Labor and worker rights - The Sustainability Management Wiki

Authors: Wiebke Lachnitt
Edited by: –
Last updated: October 8, 2025

Executive summary

Labor and worker rights are fundamental human rights that safeguard fair treatment, workplace safety, and equitable remuneration. This document explores their historical evolution, modern challenges, and corporate responsibilities in a globalized economy.

Historically, labor rights emerged during industrialization to address exploitative conditions, leading to milestones such as the Factory Acts and the founding of the International Labour Organization (ILO) in 1919. The ILO established conventions that remain central to global labor governance, including prohibitions on forced labor, child labor, and discrimination, as well as rights to collective bargaining and freedom of association.

Modern challenges include precarious and informal work, exploitation of migrant workers, and the impact of digitalization and artificial intelligence on employment. Migrant workers, particularly in sectors like construction and domestic work, face systemic vulnerabilities under frameworks such as the Kafala system, which restricts mobility and fosters abuse. Despite reforms, enforcement gaps persist, leaving workers exposed to debt bondage, unsafe conditions, and limited access to justice.

Corporate actors play a dual role: they can perpetuate exploitative practices through cost-driven strategies or champion improvements via voluntary codes of conduct, multi-stakeholder initiatives (MSIs), and sustainability reporting. Instruments such as SA 8000, ISO standards, and frameworks like the UN Guiding Principles on Business and Human Rights provide guidance for integrating labor rights into corporate governance. However, voluntary measures often suffer from weak enforcement and limited impact on process rights, such as freedom of association.

The document outlines a practical implementation guideline based on the Plan-Do-Check-Act (PDCA) cycle, enabling companies to assess current practices, identify risks, implement corrective measures, and monitor progress. Complementary approaches include capability-building programs for suppliers and participation in MSIs to enhance transparency and accountability.

Drivers for improving labor rights include regulatory frameworks like the EU Corporate Sustainability Reporting Directive (CSRD) and the Corporate Sustainability Due Diligence Directive (CSDDD), stakeholder pressure from investors and consumers, and reputational incentives. Conversely, barriers such as weak enforcement, resource constraints, governance gaps, and competing stakeholder interests hinder progress.

Case studies of Fairphone and Patagonia illustrate best practices, combining innovative measures like living wage programs with established standards and collaborative initiatives. These examples demonstrate that strategic integration of labor rights into corporate operations not only fulfills ethical obligations but also strengthens competitiveness and resilience.

In conclusion, advancing labor and worker rights requires a holistic approach that blends regulatory compliance, voluntary initiatives, and continuous improvement. Companies that embed these principles into their strategies can achieve both social impact and long-term business value.

1 Introduction

In 2021, international media reported on the deaths of approximately 6,500 migrant workers in Qatar since the country won the bid to host the Fédération Internationale de Football Association’s (FIFA) 2022 World Cup in 2010.¹ This figure refers to the deaths of migrant workers from South Asian countries, particularly India, Pakistan, Nepal, Bangladesh and Sri Lanka. Yet, it does not distinguish between work-related and non-work-related causes of death.¹² Moreover, a direct connection between the deaths and the World Cup-related construction projects remains disputed, as Qatar has failed to document different work-related causes of death.³ Nevertheless, these reports fueled widespread international criticism regarding human rights issues in Qatar, including not only labor. And worker rights but also the rights of women and the LGBTQI+ community, restrictions on freedom of speech, as well as allegations of bribery and corruption within FIFA itself.¹⁴

The central criticism concerning labor and worker rights violations in Qatar relates to the treatment of migrant workers under the Kafala system. The state sponsors companies and thus legally binds foreign workers to their employers, thereby creating structural power asymmetries that facilitate exploitation and abuse.¹⁵ While the Kafala system is widespread across Gulf Arab states, as well as in countries such as Lebanon and Jordan, Qatar has introduced comparatively progressive reforms.¹⁶ These include granting workers in all sectors the right to change employers with reasonable notice and abolishing the mandatory exit permit.¹⁶ However, practical implementation of these reforms remained problematic, as employers often sought to prevent workers from exercising these rights by threatening retaliation.¹⁶ Furthermore, the system reinforced the notion of labor migration as temporary and reduced state responsibility for protecting migrant workers by shifting financial and legal obligations onto individual sponsors.⁷ Thereby, migrant workers in Qatar were confronted with multiple labor and worker rights violations.¹⁵⁶ For instance, many workers incurred substantial debts due to unlawful and unethical recruitment practices, in some cases paying recruitment agencies up to ten months’ wages, which effectively placed them in situations of debt bondage and forced labor.¹⁵⁶ Moreover, access to justice for labor and worker rights violations was severely constrained.¹⁵ Structural barriers included bureaucratic complexity, language barriers, travel costs, the absence of free legal advice and the difficulty of pursuing claims once workers had left the country.⁷ Even when complaints were filed, labor dispute committees often required three to eight months to reach a decision and compensation was not guaranteed.³ The persistent failure to enforce labor laws and punish abusive employers also contributed to the situation.⁵⁷ Although regulatory reforms were introduced, including the establishment of a minimum wage and the formal possibility for workers to change employers, significant gaps in accountability remained.⁵⁷ Social protection mechanisms for migrant workers were largely absent, particularly regarding long-term provisions such as pensions or unemployment insurance.⁶ This represents a significant gap in the protection system, which does not meet international standards.⁷ These shortcomings prompted extensive criticism from civil society organizations. And human rights groups like Amnesty International, which have characterized the Kafala system as a form of forced labor, which the International labor Organization (ILO, 1930) defines as “all work or service which is extracted from any person under the threat of a penalty and for which the person has not offered himself or herself voluntarily. ”(Art.² (1)).⁵⁸ In contrast, during the World Cup, local media coverage in Qatar predominantly emphasized governmental efforts to address these criticisms, often framed through conflicts and accountability frameworks, while moral and human-centered perspectives remained marginalized.⁵

The case of Qatar illustrates not only the structural vulnerabilities of migrant workers under the Kafala system, but also the role of powerful organizations such as FIFA in shaping labor and worker rights.¹⁹ The controversies surrounding the 2022 World Cup demonstrate that corporate and organizational actors are not passive observers but active participants whose decisions can either reinforce exploitative practices or help to dismantle them.¹⁹ This raises the central question of how companies can both prevent violations and improve labor and worker rights. On the one hand, companies follow economic interest, business models based on cost reduction and flexible labor markets may foster exploitative practices and promote power asymmetries.¹⁰ On the other hand, companies possess considerable potential to promote fair operations and supply chains.¹¹ The practical implementation of labor and worker rights is crucial, as without active corporate commitment, rights often remain confined to paper declarations with little effect on the daily realities of workers.¹²

The motivation for this thesis arises from both personal. And societal interests, especially the desire to understand how corporate actors influence the implementation of labor and worker rights, a topic of growing importance given recent public debates and regulatory developments.¹³ Furthermore, the importance of labor and worker rights has gained renewed attention in recent years, not only in academic discourses but also in political and societal debates.¹⁰ The growing awareness of exploitative practices in global supply chains, combined with increasing regulatory initiatives, underlines that labor standards are no longer a marginal concern but a central issue in evaluating corporate conduct.¹⁰ Recent legislative developments, such as the German Supply Chain Due Diligence Act (orig. : Lieferkettensorgfaltspflichtengesetz, LkSG), as well as the European Union’s Corporate Social Responsibility Directive (CSRD). And the Corporate Sustainability Due Diligence Directive (CSDDD), illustrate that the protection of labor and worker rights is progressively shifting from a voluntary commitment to a binding requirement.⁹¹⁴ At the same time, companies are under pressure from investors, consumers and civil society to integrate labor standards into broader Corporate Social Responsibility (CSR) strategies, demonstrating that these rights are inseparable from a contemporary understanding of corporate accountability.¹⁵

From a historical perspective, labor and worker rights have always been closely connected to broader social and economic transformations.¹⁰ The rise of industrialization in the 19th century exposed workers to unprecedented risks, long working hours and inadequate protections, prompting the emergence of labor movements and trade unions.¹⁶¹⁷ The establishment of the ILO in 1919 marked a turning point in codifying labor standards at the international level, reflecting the recognition that social justice and economic development are interdependent.¹⁶¹⁷ While these rights were initially conceptualized within national frameworks, globalization and the expansion of transnational supply chains have shifted the focus toward the global enforcement of labor standards.¹⁶¹⁷ Today, violations of workers’ rights in one country can have reputational, financial and legal consequences for corporations operating worldwide, underscoring the global relevance of the issue.¹⁸

Despite these developments, existing research often addresses labor and worker rights in fragmented ways. Much of the literature either emphasizes the role of states and international organizations in setting standards, or it examines Corporate Social Responsibility in isolation from broader labor rights frameworks.¹⁹²⁰ Less attention has been paid to the dynamic. And reciprocal relationship between corporate actors and labor rights and how companies are both shaped by regulatory requirements and societal expectations, while simultaneously shaping the implementation and effectiveness of these rights through their decisions and practices.²¹ Addressing this gap is essential for understanding the realities of labor standards in a globalized economy, where formal commitments on paper may diverge significantly from practical outcomes.²²²³ By focusing on this interplay, this thesis aims to contribute to a more nuanced understanding of labor and worker rights as both a regulatory framework and a lived practice. It highlights how corporate conduct can reinforce existing inequalities or, alternatively, become a driver of social progress. This dual perspective not only enriches the academic discussions but also offers insights for policymakers, businesses and civil society actors seeking to ensure that labor and worker rights are not merely aspirational but effectively implemented in everyday practice.

In this thesis, the terms work, employment and labor are used frequently. Although they are often treated as synonyms, their definitions differ.²⁴ Work is defined as any activity performed by a person, regardless of age or gender, that produces goods or provides services for others or themselves.²⁴ Traditionally, labor was used to refer to work that is physical or strenuous, but today it is used interchangeably with work.²⁵ In addition, employment is defined as a person who worked at least one hour for pay or a person absent from work due to reasons such as sickness, maternity leave, or annual leave, in a reference period.²⁶ Moreover, labor and worker rights are understood as fundamental human rights encompassing both collective and individual dimensions, including freedom of association, collective bargaining, workplace safety and fair remuneration.²⁷²⁸ These rights are codified in international labor standards that seek to protect workers in all sectors from exploitation and promote dignity at work.²⁷²⁸ Furthermore, terms such as labor standards or labor rights are understood and occasionally used synonymously for labor and worker rights, as they refer to the same underlying principles in the reviewed literature.

Closely linked to this discussion is the concept of Corporate Social Responsibility. CSR describes the voluntary commitment of companies to assume social responsibility beyond mere compliance with legal regulations.²⁹ Labor and worker rights constitute a core area in this context, as corporate decisions regarding production conditions, supply chain management, or human resource policies have direct impacts on the realization of these rights.²⁹ At the same time, companies are increasingly required to systematically integrate labor rights into their strategies and structures due to societal expectations, regulatory developments and reputational risks.¹⁵ The engagement with CSR thus clearly demonstrates that labor and worker rights are not solely matters for the state but are significantly shaped by corporate action.

Another important distinction has to be made between labor rights and human rights. While fundamental labor rights, such as the prohibition of forced labor or child labor, are considered part of universal human rights, differences exist in scope and focus.³⁰ Human rights relate to the dignity and freedom of individuals in all areas of life, whereas labor and worker rights are specifically oriented toward the relationship between employers and employees.²⁷²⁸ Labor rights can therefore be understood as a subset of human rights, characterized by their specific framing within the work context.³¹ For companies, this means human rights must not be implemented abstractly, but in the form of concrete labor standards.³² Especially in global supply chains, the practical implementation determines whether rights exist merely on paper or have tangible effects.³³

In summary, this thesis addresses labor and worker rights as a complex issue shaped by both corporate practices and broader societal and legal frameworks. It aims to provide an understanding of the interplay between companies’ strategies, regulatory requirements and the effective implementation of labor standards, which is essential for assessing how rights are upheld in practice.

To provide a systematic analysis, the thesis is structured in several parts. The following chapter first introduces the methodology applied in this thesis. This section explains in detail how the literature review was conducted, which databases and search terms were used and according to which criteria relevant literature was selected or excluded. Chapter 3 is the sustainability analysis, which consists of two major parts and provides the theoretical background for the following practical implementation and drivers & barriers. In the first half, the historical emergence of labor and worker rights is addressed. It discusses early developments and the rise of workers’ organizations, with particular attention to the UK’s 1933 Factory Act. As it is considered a milestone.¹⁶³⁴ The internationalization of trade unions will then be reviewed, followed by the founding of the ILO. The ILO will be discussed in greater detail as the ILO has shaped and inspired most of today’s labor and worker rights measures.³⁵³⁶ Finally, this section considers the globalization of labor standards.

In the second half of the sustainability analysis, the focus is shifted to modern issues by presenting current labor. And worker rights issues, namely, informal and precarious work, the exploitation of migrant workers and the influence of artificial intelligence (AI) on labor. Afterwards, the relationship between companies and labor and worker rights will be analyzed. Here, two perspectives will be discussed. First, the influence of labor and worker rights on companies and secondly, the influence of companies on labor and worker rights. The relationship between labor and worker rights and corporate actors is reciprocal.³⁷ On the one hand, existing labor standards, regulations and international norms influence companies by establishing obligations and boundaries that shape corporate practices.³⁷ On the other hand, companies themselves have a decisive impact on the implementation of these rights, as their operational decisions, supply chain management and corporate policies can either support or undermine the effective implementation of labor and worker rights.¹⁵ Distinguishing between these two directions of influence is essential for understanding both the constraints under which companies operate and their potential role in promoting fair working conditions.³⁷

The aim of this chapter is also to identify and explain in which way companies can positively contribute to the improvement of labor and worker rights. Furthermore, it will be examined how corporate performance in this field can be assessed, with a focus on the instruments of single-stakeholder codes of conduct and multi-stakeholder initiatives.³²³⁸ Moreover, sustainability reporting standards and Key Performance Indicators (KPIs), including wages, working hours and occupational health and safety, will be discussed, as well as how those can be obtained to provide a comprehensive framework for measuring corporate performance. In addition, best practice examples will illustrate how they have implemented these instruments to improve their labor and worker rights performance and enhance accountability across supply chains.

The fourth chapter is the practical implementation of labor and worker rights. The overarching goal of this chapter is to provide a guideline for companies on how to systematically integrate labor and worker rights into business operations. Building on findings from the sustainability analysis, the chapter follows a Plan-Do-Check-Act (PDCA) cycle as a base structure of the guideline. It begins with an assessment of the current state of a company’s labor and worker rights performance, including its supply chain. Based on this diagnosis, potential measures and initiatives are presented, some general measures and some that are industry-specific. The following two phases of the PDCA-cycle address how these measures are monitored for effectiveness, how shortcomings are identified and which corrective actions can be taken. Moreover, two alternative approaches will be addressed based on practical examples.

Chapter 5 discusses the drivers and barriers that affect the implementation of labor and worker rights in companies. This chapter first explores potential drivers that can strengthen labor and worker rights, such as regulatory frameworks, international organizations and corporate values. It then turns to potential barriers that hinder effective implementation, ranging from structural challenges to stakeholder resistance, but also how companies can overcome these barriers. Particular attention will be paid to actors like the ILO, which can function as both a driver and a barrier depending on the context. By discussing enabling and constraining factors, this chapter sheds light on the complex dynamics that can shape the outcome of implementing labor and worker rights.

Lastly, the most important findings of this thesis will be summarized in the conclusion. Furthermore, limitations and possible directions for further research will be discussed.

2 Sustainability analysis

2.1 Historical emergence of labor and worker rights

2.1.1 Early developments and the ormation of workers’ organizations

Some of the earliest labor law developments took place in Europe in the 14th century, where labor laws such as maximum wage were first adopted.³⁹ In the 16th and 17th centuries, laws improving the treatment of slaves in European colonies, including minimum hours of work and acceptable punishments, were implemented.³⁹ However, the protection of workers and their benefits was merely a by-product back then.³⁹ These laws were enforced by the elites who had their own interests in mind, without much consideration for their employees.³⁹ A shift of that mindset first took place during the Industrial Revolution in the 18th and 19th centuries, when the benefits of such laws were directed towards the workers themselves.³⁹ The Industrialization led to major differences in working conditions, especially negatively affecting those performing menial tasks.¹⁶¹⁷ Workers suffered from long working hours, hazardous working conditions, very low wages and child labor.¹⁶¹⁷ From the mid-18th century onward, workers, especially in Europe, started to stand up for their rights and to associate in order to address the so-called Social Question of inequality and injustice (see Figure 1).¹⁶¹⁷³⁹ Due to alliances of workers becoming more powerful, employers and governments began to restrict such activities with consequential new laws and regulations.¹⁶³⁹ It was not until the mid-19th century that the right to combine gained ground and workers’ organizations developed all over Western Europe.¹⁶ The history of national trade unions is analogous.¹⁶

*Figure 1: Timeline of the emergence of labor and worker rights (1), own illustration based on Maul (2019), Nardinelli (1980), Rodgers et al. (2009) & United Nations (1948).^17,34,16,30*

Labor standard concerns were directed towards children and women back then and not men.³⁹ This was because women and children were not considered to be able to make decisions for themselves.³⁹ Additionally, they had limited political power, control over money, and were usually not in a position to bargain, however, male workers implicitly benefited from these labor standard developments as well.³⁹ Nonetheless, as illustrated in Figure 1, one breakthrough and milestone of the earliest labor movements was the protection of child workers in the textile industry in the United Kingdom.³⁴ The Factory Act of 1833 “prohibited the employment of children under the age of nine in all textile mills (except silk) powered by steam or water” (Nardinelli 1980, p. 741) and limited the amount of time children between the ages of nine and twelve were allowed to work, which was nine hours per day or 48 hours per week.³⁴ In addition, the Factory Act required working children to attend school.³⁴ The silk mills were exempt from these rules because they were deemed less harmful than other textile factories and child labor was considered an integral part of the industry’s survival.³⁴ Therefore, less rigorous rules were imposed on silk mills.³⁴

An implicit tax on child labor ensured the success of the 1833 Factory Act.³⁴ Factory owners were required to collect age certificates and some needed to hire staff to handle the extra paperwork.³⁴ Due to the compulsory schooling, some factories had to establish a shift system, if there wasn’t one already, and provide schools if no school existed nearby.³⁴ All these measures have raised costs for the factory owners, leading to an implicit tax on child labor.³⁴ An example of the tax’s positive effect is the drop in the number of employed children from 56,000 to 33,000 in textile factories after the enforcement of the law between 1835 and 1838.³⁴ And even though there might have been some cheating, suggesting the numbers were not as high as reported, the law was substantially obeyed and therefore a success.³⁴ However, it is important to note that the number of child workers in textile factories was decreasing before the 1833 Factory Act, due to Industrialization and technological improvements.³⁴ Secondary jobs, usually performed by children, such as picking up waste or piecing together broken threads, became mostly obsolete since the improved machines did not break as many threads and produced less waste.³⁴

One point of criticism could be that the 1833 Factory Act only targeted the textile industry and legislative restrictions on other industries were not enforced until the 1860s and 1870s.³⁴ Nevertheless, the 1833 Factory Act was one of many in a series of Factory Acts, which acted as a blueprint for similar legislation in most European. And North American countries that was adopted towards the end of the 19th century.¹⁶³⁴

2.1.2 Internationalization of trade unions

The first worker rights subject dealt with at an international level was forced and compulsory labor, discussed at the Congress of Vienna in 1815.¹⁶ The goal was to end cruel treatment towards workers and propagate more humanity.¹⁶ After the Congress of Vienna, many countries adopted national laws that prohibited the slave trade and imposed sanctions for non-compliance with these laws.¹⁶ Nevertheless, the formation of international trade unions did not occur until the second half of the 19th century, but it was a major development towards the labor and worker rights of today (see Figure 1).¹⁶¹⁷ During that time, the International Trade Secretariats were founded, followed by the International Federation of Trade Unions, formed in 1913.¹⁶ Throughout World War I, between 1914 and 1918, members of the international trade union movement kept in touch and managed to make plans for a post-war period.¹⁶ At a trade union conference in Leeds in 1916, a list of demands of workers’ rights was drafted, which included “freedom of association, limited working hours, a minimum working age of 14 years, the abolition of night work for women, comprehensive social security. And factory inspectorates, […]” (Rodgers et al. 2009, p. 46).¹⁶ After the war ended and the ILO was founded, they took on every one of these demands.¹⁶

A pivotal forerunner of the ILO was the International Association for labor Legislation (IALL), founded in 1900.¹⁷ The association reflected the internationalist spirit of the late 19th century by juxtaposing “the ideals of peace, progress and cooperation among states” (Maul 2019, p. 18) with the reality of a world of competing nations.¹⁷ Even though IALL members were mostly academics, the work of the IALL was defined by the involvement of private initiatives and governments, similar to the International Red Cross movement at that time.¹⁷ Experts and representatives of different countries that financed the IALL joined the association with the formation of the IALL’s permanent secretariat in Basel in 1901.¹⁷ Especially members of major industrial countries like France, Germany, or the United States of America made the IALL an opportunity to compare and judge their different social reform models.¹⁷

The association’s primary goal was to spread and implement labor law internationally.¹⁷ The Basel Office pursued its objectives by coordinating national sections, facilitating transnational reformist exchange and promoting labor law harmonization through its networks.¹⁷ The IALL’s work intersected with that of several other international bodies, such as the Permanent Committee for Social Insurance or the International Association for the Prevention of Unemployment.¹⁷ They all shared a commitment to social reform and international cooperation, which influenced the IALL’s work significantly.¹⁷

The promotion of international labor conventions was the main target of the IALL and the association achieved notable success in two cases in 1906.¹⁷ The first convention banned the usage of white phosphorus in match production, marking a milestone in the fight against hazardous workplace conditions.¹⁷ The second convention was on the prohibition of night work for women, which found broad support across political lines.¹⁷ Further conventions were planned, such as the prohibition of night work for children under the age of 14. And the reduction of working hours to ten hours a day for adolescents and women, which also addressed the demands of the trade union movement.¹⁷ However, these conventions never came to fruition due to the outbreak of World War I in 1914.¹⁷

Just like the demands of the Leeds trade union conference, the ILO took on and executed the IALL conventions that could not be realized.¹⁶¹⁷ In retrospect, the IALL is considered a major testing ground for what would later become the ILO.¹⁷

2.1.3 Founding of the ILO

The ILO was established alongside the League of Nations at the Paris Peace Conference in 1919 and was anchored in the Treaty of Versailles, which formally marked the end of World War I.¹⁶¹⁷ Both institutions were conceived as a response to the profound political and social upheavals triggered by the war. A central conviction guiding the Conference and the Treaty was that lasting peace required not only political settlements, but also social justice.¹⁶¹⁷ The creation of the ILO reflected this belief and represented a social justice as an essential cornerstone for peace and not just as a commodity.¹⁶¹⁷

Furthermore, the ILO was supposed to be an answer to the Social Question of inequality. And injustice of workers, which first came up during the Industrial Revolution and continue the pre-war work of other organizations such as the IALL and the trade union movement.¹⁶¹⁷ Different from previous organizations and associations, the ILO has a unique tripartite structure with national representatives from not only governments and employers, but also workers, all with equal voting power.¹⁶¹⁷⁴⁰ The formulation and adoption of international labor standards were considered the ILO’s primary mandate, aiming to regulate nearly all dimensions of labor law and industrial relations.¹⁶¹⁷⁴¹

The ILO hit several milestones in its first couple of years, such as the Minimum Wage-Fixing Machinery Convention (No. 26) in 1928, which set a minimum wage, or the Forced labor Convention (No. 29) in 1930, which prohibited forced labor.⁸⁴² Moreover, the organization outsourced its supervisory expertise for the ratification of standards in 1926.¹⁶¹⁷ From 1927 onward, that was going to be the job of the newly developed Committee of Experts on the Application of Conventions and Recommendations (CEACR).¹⁶¹⁷ The CEACR consisted mostly of internationally renowned jurists and labor law experts and their job was to review the annual reports of nations that ratified standards.¹⁷ The experts became crucial in the establishment of the international labor law of the member states.¹⁷ Due to the precarious situation in Europe during World War II (1939-1945), the ILO moved its headquarters from Geneva to Montreal to secure its freedom of action.¹⁶¹⁷ This move led to the Philadelphia Conference in 1944, which is considered the second founding of the ILO.¹⁶¹⁷ The outcome of that Conference was the Philadelphia Declaration, which outlined the universal will of renewing liberal democracies, after the experiences of the rise of Fascism and Nazism during the war.¹⁶¹⁷ The fundamental principles of the Declaration reaffirmed the existing ILO principles and put special emphasis on some of them, such as the principle that labor is not a commodity.¹⁶¹⁷⁴³ Among others, the Declaration made a big impact on the international human rights movement. Universal human rights were defined as such: “all human beings, irrespective of race, creed or sex, have the right to pursue both material well-being. And their spiritual development in conditions of freedom and dignity, of economic security and equal opportunity” (ILO 1944, p. 1), which became a main source of inspiration for the Charter of the United Nations (UN) and the UN’s Universal Declaration of Human Rights (UDHR) from 1948.¹⁶¹⁷⁴⁴

When the ILO was founded, the organization had 44 member states, which rapidly grew to 121 member states after World War II and the dissolution of European colonies.¹⁷³⁹⁴⁰ Today, the organization has 187 member states.¹⁷³⁹⁴⁰ Moreover, as of 2025, the ILO has adopted 192 Conventions and formulated 209 Recommendations.⁴⁵ In the Declaration of 1998, the eight most important conventions were grouped as the Fundamental Conventions, which are considered to be the fundamental human rights in the workplace.⁴⁶⁴¹ The Conventions are also known as the Core Labor Standards and are central to the ILO’s mission of achieving social justice worldwide.¹⁶⁴⁶ They cover labor and worker rights, such as the abolishment of forced labor, minimum age, discrimination, the freedom to associate, the right to collective bargaining and equal remuneration (see Table 1).¹⁶ What is special about these conventions is that they apply to all 187 member states and the members have to adhere to them, regardless of whether they have ratified them or not.¹⁶¹⁷⁴¹ However, most member states have also ratified the Fundamental Conventions, as illustrated in Table 1.¹⁶¹⁷ Nevertheless, the only convention ratified by all member states is the C182 – Worst Forms of Child labor Convention.⁴⁷

Convention

Purpose & Ratifications

C029 – Forced labor Convention, 1930 (No. 29)

Aims to abolish all forms of forced and compulsory labor. While widely ratified (181 ratifications), its principles continue to be violated in practice, with modern challenges including prison labor, trafficking and exploitation of domestic workers. C087 – Freedom of Association and Protection of the Right to Organise Convention, 1948 (No. 87)

Guarantees the rights of workers and employers to freely organize in defense of their interests and is recognized as a foundational human right. Despite its significance, major economies like China, India and the USA remain outside of it due to structural and political barriers. Nevertheless, most member states have ratified it (158 ratifications). C098 – Right to Organise and Collective Bargaining Convention, 1949 (No. 98)

Complements earlier protections by strengthening the rights to organize and engage in collective bargaining, reinforcing the formation of independent organizations for both workers and employers. However, its political nature has limited global ratification, similar to its predecessor (168 ratifications). C100 – Equal Remuneration Convention, 1951 (No. 100)

Seeks to eliminate pay discrimination by requiring equal remuneration for work of equal value. It refines previous principles refining and strengthening the commitment to gender pay equality. This convention has been ratified by the majority of ILO members (174 ratifications). C105 – Abolition of Forced labor Convention, 1957 (No. 105)

Bans forced labor used as punishment for political views, strikes, discrimination or breaches of labor discipline, targeting abuses seen during World War II and Soviet Gulags. Like its predecessor, it ranks among the most widely ratified ILO conventions (178 ratifications). C111 – Discrimination (Employment and Occupation) Convention, 1958 (No. 111)

Requires states to promote equality of opportunity and treatment in employment and occupation, aiming to eliminate discrimination, which has been adopted into many national constitutions worldwide. It has been widely ratified (175 ratifications). C138 – Minimum Age Convention, 1973 (No. 138)

Establishes a general minimum age for employment, replacing earlier sector-specific rules on child labor. It requires that this age be no lower than the end of compulsory schooling and generally not under 15, with some flexibility for developing countries. It has been ratified by most ILO members (177 ratifications). C182 – Worst Forms of Child labor Convention, 1999 (No. 182)

Calls for immediate elimination of the worst forms of child labor, including slavery, prostitution, illicit activities and hazardous work. It became the fastest-ratified ILO convention in history and has attracted broad support and funding (187 ratifications).

Convention	Purpose & Ratifications
C029 – Forced Labour Convention, 1930 (No. 29)	Aims to abolish all forms of forced and compulsory labor. While widely ratified (181 ratifications), its principles continue to be violated in practice, with modern challenges including prison labor, trafficking and exploitation of domestic workers.
C087 – Freedom of Association and Protection of the Right to Organise Convention, 1948 (No. 87)	Guarantees the rights of workers and employers to freely organize in defense of their interests and is recognized as a foundational human right. Despite its significance, it has been ratified by less than half of all states, with major economies like China, India and the USA remaining outside due to structural and political barriers. Nevertheless, most member states have ratified it (158 ratifications).
C098 – Right to Organise and Collective Bargaining Convention, 1949 (No. 98)	Complements earlier protections by strengthening the rights to organize and engage in collective bargaining, reinforcing the formation of independent organizations for both workers and employers. However, its political nature has limited global ratification, similar to its predecessor (168 ratifications).
C100 – Equal Remuneration Convention, 1951 (No. 100)	Seeks to eliminate pay discrimination by requiring equal remuneration for work of equal value. It refines previous principles refining and strengthening the commitment to gender pay equality. This convention has been ratified by the majority of ILO members (174 ratifications).
C105 – Abolition of Forced Labour Convention, 1957 (No. 105)	Bans forced labor used as punishment for political views, strikes, discrimination or breaches of labor discipline, targeting abuses seen during World War II and Soviet Gulags. Like its predecessor, it ranks among the most widely ratified ILO conventions (178 ratifications).
C111 – Discrimination (Employment and Occupation) Convention, 1958 (No. 111)	Requires states to promote equality of opportunity and treatment in employment and occupation, aiming to eliminate discrimination, which has been adopted into many national constitutions worldwide. It has been widely ratified (175 ratifications).
C138 – Minimum Age Convention, 1973 (No. 138)	Establishes a general minimum age for employment, replacing earlier sector-specific rules on child labor. It requires that this age be no lower than the end of compulsory schooling and generally not under 15, with some flexibility for developing countries. It has been ratified by most ILO members (177 ratifications).
C182 – Worst Forms of Child Labour Convention, 1999 (No. 182)	Calls for immediate elimination of the worst forms of child labor, including slavery, prostitution, illicit activities and hazardous work. It became the fastest-ratified ILO convention in history and has attracted broad support and funding (187 ratifications).

Table 3: List of Fundamental Conventions, own table based on ILO (1930, 1948, 1949, 1951, 1957, 1958, 1973, 1999), Maul (2019), Rodgers et al. (2009).^{16,17,49–56}

Some Conventions are additions to previous Conventions, like the C105 – Abolition of Forced labor Convention, 1957 (No. 105), which is an addition to the C029 – Forced labor Convention, 1930 (No. 29) (see Table 1). However, the ILO regularly passes new Conventions that go beyond the Fundamental Conventions and address ‘modern’ labor and worker rights issues.¹⁷⁴⁰⁵⁵ One example of that is the C189 – Domestic Workers Convention, 2011 (No. 189), which was the first occupational safety standard for domestic workers.¹⁷⁴⁰⁵⁵ The ILO, ILO conventions, and especially the Core Labor Standards, are still of great importance today, as they provide the framework for many other labor standards, regulations and national legislations that followed.³⁵³⁶

2.1.4 Globalization of labor standards & status quo

The process of internationalizing labor and worker rights had already begun before the establishment of the ILO.³⁵³⁹⁴¹ Nonetheless, the globalization of labor and worker rights has accelerated since its founding.³⁵³⁹⁴¹ A turning point for the globalization of labor standards was the Declaration of Philadelphia, due to the strong emphasis on universal human rights, followed by the departure from a Eurocentric orientation. And the shift to a global one in the mid-20thcentury.¹⁶¹⁷⁴¹ Moreover, the decolonization of European colonies led to a growth of member states from the global south, which also encouraged a globalized orientation.¹⁶¹⁷

*Figure 2: Timeline of the emergence of labor and worker rights (2)*, *own illustration based on Arnold & Bongiovi (2013), Graham & Anwar (2020), Maul (2019), Rodgers et al. (2009), United Nations (2011), United Nations (n. d.)^{10,16,17,58–60}*

However, the ILO was not the only organization contributing to this movement.¹⁶¹⁷⁴⁶ Many other organizations and initiatives formed from the mid-20th century onward, like the UDHR, the organization for Economic Co-operation and Development (OECD) and the UN Global Compact (see Figure 2).¹⁶¹⁷⁴⁶ All these have a different impact on labor and worker rights, but what they all have in common is that they follow a soft law approach, meaning they are voluntary.⁶⁵⁷⁵⁹⁶⁰⁶¹ The UDHR defines universal. And fundamental human rights, which are internationally recognized, and Article 23 establishes basic labor and worker rights for everyone, such as the right to work, equal pay, no discrimination and the right to join trade unions.²¹⁴⁷ It posed as a framework for subsequent international human rights treaties.²¹⁴⁷ The OECD’s influence on labor and worker rights is mostly indirect since its activities focus on other issues, such as offering economic expertise and the coordination of policy measures.²⁰ However, in 1976, the organization published the OECD Guidelines for Multinational Enterprises on Responsible Business Conduct, which established behavioral norms for enterprises, covering the following issues: “employment. And industrial relations, environmental protection, information disclosure, competition, financing, taxation, and science and technology” (OECD 1999, p. 19).⁶⁰ The Guidelines are not legally binding, but the OECD member governments are required to promote their adherence.⁶⁰ Since its establishment, the Guidelines have been revised multiple times, most recently in 2023.⁴⁶⁶¹ The UN Global Compact goes in a similar direction. It is also a voluntary measure and companies that join the Global Compact commit to adhere to the ten principles, which are partly based on the ILO’s Core Labor Standards.⁴⁶ The Initiative was a reaction to legally binding codes of conduct for Multinational Enterprises (MNEs). And their supply chains, which had failed in the past, hence, this soft law approach, under which companies were only required to provide evidence of compliance, proved successful.⁴⁶

Furthermore, as seen in Figure 2, in 2011, the UN published the UN Guiding Principles on Business and Human Rights (UNGPs).⁵⁹⁶² The UNGPs promote the implementation of corporate Due Diligence mechanisms.⁵⁹⁶² This means that companies must identify, prevent, mitigate and account for human rights abuses.⁵⁹⁶² This also includes the behavior of MNEs with regard to freedom of association, one of the core labor standards.⁵⁹⁶²

A most recent development is the Sustainable Development Goals (SDGs), adopted by the UN in 2015.⁶³ The 17 goals aim for a sustainable development on a social, ecological and economic level.⁶³ SDG 8 promotes decent work and economic growth.⁵⁸ It contains sub-targets about the protection of labor and worker rights and a secure working environment for all types of workers, especially women migrant workers.⁵⁸ Moreover, SDG 8 targets to end forced labor, modern slavery and human trafficking.⁶⁵⁸

In a nutshell, the development of labor and worker rights has led from labor laws that managed maximum wages or minimal working hours to labor standards of today that demand minimum wages and regulate maximum working hours.³⁹ Engerman (2003) has divided modern labor and worker rights into three categories.³⁹ Firstly, the most basic labor and worker rights: minimum wage and maximum hours of work.³⁹ Secondly, laws that stipulate acceptable working conditions in factories: occupational health and safety conditions, as well as the elimination of work hazards.³⁹ And thirdly, laws that dictate the range of permissible agreements between employer and employee, such as rights of association, formation of unions and bargaining rights.³⁹

While Engerman’s categories reflect the core of modern labor and worker rights, recent developments reveal new forms of vulnerability, as well as new challenges, which will be addressed in the following chapter.

2.2 Modern labor and worker rights issues

The most talked about labor and worker rights issues of today are precarious and informal work, the exploitation of migrant workers, as well as the digital transformation and the rise of Artificial Intelligence.⁵¹⁰¹⁷⁶⁴⁶⁵⁶⁶

Precarious and informal work are terms for employment with very limited or without any kind of legal worker protection, which are often used interchangeably.¹⁰ Even though they often overlap, they do not mean the same.¹⁰ Precarious work, on the one hand, is associated with uncertainty and instability (lack of job security), low income, very limited social benefits and a lack of workplace safety.¹⁰ One example are platform workers, like food delivery drivers working for platforms like Uber Eats.⁶⁷ Platform workers are frequently excluded from labor protections due to the conditions deliberately shaped by the platforms themselves, which classify them in ways that deny them legal recognition as employees, thereby depriving them of fundamental labor rights.⁶⁷

Informal work, on the other hand, is any type of employment that is not recognized, regulated, or protected by existing legal or regulatory frameworks.¹⁰ Other than precarious workers, informal workers often do not have employment contracts or enjoy any kind of social benefits.¹⁰ Domestic workers often fall under this category, as they are frequently fully or partially excluded from labor laws due to their work in private households, which are often not recognized as a formal workplace.⁶⁸ One labor and worker rights development to tackle the domestic work issue was the ILO’s C189 – Domestic Workers Convention, 2011 (No. 189). However, it has only been ratified by 40 countries and in the majority of the world, domestic work is still not recognized as real work.⁶⁵⁶⁹

Other recent developments are the technological change and the rise of AI, as well as the possible effects these may have on jobs.⁷⁰⁷¹ Due to the technological transformation, some human-made work, work that low-skilled workers used to perform, is increasingly taken over by intelligent systems.⁷² Unlike previous technological advancements, the recent advancements in AI and robotics offer autonomous capabilities and are thus driving structural technological unemployment, as human labor becomes increasingly redundant.⁷⁰⁷¹ Moreover, the labor market fails to generate sufficient employment opportunities to offset the resulting displacement.⁷⁰⁷¹

One outcome of all these developments is the so-called Gig Economy (see Figure 2). The rapid digitalization of work and advancements in automation and communication technologies are not only expanding the work process to include digital data and machines, but also embedding it in far-reaching production networks.⁵⁶ The Gig Economy refers to a new way of working in which workers support themselves by performing a series of ‘gigs’ on a freelance basis. These gig workers usually work for several different clients, rather than having a permanent position.⁷³ Due to the low wages and very limited social benefits these gigs provide, gig work can also be counted as a form of informal work.⁷³⁷⁴

There are currently only a few regulatory frameworks addressing AI, most of which focus on ethical and governance issues.⁷⁰ For instance, in 2024, the European Union adopted the EU-AI Act.⁷⁵ That framework has the goal to promote the responsible development and use of AI in the EU, addressing potential risks to health, safety and fundamental rights.⁷⁵ After copyright infringements of music, videos, illustrations and articles, the EU recently extended the Act, which mandates that providers of large, powerful AI models to disclose which websites they use to access copyright-protected work.⁷⁶ It remains to be seen whether future regulatory frameworks will be developed that address the influence of AI on labor and worker rights.

Moreover, during the globalization of economies, international workers have become a staple.⁷⁷ Migrant workers are crucial to many sectors and economies in addressing labor shortages in destination countries, particularly in sectors such as construction, agriculture, as well a care and domestic work and are often referred to as the backbone of global supply chains.⁷⁷ According to recent calculations, there were an estimated 167.7 million migrant workers worldwide in 2022.⁷⁷⁷⁸ They are particularly common in North America, Southern and Western Europe and the Arab states.⁶ In the Gulf Cooperation Council member countries (Bahrain, Saudi Arabia, Kuwait, Oman, Qatar, United Arab Emirates), they represent the largest share of the working population, accounting for over 75 per cent of the workforce.⁷⁷⁹ In Qatar, they even make up an estimated 88.4 per cent of the population.³ Many high-income countries are facing an aging population, which is leading to an increasing demand for labor that is often met by migrants.⁸⁰ A key driver is the desire of companies and economies to secure national competitiveness and growth through access to low-wage workers and significant income differences between countries of origin and destination are strong incentives for migration.¹⁷ Even with low wages of, for instance, 250 to 300 dollars per month in a Gulf state, migration is worthwhile for many workers, as these jobs pay better than in their home countries.¹ Furthermore, in many countries, there is a lack of decent work and underemployment is prevalent, whereby labor migration is often encouraged by the government and thus often seen as a necessity rather than free choice.¹⁸⁰

As the example of the FIFA World Cup in Qatar has illustrated, labor migration often comes with exploitation and violations of labor and worker rights.⁵⁷ This exploitation is directly encouraged by the government and its Kafala system, which ties migrant workers to a single employer in terms of their legal status and their right of residence.⁵⁷ This system creates an enormous power imbalance that encourages abuse and exploitation.¹ Migrant workers are frequently denied fundamental rights such as freedom of association and the right to collective bargaining and countries like Qatar do not have trade unions, which could potentially help workers to stand up for their rights.¹ Since migration is seen as temporary, social security systems are often neglected, which leads to migrants having limited access to health care, pensions, or unemployment insurance.⁷⁷⁷ Moreover, the enforcement of laws, such as minimum wages, is often weak and companies are rarely penalized for violations.³ In summary, the employment of migrant workers is driven by several global. And local factors, but is deeply problematic due to systemic exploitation and legal shortcomings and recent examples like the 2022 World Cup underscore the urgency of this labor and worker rights issue.

2.3 Relationship between companies and labor and worker rights

2.3.1 Influence of labor and worker rights on companies

Companies are required to follow national labor and worker laws and regulations that set minimum standards for labor and worker rights, such as wages, working hours, occupational health and safety, as well as protection against child labor and forced labor.⁸¹ These minimum standards are often based on the ILO Core Labor Standards (see Table 1).⁸¹ International standards like these apply in addition to national labor and worker rights legislation.¹⁷ Even if states have not ratified ILO conventions, their ILO membership obliges them to respect the Core Labor Standards, such as C087 – Freedom of Association and Protection of the Right to Organise Convention, 1948 (No. 87) and the C098 – Right to Organise and Collective Bargaining Convention, 1949 (No. 98) (see Table 1).¹⁶¹⁷ Consequently, these governmental duties exert normative pressure on companies.⁸²

The introduction of labor standards may initially be perceived as a cost factor that impairs economic competitiveness.³⁵ Research has shown, however, that the implementation of labor standards can increase economic efficiency and improve export competitiveness rather than harm it.³⁵ Nevertheless, the degree of commitment that companies maintain and monitor labor standards largely depends on factors like “sectors, size, the value chain, and leadership” (Hassel 2008, p. 247).⁴⁶ Weak enforcement can incentivize companies, particularly from weakly regulated countries, to undercut and exploit labor standards for a competitive advantage.⁴⁶ This can lead to a widening gap between high and low labor standards in specific sectors, rather than raising them overall.⁴⁶

As outlined earlier the expansion and tightening of labor and worker rights is not a new development, yet it continues to present ongoing challenges for companies, particularly MNEs.⁸³ These challenges are further intensified by growing pressure from stakeholders such as consumers, Non-Governmental Organizations (NGOs), or the media to ensure compliance with labor and worker rights, as well as their environmental performance across global operations and supply chains.¹¹⁸⁴ A good reputation regarding high labor standards can act as a powerful selling point for companies, because if a company has one bad supplier, it can damage the whole company’s reputation.²⁹⁸⁴ Consequently, the fear of reputational damage can motivate companies to take voluntary measures, such as the introduction of their own codes of conduct, monitoring systems, or the development of Corporate Social Responsibility programs.¹¹⁴⁶⁸⁴ These measures describe the impacts companies can have on labor and worker rights and will therefore be discussed in further detail in the following chapter.

2.3.2 Influence of companies on labor and worker rights

Companies play a pivotal role in shaping labor and worker rights, within and beyond their own operations, both positive and negative.¹¹²⁹⁵⁹⁶² Before discussing the positive impact companies can have on labor and worker rights, the negative impacts will be addressed.

One negative impact is that there can be major power imbalances between employers and employees, especially in global supply chains.⁴⁰ Supply chains are becoming increasingly international, which allows companies to shift their production between different countries and thus take advantage of flexible employment relationships.¹⁰ For instance, MNEs can lower the prices they pay their suppliers and demand faster delivery times.¹⁰⁴⁰ This puts pressure on suppliers to lower wages, impose excessive and forced overtime, promote precarious working conditions and prevent unionization to control costs.¹⁰⁴⁰

Furthermore, some MNEs exploit deregulated labor markets in countries such as the United States, leveraging the nation’s economic and legal system to their advantage.⁶² On the one hand, they are drawn by access to capital and efficient transportation networks and on the other hand by a labor law framework that favors employers over trade unions and thus employees.⁶² Despite benefitting from these anti-union regulations, many companies still openly endorse global labor standards such as the UDHR, UNGPs, or ILO conventions, which include safeguarding the right to associate.⁶² It is not uncommon for companies to resist union efforts, some even launch aggressive campaigns to intimidate their employees and therefore prevent unionization.²⁹ Some companies, therefore, prefer to utilize voluntary codes of conduct because they would rather address enforcing those than governmental regulations.²⁹

Moreover, complex supply chains can be used to obscure responsibility for the conduct of suppliers and subcontractors, as accountability becomes increasingly opaque.⁴⁶ This structural separation also enables MNEs to evade liability for human rights violations committed by subsidiaries or suppliers, since these entities are regarded as legally distinct, thereby significantly hindering victims’ access to legal remedies.⁵⁹ Even initiatives such as the French Duty of Vigilance Law (orig. : Loi de Vigilance) of 2017, which obliges companies to assume liability for any negative human rights or environmental impact caused by their subsidiaries, encounter significant challenges.⁵⁹ The burden of proof frequently rests with the plaintiffs, while the structural power asymmetries between MNEs and affected communities substantially hinder access to effective legal remedies.⁵⁹

Despite that, not every impact a company has on labor and worker rights is negative.²⁹ In the last few decades, MNEs have increasingly established voluntary codes of conduct in order to improve their labor and worker rights performance along their supply chains.¹⁸²⁹ Companies such as Levi Strauss & Co. and Reebok Corp. were forerunners in developing such internal codes of conduct, which were based on the UN’s UDHR and ILO conventions.¹¹²⁹ These measures usually set out basic expectations for working conditions, often based on the ILO’s Fundamental Conventions, that suppliers must comply with.¹⁸²⁹ Some firms favor voluntary codes of conduct or monitoring systems over governmental regulations, as these voluntary measures are often considered more compatible with business strategies by MNEs, due to being specifically designed to align with their operational structures.⁸⁴ A positive side effect of codes of conduct can be the strengthening of supplier relationships, as the associated improvements in quality and delivery times foster greater mutual trust.⁴⁶

In recent years, many multi-stakeholder initiatives (MSIs) have been established in collaboration with multiple actors like companies, trade unions, NGOs, universities and governments to address challenges such as labor and worker rights across various industries.³² Furthermore, MSIs’ stakeholders all have equal decision-making powers.¹⁸³² Examples of this are the Fair Labor Association (FLA) and the Global Network Initiative (GNI).³² MSIs can help clarify and refine the application of labor and worker rights standards to specific business processes and companies are increasingly using MSIs to improve their labor and worker rights performance along the supply chain.²⁹³² The participation obliges companies to comply with the according standards and to remedy violations.³² Next to reputational advantages of participating in MSIs, other incentives can be risk minimization of violating labor. And worker rights, as well as the opportunity to use peer pressure to implement higher labor standards across the industry and therefore not having to bear the burden alone.³²⁴⁶

2.4 Measuring the sustainability performance of companies regarding labor and worker rights

2.4.1 Codes of conduct

The previous chapter examined the impacts of companies on labor and worker rights and vice versa. The following section addresses how companies can measure their performance regarding labor and worker rights. Companies can implement several measures to determine their labor and worker rights performance and some have been mentioned already, such as codes of conduct and multi-stakeholder initiatives.¹⁸

Codes of conduct define standards and regulations used to evaluate a factory’s performance.¹⁸⁸⁴ A comprehensive code usually covers various specific working conditions, for instance, the prohibition of forced labor, child labor and discrimination.²³ An effective implementation requires assigning responsibility to named, on-site managers, as well as continuous monitoring and reporting on labor and worker rights conditions.¹¹ To evaluate the actual performance, companies utilize internal monitoring and enforcement mechanisms, which include distributing detailed questionnaires to their suppliers and conducting unannounced site visits and inspections by their own staff.¹¹ Companies like Levi Strauss & Co. have introduced a three-tiered approach for the events of violations, with the worst cases ending in the termination of supplier contracts.¹¹ In response to skepticism from critics regarding the credibility of internal audits of suppliers’ compliance with codes of conduct and the transparency of related disclosures, companies are increasingly relying on third-party monitoring, which is carried out by specialized agencies.¹⁸²⁹ These third-party agencies, like MSIs, perform audits designed to assess suppliers’ compliance with codes of conduct.¹⁸²⁹ Organizations such as the Social Accountability International, with its SA 8000 standard and the Fair Wear Foundation (FWF) are examples of such initiatives.²³⁸⁵ However, external audits can also be controversial, as companies can specifically select monitoring organizations with lower standards or less aggressive inspections, which undermines the credibility.¹⁸

Levi Strauss was a forerunner and some would describe it as a best practice example, as the company was one of the first to implement an internal code of conduct.¹¹ A code of international business principles was already in place in 1975.¹¹ This step, and in particular the publication of the Business Partner Terms of Engagement and Guidelines for Country Selection in 1992, positioned Levi’s as a pioneer in corporate responsibility.¹¹ Levi Strauss developed a sophisticated internal monitoring and enforcement system that included detailed questionnaires, audits, unannounced factory visits.¹¹ In 2000, a separate department was established just for the enforcement and adjustment of their code of conduct.⁸⁶ As mentioned, Levi Strauss strictly enforced their code by terminating contracts of non-abiding suppliers.¹¹⁸⁶ Moreover, after initial reservations regarding external monitoring, the company transformed in 1999 by joining the FLA and the Ethical Trading Initiative (ETI).⁸⁶ In 2005, Levi Strauss published its global factory list on its website, which was seen as the culmination of a series of steps towards more transparency and positioned the company as a pioneer in this area, too.⁸⁶ What speaks against Levi Strauss as a best practice example is that they originally excluded two fundamental labor and worker rights: the right to form and join trade unions and the right to bargain collectively.¹¹ This is noteworthy because these standards are included in every international human rights instrument that addresses labor issues.¹¹ However, nowadays, Levi Straus has included these core labor rights in their Levi Strauss’s Global Employee Code of Conduct.⁸⁷

Reebok may pose as a better best practice example as they had a very similar approach to Levi Strauss in developing their code of conduct, but with one significant difference.¹¹ Reebok has included the two fundamental rights that Levi Strauss omitted from the beginning.¹¹ Furthermore, rather than terminating contracts if code violations occur, like Levi Strauss, Reebok pursued an engagement strategy.¹¹ They advocate for long-term supplier relationships and the advancement of labor and worker rights, while acknowledging the importance of protecting workers rather than depriving them of employment.¹¹

Despite their widespread adoption, codes of conduct present limitations when it comes to accurately measuring corporate performance on labor and worker rights.¹⁸ As voluntary instruments, codes of conduct are not legally binding and are frequently utilized by companies as a public relations strategy to enhance their corporate image, without a genuine commitment to preventing labor and worker rights abuses.¹⁸ Codes of conduct tend to be more effective regarding the improvement of outcome standards instead of process rights.¹⁸²²²³ This is likely due to improvements in outcome standards, meaning specific working conditions such as wages, working hours and health and safety, being easier to measure and calculate.¹⁸²²²³ Whereas, companies largely fail to improve process rights, such as freedom of association, the right to collective bargaining and protection against discrimination.¹⁸²²²³ These rights are more difficult to monitor and their impact on business success is less predictable.¹⁸²²²³ Furthermore, the actual improvements in working conditions achieved through company codes are generally difficult to determine.⁹²³⁸⁸ The research on this is limited and some studies only find limited or no significant improvements over time.⁹²³⁸⁸ Furthermore, audits are only snapshots and can be manipulated by falsified records or employees being instructed beforehand to make false statements during interviews.²³ Many codes of conduct are also drawn up by companies without negotiation or consultation with employees.⁴⁹ Employees are often only marginally involved in the process and may not even be aware that such a code exists or that it could be a tool for their protection.⁴⁹

2.4.2 Multi-stakeholder initiatives

Multi-stakeholder initiatives play a central role in measuring and improving corporate performance concerning labor and worker rights, especially where governmental regulations and enforcement are weak.³² They act as a form of private governance or network governance that transcends the traditional dichotomy of voluntary and mandatory approaches.³² MSIs place corporate behavior under the surveillance of a wide range of stakeholders, including not only governments, but also NGOs, trade unions, industry associations and other international organizations.³² Similar to single-stakeholder codes of conduct, codes of conduct drafted by companies themselves, MSIs also develop codes of conduct and guidelines, based on international labor standards like the ILO Core Labor Standards.³⁸ One of MSIs’ responsibilities is conducting audits for companies at the companies’ suppliers to verify the compliance with codes of conduct.³² Audits often include unannounced visits to suppliers’ production facilities and interviews with employees, which may be conducted on-site or off-site to ensure freedom of expression.¹¹²³ MSIs often follow similar goals of transparency, legitimacy and effectiveness, but their foci differ.³²⁸⁴ For instance, the FLA’s main focus is on manufacturing industries, such as apparel, shoes and agriculture and the GNI concentrates on the information and communication technology industry.³²⁸⁴ Not all are industry-specific, though, the ETI explicitly sees itself as an experimental learning initiative that aims to identify and disseminate best practices in the implementation of codes of conduct.⁸⁴⁸⁵

The effectiveness of MSI is as controversial as that of single-stakeholder codes of conduct, because they bear the same limitations and the difficulty of measuring improvements or impairments of labor and worker rights remains.¹⁸²³⁸⁵ Some initiatives, such as the FWF, deliver marginal improvements in workers’ rights at the global level, but few significant results for specific labor and worker rights.²³ An advantage of MSIs in contrast to single-stakeholder codes of conduct is, however, that in the case of code violations, peer pressure within an MSI or the threat of exclusion from the initiative can motivate companies to improve their performance, as reputational risks. And consumer campaigns play a crucial role.³² A case like this happened at the FLA when a participating company was placed under special monitoring due to code violations at a supplier factory.³² Other participating companies saw this incident as a threat to the FLA’s credibility and called for a root-cause analysis, as well as thorough remediation measures.³²

The equal and substantial participation of workers and local NGOs is often a challenge, as many MSIs lack genuine involvement of the directly affected population in decision-making bodies.⁸⁵ One point of criticism is that companies might try to control these processes by co-opting NGOs, turning them from independent inspectors into partners and simultaneously undermining strict local laws and unions.⁸⁵ Hence, despite the multi-stakeholder approach, power imbalances often exist, with companies exerting considerable influence over the definition and enforcement of standards.⁸⁵

2.4.3 Reporting standards

Reporting standards such as those of the Global Reporting Initiative (GRI). And the European Sustainability Reporting Standards (ESRS) create a systematic framework that guides companies in disclosing their performance in environmental, governance and social aspects in a way that is comparable and based on reliable data.⁸⁹⁹⁰ GRI standards and ESRS share similar objectives, however the implementation of GRI is voluntary and ESRS, which came with the EU’s new CSRD, will be mandatory for most companies in the EU in the near future.⁸⁹⁹⁰ By defining what and how to report, they enable stakeholders, such as investors, consumers and NGOs, to compare and evaluate the performance of different companies.⁸⁹⁹⁰ Both address more issues than just labor and worker rights, nevertheless both attempt to divide them into measurable items.⁸⁹ The primary objective of GRI is to establish standards for sustainability reporting by providing globally applicable guidelines covering the economic, social and environmental (ESG) performance of companies.⁹¹ GRI’s overarching aim is to elevate sustainability reporting to a level comparable to that of financial reporting.⁹¹ The GRI standards include specific indicators on labor practices, including employment, occupational health and safety, training and education, non-discrimination, freedom of association and collective bargaining.⁸⁹ Next to the general requirements. And disclosures, ESRS standards are also divided into the three ESG dimensions and the ESRS social disclosures require information on a company’s own workforce (ESRS S1), workers in the value chain (ESRS S2), affected communities (ESRS S3) and consumers and end-users (ESRS S4).⁹² A key concept of the new ESRS is the dual materiality.⁸⁹ GRI initially only focused on one directional materiality, but has now incorporated the double materiality approach as well.⁹³ This means, companies must not only report on how sustainability issues affect their financial performance (financial materiality) but also how their own activities impact people and environment (impact materiality).⁸⁹ This approach forces companies to systematically document their impact, for example on labor and worker rights, and translate them into KPIs.⁵⁹ Possible KPIs can be the number of workplace accidents, gender pay gap and employee fluctuation rate.⁸⁹⁹⁴ The transparency created by these KPIs allows stakeholders to make comparisons to other companies, which can then put pressure on companies to improve their performance and lead to reputational damages.⁹⁴ Companies can also utilize other instruments like codes of conduct or MSIs and perform audits to gain information about the adherence to labor and worker rights of their suppliers.²³

A limitation of reporting standards is the discrepancy between what companies report and what they actually implement.⁹⁵ Large companies are often good at communication. And reporting, but perform weakly in the actual internal implementation. Voluntary standards, such as GRI, can lead to cherry-picking, which is the deliberate selection of positive aspects and thereby painting a falsely positive picture of their sustainability performance.⁹⁵⁹⁰ However, with the new and mandatory ESRS, the EU tried to solve this problem.⁸⁹ Furthermore, like codes of conduct and MSIs, reporting standards also often poorly report on process rights.⁹⁶ Even though process rights like the right to collective bargaining. And freedom of association have to be reported, companies often fail to identify violations, whereby KPIs in these areas that are based solely on audits are often incomplete and misleading.²³⁹⁶ In conclusion, reporting standards define relevant topics, create transparency and provide some useful KPIs regarding a company’s social performance, however, their informative value can be limited.

2.4.4 KPIs

To assess their performance, companies frequently use key performance indicators and apply them across diverse domains, ranging from financial outcomes to sustainability performance.⁹⁷⁹⁸ This chapter will address KPIs that measure the labor and worker rights performance of companies.

As discussed earlier, single- and multi-stakeholder codes of conduct and reporting standards can offer KPIs for evaluating a company’s labor and worker rights performance, however, they only present one approach of measurement. Outcome standards and process rights likewise serve to evaluate the effectiveness of such codes, while also being wider evaluative frameworks.¹⁸ Outcome standards refer to specific, measurable details of the working relationship and the actual conditions that employees encounter.¹⁸²² They are often the result of negotiations between employers and employees and focus on tangible benefits and conditions.¹⁸²² These KPIs encompass areas such as the regulation of working hours and overtime, wages and benefits, including remuneration for overtime and health insurance, as well as occupational health and safety standards.¹⁸²²²³ Companies tend to prioritize improving outcome standards, as these deliver relatively quick and tangible results and ensure compliance with legal obligations. Furthermore, audits and monitoring systems are usually more effective in identifying and improving tangible labor and worker rights standards.¹⁸²²

Process rights refer to more diffuse labor rights that give workers the ability to assert their rights themselves or negotiate further outcome standards.¹⁸²² These rights aim to reduce power imbalances and strengthen worker autonomy.¹⁸²² Examples for process rights are freedom of association, the right to collective bargaining and the right to freedom of expression of grievances.¹⁸²²²³⁹⁹ Civil society actors and employee organizations place particular emphasis on process rights when it comes to improving working conditions, leading to tensions between companies’ focus on outcome standards and civil society’s focus on process rights.¹⁸ Civil society actors argue that strengthening these rights enables employees to fight for and improve their own working conditions independently.¹⁸ While outcome standards are often positively influenced by codes of conduct, process rights tend to demonstrate little or no improvement.¹⁸²²²³ Implementing and monitoring process rights in factories is more difficult and the economic consequences of improving them are less predictable than with outcome standards.¹⁸ MSIs attempt to address these differing priorities, but often encounter obstacles due to conflicting interests.¹⁸ Nevertheless, MSIs can provide valuable platforms for the practical application and monitoring of international standards and specific business environments.¹⁸

Companies can also implement management systems such as SA 8000, which is an internationally recognized standard for corporate social responsibility that focuses on protecting workers’ rights and ensuring decent working conditions in all industrial sectors.¹⁰⁰¹⁰¹ The standard measures the performance of certified companies in nine specific areas that can serve as KPIs.¹⁰² These include the prohibition of child. And forced labor, as well as discrimination and physical punishments as a disciplinary measure, ensuring a safe and healthy working environment, freedom of association and the right to collective bargaining, working hours, remuneration and the existence of a management system for the continuous compliance with the standard.⁸⁴¹⁰¹¹⁰² SA 8000 has its limitations as well, as it can be criticized for its lack of depth.⁸⁴⁸⁵ Critics argue that an annual audit taking only one day is not sufficient to ensure compliance with the standard.⁸⁴⁸⁵ Moreover, audits are conducted by professional service firms that are paid directly by the factories being audited.⁸⁴⁸⁵ This raises concerns about the objectivity and quality of the audits and may create incentives for companies to choose less rigorous auditors.⁸⁴⁸⁵¹⁰² There is also no clear evidence of whether and how SA 8000 actually influences working practices or business results.⁸⁴⁸⁵¹⁰²

Companies can also obtain KPIs through further management systems, such as corporate grievance mechanisms or human rights due diligence.¹⁰³ Human rights due diligence is a central pillar of corporate responsibility, enshrined in the UNGPs.⁵⁹ Effective human rights due diligence entails the identification, prevention, mitigation and remediation of negative human rights impacts.³⁸⁶²¹⁰³ This process involves evaluating how effectively risks are identified and addressed, with the resulting data serving as KPIs for a company’s labor and worker rights performance.³⁸⁶²¹⁰³ Moreover, corporate grievance mechanisms are mechanisms that enable affected parties to complain about corporate misconduct and, if the complaints are justified, to obtain remediation.¹⁰³ Companies can measure the effectiveness of their corporate grievance mechanisms by collecting data on the number of complaints submitted, broken down by type, location, complainant and the type of allegations.¹⁰³ Other metrics include the accessibility of corporate grievance mechanisms, the processing time of complaints and the type of remedies provided.¹⁰³

Furthermore, compliance with relevant national labor laws and regulations can serve as a basic metric.¹⁸³³ The avoidance or resolution of lawsuits alleging unfair labor practices and other legal disputes, including the outcomes of court proceedings, is an additional indicator of a company’s labor and worker rights performance.⁶²¹⁰⁴

In summary, Chapter 3 first outlines the historical development of labor and worker rights, beginning with early workers’ organizations from the 14th century and landmark regulations such as the Factory Act of 1833 in the United Kingdom. It further traced the growing internationalization of labor movements in the late 19th century, considering organizations like the IALL, a direct predecessor of the ILO. The founding of the ILO in 1919 marked a turning point by establishing conventions that continue to serve as a basis for many subsequent standards and frameworks. It also laid the groundwork for the globalization of labor and worker rights throughout the 20th century, when a range of international organizations and initiatives were established that now addressed labor and worker rights issues on a global level. Next followed modern issues, in which recent developments and challenges are addressed, including the rise of precarious and informal work as well as AI and the exploitation of migrant workers.

The second half of this chapter examined the complex relationship between companies and labor and worker rights. It began by considering how labor and worker rights influence corporate behavior, for instance, through national laws. Attention then turned to the effects of companies on labor and worker rights, highlighting both negative impacts, such as worker exploitation and positive contributions, including voluntary initiatives aimed at improving conditions across supply chains. The analysis then moved to how corporate performance in this area can be assessed through instruments such as codes of conduct, MSIs and other mechanisms providing KPIs. Together, these analyses provide a conceptual and practical foundation for the following chapter, which focuses on the implementation of labor and worker rights measures in corporate practice.

3 Practical implementation

3.1 Operational guideline

3.1.1 Application of the PDCA-cycle

Labor and worker rights have played a big role for companies for centuries now and yet there are still many companies that can improve their performance.³⁹ This chapter aims to demonstrate how companies can enhance their labor and worker rights performance by implementing corresponding processes, measures and tools. It is further intended to serve as a practical guideline for companies seeking to assess and improve their performance in this area. The guideline outlined in the following chapters is inspired by the Plan-Do-Check-Act-cycle, also known as the Deming wheel, a widely applied framework for process improvements used as a foundation for management systems, such as the International Organization for Standardization’s (ISO) standards ISO 14001 – Environmental Management System. And ISO 45001 – Occupational Health and Safety Management System.¹⁰⁵¹⁰⁶¹⁰⁷ As illustrated in Figure 3, the PDCA-cycle is an iterative, four-step management model that serves to continuously improve processes, products, or services.¹⁰⁵¹⁰⁷

Although the PDCA-cycle offers a general framework, its effectiveness is largely dependent on the extent and rigor of its implementation within an organization.¹⁰⁸¹⁰⁹ For instance, ISO standards, like ISO 45001, based on the PDCA principles, define minimum structural requirements for the design of a management system.¹⁰⁸ They do not, however, prescribe specific objectives, organizational structures, process flows, performance benchmarks, or the tools and methods to be applied.¹⁰⁸ Consequently, the practical effectiveness of the system depends on how these requirements are operationalized by the organization.¹⁰⁸¹⁰⁹ In addition, an inadequate analysis of relevant factors during the plan- and do-phases may significantly constrain the system’s problem-solving capacity.¹⁰⁹ With the right commitment, however, this should not pose a problem, as organizational dedication and continuous monitoring can ensure that the PDCA-cycle is applied effectively and adapted to the specific context of the company.¹⁰⁵¹⁰⁷

*Figure 3: PDCA-Cycle for labor and worker rights implementation, own illustration inspired by the PDCA-cycle depicted in Bundesamt für Sicherheit in der Informationstechnik (n. D.).*¹¹¹

Alternative frameworks, such as the DIMAC approach, which stands for Define-Measure-Analyze-Improve-Control, could have been applied for this purpose as well, as their steps frequently resemble those of the PDCA-cycle.¹⁰⁵ Nevertheless, the PDCA-cycle is particularly well established in both theory and practice and has demonstrated its effectiveness across diverse organizational contexts.¹⁰⁷ Moreover, many of the outlined steps are consistent with the literature on integrating CSR into corporate strategy.¹⁹⁹⁴⁹⁵¹¹¹ The German EMAS Advisory Board published a policy paper on synergy effects in the implementation processes of CSRD and the European Eco-Management and Audit Scheme (EMAS).¹¹² The paper proposes that companies that have not implemented sustainability reporting yet, but have implemented EMAS, which is a well-established management system for improving corporate environmental performance, can use information gathered for the EMAS audit. And reuse it as foundational information for CSRD/ ESRS.¹¹² Due to its widespread use, many companies have already implemented PDCA-cycles that address labor. And worker rights issues in their operations, like ISO 45001 for occupational health and safety.¹⁰⁷¹⁰⁸ Which suggests that companies can also utilize existing structures and information to create synergies for the implementation of a PDCA-cycle for improving labor and worker rights, rather than implementing them in isolation.

Before initiating the PDCA-cycle, a company should publicly declare its commitment to CSR strategies, as labor and worker rights form an integral part of that.¹⁹⁹⁵ Embedding CSR values and practices into daily business processes and routines is essential, as this goes beyond mere regulatory compliance and aims at strategic integration, moving the company from reactive adherence to proactive shaping of the CSR agenda.¹⁹⁹⁵ This requires commitment from senior management, clearly defined responsibilities and governance structures such as dedicated committees to guide and monitor implementation.⁹⁴¹¹¹ Moreover, CSR should be anchored in policy documents, mission statements and vision.¹⁹⁹⁵

3.1.2 Plan: Status quo assessment & risk analysis

Building on this strategic integration of CSR into business operations, the PDCA-cycle begins with the plan-phase, in which goals are defined and the necessary steps to achieve these goals are planned.¹⁰⁷ This involves reviewing the mission, vision, values and guidelines, as well as developing strategic directions.¹⁰⁷ In addition, measurable criteria must be established in order to verify the achievement of objectives.¹⁹¹⁰⁵ Furthermore, companies should conduct a comprehensive analysis of existing practices, beginning with legal requirements and extending to voluntary measures, in order to determine the extent to which mechanisms protecting labor and worker rights are already in place.¹⁰⁷¹¹³ This means, in particular, that companies need to evaluate the following measures.

Codes of conduct are a widely used instrument in CSR, serving both to establish responsible business practices and to communicate ethical corporate culture.¹⁸¹¹⁴ Companies can therefore assess compliance with these codes both internally and across their supply chain through audits, providing an initial indication of their impact on labor and worker rights.⁸⁴ As previously stated, the effectiveness of codes of conduct remains disputed, nevertheless, they can provide valuable insights into a company’s performance, particularly concerning outcome standards, which include KPIs such as wages, working hours and health insurance.¹⁸²²²³ Furthermore, companies must review their already implemented management and reporting systems to determine whether these include the protection of labor and worker rights and if so, to what extent.¹¹⁵ Relevant management systems could be the SA 8000 standard, which covers working conditions across sectors, or ISO 45001, a standard for occupational health and safety.¹⁰¹¹⁰⁵ On the one hand, SA 8000 offers an overview of compliance with labor standards across the supply chain and, alongside codes of conduct, provides data on core labor standards such as the prohibition of child. And forced labor, adherence to minimum wages and limits on working hours.¹⁰⁰ On the other hand, management systems like ISO 45001, that go more into detail about one specific labor right, can also be helpful.¹⁰⁵ Although ISO 45001 does not mandate a prescriptive list of KPIs, it requires companies to formulate measurable goals, systematically monitor and evaluate the performance of their occupational health and safety measures.¹⁰⁵ Hence, this standard could also be a valuable indicator of the status quo of a company’s labor and worker rights performance.

Nonetheless, a status quo assessment on its own is insufficient. Companies should also conduct a risk analysis to identify the occurrence, location and nature of labor and worker rights violations within their supply chains.¹⁰⁵¹⁰⁷ This type of thinking can also be found in the processes of management systems like ISO 45001.¹⁰⁸ Moreover, risks can be understood as the effects of uncertainty, which can be both positive (opportunities) and negative (threats).¹⁰⁵¹⁰⁸ By identifying potential negative risks during the plan-phase, preventative measures can be developed and implemented in the following phases.¹⁰⁵ At the same time, opportunities can be integrated in order to improve the overall performance.¹⁰⁵ However, there are currently only a few well-established methods for identifying opportunities.¹⁰⁸ Organizations usually identify opportunities by reframing risk mitigation measures in a positive light.¹⁰⁸ For example, measures taken to reduce strain when handling heavy loads (e. g. , use of lifting cranes, ergonomics training) create an opportunity to improve employee health.¹⁰⁸

Nevertheless, risk analyses can help to identify and prioritize critical problem areas, which enables companies to deploy their resources where they will be most effective in reducing risks or exploiting opportunities.¹⁰⁵¹¹³ In order to prioritize risks, companies can conduct a risk priority matrix as seen in Figure 4. In a matrix like this, risks are classified based on two dimensions: the likelihood of occurrence and the severity of the potential damage. This classification is often done on levels such as high, medium and low, which provides a quick overview of the most critical risks.¹⁰⁵¹⁰⁸

*Figure 4: Risk Priority Matrix*, *own illustration adapted from Kohl (2020, p. 36).*¹⁰⁶

If a company has implemented risk management processes through human rights due diligence mechanisms, these can be used to further identify risks, as detecting labor and worker rights violations is most effective when directly engaging with those affected.⁹ In some countries, particularly some European countries, laws mandating human rights due diligence have been enacted in the last few years, hence, they are already mandatory for some companies.⁹ Examples are the Dutch Child Labor Due Diligence Act (orig. : Wet Zorgplicht Kinderarbeid), the French Corporate Duty of Vigilance Law and the German Supply Chain Due Diligence Act.⁹ These laws go beyond voluntary CSR by establishing mandatory due diligence obligations, thereby requiring companies to implement corresponding mechanisms.⁹ However, these laws also have limitations, as they often only establish procedural liability, i. e. , companies are held liable for non-compliance with the due diligence process, not necessarily for the actual human rights violation itself.⁹ Other limitations are that these laws often only apply to large companies or are limited to certain human rights risks, like the Dutch law on child labor.⁹ Nevertheless, employees are the primary and most effective sources of information about labor and worker rights violations, as they experience workplace conditions firsthand and should therefore play a crucial role in the identification of labor and worker rights risks.⁹³⁶¹¹⁶ The final step of the plan-phase is to define strategic plans and goals for the improvement of labor and worker rights.¹⁰⁷

To summarize the plan-phase, companies should first do a status quo assessment of the labor and worker rights measures they have already taken, such as the implementation of codes of conduct and suitable management systems. The next step should be a risk analysis of labor and worker rights violations caused by the company’s operations and across the supply chain. Since risk analyses are often already included in management systems, companies can build on this information, complemented by insights obtained through human rights due diligence mechanisms. Lastly, a company needs to define its labor and worker rights goals.

3.1.3 Do: Strategy development

Based on the information gained in the plan-phase, companies can develop strategies during the do-phase. In this second step (see Figure 3), the previously defined strategic plans and goals are now converted into detailed operational plans and projects, which will then be implemented.¹⁰⁷

As discussed in Chapter 3, corporate actions can positively influence labor and worker rights by applying a range of instruments. Implementing such instruments, if not already in place, is therefore a reasonable approach to strengthening their labor and worker rights performance.¹¹⁷ In addition, the voluntary adoption of international frameworks demonstrates commitment and provides a structure for implementation and reporting.⁹⁴⁹⁵ First of all, companies should implement concrete measures to remedy identified labor and worker rights violations and prevent future abuses. For instance, this may involve adapting workflows and processes to eliminate occupational health and safety risks, or revising remuneration systems or other contractual terms to ensure fair wages and benefits, as well as to prevent discrimination (e. g. , by including temporary workers in bonus systems).¹¹⁷

Next, it is advisable to implement a company-wide monitoring mechanism like a code of conduct. The effectiveness is disputed, yet they are often highly requested by stakeholders like consumers, NGOs, or governments, as they cover basic labor standards and should therefore definitely be implemented.¹⁸ Moreover, codes of conduct require regular audits, which, on the one hand, represent the status quo and provide KPIs and on the other hand demonstrate where room for improvement lies.¹⁸²² For more transparency, companies should also consider joining multi-stakeholder initiatives or at least hire an external organization for monitoring the adherence to their code of conduct.²⁹⁸⁶ MSIs are generally considered more credible and legitimate than programs that are entirely controlled by companies.¹⁸⁹⁶ This is due to the involvement of a wide range of actors apart from the companies themselves, such as trade unions, NGOs and other organizations.¹⁸²⁹ When joining multi-stakeholder initiatives, it makes sense to choose industry-specific ones, as these are directly tailored to the specific challenges and circumstances of the industry.¹⁰⁵ The adoption of an industry-specific standard can lead to its widespread acceptance, which in turn can strengthen the competitiveness of participating companies as they demonstrate a common, recognized level of responsibility.¹¹⁷ For example, a well-established MSI for the textile industry is the Fair Wear Foundation.²³ What distinguishes it from other MSIs is that it limits the influence of individual companies by obtaining their funding from various stakeholder groups instead of from companies only and therefore increases the credibility of the independent audits.²³

As mentioned in the plan-phase, companies can also implement management systems, in the case of labor and worker rights, those should aim to improve those. Much like SA 8000 aims to improve labor and worker rights generally, or ISO 45001’s aim to improve occupational health and safety standards.¹⁰¹¹⁰⁵ However, there are many more management systems that firms can implement for improved labor and worker rights across their supply chain. Another option is ISO 37301 – Compliance Management Systems, which offers guidance for the introduction, implementation, maintenance and improvement of compliance mechanisms for companies.¹¹⁸ By implementing this standard, companies are required to develop measurement methods to evaluate compliance management performance, eventually leading to an improvement in performance and therefore ensuring its effectiveness.¹¹⁸ Moreover, ISO 37301 mandates organizations to train their employees on understanding the compliance requirements, in order for them to correctly identify compliance breaches.¹¹⁸ Since compliance is a very important factor for the improvement of labor and worker rights, effective compliance management is essential.²²

Another important standard for companies’ compliance with and improvements of labor and worker rights is the ISO 37001 – Anti-bribery Management Systems, primarily by promoting ethical corporate governance and protecting employees who report misconduct.¹⁰⁵¹¹⁸ Besides its different focus to ISO 37301, the implementation procedure is very similar.¹¹⁸ A direct contribution to the protection of labor. And worker rights is ISO 37001’s requirement that employees must not be subjected to discrimination or other negative consequences when they raise concerns about actual or suspected bribery or other violations of the anti-bribery policy.¹⁰⁵¹¹⁸ This strengthens the right of employees to report grievances without fear of repercussions, which is an important component of workers’ rights.¹⁰⁵¹¹⁸

All these management systems, however, entail certain limitations. For example, ISO 45001 defines only minimum requirements for the structure and design of an occupational health and safety management system, without prescribing concrete goals, organizational structures, process flows, or performance outcomes.¹⁰⁵¹⁰⁸ Consequently, the system’s effectiveness largely depends on how it is implemented within the organization, as is the case for most management systems.¹⁰⁸¹¹⁶ Moreover, the ISO approach has been criticized for prioritizing procedural compliance over employees’ needs, while neglecting social dialogue and fundamental labor and worker rights.¹¹⁶

Another alternative is the implementation of human rights due diligence, if it has not been implemented yet. Due diligence seeks to bridge the gap between principles and practice and tries to promote social dialogue, which is often missing in instruments like management systems.⁹²² Voluntary CSR programs and codes of conduct often face a decoupling problem, in which formal guidelines fail to translate into actual practice.⁹²² However, due diligence, especially if legally binding (e. g. , the French Corporate Duty of Vigilance Law), can promote recoupling by establishing clear obligations, sanctions and access to legal remedies for victims.⁹³⁷ In addition to existing national laws, the EU has recently adopted the Corporate Sustainability Due Diligence Directive (CSDDD), which entered into force on 25 July 2024. EU Member States are currently required to transpose the directive into national law by 26 July 2028, following a postponement of the original timeline as part of recent EU simplification measures.¹¹⁹¹²⁰ And, although many due diligence laws are not yet legally binding, the implementation of due diligence mechanisms is still advisable, as the CSDDD will require MNEs to comply in the near future.¹²¹ Around 6,000 companies are expected to be affected by this just in the EU.¹²¹ Moreover, smaller companies are likely to be indirectly affected through business partners within their value chains.¹²¹

In addition, companies can consider the implementation of instruments that address the overall sustainability of a company rather than focusing solely on labor and worker rights, such as the GRI standards.⁹¹ Given the growing importance of sustainability reporting over the past decades and the imminent introduction of mandatory reporting standards, the inclusion of labor and worker rights has become a standard practice.⁹⁰⁹¹ Thus, sustainability reporting also serves as a possible instrument for addressing labor and worker rights.⁹⁰⁹¹

While GRI can also be considered an MSI, its standards differ in that they apply across all sectors and go beyond prescribing codes of conduct or behavioral norms.⁹¹ In recent years, the GRI standards have been some of the most used sustainability reporting standards globally. And regarding labor and worker rights, GRI standards address topics such as the Core Labor Standards, as well as grievance mechanisms and due diligence.⁹⁰¹²² Nonetheless, GRI remains a voluntary measure and will arguably be superseded, at least within the EU, by the European Sustainability Reporting Standards, which are mandated under the EU’s Corporate Sustainability Reporting Directive.¹⁴⁹⁰¹²³ CSRD is mandatory for MNEs and voluntary for Small and Medium-sized Enterprises (SME).¹⁴⁹⁰¹²³ The requirements for disclosure of information focus on how the company affects people and the environment.¹⁴⁹⁰¹²³ Due to the utilization of other sustainability reporting tools and standards for greenwashing and marketing purposes, CSRD aims to significantly improve the availability, comparability and reliability of sustainability data by providing a uniform European standard.⁹⁰¹²⁴ As previously outlined, ESRS requires social information on its own workforce, workforce in the value chain, affected communities and consumers and end users.⁸⁹⁹² As sustainability reporting obligations primarily apply to MNEs while SMEs are indirectly affected, the EU recently issued a recommendation on voluntary sustainability reporting for SMEs.¹²⁵ The aim is to reduce the administrative burden on SMEs that are asked by large companies and financial institutions, which are subjected to CSRD requirements, to provide sustainability-related information.¹²⁵

Apart from traditional monitoring approaches, companies can implement capability-building programs for their suppliers.¹¹⁷ Capability-building programs are an alternative approach to combating poor labor standards in global supply chains.¹¹⁷ They are based on observations that factories in developing countries often lack the resources, technical expertise and management systems to resolve compliance issues on their own.¹¹⁷ The main goal is to prevent labor standard violations by providing factories with the skills, technologies and organizational capacities to enforce labor and worker rights independently.¹¹⁷ It also aims to strengthen the financial capacity of companies, enabling investments in higher wages and improved working conditions.¹¹⁷ At the same time, it seeks to restructure work processes, enhance employee skills and empower workers to, for instance, correct production errors independently.¹¹⁷ This creates a self-reinforcing cycle in which more efficient companies invest in their workforce, who in turn drive continuous improvement, thereby further enhancing efficiency of companies and supporting compliance with codes of conduct.¹¹⁷ One example of such an initiative is the Better Work Program, jointly developed by the ILO and the International Finance Corporation.⁹ The program provides factory-level consulting and training services grounded in social dialogue, for instance, through Performance Improvement Consultative Committees, where management and employee representatives decide on measures to be implemented with shared decision-making power.⁹ Empirical evaluations demonstrate that the Better Work program contributes to higher wages, improved working conditions and has a positive impact on both productivity and profitability.⁹

Once measures have been selected to address the previously identified risks, for example, implementing ISO 45001 in response to occupational health and safety risks, their implementation represents the concluding step of the do-phase.¹⁰⁷¹⁰⁸

In a nutshell, the do-phase should begin with remedying identified labor and worker rights violations and prevent future abuses. Next, in accordance with the collected data from the plan-phase, companies need to decide on concrete measures to work on the improvement of labor and worker rights across their supply chain. For example, by implementing a code of conduct, due diligence mechanisms, or management systems that directly address labor and worker rights issues like occupational health and safety. Sustainability reporting should also be considered, as it encompasses not only social but also environmental and governance issues and has already achieved broad adoption driven by both upcoming mandatory requirements and stakeholder pressure. Lastly, companies need to implement their chosen instruments.

3.1.4 Check: Performance evaluation

The third phase is the check-phase (see Figure 3) and its goal is to evaluate the results and performance of the measures implemented and compare them with the planned goals and requirements.¹⁰⁵¹⁰⁷ It is a crucial phase for learning from successes and failures.¹⁰⁵¹⁰⁷

Firstly, companies must monitor and evaluate their implemented labor and worker rights measures by tracking implementation activities and strategic plans regularly, for example monthly, quarterly or annually.¹⁰⁵ Moreover, performance should be measured based on previously defined criteria, targets and KPIs.¹⁰⁵

Secondly, performance data needs to be analyzed and assessed to determine whether processes function as intended and objectives have been achieved.¹⁰⁵¹⁰⁷ The effectiveness of management standards requires systematic evaluation as well.¹⁰⁵ In addition, directly implemented remedial measures addressing labor and worker rights violations should be monitored to verify whether they achieve the desired outcome.¹⁰⁹¹¹⁸

Furthermore, any non-conformity needs to be documented.¹⁰⁸ A non-conformity refers to the failure to meet the requirements of a commitment, standard, or management system and its disclosure is essential for improving future performances, as only through identifying the root cause can effective corrective measures be defined.¹⁰⁸ As a general principle, all findings, results, non-conformities and decisions should be documented and regular audits are a central instrument for self-assessment.¹⁰⁵¹⁰⁸

On top of that, complaint mechanisms are particularly valuable because they enable a bottom-up process and give marginalized actors such as workers a chance to express when their rights are violated.¹⁰³ These mechanisms allow for continuous monitoring because complaints can be filed at any time when a standard has been violated.¹⁰³ One crucial component of this is employee training, which enhances employees’ ability to recognize and report hazards, risks or other incidents.¹⁰⁸ It is a key element of the check-phase as it ensures the accuracy, reliability and effectiveness of all monitoring measurements, analysis and evaluation processes related to improvements of labor and worker rights.¹⁰⁸

Companies may also encounter challenges in this phase, as the complexity and breadth of applicable requirements make their systematic documentation and continuous updating difficult.¹⁰⁵¹⁰⁸ This is particularly difficult for smaller companies with limited human and financial resources, but it can likewise affect larger companies due to their diverse processes and product portfolios.¹⁰⁸

Overall, the check-phase aims to provide a clear understanding of which measures are effective and why, as well as which are not and the reasons for their shortcomings. This insight enables informed adjustments and corrective actions in the following act-phase, fostering continuous improvement.

3.1.5 Act: Problem resolution & knowledge application

The last phase of the PDCA-cycle is the act-phase (see Figure 3), which is deeply intertwined with the previous check-phase.¹⁰⁷ The check-phase provides information on the effectiveness of implementation, while the act-phase primarily serves as a stage for problem-solving and learning.¹⁰⁷ Furthermore, this phase can take two directions. If the results of the check-phase are satisfactory and the objectives have been met, the newly implemented methods, internal rules, or instruments can be considered successful and should therefore be standardized.¹⁰⁷ This enables the consolidation of best practices and supports sustainable improvement.¹⁰⁷ If, however, activities and outcomes are unsatisfactory, the organization is required to take corrective action, with the primary purpose of this phase being to determine the appropriate course of action and the timeframe for its resolution.¹⁰⁷

The company must respond to incidents or non-conformities promptly and take appropriate monitoring and corrective measures to address the consequences.¹⁰⁸ Conducting a root-cause analysis is essential and often involves employees and other relevant stakeholders.¹⁰⁷¹⁰⁸ Problem analysis methods and tools, such as the 5-Why method, can be used for this purpose.¹⁰⁷¹⁰⁸ The 5-Why method is a systematic problem-solving technique that identifies the root cause of an issue by repeatedly asking ‘Why? ’ to go beyond obvious indicators and prevent recurrence.¹⁰⁵¹⁰⁷¹⁰⁹ Although the name suggests five iterations, the number is flexible.¹⁰⁵ The method is widely used in management systems, like the PDCA-cycle, to enhance causal analysis and support organizational learning.¹⁰⁵¹⁰⁷¹⁰⁹

Furthermore, the effectiveness of the corrective measures must be assessed to ensure that the problem does not recur.¹⁰⁸¹⁰⁹ In addition, all actions taken to address incidents and non-conformities must be documented.¹⁰⁸¹⁰⁹

In conclusion, in the act-phase, companies must resolve the previously identified problems, while also standardizing and consolidating practices that have proven successful. Finally, upon completing the act-phase, the PDCA-cycle has been fully executed, however, as an iterative process, it is never truly complete.¹⁰⁵¹⁰⁷¹⁰⁹ Subsequently, a new PDCA-cycle begins, incorporating adjusted goals or revised plans to address identified issues and achieve the desired improvements.¹⁰⁵¹⁰⁷¹⁰⁹

3.2 Alternative approaches of practical examples

3.2.1 Fairphone

Although the PDCA logic provides a structured pathway to advancing labor and worker rights, this chapter examines alternative approaches implemented by Fairphone and Patagonia. Fairphone is a Dutch smartphone manufacturer that differentiates itself through its commitment to ethical and sustainable production practices as well as its circular business model.¹²⁶ In 2010, Bas van Abel launched a campaign highlighting the use of conflict minerals in the mobile phone industry and the sector’s excessive electronic waste.¹²⁶ Aimed at raising awareness of the social consequences of mineral extraction in African countries, the campaign gained significant traction.¹²⁶ In collaboration with the charity Waap, van Abel developed the first fair phone, which ultimately led to the founding of the company Fairphone in 2013.¹²⁶¹²⁷ Fairphone pursues a dual objective of mitigating environmental and social issues, while still being commercially successful.¹²⁶ Central to their strategy is the extension of product life cycles through modular design and the use of recycled materials.¹²⁶ The company’s ambition is to generate positive effects across the value chain, beginning with responsible mineral sourcing and extending to design, production and product use, thereby positioning itself as an ethical alternative in the smartphone market.¹¹² Fairphone targets an average usage period of three years and the modular, upgradable and durable design enables users to repair their phones or replace parts themselves, thereby facilitating an extended lifecycle.¹²⁶ Furthermore, Fairphone works on closing resource loops by increasing the share of recycled material across all components.¹²⁶ To achieve this, the company collaborated with partners specialized in collecting and disassembling discarded phones.¹²⁶

Alongside environmental considerations, Fairphone focuses on fair labor conditions.¹²⁶ They were the first electronics company to source gold from Fairtrade-certified artisanal mines and actively promote fair working conditions in the sourcing of other critical materials, such as cobalt.¹²⁶ Through comprehensive supply chain management, the company ensures that all partners adhere to high social standards and comply with TCO guidelines, a standard for adequate working conditions.¹²⁶

Among Fairphone’s social responsibility initiatives, its living wages program is particularly significant.¹²⁸¹²⁹ The company regards the payment of living wages as a core responsibility and has implemented a system to close wage gaps among its suppliers.¹²⁸¹²⁹ Fairphone uses methodologies such as the Global Living Wage Coalition’s Anchor Method and the Asia Floor Wage to determine fair compensation.¹²⁸¹²⁹ The Global Living Wage Coalition, for instance, defines a living wage as the remuneration for a standard working week that is sufficient to provide workers and their families with a decent standard of living.¹²⁸¹²⁹ This encompasses basic necessities such as food, water, housing, education, healthcare, transportation and clothing, as well as provisions for unforeseen expenses.¹²⁸¹²⁹ Fairphone has calculated that ensuring living wages for the workforce of its direct suppliers adds less than 1.50 Euros per smartphone, which is less than 0.3% of the retail price and an amount easily abided by the company or the customer.¹²⁸¹²⁹ The so-called Fairphone Bonus is distributed not only to production line employees but to all workers of a factory earning below the target living wage, thereby promoting fairness and fostering employee loyalty.¹²⁸¹²⁹ The Fairphone Bonus, originally paid quarterly, is now distributed monthly, which significantly reduces the wage gap for the lowest-paid workers, with some of the lowest earners receiving the equivalent of up to three additional months’ salaries.¹²⁸¹²⁹

Fairphone’s approach may be seen as innovative. And more far-reaching compared to other companies’ efforts to address labor and worker rights issues, nevertheless, it also relies on established standards and frameworks to achieve its objectives, which have also been presented in previous chapters of this thesis.¹²⁶ For its 2024 sustainability report, Fairphone applied the CSRD/ ESRS requirements for the first time.¹³⁰ Moreover, to strengthen workplace safety, the company has implemented several management systems, namely ISO 14001, ISO 45001 and ISO 50001 (Energy Management).¹³⁰ According to Fairphone, tier-two suppliers often hold ISO certifications but are rarely audited against broader compliance standards.¹³⁰ Therefore, Fairphone has supported several sub-suppliers in preparing for compliance audits, stating that “[t]his goes a long way in creating workplaces that are safer and more sustainable in every way. ” (Fairphone 2025, p. 28).¹³⁰ Moreover, Fairphone has adopted due diligence measures aligned with international guidelines. And standards, such as the UNGPs, the OECD Guidelines for Multinational Enterprises on Responsible Business Conduct and the OECD’s Due Diligence Guidance for Responsible Supply Chains of Minerals from Conflict-Affected and High-Risk Areas.¹³⁰ By adhering to these frameworks, the company addresses both general and industry-specific due diligence requirements.¹³⁰ In addition, Fairphone has introduced a code of conduct, which builds on international standards like the ILO Fundamental Principles. And Rights at Work, the UNGPs, the OECD Guidelines for Multinational Enterprises on Responsible Business Conduct, complemented by their own experience.¹³⁰ The code covers human rights, health and safety, the environment, responsible sourcing and business ethics.¹³⁰¹³¹

These measures demonstrate that, although Fairphone’s Living Wage program may initially appear radical, its approach to social sustainability can be effectively implemented through widely recognized international standards, illustrating a model that other companies could potentially adopt. Notably, Fairphone’s adoption of these frameworks appears to be driven primarily by a genuine commitment to improving their performance, rather than by external image considerations, as is often observed in other companies regarding sustainability initiatives.¹⁸¹²⁶

3.2.2 Patagonia

Patagonia is an outdoor apparel company founded in the 1970s by Yvon Chouinard.¹³² Its origins, however, go back to the 1950s, when Chouinard, an avid rock climber, began selling high-quality climbing pitons that outperformed those available on the market.¹³²¹³³¹³⁴ In 1957, he formally founded Chouinard Equipment for Alpinists Inc., which by 1970 had become the largest supplier of climbing hardware in the U. S.¹³²¹³³¹³⁴ Recognizing the environmental damage caused by pitons, Chouinard discontinued the highly profitable product line in 1972 to develop more sustainable alternatives such as climbing irons and ice axes.¹³²¹³⁴ In the same year, Chouinard Equipment introduced a new line of durable, technical clothing under the name Patagonia, which was incorporated as a separate company in 1979. Following rapid expansion in the late 1980s and early 1990s, Patagonia overextended itself and nearly went bankrupt, leading to the dismissal of one-fifth of its workforce.¹³⁴ This crisis prompted a reassessment of corporate values and a stronger commitment to reducing environmental impacts.¹³⁴ Although sustainability had been part of Chouinard Equipment’s and Patagonia’s philosophy from the beginning, this turning point marked the real starting point of Patagonia’s comprehensive sustainability strategy.¹³⁴ The company has built its business model on the principles of sustainable development and is known as a best practice example for its responsible behavior and transparency in the environmental sector.¹³⁵ The company has continuously worked to improve the sustainability performance of its products and has sometimes taken approaches that might be considered radical.¹³³¹³⁵ For example, Patagonia has relied exclusively on organic cotton since 1996, a decision that initially led to supply shortages and almost double the costs compared to non-organic cotton.¹³⁴¹³⁵ Moreover, they have started campaigns such as Don’t Buy This Jacket and Buy Less, urging consumers to reduce their consumption and shop more consciously, paradoxically resulting in increased sales.¹³⁴

Like for Fairphone, social sustainability is also a central priority for Patagonia.¹³⁶ One of their measures is that the company is a founding member of the Fair Labor Association and undergoes its annual assessment each year.¹³⁶¹³⁷ Furthermore, the FLA accreditation serves as a guide for Patagonia’s responsible purchasing practices.¹³⁷ These practices reflect the company’s commitment to establishing and implementing guidelines that consider the needs of both the company and its suppliers, to create fair and mutually beneficial partnerships.¹³⁸ They include, for instance, clearly defining and adhering to agreed order quantities, payments and terms, providing sufficient lead times and technical details and sharing responsibility for social and environmental aspects.¹³⁸ Poor or unenforced purchasing practices, by contrast, can place suppliers in compromising situations, potentially resulting in underpayment of workers, excessive working hours, unsafe working conditions, layoffs, or the use of unauthorized subcontractors just to meet buyer demands.¹³⁸ Patagonia stresses that ethical purchasing lies at the core of social responsibility and forms the basis for addressing worker well-being and environmental impact.¹³⁸

Patagonia seeks to build long-term, mutually beneficial relationships with its business partners and has therefore implemented a 4-fold process for selecting suppliers.¹³⁹¹⁴⁰ Since Patagonia does not own factories, the company addresses this by carefully choosing suitable partners.¹⁴⁰¹⁴¹ In this 4-fold process, employees from sourcing and quality, and the environmental and social responsibility teams must jointly decide whether a supplier is approved.¹³⁹¹⁴⁰ By involving these groups, supplier selection becomes a value-driven, rather than a financially motivated decision.¹³⁹¹⁴⁰

Furthermore, to sustain long-term relationships, Patagonia provides resources such as financing the audits and offering technological support to help their suppliers improve their sustainability practices.¹⁴⁰ However, if a supplier fails to meet Patagonia’s social and economic standards or is unable to implement necessary improvements, the contract will be terminated.¹³⁹¹⁴⁰ For such cases, Patagonia has implemented its FLA-approved responsible exit strategy, where suppliers are informed nine to twelve months in advance to ensure a fair and transparent transition.¹³⁹¹⁴⁰

A central component of Patagonia’s responsible purchasing practices is the integration of the FLA’s living wage standard into its code of conduct.¹⁴² Like Fairphone’s Living Wage Program, Patagonia’s standard states that workers must receive remuneration in a regular working week that is sufficient to cover their basic needs, as well as those of their families. And to allow them a certain amount of disposable income.¹⁴²¹⁴³ As of 2023, Patagonia’s supply chain employs more than 65,000 workers.¹⁴² An analysis revealed that all suppliers pay wages above the legal minimum, with many offering two to three times that amount.¹⁴² Approximately one-third of suppliers were found to pay a living wage, another third provide at least 80% of a living wage, while the remaining suppliers pay at least 50%.¹⁴² Additionally, Patagonia’s Fair Trade program has reached more than 85,000 workers worldwide because for every item produced in a Fair Trade Certified factory, the company pays a premium that flows directly into a worker-controlled Community Development Fund.¹³⁶¹⁴⁴ In fiscal year 2024, 88% of Patagonia’s products were manufactured in Fair Trade Certified factories.¹³⁶¹⁴⁴ Beyond these measures, Patagonia has also established a program to support migrant workers, who are often particularly vulnerable to exploitation when employed by third-party agencies rather than by suppliers directly, as such agencies often pay lower wages than national workers receive.¹⁴⁵ In addition, Patagonia promotes employee welfare by providing health care premiums for its U. S. workforce, offering training and career development opportunities and running an environmental internship program that allows employees to take paid leave to work for an environmental organization for several months.¹³⁴¹³⁶

In a nutshell, Patagonia can be considered purpose-driven and the company has implemented numerous social and environmental practices over the past decades.¹³⁵ At the same time, the company also relies on widely used standards and frameworks, which, although differing slightly from those previously discussed, provide an important perspective on corporate social responsibility measures from a U. S. context. Patagonia has, for instance, adopted a code of conduct based on FLA and ILO standards.¹⁴⁶ Patagonia does not report according to a sustainability standard, however, they publish information about their activities transparently on their website and in documents like their Annual Benefit Corporation Report: Fiscal Years 2023 and 2024.¹³⁶¹⁴¹ Moreover, the company holds both Fair Trade and B Corp certifications, with the latter serving as a benchmark for assessing the social and environmental performance of companies.¹³³¹³⁴¹³⁶¹⁴⁰¹⁴⁷ Similar to Fairphone, Patagonia supports living wages and maintains partnerships with MSIs such as the FLA and the Sustainable Apparel Coalition, which comprises of major brands like Nike, Levi’s and the Gap.¹³⁴¹³⁸¹⁴²

To summarize, this chapter began with a description of the PDCA-cycle as one possible pathway to successfully implementing labor and worker rights strategies aimed at long-term monitoring and improvement. The PDCA-cycle begins with the plan-phase, in which the status quo is assessed, existing measures are identified and suitable KPIs are determined. A risk assessment can further help to identify labor and worker rights violations across the supply chain. After risks are prioritized, this information can be used to set goals and develop prevention strategies. In the subsequent do-phase, companies need to select and implement the chosen measures based on the analysis from the plan-phase. The check-phase then involves evaluating whether the measures were implemented correctly and assessing their effectiveness. Finally, in the act-phase, identified problems are addressed and the process is standardized so the cycle can begin again.

Following this, two practical examples were analyzed to illustrate alternative approaches to improving their labor and worker rights performance, namely Fairphone and Patagonia. While both companies pursue measures that might be considered entrepreneurial and progressive, such as living wage programs, they also rely on widely established instruments. Both companies have adopted codes of conduct that are aligned with international standards, such as the ILO conventions and participate in MSIs and management systems, including the FLA and ISO standards. This indicates that, in addition to pursuing their own more progressive measures, Fairphone and Patagonia also make use of instruments that are broadly recognized within the industry and could, in principle, be applied by other companies within their respective industries.

4 Drivers and barriers

4.1 Drivers

Companies can be faced with drivers and barriers when it comes to implementing mechanisms that protect and improve labor and worker rights along their supply chain.¹⁵ Those drivers and barriers can be internal and external factors influencing decision-making processes.¹⁵ Drivers and barriers may arise from various stakeholder groups, including internal actors such as employees and management, as well as external stakeholders such as governments, investors, consumers, NGOs and international organizations.¹⁵ In addition, structural factors like competition and reputation can play a significant role.¹⁵¹⁴⁸ The following section will first address the drivers before turning to potential barriers. Internal drivers influence a company’s decisions from within, which is why the values a company represents play a key role, as well as the values and personal convictions of a company’s management and thus drive the implementation of CSR activities.¹⁵ Research has shown that companies led by managers who act ethically tend to be more socially responsible.¹⁵ Moreover, an ethical leadership style can instill a sense of ethical behavior in employees by having managers act as role models.¹⁹ These values can be directly embedded in the organization through corporate mission statements, guidelines such as codes of conduct and other formal procedures.¹⁹ Companies such as Fairphone and Patagonia have systematically embedded their core values within organizational structures, reflecting the ethical priorities of their management.¹²⁶¹³⁰¹³³¹³⁴ Consequently, these values act as a driver for the implementation and continuous improvement of labor and worker rights across their supply chains.¹²⁶¹³⁰¹³³¹³⁴

Employees are another internal driver, as they are the primary recipients of labor and worker rights measures and are also the primary and most effective source of information regarding violations.³⁶¹¹⁶ Moreover, they are often represented by labor unions, which have historically played a key role in negotiating labor standards since the 18th century, ultimately leading to one of the Core Labor Standard of collective bargaining (see Table 1).¹⁶¹⁷⁸⁸ Accessible and user-friendly grievance mechanisms can further strengthen workers’ access to remedies, especially in the absence of fear of repercussions.⁸⁸¹¹⁸ Employee training on understanding the compliance requirements further aids workers in correctly identifying violations.¹¹⁸ In principle, workers can not only insist on their own rights but also advocate for improved working conditions across the supply chain.⁷ In practice, however, this is often constrained by employer pressure, power imbalances or even the threat of repercussions.⁷ Furthermore, the successful implementation of labor and worker rights can enhance a company’s attractiveness as an employer and contribute to higher employee motivation, as workers are more likely to identify with and support the organization’s values.¹⁴⁸¹⁴⁹

External drivers come from outside the company, exerting pressure on the company, or create incentives to engage in CSR and comply with certain standards.¹⁵ Governments. And international organizations play a central role in shaping the legal and institutional framework for labor and worker rights, thus one main external driver is national legislation on supply chain due diligence, such as the German Supply Chain Due Diligence Act.¹⁴⁸¹⁵⁰ Frameworks like these oblige companies to take responsibility and thereby strengthen the implementation of due diligence mechanisms as well as labor and worker rights.¹⁴⁸¹⁵⁰ At the European level, the EU’s CSDDD will become mandatory for MNEs across the EU and non-EU companies with business in the EU in the near future and has to be incorporated into national law by 2026.¹¹⁹ The Corporate Sustainability Reporting Directive is another significant expansion of European legislation on corporate accountability.⁹⁰ Unlike its predecessor, the Non-Financial Reporting Directive, which applied to roughly 11,000 companies, the CSRD will cover nearly 49,000 firms across the EU.¹²⁴ By introducing the ESRS standards, the EU established uniform requirements for sustainability reporting, also including labor and worker rights.⁹⁰ This standardization aims to enhance the reliability and comparability of disclosed information, similar to financial reporting standards.¹⁴⁹⁰ In practice, CSRD acts as a strong driver for companies to improve their social performance, as vague statements and selective disclosures will be easily detectable due to the standardized reporting framework.¹⁴⁹⁰ At the same time, stakeholders such as investors, employees and NGOs gain improved access to consistent data, which increases their ability to evaluate and compare companies, thereby further incentivizing firms to strengthen their labor and worker rights practices.¹²⁴

Among international organizations, the ILO stands out as a key actor by providing international labor standards and conventions, most notably the Fundamental Conventions, which are binding for all ILO member states.¹⁶¹⁵⁰ The ILO does not possess sanctioning powers, however, its monitoring system allows the organization to uncover violations and publicly expose those responsible.³⁵ Such complaint procedures generate political and public pressure on states to enforce labor standards, which in turn indirectly drives companies operating within these jurisdictions to improve their practices.³⁵ Research indicates that ILO reporting has a positive and lasting impact on states’ respect for labor rights, particularly in cases of severe violations.¹⁵¹ The monitoring process creates transparency and provides information that domestic actors, such as trade unions and NGOs, can use to pressure their governments.¹⁵¹ Even in cases where conventions are not ratified, the process of drafting and adopting them can still influence national regulations by initiating dialogue, fostering learning and stimulating domestic mobilization.¹⁵² Furthermore, the ILO. And its conventions play a pivotal role in shaping international labor standards, as they have served as the foundation for most subsequent labor and worker rights standards, laws and instruments, such as codes of conduct, SA 8000, the FLA, etc. , for over a century now.³⁵⁸⁸¹²²¹⁵⁰

Moreover, companies, especially global corporations, are vulnerable to campaigns by activist groups and NGOs, which can thereby act as drivers.¹⁵¹¹⁷ These groups can utilize consumer boycotts and name-and-shame campaigns, which are also used by the ILO, to address violations. And force companies to introduce labor and worker rights protection measures, such as codes of conduct and monitoring systems for their suppliers.³⁵¹¹⁷ Creating credible information about product quality through industry standards can strengthen stakeholder confidence and increase the profitability of the industry.¹⁵ Therefore, stakeholder pressure can not only lead to an increased corporate social responsibility but also help avoid reputational risks and damages to brand value.¹¹⁷

The media plays a crucial role in this, as they are educating the public about emerging issues such as environmental problems or human rights violations.¹⁵³ They are often the primary source of publicity for campaigns by NGOs, which exert pressure on companies in this way.¹⁵³ This media visibility can also drive the implementation of sustainability reports, as the public pressure forces companies to address society’s expectations to maintain their legitimacy.¹⁵⁴ An example that demonstrates the importance of media coverage is the Rana Plaza disaster, when a factory collapsed in Bangladesh in 2013, that killed over 1,100 and injured between 2,000 and 3,000 people.¹⁵⁵¹⁵⁶ The disaster is considered the worst industrial tragedy in the 200-year history of mass clothing production and immediately after the accident, numerous reports appeared about the catastrophic working conditions in the factory.⁸⁸¹⁵⁵ However, criticism and media attention were not only directed at local factory owners, but also at the entire Bangladeshi garment industry and its customers, including many brands based in the EU, such as Zara, Primark and Benetton.¹⁵⁵ Media coverage was therefore crucial in tracing responsibility along the supply chain to the global brands and retailers that benefited from the cheap production.¹⁴⁴ The Rana Plaza disaster and the following global media coverage sparked a broad debate about corporate responsibility in supply chains.¹⁵⁶ It was a catalyst for the creation of initiatives such as the Accord on Fire and Building Safety in Bangladesh, a binding agreement between international brands and trade unions to improve safety standards in factories.¹⁵⁶

Another driver can be investors, as the financial sector influences companies through investment decisions and demands for transparency.¹⁵⁴ Investors are increasingly taking long-term sustainability ratings containing ESG factors into account for their decision-making, especially now with the mandatory CSRD reporting, which represents a powerful incentive to act and promotes greater transparency.⁹⁰⁹⁴¹⁵³ There is increasing recognition among larger companies that advancing corporate sustainability is not only expected but also creates value for the business.⁹⁴ This reflects a managerial shift towards enlightened shareholder value, moving beyond a purely shareholder-oriented perspective.⁹⁴ Embedding CSR into business strategy acknowledges that the interests of employees, supportive communities and loyal customers are essential to a company’s long-term success.⁹⁴ Driven by the potential to create value through CSR activities, investors increasingly advocate projects that enhance a company’s competitiveness and profitability.¹⁴⁸ In this context, differentiation through corporate responsibility initiatives that are difficult to replicate can provide a strategic advantage.¹⁴⁸ Name-and-shame campaigns can also influence investors, as negative publicity regarding inadequate labor conditions may increase perceived risks and threaten long-term profitability.¹¹⁷¹⁵⁰ In response, investors may exert pressure on the company to strengthen their labor standards, both to safeguard financial performance and maintain legitimacy in the eyes of stakeholders.¹⁵¹¹⁷¹⁵⁰ This dynamic illustrates how reputational concerns and investors’ expectations can jointly act as powerful drivers for improving labor and worker rights.¹¹⁷¹⁵⁰

Consumers also serve as important drivers, as they can influence companies through their purchasing decisions.¹⁴⁸ Many consumers consider not only financial factors, but also a company’s social performance and thus avoid interactions with firms whose practices they view as ethically problematic.¹⁴⁸ Consumers are often willing to pay more for a product that has been manufactured under higher environmental and social standards.¹⁴⁸ Research indicates that, particularly among Western consumers with a greater purchasing power, willingness to pay is higher for goods produced socially or environmentally sustainable, especially when accompanied by recognized certifications.¹⁰¹ These certifications enhance the perceived value of products, enabling companies to charge premium prices.¹⁰¹ In addition, consumers can be influenced by NGOs or activist groups to boycott certain products.¹¹⁷¹⁴⁸ By not expressing dissatisfaction with a company’s social performance, they can enforce significant pressure, which may ultimately result in reputational damage.¹¹⁷¹⁴⁸

Beyond reputational risks driving improvements in labor and worker rights, reputational advantages can also be strategically leveraged.²⁹ A good reputation for ethical business practices creates a valuable intangible asset.¹¹ Companies such as Levi Strauss recognized that collaborating with responsible partners both safeguards and enhances their brand image.¹¹ Moreover, codes of conduct, in particular, function as a reputational asset that can attract consumers and investors and potentially provide a competitive advantage.⁹ Companies that already invest in higher labor standards have a vested interest in ensuring that their competitors adhere to comparable requirements.⁴⁶ While having an interest in the sector-wide compliance, without such alignment, companies can also risk facing a competitive disadvantage compared to companies that reduce costs by exploiting workers.⁴⁶ Only a few companies, like Patagonia or Fairphone, willingly accept the potential competitive disadvantage and associated higher costs.¹²⁶¹³⁰¹³³¹³⁴¹³⁵ Consequently, leading companies have formed alliances and, in some cases, advocated for binding government regulations.⁴⁶ They also support private regulatory initiatives aimed at creating industry-wide standards and thereby equalizing costs across the market.⁴⁶ This mechanism effectively transforms voluntary commitments into a de facto industry standard, which competitors cannot avoid, while simultaneously serving as a driver for the advancement of labor and worker rights.³²⁴⁶

Although the implementation of labor and worker rights measures may entail competitive disadvantages in the short term, such measures can also enhance long-term profitability by mitigating market risks and generating new market opportunities, thereby contributing to sustainable competitive advantages.¹⁵ Moreover, CSR allows companies to differentiate their products in the market.¹⁴⁸ When consumers are willing to pay a premium for products produced in line with social standards, firms can offset additional costs associated with such practices.¹⁴⁸ A strong CSR commitment may thus not only attract new customer segments but also foster customer loyalty.¹⁵ In particular, some SMEs view transparency across the entire value chain as a competitive advantage, as it enables them to offer a product that remains difficult to replicate for many competitors.⁹⁵

Technologies can significantly advance and drive the implementation and monitoring of CSR and labor and worker rights by improving traditional management approaches and creating new opportunities.¹⁵⁷ Digitalization enables a more efficient and transparent dissemination of information, which makes it easier for traditional management approaches to improve their supply chain performance.¹⁵⁷ To achieve this, technological developments like Blockchain. And Big Data Analytics can be used to track working conditions, working hours, living wages, social benefits and equality, while also promoting health and safety in the workplace and reduce fraudulent and unethical recruitment practices among migrant workers.¹⁵⁷ However, these modern technologies are cost-intensive. And at first, there will be a shortage of employees who have both knowledge of supply chain management and the required expertise to operate these new technologies, especially in the context of improving labor and worker rights.¹⁵⁷

To summarize, both internal and external drivers can shape companies’ implementation of labor and worker rights and CSR more broadly. Internal drivers include stakeholders like employees and management, as well as corporate values.¹⁵¹⁹⁸⁸ External drivers encompass governments, binding frameworks, such as the EU’s CSRD, international organizations like the ILO, as well as pressure from investors, NGOs and consumers.⁹⁴¹⁴⁸¹⁵⁰¹⁵¹ Competitive and reputational advantages further drive implementation.²⁹ In conclusion, when implemented strategically, transparently. And consistently, CSR activities like the improvement of labor and worker rights not only lead to an improved social sustainability, but can also generate long-term economic benefits, including strengthened competitiveness and improved corporate reputation.⁹⁴¹¹¹

4.2 Barriers

During the implementation of labor and worker rights measures, as well as in preparatory phases, companies may be confronted with not only drivers, but barriers as well, which can also be divided into internal and external dimensions.¹⁵

Contrary to its role as an internal driver, management can also function as an internal barrier.¹⁵ A lack of commitment regarding CSR and labor standards may hinder implementation, as the necessary willingness to embed such practices into core business functions is absent.¹⁵ Without the representation of ethical values, managers are inclined to prioritize symbolic actions over substantive improvements.⁹⁴ This often results in signaling compliance externally, while underlying problems persist internally.⁹⁴ Consequently, CSR activities risk being perceived primarily as instruments of public relations rather than as genuine commitments to organizational change.¹⁸⁹⁴

A recurring barrier to the effective implementation of labor and worker rights measures is the lack of knowledge and expertise within companies.¹⁵ Compliance and audit processes require specialized competencies in areas such as occupational health and safety, human rights and operations management.¹⁵¹¹⁷ Many companies face challenges due to the absence of clear guidelines, coherent strategies and well-defined project requirements.¹⁵ A frequent weakness is the insufficient integration of CSR into core business processes.¹⁵ In particular, SMEs often lack structured frameworks for implementing, measuring and monitoring a comprehensive CSR approach.¹⁴⁹ Furthermore, when trained auditors or relevant expertise are lacking, the result is often incomplete or inaccurate information, which in turn undermines the reliability and effectiveness of monitoring systems.¹¹⁷ In addition, many initiatives fail to adequately consider divergent. And sometimes competing interests of various stakeholders in global supply chains, such as the company itself, suppliers and workers, which can lead to resistance to improvements when the associated benefits are not perceived as being evenly distributed.¹¹⁷ An increasing number of suppliers and internal departments in larger companies can further create conflicting individual interests, which may stand in opposition to overarching CSR objectives and thereby hinder effective implementation.¹⁵

Insufficient financial resources are another significant barrier, particularly for SMEs.¹⁵ Limited budgets often restrict their ability to allocate funds for CSR initiatives, as effective implementation requires capacity, time, knowledge and infrastructure, which are areas where no immediate returns can be expected.¹⁵ The implementation costs of labor standards, such as higher wages, facility improvements and audit administrations, place an additional burden on companies and their suppliers.⁸⁸¹⁰¹

Financial resources are not the only resources posing as a barrier. Suppliers in developing countries often lack the resources, technical expertise and management systems to address the root causes of compliance deficiencies.¹¹⁷ As a result, companies often resort to penalizing or policing these factories, instead of providing constructive support.¹¹⁷ Moreover, CSR initiatives such as the UN Global Compact or the GRI standards are primarily designed for large companies that have the human. And financial resources to implement the necessary procedures, whereby SMEs are systematically disadvantaged by the complex reporting requirements and their informal management approaches.⁹⁵

A lack of information and transparency embodies another barrier, particularly concerning MNEs’ control over subsidiaries or business partners.¹⁵⁵ Audit results are frequently inaccurate, biased, or incomplete, as they often rely on documentation that can easily be manipulated.¹¹⁷ Furthermore, the boundaries of corporate responsibility within global supply chains are often ambiguous, which complicates the identification of concrete measures required from companies.¹¹⁷ Establishing liability of parent companies for labor and worker rights violations committed by subsidiaries or contractors in third countries poses additional challenges, as victims frequently lack sufficient evidence to demonstrate effective corporate control.¹⁵⁵ The legal attribution of responsibility is further constrained by the requirement to establish a causal link between specific corporate actions and the resulting harm, a criterion that is not always clearly defined in practice.¹⁵⁰

Another external barrier can be investors, whose primary focus lies on profit maximization, which can pose as an external barrier.⁹⁵ Such investors tend to pressure companies to prioritize short-term financial returns and shareholder value, rather than allocating resources to CSR measures and compliance with labor standards.⁹⁵ This barrier predominantly affects MNEs, as SMEs are often owner-managed and therefore subject to less external investor pressure, which grants them comparatively greater flexibility in investment decisions.⁹⁵ At the same time, however, SMEs often lack the financial resources to implement CSR practices effectively.¹⁵ The resulting inadequate cost/ benefit ratio limits their ability to leverage CSR measures as a source of competitive advantage, even though such measures are otherwise considered important drivers of corporate responsibility.¹⁵

Another stakeholder group that may act as a barrier are consumers, whose purchasing decisions often reflect limited interest in socially responsible products.¹⁴⁹ Traditional consumers prioritize factors such as price or brand recognition, while social and environmental considerations remain secondary.¹¹¹ Research further indicates that consumer awareness of socially sustainable brands and the meaning of corporate responsibility is often limited.¹⁴⁹ Globalization and competitive pressure in the retail sector reinforce this trend, as demand for low-priced goods, particularly in the food and fashion industries, compromises companies’ willingness to invest in more sustainable practices.¹⁵ Moreover, the comparatively higher costs of sustainable products are another barrier, as price-sensitive customers may shift to cheaper alternatives, thereby reducing the attractiveness of improving labor and environmental standards.¹⁵¹¹⁷

National regulations can act as a barrier as they often cannot keep pace with the transnational activities of companies, leading to so-called governance gaps.¹⁵⁰ Companies comply with national laws, but these often do not cover their complex foreign activities in global supply chains.¹⁵⁰ Ineffective regulatory and governance systems, combined with weak enforcement of existing laws, constitute a major barrier, particularly in developing countries.¹⁵ States often lack either the institutional capacity or the political will to ensure compliance with labor regulations, for instance, in addressing forced labor.¹¹⁷¹⁵⁰ When laws exist to protect workers or the environment but are not enforced, companies have little incentive to go beyond the minimum legal requirements.⁷¹⁵⁴ This is also evident in the context of global supply chains, where some governments deliberately refrain from enforcing their own national laws out of fear of losing investment.¹¹⁷ This way the inadequate implementation of legal standards becomes embedded in the political economy itself, creating structural incentives for foreign companies to exploit these weaknesses.¹⁵⁰

A major challenge and barrier is the lack of a universally accepted concept for measuring CSR using quantifiable indicators.¹¹¹ Without a robust data infrastructure and KPIs, companies cannot systematically collect, manage, or transparently report on their sustainability performance.¹¹¹ This shortcoming makes it difficult to translate CSR into measurable goals beyond vague declarations of intent.¹¹¹

Political structures can also influence the implementation of CSR.¹⁵ For example, in Middle Eastern and North African regions corruption is one main barrier to implementing CSR.¹⁵ High levels of corruption create additional burdens and costs for companies, undermine trust and discourage formal business engagement, which hinders CSR initiatives.¹⁵

Even though the ILO has been and still is a main driver of the development of labor standards, it also has its disadvantages, which can act as barriers to the implementation of labor and worker rights in companies.⁴¹ The ILO is lacking enforcement powers, as it cannot compel states to comply with international labor standards and has no legal or financial sanctions at its disposal.¹¹¹⁵¹ Furthermore, as the traditional approach of the ILO is state-centered. And focuses on national legislation and horizontal labor regulation, it makes it less effective in addressing the complex, transnational and multi-tiered nature of global supply chains, where CSR efforts are often located.⁴⁰ Its monitoring system primarily relies on naming-and-shaming through the public disclosure of violations, a mechanism that often proves insufficient to induce substantive change.¹¹¹⁵⁸ To avoid such scrutiny, many countries deliberately refrain from ratifying ILO conventions, thereby weakening the normative foundation for labor. And worker rights initiatives based on compliance with these standards to avoid the strict monitoring and risk of public naming-and-shaming that this entails.¹¹¹⁵² Moreover, even when MNEs refer to ILO conventions in their codes of conduct, these commitments are typically non-binding and rarely require companies to comply with the conventions ratified in the respective host countries.⁴¹

One central issue of the ILO is the so-called norm-law gap.¹⁵⁰ The norm-law gap describes the discrepancy between the normative content of a regulation and its legal codification in a law or contract.¹⁵⁰ In other words, the normative ideal is not always fully reflected in written law.¹⁵⁰ For example, the prohibition of forced labor is often narrowly defined as an interpersonal relationship based on direct coercion.¹⁵⁰ This neglects deeper economic and structural conditions, such as poverty, pressure from global supply chains, or informal work, that can also lead to forced labor.¹⁵⁰ Consequently, responsibility is often individualized and forced labor is conceptualized as a form of criminal deviance rather than as a structural problem.¹⁵⁰

As of 2025, the ILO has adopted 192 conventions, yet some exhibit a very low ratification rate.⁴⁵¹⁵⁰ Companies that voluntarily adopt higher labor standards risk a loss of competitiveness, particularly when binding international frameworks are lacking.³¹ The ILO itself has highlighted that the absence of decent working conditions in some countries creates disincentives for others to raise their own standards.³¹ Companies that incur additional costs for compliance may thus be disadvantaged relative to competitors operating under weaker or poorly enforced regulations.¹⁶³² Moreover, some governments continue to view labor regulations as a constraint on economic efficiency and growth.¹⁶ Low ratification rates and the predominantly voluntary nature of CSR further enable states to formally endorse international agreements without demonstrating the capacity or willingness to implement them.³³³⁶ Such strategic ratification establishes a form of decoupling, whereby formal commitments are disconnected from actual practices.³³ This phenomenon is particularly problematic in the field of labor and worker rights.³³ Even when more comprehensive labor legislation is adopted, weak enforcement mechanisms allow violations to persist in practice.³³ In summary, the ILO can act as a barrier to the implementation of labor. And worker rights in companies due to its lack of power, voluntary nature of conventions, a norm-law gap, which is an insufficient application into written law and low ratification rates.

Instruments implemented by companies to improve labor and worker rights can, under certain conditions, themselves become barriers.¹¹⁷ A key limitation lies in their voluntary nature and despite their widespread adoption, such initiatives often lack enforcement mechanisms and therefore function primarily as guidelines.¹¹⁷ Their implementation is further associated with significant costs, including corporate-wide regulatory adjustments, employee training, remuneration of internal and external auditors and corrective measures identified in audits, wage increases or workplace improvements.⁸⁵ Instruments like codes of conduct have been frequently criticized as symbolic public relations tools or as strategies to avoid stricter governmental regulations, which undermines their credibility.¹⁸¹⁵⁸ Additionally, their actual impact on working conditions is often limited or insufficient.¹⁸²³ Research indicates that even with substantial investments, only a minority of factories achieve notable improvements in compliance, while many stagnate or even regress.²³ While codes of conduct can facilitate the measurement of outcome standards like wages. And overtime, their influence on process rights, such as freedom of association or the right to collective bargaining, remains marginal, given the challenges of monitoring and quantifying such rights.¹⁸ Furthermore, the increase in codes and monitoring systems across global supply chains creates redundancies and inconsistencies.¹¹⁷ Suppliers are often required to comply to multiple, sometimes contradictory, standards, resulting in a so-called monitoring fatigue, as factories undergo several audits per year for different clients.¹¹⁷ This situation can also be described as a compliance limbo, as suppliers struggle to meet divergent requirements without necessarily achieving substantive improvements in working conditions.¹¹⁷

In a nutshell, internal barriers include a lack of interest in change among employees and management, as well as insufficient knowledge, expertise and financial resources, all of which obstruct the effective implementation of labor and worker rights.¹⁵⁹⁴⁹⁵ External barriers can arise from investor pressure, restrictive national governments, or the voluntary nature of international frameworks such as those provided by the ILO.¹⁵¹⁵⁰¹⁵¹

4.3 Overcoming barriers

The first step to overcome these barriers is to begin internally by re-evaluating corporate values and integrating the improvement of labor and worker rights into core strategies.¹⁰⁵ For instance, Levi Strauss was one of the first U. S. companies to systematically address social issues and embed them into its corporate identity.¹¹¹⁵⁹ Although the implementation of sustainability initiatives is often associated with higher costs, in the case of Levi Strauss, it led to improved cost effectiveness in their supply chains.¹³⁴ Before introducing further measures, it is essential to address existing labor and worker rights violations.¹¹⁷ Compliance programs, such as Nike’s, are specifically designed to identify the root causes of such violations and to foster capacity building.¹¹⁷ It has to be noted, though, that private compliance programs are shaped by local political contexts, as well as the effectiveness of national legislations and they have shown to have the greatest impact in countries with stronger institutional frameworks.¹¹⁷ Beyond subsidiaries, such strategies must also extend to suppliers.¹⁸ Most companies rely on codes of conduct, yet given their limited effectiveness, it is advisable to complement them with additional instruments, such as Fairphone’s and Patagonia’s living wage programs.¹⁸¹³⁰¹⁴²¹⁵⁸ Effective integration into core strategies requires strong employee involvement and capacity building.⁹⁵ Rather than relying solely on penalties for violations, many companies increasingly support suppliers through capacity-building initiatives, like Nike.¹¹⁷ This preventative approach equips factories with the necessary skills, technologies and organizational structures to independently uphold labor standards.¹¹⁷ For instance, Nike linked technical upgrading at a Mexican supplier factory with greater employee participation and empowerment, which ultimately resulted in better working conditions.¹¹⁷

Once internal barriers have been addressed, external challenges need to be considered. To convince stakeholders such as NGOs and consumers that CSR activities are genuine rather than symbolic, whereby continuity and long-term commitment are key.¹³⁵ Companies with an established history of CSR engagement are generally perceived as more credible and face less criticism.¹³⁵ In addition, participation in multi-stakeholder initiatives, such as the FLA joined by Nike, Levi Strauss and Patagonia, or accreditations like Patagonia’s B Corp certification can enhance legitimacy and transparency.⁸⁶¹³⁵¹³⁶¹⁴³ Since suppliers are central to a company’s CSR performance, Patagonia introduced responsible purchasing practices designed to balance the needs of both brand and supplier, thereby fostering fair, long-term and mutually beneficial partnerships.¹³⁸ These include adherence to clearly defined order quantities, payment and delivery terms, as well as sufficient lead times, particularly in the case of terminated partnerships.¹³⁸

In summary, overcoming these barriers requires companies to re-evaluate their values and commit to long-term strategies for improving labor and worker rights in order to build credibility.¹³⁴¹³⁵ In the long term, such efforts can contribute not only to enhanced social performance but also to economic benefits, including greater cost efficiency and strengthened competitiveness.²⁹⁹⁵

5 Conclusion

This master’s thesis set out to analyze the role of labor and worker rights in the corporate context. The main objective was to illustrate the theoretical background, how companies can practically implement labor and worker rights into their business operations and which possible drivers and barriers they face along the way.

The sustainability analysis begins with the historical emergence of labor and worker rights, with the earliest developments going back to 14th-century Europe. However, substantial progress only occurred during the Industrial Revolution in the 18th and 19th centuries, when poor working conditions led to workers standing up for their rights and forming workers’ organizations. A heavily discussed topic was child labor, resulting in strict legislations such as the UK Factory Act of 1833, which severely limited the employment of children in textile mills. This Factory Act later served as a blueprint for labor legislation across European and North American countries.

Workers’ organizations gradually evolved into trade unions, with international unions emerging in the late 19th century. Forerunners of the ILO, such as the IALL, achieved early success by fulfilling trade unions’ demands, such as banning night work for women and improving hazardous working conditions. After World War I, the ILO was established at the Paris Peace Conference, continuing the work the IALL was not able to finish due to the outbreak of the war. Since its founding in 1919, the ILO has adopted 192 conventions and 209 recommendations, of which the Fundamental Conventions remain the most important ones. These conventions are the only mandatory ones and cover issues such as forced labor, child labor, minimum ages and the right to organize and collective bargaining. Moreover, these conventions have shaped and become the basic principles behind many widely applied labor standards and legislations worldwide.

Following the ILO’s departure from a Eurocentric focus after the Declaration of Philadelphia, further international organizations and frameworks emerged throughout the 20th century. The UDHR (Article 23), the OECD Guidelines for Multinational Enterprises, the UN Global Compact and the UN Guiding Principles on Business and Human Rights have all contributed to establishing behavioral norms and due diligence standards for corporations.

Recent labor and worker rights issues include precarious and informal work, migrant workers and the rise of AI. Precarious jobs, such as platform-based food delivery, are characterized by uncertainty, low income and a lack of social protection. Informal work, such as domestic employment, is often excluded from legal frameworks and social benefits, despite the ILO’s efforts with the Domestic Workers Convention. Digitalization and AI present further risks, as low-skilled jobs may be replaced by automation. These developments have accelerated the Gig Economy, characterized by multiple non-permanent and poorly paid jobs without social protection. Furthermore, the exploitation of migrant workers is still a pressing issue due to poor working conditions reminiscent of forced labor, as the introductory example of the 2022 FIFA World Cup in Qatar illustrated.

The sustainability analysis then turned to the relationship between companies and labor and worker rights. Companies must comply with national legislation and, where applicable, ratified international conventions. Therefore, implementing labor rights can directly affect business performance. A strong implementation fosters efficiency and legitimacy, while weak implementation risks reputational damage under stakeholder pressure from NGOs, consumers and the media.

Furthermore, companies can exert both negative and positive influences regarding labor and worker rights. On the negative side, global supply chains often involve power imbalances and exploitation of deregulated markets, with responsibilities obscured by complexity. On the positive side, many companies have voluntarily adopted codes of conduct and joined MSIs, enabling external audits of compliance and safeguarding basic labor and worker rights.

Lastly, the sustainability analysis turned to the question of how companies can measure their labor and worker rights performance, which can be achieved through various instruments. One option are codes of conduct, including definitions of labor standards. The adherence is controlled through supplier questionnaires and unannounced audits, providing insight into compliance. Levi Strauss and Reebok were pioneers in this area. To enforce compliance, both implemented codes of conduct with sophisticated internal monitoring and enforcement systems. The difference was, however, that Levi Strauss terminated contracts in the event of non-compliance, while Reebok pursued an engagement strategy and focused on long-term supplier contracts. Nevertheless, codes of conduct are criticized for being symbolic rather than substantive, often producing outcome-based KPIs (e. g. , wages, working hours) while neglecting process rights (e. g. , freedom of association, right to collective bargaining), which are arguably more important.

To increase transparency, many companies join MSIs, where peer accountability and external audits strengthen legitimacy. However, MSIs face similar criticism regarding their effectiveness and additionally, some have been accused of co-opting NGOs to gain more control over the audits.

Reporting standards such as GRI and ESRS also provide labor-related disclosures, like occupational health and safety, employee fluctuation rates, non-discrimination and freedom of association. While these standards enhance comparability, process rights remain underreported, but this might change soon with ESRS becoming mandatory in the EU. Another way to assess the labor and worker rights performance is to use KPIs. Most instruments provide KPIs of outcome standards, which are often prioritized by companies over process rights, as they are easier to quantify and provide tangible, predictable results. Civil society actors and employee organizations advocate for greater emphasis on process rights, which can empower workers to negotiate improvements independently. MSIs attempt to address this gap but encounter challenges due to conflicting interests of stakeholders. Furthermore, companies can implement management systems like the standard SA 8000, corporate grievance or due diligence mechanisms, which can help to assess the effectiveness of measures and enable continuous improvement.

From a theoretical perspective, this thesis contributes to a deeper understanding of how labor and worker rights have developed into a multidimensional field influenced by law, politics, economics and international institutions. By tracing the trajectory from early European regulations to contemporary global frameworks, the analysis underscores the dynamic and interdependent character of labor and worker rights. Moreover, the analysis demonstrates that sustainable progress cannot be captured through quantitative indicators alone and the inclusion of process rights is essential for a comprehensive picture.

Chapter 4 introduces the PDCA-cycle, a widely used framework for process improvements, as a practical guideline. Leadership commitment is essential to initiate the cycle, which starts with the plan-phase. This phase should be used to assess the status quo, which means, in particular, all already implemented instruments that address labor and worker rights should be reviewed, such as codes of conduct, MSIs, due diligence mechanisms and management systems. Furthermore, companies can carry out a risk assessment analysis to identify where violations occur and prioritize them according to probability and potential impact. Then, companies can start to plan strategic goals of improving labor and worker rights. The purpose of the do-phase is to decide on concrete measures to remediate possible labor and worker rights violations, but also consider measures that improve the overall labor and worker rights performance of a company. To achieve that, companies can evaluate multiple measures like codes of conduct, MSIs, reporting standards, or management systems, followed by the implementation thereof. The check-phase aims to analyze the implemented measures for their effectiveness and if they have been implemented correctly. The act-phase then serves to perform corrective measures, standardize the successfully implemented measures and processes. After completing all four steps, the iterative PDCA-cycle can begin again to further improve labor and worker rights along the supply chain.

Next, two alternative approaches of implementing labor and worker rights have been discussed, illustrated by best practice examples. Fairphone secures fair working conditions through responsible mineral sourcing and a living wage program for suppliers’ employees. Patagonia has adopted similar measures, like only sourcing organic cotton, as well as a living wage program. Both companies have also implemented codes of conduct, participate in MSIs and transparently report on their activities, which are all instruments reflected in the previously presented guideline.

Lastly, drivers and barriers were discussed. Internal drivers include ethical leadership and, therefore, ethical company values, as well as involved employees. External drivers include national and international legislations and regulations like CSRD and ILO conventions, as well as stakeholder pressure and technological innovation. Internal barriers can be a lack of ethical values, commitment, resources and expertise. External barriers are insufficient national regulations, political structures and limited enforcement by international organizations. The norm-law gap illustrates the difficulty of translating ILO norms into comprehensive national laws.

To overcome these barriers, companies must align values with sustainability goals, implement long-term measures and embed labor rights into core business strategies. The best practice examples showed that genuine commitment and integration into core business strategies can ensure effective protection of labor and worker rights, while still being competitive.

From a practical perspective, this thesis illustrates that companies face both drivers and barriers when addressing labor rights. Compliance with national legislation and ratified international conventions is a non-negotiable, but beyond compliance, companies can strengthen legitimacy and stakeholder trust by voluntarily adopting codes of conduct, joining multi-stakeholder initiatives and adhering to reporting frameworks such as GRI or ESRS. The PDCA-cycle has shown to provide an effective management tool for integrating labor rights into corporate processes, ensuring systematic assessment, implementation, evaluation and continuous improvement. Best practice cases such as Fairphone and Patagonia demonstrate that proactive strategies, ranging from responsible sourcing to living wage programs, can be successfully integrated into business operations and even serve as a competitive advantage.

While these findings offer valuable insights, the limitations of this thesis must be acknowledged. This thesis is primarily conceptual and relies on secondary literature, which limits the extent to which empirical generalizations can be made. Although the historical and institutional analysis provides a solid foundation, more case studies or quantitative data could have strengthened it. Moreover, given the vast number of international conventions, initiatives and corporate instruments, only a limited amount could be examined in detail. Other relevant aspects, such as regional and sectoral variations in labor standards, were not addressed in detail, which could have provided a more comprehensive outcome.

During the course of this thesis, several implications for future research emerged. A key limitation of the current literature is that many case studies on the implementation of labor and worker rights or CSR are over a decade old. Reassessing these cases against today’s standards and regulatory frameworks would generate valuable insights, particularly in the context of the EU’s recently introduced CSRD/ ESRS standards. Future research could examine not only how companies adapt to these requirements but also how effective CSRD proves to be in practice. In addition, a comparative analysis of the (social) sustainability performance of a company with mandatory reporting obligations, for example, a European company, versus a company from a country without reporting obligations, such as the USA, which only has a few regulations at state level, could provide interesting insights on how regulatory environments shape corporate behavior.¹⁶⁰ Furthermore, building on the practical guideline outlined in this thesis, it would be worthwhile to study how a company implements labor and worker rights through a PDCA-cycle-based approach.

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