10.6092/issn.1561-8048/15832
The paper considers the place of international labour standards in the key ESG instruments adopted at the level of the UN: UN Global Compact, Guiding principles on business and Human Rights and the Principles of responsible investment. In the first part, the focus will be made on the definition of ESG and its content, the second part is dedicated to analysing the texts of the instruments and the relevant guidelines on the point of their reference to international labour standards. This part substantiates the absence of clear incorporation of the international labour standards (other than fundamental ones) in the UN ESG instruments. Also, it argues that both business and the UN ESG agenda lack the understanding of the related to labour human rights in line with the UN Human Rights covenants.
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Elena Sychenko
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Italian Labour Law e-Journal
International Labour Standards
Labour Rights and International Labour Standards in the ESG Agenda
Text.Serial.Journal
https://illej.unibo.it/
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Miscellaneous
2023-07-20
2022-11-22
2023-07-20
2023-07-20
135-148
ILLeJ
Elena Sychenko
2023/07/20
10.6092/issn.1561-8048/15832
135
Saint Petersburg State University
1561-8048
1
International Labour Standards
en
148
Labour Rights and International Labour Standards in the ESG Agenda
https://illej.unibo.it/article/download/15832/16536
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Labour Rights and International Labour Standards in the ESG                                Italian Labour Law e-Journal
Agenda                                                                                            Issue 1, Vol. 16 (2023)
Elena Sychenko                                                                                          ISSN 1561-8048
elena.sychenko@unibo.it                                                  https://doi.org/10.6092/issn.1561-8048/15832




    Labour Rights and International Labour Standards in
                     the ESG Agenda
                                              Elena Sychenko*

1. Introduction. 2. ESG compliance – much ado about what? 3. Labour-related social issues
in the key UN ESG instruments. 3.1 UN Global Compact, labour rights and ILS. 3.2. UN
Guiding Principles on Business and Human Rights, labour rights and ILS. 3.3. ILS, Labour
Rights and the Principles of Responsible Investment. 4. Conclusions.


                                                       Abstract

    The paper considers the place of international labour standards in the key ESG instruments
    adopted at the level of the UN: UN Gobal Compact, Guiding principles on business and Human
    Rights and the Principles of responsible investment. In the first part the focus will be made on
    the definition of ESG and its content, the second part analyses the texts of the instruments and
    the relevant guidelines on the point of their reference to ILS. This part substantiates the lack of
    clear incorporation of the international labour standards (other than fundamental ones) in the
    UN ESG instruments. Also, it arguments the lack of the understanding by business of related to
    labour human rights in line with the UN human rights covenants.

    Keywords: ESG; CSR; International Labour Standards; Labour rights; Human Rights.



1. Introduction.

   Environmental, Social and Governmental (ESG) compliance is a very trendy topic. Much
is written about it while for many lawyers it might remain rather unclear what does ESG
really mean. Financial Times Lexicon defines it as “a generic term used in capital markets
and by investors to evaluate corporate behaviour and to determine the future financial
performance of companies”.1 Some authors recognize the congruence between ESG and
CSR and use this abbreviatures interchangeably,2 others understand it in term of


* Adjunct professor, University of Bologna. I would like to express my gratitude to the colleagues who
commented on the drafts of this paper and whose advice was very helpful: Sebastian Rombouts, Emanuele
Menegatti, and Bernd Waas. This essay has been submitted to a double-blind peer review.
1 See https://markets.ft.com/glossary/searchLetter.asp?letter=E
2 Huang D., Environmental, social and governance (ESG) activity and firm performance: A review and consolidation,

in Accounting & finance, 61, 1, 2021, 335-360; Baraibar-Diez E., Odriozola M., CSR Committees and Their Effect on
ESG Performance in UK, France, Germany, and Spain, in Sustainability, 2019, 11, 18, 5077; Gillan S. L., Koch A.,
Starks L.T., Firms and social responsibility: A review of ESG and CSR research in corporate finance, in Journal of Corporate
Finance, 2021, 66, 101889.
    Elena Sychenko                                                                  Italian Labour Law e-Journal
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                                                                                           Section: Miscellaneous




sustainability,3 some speak about “internal CSR and external ESG performance metrics”.4
ESG movement started at the level of the UN as an attempt to solve the problem of the
regulatory gap: the lack of the binding mechanism to ensure that multinational enterprises
respect intentional human and labour rights in their operations in developing countries.
   The launch of the UN Global Compact (UNGC) initiative5 in 2000 and the adoption of
the UN Guiding principles on business and Human Rights (UNGPs) in 2011 (so-called
Ruggie principles) were one of the first steps towards promotion of the commitment of
business to respect human rights (the “S” part of the ESG agenda). The roots of this
commitment go to the OECD Guidelines for Multinational Enterprises’ 1976 and the ILO
Tripartite Declaration of Principles Concerning Multinational Enterprises and Social Policy
(“MNE Declaration”) ’1977. Mostly since the adoption of the UNGPs, ESG compliance,
including the compliance with human rights (HR) and ILO fundamental principles, has
become an important issue for academics, big business and investors. The recent study of
Wharton School found that firms that had strong performance on material ESG measures
generated 4% higher returns over a three-year period as measured by return on invested
capital (ROIC).6 In the web it is easy to find hundreds of articles publicizing “sustainable
investment”.7 One Forbes article, for example, calls on “making money through
sustainability, social justice and ESG investing”.8 ESG also has become a source of making
profit for numerous consulting, ranking, information providing firms and turned into a big
business per se.9
       The compliance with human rights and ILO fundamental standards is a part of the
“S” (Social) part of ESG. According to the principle 12 of the UNGPs, the responsibility of
business enterprises to respect human rights refers to internationally recognized human
rights – understood, at a minimum, as those expressed in the International Bill of Human
Rights and the principles concerning fundamental rights set out in the International Labour
Organization’s Declaration on Fundamental Principles and Rights at Work.10 Following the
UNGPs and exposed to much public pressure by various international NGOs the MNEs
now tend to report about their performance in the sphere of individual and collective labour
rights and react upon the allegations on the violations in this field. As a recent example we
may refer to the H&M reaction on allegations of being engaged in forced labour of Uyghur

3 Abhayawansa S., Tyagi Sh., Sustainable Investing: The Black Box of Environmental, Social, and Governance (ESG)
Ratings, in The Journal of Wealth Management, Apr 2021, 24, 1, 49-54.
4 Meaney M. E., Private Corporations and Environmental Social Governance: An Uneven Response, in Fulfilling the

Sustainable Development Goals, Routledge, 2021, 437-438.
5 See https://www.unglobalcompact.org/what-is-gc/mission/principles
6    Wharton Report. Walking The Talk: Valuing A Multi-Stakeholder Strategy. 2022:
https://www.fcltglobal.org/wp-content/uploads/Walking-the-Talk_Stakeholder_Capitalism_Report.pdf
7 For ex: Polman P., Winston A., Yes, Investing in ESG Pays Off, in Harvard Business Review:

https://hbr.org/2022/04/yes-investing-in-esg-pays-off, April 13, 2022.
8 Brewer J., Making Money Through Sustainability, Social Justice and ESG Investing. Oct 11, 2020

https://www.forbes.com/sites/jbrewer/2020/10/11/making-money-through-sustainability-social-justice-
and-esg-investing/?sh=66db51a320fb.
9 See Bloomberg video about MSCI, the largest ESG rating company, which, in the opinion of the authors

“doesn’t even try to measure the impact of a corporation on the world,” see
https://www.youtube.com/watch?v=f_rrS-_giP8
10 https://www.ohchr.org/sites/default/files/documents/publications/guidingprinciplesbusinesshr_en.pdf



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in China. This organization is part of UN Global compact since 200111 and in 2012 it adopted
the Human Rights Policy based on the UNGPs.12 In 2021 it issued the statement of non-
working with any garment manufacturing factories located in XUAR, and non-sourcing
products from this region thus seemingly contributing to the struggle with forced labour in
China.13 The broad media coverage of such cases might make the public feel that finally the
solution to the problem of implementation of international labour standards (ILS) is found
and think that the system of ESG compliance is a mechanism that serve this objective. In
the present paper, the place of ILS and labour rights will be considered in different ESG
instruments. Firstly, the focus will be on the definition of ESG and its content (part 1),
secondly, different public ESG instruments will be reviewed to establish their relevance to
labour rights and ILS (part 2). In the conclusions the recommendation on the clearer
incorporation of the ILS and broader understanding of related to labour human rights in the
ESG agenda will be formulated.


2. ESG compliance – very much ado about what?

    In the abundance of the literature on ESG it is hard to encounter a clear definition of
what it is. A recent study provided seven definitions and all of them had one key trait in
common: they refer to the evaluation of the Environmental, Social and Governmental
performance of organizations for investors.14 It makes clear that ESG is mostly perceived as
an investor’s tool. However, it is much broader and complex than this. It is about the
voluntary and in some cases mandatory15 commitment of business to act in line with
international norms on human and labour rights, ensure due diligence in its operations and
disclose the relevant non-financial information which matters for their business. It is largely
the same as the concept of Corporate Social responsibility (CSR). The EU, for example,
defined the subjects of CSR in 2011 as human rights, labour and employment practices (such
as training, diversity, gender equality and employee health and well-being etc.), environmental
issues, and combatting bribery and corruption.



11 See https://unglobalcompact.org/what-is-gc/participants/4719-H-M-Hennes-Mauritz-AB
12 See https://hmgroup.com/wp-content/uploads/2020/10/HM_Group_UNGP_Index_2018.pdf
13
   H&M Group statement on due diligence see https://hmgroup.com/sustainability/fair-and-equal/human-
rights/h-m-group-statement-on-due-diligence/ . It is worth noting that this statement provoked a boycott of
H&M goods by Chinese online e-commerce platforms and customers. See: Teh C., “Die, H&M, die”: brand
grapples with Chinese boycott and social media firestorm over Xinjiang “forced labor” comments. Mar 25, 2021, in
https://www.insider.com/hm-chinese-e-commerce-boycott-social-media-firestorm-2021-3
14 Doni F., Johannsdottir L., Environmental Social and Governance (ESG) Ratings, in Leal Filho, W., Azul, A.M.,

Brandli, L., Özuyar, P.G., Wall, T. (eds) Climate Action. Encyclopedia of the UN Sustainable Development Goals,
Springer, Cham, 2020.
15 See the proposal for the EU Directive on corporate sustainability due diligence which will provide

corporate due diligence duty to identify, bring to an end, prevent, mitigate and account for negative human
rights and environmental impacts in their own operations, subsidiaries and value chains. See also the Child
Labour Due Diligence Act 2019 in the Netherlands, the Supply Chain Due Diligence Act in Germany (comes
into force in January 2023), the Corporate Duty of Vigilance Act 2017 in France, Modern Slavery Act in the
UK.

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    The same subjects are considered in the three parts of the ESG – Environmental, Social
and Governmental.
      Interestingly, the ESG term seems to become more used than CSR, especially in the
context of non-financial performance of an enterprise. For example, it is currently more
searched than CSR, as Google Trend demonstrates:




      Picture 1. Google trend in the searches for “ESG” and “CSR”
      https://trends.google.com/trends/explore?date=all&q=ESG,CSR


   The ESG requirements or recommendation are set in different public and private
instrument also called non-financial reporting provisions. These are the documents providing
mandatory or voluntary commitment of covered business to respect HR and fundamental
labour standards within business and in the relations with the supply chain (further referred
to as ESG instruments).
     ESG instruments are numerous. The 2020 Carrot and Sticks report (C&S), an
international initiative to assesses the regulatory landscape of non-financial and sustainability
reporting, covered 614 reporting provisions, of which 73 are from Africa and Middle East,
174 from the Asia Pacific, 245 from Europe, 37 from North America and 85 from South
America, including public laws and regulations; self-regulation (for example, issued by stock
exchanges or industry bodies); codes, guidance and questionnaires; guidelines and standards
for non-financial reporting; index questionnaires (for preparing ratings).16 C&S have
evidenced the significant growth of mandatory provisions understood as disclosure
requirements, introduced by regulatory and self-regulatory actors in the public and market
sphere, for example, the mandatory ESG listing requirements are now adopted by about 50
exchanges following the UN-backed Sustainable Stock Exchanges (SSE) initiative.17


16   Carrots & Sticks.
17   Ibid.

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      It is important to distinguish some other types of ESG instruments. First of all, they
might be public (ex. OECD Guidelines, UNGC, UNGPs, World Bank Environmental and
Social Policy for Investment Project Financing) and private.18 The private might be
multistakeholder as, for example, ISO 26000, SA8000, Global Reporting Initiative (GRI)19
or SASB standards, and company instruments (ex. Codes of Conduct, Framework
Agreements, HR policies). As it is impossible to address all those reporting provisions in this
paper, in the second part it will focus on the ILS in the key ESG instruments adopted on the
level of the United Nations: UNGC, UNGPs and the Principles of Responsible Investment.
These instruments provide a universal vision of business commitments and serve as a source
of inspiration and direct borrowing for a number of other public and private ESG
instruments.


3. Labour-related issues in the key UN ESG instruments.

   It was noted in one research that similar to the absence of ESG definition, there are no
common definitions of what ESG factors and criteria include.20 Already mentioned UN
Global Compact and the UNGPS are the key pillars for understanding what the list of ESG
issues/factors/criteria is.


3.1 UN Global Compact, labour rights and ILS.

   UNGC is a UN initiative for business, which might be joined by any enterprise sending
the filled form about the commitment to 10 principles, dedicated to human rights, labour,
environment and anti-Corruption. Parties are supposed to produce an annual
Communication on Progress that outlines efforts to operate responsibly and support
society.21 It is stated in the UNGC principles that theyderive from the Universal Declaration
of Human Rights, the ILO Declaration on Fundamental Principles and Rights at Work, the
Rio Declaration on Environment and Development, and the United Nations Convention
Against Corruption. Among the ten principles of Global Compact, four directly refer to
fundamental labour standards.22


18 In literature also referred to as transnational private labour initiatives. See Alhambra A. G. M., Ter Haar B.,
Kun A., Harnessing Public Institutions for Labour Law Enforcement: Embedding a Transnational Labour Inspectorate within
the ILO, in International Organizations Law Review, 2020, 17, 1, 233-260.
19 Professor B. Waas considered in the recent paper the place of ILS in a private ESG reporting instrument –

GRI – and underlined the need to attach more attention to the ILS and to the opinions of ILO supervisory
bodies in ESG compliance. Waas B., The “S” in ESG and international labour standards, in International Journal of
Disclosure and Governance, 2021, 18, 403-410.
20 Doni F., Johannsdottir L., nt. (14).
21 See https://www.unglobalcompact.org/participation/join/application
22
   Principle 3: The freedom of association and the effective recognition of the right to collective bargaining;
Principle 4: the elimination of all forms of forced and compulsory labour; Principle 5: the effective abolition
of child labour; and Principle 6: the elimination of discrimination in respect of employment and occupation.

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        Thus, we can presume that at least these 4 principles – ILO fundamental labour
standards – form the part of the “S” issues when we speak about the UN approach to ESG.
The ILO report23 about the labour principles in the Global Compact provided
recommendations to the parties of this initiative following from the ILO fundamental
conventions (8 conventions back then). The first block of the Global Compact principles
refers to human rights in general. Labour rights form part of the internationally recognized
human rights in a much broader scope than they are recognized in the fundamental ILO
principles. The Universal Declaration of Human Rights (UNDHR), referred to in the UNGC
lists a number of labour and social rights which were developed further in the UN Covenants.
Therefore, the scope of labour rights set in the UN Global Compact is much broader that
just ILO fundamental standards.
        For example, the norm of the article 23 of the UNDHR provides the right to just and
favourable remuneration ensuring for a worker and his family an existence worthy of human
dignity. This right is not mentioned in the UNGC directly, but there is a separate project
within the framework of the Global Compact towards promoting living wage – the Living
Wage Think Lab. This initiative is supposed to promote theprovision of a living wage to all
employees regardless of their employment status and country of residence between business,
help to address key business challenges and identify good practice across sectors and
regions.24 Also, on the site of UNGC there is a separate page dedicated to the topic “Ensuring
a Living Wage is an Essential Aspect of Decent Work”.25 On this page it is stated that “an
“adequate standard of living” and “just and favourable conditions of work” are universally
recognized human rights.
       Thus, from the analysis of the UNGC it becomes clear that in theory, labour rights
should form a much wider part of the UNGC commitments than those directly stated in the
principles 3-6, coming from ILO fundamental standards. However, such opinion might be
formed only if one will make an effort to search for particular labour rights. The review of
the new questioner which the business should fill under UNGC demonstrates that it is not
required to provide the information concerning labour rights other than fundamental
standards. The part on reporting about labour rights is divided into the parts, dedicated to
“commitment”, “prevention” and “performance”. The “commitment” part is mostly about
the adoption of the labour rights policies. If the policy in respect of one of the listed labour
rights (“fundamental labour standards”26 + “working conditions (wages, working hours)”) is
adopted, the enterprise has to report if this policy is aligned with international labour
standards (ILS). Though the questioner leaves unclear what is meant under ILS, what kind
of standards should be referred to as the benchmarks. It does not mention any norm of any
ILO Convention.

23  ILO. The Labour Principles of the United Nations Global Compact A Guide for Business. 2008.
https://d306pr3pise04h.cloudfront.net/docs/issues_doc%2Flabour%2Fthe_labour_principles_a_guide_for_
business.pdf
24 https://unglobalcompact.org/take-action/think-labs/just-transition/living-wage
25 https://www.unglobalcompact.org/what-is-gc/our-work/livingwages
26 These are: freedom of association and the effective recognition of the right to collective bargaining, forced

labour, child labour, non-discrimination in respect of employment and occupation, safe and healthy working
environment.

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       The part L3 of the questioner includes the question about the type of action that the
company has taken in the reporting period with the aim of preventing/mitigating the
risks/impacts associated with the labour rights topic, including safe and healthy working
environment and working conditions (wages, working hours). The latter, though, will appear
in the communication only if the working conditions issue was chosen by the reporting
enterprise as material human rights topics connected with its operations and/or value chain.
The part L3 further lists possible answers about the type of action taken by business in the
field of labour rights. It includes the following: “Provided internal training/ capacity building
for the direct workforce; Building capacity among relevant business relationships;
Conducting an audit process and/or corrective action plan; Collective Action with peers or
other stakeholders, in particular workers’ organizations, to address the issue; Collaboration
with governmental or regulatory bodies; Other; No action within reporting period”.27 This
list demonstrates that business is not supposed to provide information about their actual
compliance with ILS. Also, that labour rights, other than fundamental ones, may be not
addressed at all in the reports under the UNGC.
     Determining the ILS which business is supposed to follow when adopting labour
policies is not a simple task. There are no references in the UNGC to other instruments than
the UDHR, the latter is too general on labour rights. The Questioner refers only to the ILO
Occupational Safety and Health Convention 1981 (No. 155) and it remains unclear why only
this Convention deserved being mentioned.
       The relevant ILS for the fundamental labour rights are fixed in the ILO fundamental
labour conventions, thus it might be relevantly easy to determine the scope of these rights.
However, it is not clear what kind of ILS should determine the regulation of working
conditions (wages, working hours). The norms of the UN Human Rights Covenants might
be helpful to determine the benchmark for the labour rights commitments of business. In
particular, the norms of the article 7 of the International Covenant on Economic, Social and
Cultural rights and the relevant general comments of the Committee on Economic, Social
and Cultural rights (CESCR). However, in the absence of the links to the Covenant in the
UNGC, such interpretation might seem too broad and not corresponding to very “soft”
intentions of the drafters of this initiative.
      The “performance part” of the UNGC questioner contains the following questions: do
the existing collective bargaining agreement(s) provide more favourable rights than fixed in
legislation or in an applicable sectoral agreement, what is the percentage of women in senior
leadership level positions and the average ratio of the basic salary and remuneration of
women to men. It also concerns the number of injuries per hour worked, the incident rate
and the provision of remedy in case of labour rights violations. Thus, again we see that the
performance part refers solely to certain fundamental labour standards. Supposedly, the
question on the number of fines imposed by the labour inspection and about the correlation
of the minimum wage paid to the living wage (particularly, in the countries where the former
is much lower than the living wage) might bring more light to the compliance with ILS.


27 UNGC. Questionnaire Communication on Progress (Effective 2023) Document version: August 2022
https://www.unglobalcompact.org/participation/report/cop

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Summing up the research of the incorporation of ILS into the UNGC, the following
conclusion might be made: this initiative is too soft as far as it concerns other labour rights
than fundamental ones. Despite the fact that other labour rights are recognized as human
rights (the right to just and favourable conditions of work in general and to just and
favourable remuneration in particular), this initiative does not oblige business to report on
performance in this field and does not refer neither to ILS (except for the ILO Declaration)
nor to UN Human Rights Covenants.
     In contrast with the UNGC, the next UN ESG instrument – UNGPs directly refers to
the UN Covenants. Further this instrument will be considered in more detail.


3.2. UN Guiding Principles on Business and Human Rights, labour rights and ILS.

    The UNGPs establish the famous framework for the compliance of business and states
with human and labour rights: states should protect human rights, business should respect
them and both should ensure remedy in cases of violations. According to the principle 12,
the responsibility of business enterprises to respect human rights refers to internationally
recognized human rights; understood, at a minimum, as those expressed in the International
Bill of Human Rights and the principles concerning fundamental rights set out in the
International Labour Organization’s Declaration on Fundamental Principles and Rights at
Work. The so-called Bill of HR consists of two UN Covenants and the Universal Declaration
of Human rights. Each Covenant includes certain rights connected to the world of work.
International Covenant on Civil and Political Rights provided the right to privacy (Article
17), International Covenant on Economic, Social and Cultural Rights enshrines a broad right
to the enjoyment of just and favourable conditions of work (article 7). This right includes, in
particular, fair wages which guarantee a decent living for workers and their families, safe and
healthy working conditions; rest, leisure and reasonable limitation of working hours and
periodic holidays with pay, as well as remuneration for public holidays. Article 8 of the
ICESCR expressly stipulates the right to strike. The CESCR General Comments N 18 (right
to work) and N 23 (right to the enjoyment of just and favourable conditions of work) provide
the interpretations of the rights set in those two articles. The General Comment No. 18: The
Right to Work (Art. 6 of the Covenant) refers to ten ILO Conventions covering forced and
child labour, employment policy, dismissal protection, discrimination, employment of
disabled people, protection against unemployment and labour statistics.28 In the most recent
General comment No. 23 (2016) on the right to just and favourable conditions of work, the
CESCR identified twenty ILO conventions as relevant for determining favourable and just
conditions of work under article 7. Those twenty conventions cover the issues of maternity
protection, working time and rest regulation, minimum wage, equal remuneration,
discrimination, minimum age, occupational safety, workers with family responsibilities, night
and part-time work.29 In view of the fact that the Covenants are directly referenced in the

28ILO Conventions No. 2, 29, 88, 105, 111, 122, 158, 159, 160, 168.
29Sychenko E., ILO Contributions to the Jurisprudence of International Human Rights Bodies, in Zbornik Pravnog fakulteta
u Zagrebu, 2021, 71, 6, 897-920.

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UNGPs, the ILS referred to by the CESCR in the mentioned General Comments should be
considered by business as the benchmarks for the compliance with their responsibility to
respect HR and fundamental labour rights.
       In order to check whether these ILS are indeed perceived as the benchmarks by
business 12 MNCs’ reports published in the UNGPs database were considered. The UN
Guiding Principles Reporting Framework was launched in 2015 by Shift (an independent,
non-profit center for business and human rights practice) and Mazars (leading international
audit, tax and advisory firm)30 and is supported by UN experts, governments, stock
exchanges, investors. It provides 31 “smart” questions that enable companies to report on
their human rights performance, regardless of size or how far they have progressed in
implementing their responsibility to respect human rights.31 The framework32 lists
fundamental labour rights and also the right to work, to just and favourable conditions of
work which includes the right to fair wage, the right to rest, leisure and holidays, occupational
health. Describing the right to enjoy just and favourable conditions of work It states that
ILO standards provide further guidance on the content of the right without specifying the
particular ILO Conventions. Thus, it remains unclear what are the ILO norms which might
be used by business as benchmarks to evaluate their compliance with ILS.
      In the search engine of the reports database, it is possible to filter the disclosures
picking particular issues. Among these issues five refer to the fundamental ILS and there are
two more: “Labour rights” and “Wages” which are part of the human right to the enjoyment
of just and favourable conditions of work (article 7 of the ICESCR). Leaving aside the
fundamental ILS which are increasingly incorporated in different instruments,33 it is
interesting to see how the respect to labour rights other than fundamental ILS, is depicted
by business. The explanation point in the database states that “different companies use
different terminology for similar issues” and the two chosen categories (labour and wages)
might also include “employees’ rights, employment and working conditions, fair and
transparent working conditions, favourable and cordial environment, fundamental human
rights and trade union rights, humane working conditions, labour rights protection, treatment
and safety, protection of labour rights, quality of life in the workplace, respectable
employment, safe and healthy work environment, worker welfare, workers’ rights,
compensation and working hours, competitive wage, fair Living Wage, minimum wage and
work week and payment of wages.34 The list is very impressive: it contains everything and

30    https://www.mazars.com/Home/About-us/News-publications-and-media/Latest-news/UN-Reporting-
Framework-Launch
31 https://www.ungpreporting.org/framework-guidance/
32 See UN Guiding Principles Reporting Framework. Table: internationally recognized human rights and

examples          of     how        business       might        impact       them,      https://www.ungpreporting.org/wp-
content/uploads/UNGPReportingFramework_withguidance2017.pdf
33 The researches were undertaken when there were only four fundamental ILS, thus it does not cover

occupational health: Lafarre A., Rombouts B., Towards Mandatory Human Rights Due Diligence: Assessing its Impact
on Fundamental Labour Standards in Global Value Chains, in European Journal of Risk Regulation, 2022, 1-17;
Rombouts S., The international diffusion of fundamental labour standards: contemporary content, scope, supervision and
proliferation of core workers’ rights under public, private, binding, and voluntary regulatory regimes, in Columbia Human Rights
Law Review, 2019, 50, 3, 78-175; Ter Haar B., Love, Flirt or Repel: Hybrid Global Governance of the ILO Core Labour
Standards, in European Journal of Social Law, 2013, 68-102.
34 See https://www.ungpreporting.org/database-analysis/explore-disclosures/



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nothing in the same time. The first most evident point is the presence of many not legal but
evaluative concepts such as competitive wage, respectable employment or cordial
environment. This explanation point is yet another illustration of the fact that many
companies report on labour rights without any reference to particular ILS, but rather using
vague and very broad terms.
       However, the review of the reports submitted by business under UNGPs demonstrates
that they mostly deal with the fundamental ILS in a declarative way and are silent or very
general on fair wage, occupational health, rest and leisure.35 For example, EXXON MOBIL
(2015) states to provide “positive, productive and supportive work environments throughout
its global operations” and to pay “wages in accordance with local laws”. This formulation
has very little to do with ILS or human rights at work. The HR policy of Inditex, reported in
the UNGPs systems is rather an exception from the observation presented above. In this
document, they directly state that issues regarding working conditions in the occupational
safety and health area are governed by ILO Convention 155, and those regarding just, fair
and equitable working conditions are governed by ILO Conventions 1, 14, 26, 111 and 131.36


3.3. ILS, Labour Rights and the Principles of Responsible Investment.

   The vision of ESG as the investors’ tool to evaluate business takes root in the Principles
for Responsible Investment (PRI), elaborated with the support of the UN and launched at
the New York Stock Exchange in April 2006.37 According to the PRI official site, the six
Principles for Responsible Investment “offer a menu of possible actions for incorporating
ESG issues into investment practice”, “in implementing them, signatories contribute to
developing a more sustainable global financial system”.38 These principles are surprisingly
brief and do not spread any light on what is understood under the ESG issues, which the
parties are going to “incorporate into investment analysis and decision-making
processes”(see Principle 1). The PRI, as an investor initiative in partnership with UNEP
Finance Initiative and UN Global Compact, published a Blueprint For Responsible
Investment.39 There a lot of nice pictures but the words “human rights” “labour rights” or
“ILO” are not mentioned in the text describing the initiative. In 2022 the PRI issued the
report “How investors can advance decent work”, where they pointed out several
“encouraging investor initiatives”, such as, for example, Platform Living Wage Financials
which encourages and monitors investee companies as regards to paying a living wage



35 The conclusion is the result of the review of disclosures of 12 enterprises: American Express, Apple, Barrick
Gold, BP, Coca-Cola Femsa, Exxon Mobil, Inditex, Japan Tobacco, Philip Morris International, Lundin
Mining, Royal Dutch Shell, Samsung Electronics.
36 See:

https://www.inditex.com/itxcomweb/api/media/7e50ddce-a4de-4d51-9ab0-
f7c248d23656/inditex_policy_on_human_rights.pdf?t=1655306506255
37 Doni F., Johannsdottir L., nt. (14).
38 https://www.unpri.org/about-us/what-are-the-principles-for-responsible-investment
39 https://www.unpri.org/download?ac=5330



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     Elena Sychenko                                                                            Italian Labour Law e-Journal
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through their supply chains.40 It outlined the four pillars of decent work, that need to be
addressed by investors as part of driving systemic change: workers’ voice and social dialogue,
living wage, access to benefits, health and safety, and social protection and equal opportunity
and treatment.
      PRI official site states that since the development of the UN Guiding Principles on
Business and Human Rights (UNGPs), and the UNGPs’ endorsement by the UN Human
Rights Council in 2011, it has become increasingly clear that the consideration of human
rights in investment activities is of fundamental importance to the advancement
of Environmental, Social and Governance (ESG) investing.41 The parties to the PRI have to
annually report about the implementation of these principles. The review of PRI reporting
guidelines, unfortunately, does not help to establish what is the role of labour rights and ILS
in ESG. There are only very general words about the need to answer “how ESG factors are
incorporated into an organisations’ overall approach to responsible investment and their
asset allocation decisions”, the reporting on the sustainability outcomes is completely
voluntary.42 Thus, the place of labour rights and of ILO standards in the ESG approach of
PRI remains very unclear.43 Certain activities of the PRI as the report on decent work makes
us understand that ESG in the view of PRI should also be about the respect to labour rights.
However, this initiative still does little to ensure practical implementation of their principles
as far as the field of labour and the ILS are concerned.


4. Conclusions.

   Many authors writing about the due diligence, ESG or CSR point that there is lack of
clarity about what is business supposed to report about and risk of inconsistency when
different reporting frameworks are considered.44 In this paper the problem of the use of ILS
as benchmarks for ensuring the respect to labour rights was considered. The research


40 https://www.unpri.org/human-rights/how-investors-can-advance-decent-work/10190.article
41  Principles for Responsible Investment sets new human rights expectations for investors, in
https://www.unpri.org/news-and-press/principles-for-responsible-investment-sets-new-human-rights-
expectations-for-investors/6638.article, 22 October 2020
42 PRI reporting framework. Overview and structure, in:

https://dwtyzx6upklss.cloudfront.net/Uploads/w/h/f/overview_and_guidance_reporting_framework_struc
ture3_584160.pdf
43 In the same time in its own Human rights commitment, the PRI as an organization declares that they are

committed to respecting human rights as codified under international law in the International Bill of Human
Rights, the UN Global Compact 10 Principles and the ILO’s Declaration on Fundamental Principles and Rights
at Work. This commitment, however, applies only to PRI employees, members of the PRI Board and their
contractors       and       suppliers,        but       not        to        signatory       parties      of     the      PRI.
https://www.unpri.org/Uploads/y/v/q/PRI-Human-Rights-Policy.pdf
44 Landau I., Human rights due diligence and the risk of cosmetic compliance, in Melbourne Journal of International Law, 2019,

20, 221; Weil D. et al, The effectiveness of regulatory disclosure policies, in Journal of Policy Analysis and Management: The
Journal of the Association for Public Policy Analysis and Management, 2006, 25.1, 155-181, cited from Landau, I;
Rusinova V., Korotkov S., Mandatory Corporate Human Rights Due Diligence Models: Shooting Blanks? in Russian Law
Journal, 2021, 9, 4, 33-71; Parker Ch., Meta-Regulation: Legal Accountability for Corporate Social Responsibility, in
McBarnet D., Voiculescu A., Campbell T. (eds), The New Corporate Accountability: Corporate Social Responsibility and
the Law, Cambridge University Press, 2007.

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     Elena Sychenko                                                              Italian Labour Law e-Journal
                                                                                        Issue 1, Vol. 16 (2023)
                                                                                        Section: Miscellaneous




demonstrated that there is a lack of clarity in determining which labour rights are considered
as human rights and the lack of universal understanding of ILS which should determine the
minimum obligations of business in this field. These shortcomings, most evidently
demonstrated in the part about the UNGC and the PRI, lead to the possibility of so-called
cosmetic compliance and with only fundamental ILO standards. Other labour standards are
not mentioned in none of the considered initiatives.
     The analysis demonstrated that these three UN ESG instruments are too “soft” when
the rights at work are at stake. To solve this issue there firstly the need to ensure a more
general understanding of what are human rights at work and which ILS determine the quality
of business commitment. It is proposed to elaborate a more detailed commentary to these
ESG instruments in collaboration between ILO and the Committee on Economic, Social
and Cultural rights (CESCR). It should be finally noted that the UN Working Group on the
issue of human rights and transnational corporations and other business enterprises recently
stated that human rights risks are too often not considered as a key part of sustainability
commitments and the Environmental, Social and Governance (ESG) agenda, whereas they
should be at the center of the S in ESG.45 ILS, understood much broader than only
fundamental ILO Conventions, should serve as a benchmark for ensuring the compliance of
business with the obligation to respect labour rights as human rights.




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Copyright © 2023 Elena Sychenko. This article is released under a Creative Commons
Attribution 4.0 International License




https://doi.org/10.6092/issn.1561-8048/15832                                                           148
