What businesses can do about inequality

19th March, 2024

By Jenny Herrera, CEO of the Good Business Charter

Oxfam started the year publishing a report entitled ‘Inequality Inc: How corporate power divides our world and the need for a new era of public action‘.  It followed the annual cry from the High Pay Centre about how few days it takes the average FTSE100 CEO to earn the same as the average UK annual wage.  Just three days is the answer.

Oxfam followed up the report with a helpful series of emails pulling out some of the key elements.  Part 3 honed in on how corporates fuel inequality and the damaging impact of policies that undermine workers whilst the funds of the wealthy surge paint a shocking picture.  Here are a few stats they emphasised:

  • Of more than 1,600 of the largest and most influential corporations worldwide, a mere 0.4% of corporations are publicly committed to paying their workers a living wage and support a living wage in their value chains
  • 0.7% of these corporations meet a global bar for collective bargaining
  • Meanwhile, 82% of profits from major corporations were paid out in dividends and buybacks
  • Of the major global corporations, only 24% have a public commitment to gender equality and just 2.6% of corporations disclose information on the ratio of pay of women to men
  • An estimated $1 trillion in profits – 35% of foreign profits – were shifted to tax havens in 2022, depriving societies of resources to address inequality

It seems clear to me that the decisions large businesses are making are actively contributing to the rising inequality in our globalised world, and having just finished reading ‘The Inequality of Wealth’ by Liam Byrne, and ‘The Richer, The Poorer’ by Stewart Langsley, I have a better appreciation now of the specific picture in the UK and particularly how government policy has contributed to the current state of affairs where the wealthiest are shielded and the poorest struggle.

Yet, the very fact there seems to be increasing talk about inequality is encouraging.  Recognising there is a problem, and that increased inequality provides a real risk to society, is an important first step and I hope will help decision makers see that more fairness needs to be brought into our system.  A fairness that rewards every person who works a decent wage, where everyone pays their fair share of taxes.

The Good Business Charter represents a starting block on responsible business behaviour but as our team of trustees and staff have entered 2024, we have gained an increased appreciation for the high bar our 10 components actually set.  It shouldn’t be a surprise when I look at the stats that Oxfam report.  Too few businesses pay workers a living wage – directly in the UK in the form of the real living wage or indirectly ensuring living wages are paid through their supply chain.  Too few businesses facilitate collective bargaining to ensure their workers are heard, or find alternative ways to ensure the employee voice is heard in the boardroom.

Recent high profile cases of Brewdog and Capita abandoning the real living wage underline the way people – everyday, hard-working people – still seem to be bottom of the pecking order with profits to shareholders put first.  Profits that, in some corporations, are still too often inflated because not enough tax is paid on them before distribution.

One large organisation said to me this month ‘well, we didn’t actually need to change our behaviour to join the Good Business Charter’.  Their argument was that so much is governed by regulation that they have to do everything within the Good Business Charter’s 10 components.  It is lovely that they think that is the case – but what they need to realise is that they are exemplary and in the minority if they can accredit to the GBC.

Alongside a conversation like that, I’ve had conversations with others who feel unable to implement the real living wage to their regular contractors or have their small suppliers on long payment terms as standard practice.  Then there are the companies where their workers are in the UK … but their Head Office is mysteriously elsewhere.  The day we get a company change their registered office back to the UK in order to accredit with the Good Business Charter, and therefore pay their fair share of tax to the country educating and caring for their workforce, I will be dancing in the streets with joy!

Let’s not reinvent the wheel.  We have an accreditation that could become part of investing and procurement decisions, just as it is for customer and employee decisions.  The reality is that a country full of businesses committed to the GBC’s 10 components would truly contribute to reducing the terrible inequality that currently exists, and genuinely put all people first.

Join us in championing fairness and equity by supporting the Good Business Charter and accredit today.