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Sustainability Reporting as a way to Improve Working Conditions beyond the Minimum Standards

This paper has been prepared by Zeynep Kılıçkaya Kapanoğlu & Elif Berktaş Yüksel and presented at “6th Conference of the Regulating for Decent Work Network” at the International Labour Office Geneva, Switzerland 8-10 July 2019.

The increasing trend of sustainability (non-financial) reporting is a practice where companies publicly disclose information on their environmental, social and economic impacts. Within the scope of their social impacts, companies report on conditions of work, workplace diversity, collective labor rights, safety and health issues, as well as their position and contribution to the realization of decent work, among others. Sustainability reporting is increasingly becoming mandatory under national legislations and the coming into force of the EU Directive 2014/95/EU on Disclosure of Non-Financial Information in 2018 is expected to accelerate the practice worldwide. This paper analyzes the impact of sustainability reporting on the working conditions of workers and on the reduction of inequalities between different countries. The research is based on the analysis of selected companies that periodically publish sustainability reports and on the assessment of their impacts in terms of working conditions of the workers throughout their supply chains. The increase in voluntary reporting, as well as the growing number of legislative regulations that oblige sustainability reporting has affected businesses worldwide. The understanding and practice of corporate sustainability necessitates companies to create working conditions beyond the minimum legal requirements. The findings of the research reveal that there is a positive correlation between sustainability reporting and workers’ rights at work. Companies that take up sustainability reporting tend to grant working conditions that are more beneficial to workers vis-à-vis the minimum rights and standards. Furthermore, the effects of sustainability reporting of one company is not limited to its own operations and employee relations, but also covers the impacts of its suppliers. In this respect, transparency of the supply chain has de facto required supplying companies, regardless of their size, sector or location, to improve their workers’ working conditions in order to obtain business opportunities with large companies. As a result, sustainability reporting is creating a growing chain of businesses throughout the world that ensure better working conditions to their workers. This paper holds the position that in addition to the market requirements to publish sustainability reports, legislative actions that make reporting mandatory is envisaged to create significant changes in favor of the working conditions and in overcoming inequalities between countries.

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Sustainable Supply Chains