How we're improving livelihoods across our value chain

Around 700 million people globally live in extreme poverty, unable to afford food, water, housing, healthcare and education. Income and wealth inequality lead to a lack of opportunity, limiting upward mobility in lower-income countries, especially in rural areas and for women.

We are a global business, and millions of people in our value chain rely on Unilever's business success to make a living. Anouk Heilen leads on our livelihoods strategy, advocacy and partnerships for the livelihoods area. She explains the opportunity and responsibility we have to help people achieve a decent livelihood.

What is our vision for improving living standards?

Unilever's vision is for the people who grow, make and sell our products to have a decent livelihood, which includes earning a living wage. This means they can afford the essentials of daily life for themselves and their families, through work that is secure, dignified and fair.

To bring that vision to life, we take a two-pronged approach, focusing on implementation programmes and collective action.

How are we practically working to deliver better livelihoods?

We have established three short-term goals, to be met by 2026. First, we will provide 250,000 small farmers who grow our ingredients with access to livelihoods programmes, focused on income growth and regenerative agriculture.

We're also ensuring that at least half our procurement spend is with suppliers who have signed up to our Living Wage Promise. It's a tool to bring suppliers on board with the concept, to get them to identify and address any gaps towards living wage levels and to report on their progress in doing so.

Finally, we're helping 2.5 million small to medium-sized enterprises (SMEs) in our retail value chain grow their business, through access to technology and digitisation, programmes to widen access to credit and financial services, and business skills training.

Why does Unilever believe supporting a living wage is so important?

It's a fundamental and basic human right, and it has a ripple effect on other human rights, like access to social services, health and education. By paying people a living wage, you directly improve their income and livelihoods and provide them with an opportunity to improve their standard of living.

You can also measure it. Often social impact is not easily measurable, but living wages are, so we can see the progress we're making towards our goal of securing a living wage for everyone across our supply chain. We know that it increases worker productivity and satisfaction, it helps to improve supply chain resilience and for us as a consumer goods company, it grows our consumer market because more can afford our products.

Finally, it will help future-proof our business. Not only are more investors asking companies to start working and reporting on human rights but - following the approval of the EU's Corporate Sustainability Due Diligence Directive last week - we also know more legislation on living wages will be coming our way.

What have we already achieved around living wages so far?

In terms of our own workforce, we became living wage compliant in 2020 and were accredited as a global living wage employer by the Fair Wage Network in 2021, something we've maintained ever since. Since 2021, we have been working to extend this commitment to our supply chain.

It's a phased implementation, focusing first on those who are closest to our business, the factories who produce solely for Unilever. We stipulated all these factories should have living wages in their contract and we've achieved this for 99% of them - the remaining 1% being factories we are currently phasing out of our production chain.

We've also targeted factory workers on the payroll of labour agencies, and globally nearly all of these agencies are now living wage compliant. But to get traction with more of our suppliers, we need other companies also to ask this of their suppliers.

What kind of challenges are we facing beyond our own operations?

We've found that many suppliers don't understand the fundamental difference between a minimum wage, which is a legally agreed wage at country level, and a living wage, which takes into account what is needed to provide a decent standard of living.

Our baseline surveys showed that when many of our suppliers initially said they were paying a living wage, in fact, they meant they were paying the minimum wage. That's why we started our capability-building programme with the Sustainable Trade Initiative (IDH), launching later this month, helping suppliers understand what a living wage is, why it's so important and how to get started.

Another problem is that most of our procurement spend is with non-dedicated suppliers, meaning they also work for other companies. When we ask them to pay a living wage to their workers, we are asking them to do it for their entire workforce. Another buyer might not ask the same, meaning the increased cost will come back only to Unilever because we are the ones demanding it, essentially putting us at a competitive disadvantage.

That's also why we have set the interim target for 2026, asking suppliers to sign the living wage promise. Within the promise, we ask suppliers to identify the gap between what they currently pay workers versus a living wage, to create a plan to address that gap and to then report on their progress. This reporting will inform our post-2026 target and help us understand how we can close the gap with them.

How did we get involved with WageIndicator?

One of the key barriers to global progress on living wage has been access to credible and transparent living wage data. The data that did exist was owned by benchmarking bodies and often kept behind a paywall, making it difficult for businesses, including our suppliers, to assess how many of their employees were paid less than a living wage and by how much. Additionally, the benchmarks' methodologies and data varied, leading to a lack of consistency and credibility.

We wanted to improve transparency by helping to make the data publicly available. Working in coalition with 12 companies, we're now supporting WageIndicator Foundation, the biggest of these benchmarking organisations, to do just that - a gamechanger for the agenda. Making this information freely available for 165 countries will help change the conversation on living wages and will empower workers to demand a living wage for them and their families.

How else are we trying to drive change on living wages?

We're working on global and local advocacy and have seen two big recent wins. One is our repeated call to get living wages included in the EU Corporate Sustainability Due Diligence Directive, so that corporates in future will need to do proper due diligence in their supply chain to ensure that workers are paid a living wage.

The other is having the International Labour Organisation determine a global definition of what a living wage actually is. We're delighted it has been agreed, having lobbied for this for several years. Now it's in place, we should begin to see the ripple effects as governments begin to feed that into their own countries' minimum wage policies. For example, India has just announcedthat by 2025 it wants Indian minimum wage levels to be aligned with living wage levels. These kinds of change are central to our local advocacy strategy.

Finally, we're putting this on the agenda of many of the coalitions we work with. We're highlighting why it's so important, how it can benefit business and sharing our experiences to date. We believe activating other companies and driving collective advocacy are what will help a government like India's make that kind of a commitment. By working together, we can help improve the livelihoods of workers around the world.

To read more about our updated commitments on plastics, climate, nature and livelihoods, visit our Sustainability Hub.

• Business & Finance
• Future of work
• Raising living standards and the standard of living