working family.

If a person is working full-time, they should receive enough money to be able to afford the basics in the UK.  That is a challenge in the current economic climate – but that is not the individual person’s fault. The real living wage is calculated on the actual costs of living in the UK and to expect someone to work for a company, making profits for shareholders or owners, whilst unable to afford the basics in life cannot be ethically sound.  No matter how much you are doing for the planet …  And if a business says they can’t pay it and still make a profit, I would argue that perhaps their business model is therefore wrong.

I wonder how someone on a low wage feels when they hear all that the company they work for is doing to be sustainable?  While they spend the day working under a cloud of worry about how they will make ends meet that month?  Where they may be at real risk of homelessness because of the challenges around the costs they face.

We believe good businesses pay a fair wage and we kick off Good Business Week proud of our clear stance on this.  We recognise that for some sectors real living wage feels particularly challenging – but having been founded by a retailer, and also accrediting companies operating in other sectors like care – we believe where there is a will, there is a way.

I have seen the impact of in-work poverty through another charity I run – where people come to us for help to repair their car so they can keep their low paid job, or replace an appliance because their salary only covers the basics without any room to save.

If we want our workforce to give their best in their work, if we want to retain them, it is not enough to ensure they have a voice, they feel included and their wellbeing is cared for.  They need to be paid enough to live on – and ultimately if they are not, how can they really feel like they experience employee wellbeing?

Good Business Charter accreditation sends a clear signal – accredited organisations must meet all 10 components not pick and choose a sample.  That makes it a high bar – and one worth reaching for as many cannot attain it.  Indeed, an estimated 3.5 million UK jobs are currently paid below the real living wage.

Why not ask your employer or the companies you buy from why they are not GBC accredited?  It may well be because they don’t pay the real living wage – and therefore know they are excluded.  It is a choice – and we are thrilled that over 14,000 organisations have chosen to be Living Wage Employers.  If you are one of them, you have already overcome a big hurdle to achieve Good Business Charter accreditation – take a look at our other nine components and see if you are eligible to apply.