Before You Invest: Understanding Living Wage Commitments

29 May 2026

Living Wages should be a standard topic of discussion between investors and companies. It should be at the core of their conversations and investors' work, alongside human rights due diligence, ESG risk assessment and long-term company analysis, rather than a nice-to-have or a one-off question. But what questions should investors ask companies to ensure their commitment to paying Living Wages is genuine?

In this article, Paulien Osse (co-founder and global lead for Living Wages at WageIndicator) talks to Daniela Ceccon (Director of Data) to find out how investors can make Living Wages central to their work, and what risks they might face if they fail to ask the right questions.

Living Wages: Perfection or Greenwashing? Neither.

Paulien: Dani, let’s say that a company really wants to pay a Living Wage. What are your criteria in that case? What is perfection? What is not greenwashed?Dani: I would say: for me, "perfection" is not something we can really look for, but if we want to check what is “not greenwashed” we can really look at a few very concrete things.
First: is the company paying at least the Living Wage Guidance estimate, ideally the Typical Family lower bound, year after year?
Second: is this covered by the basic wage, so not by relying on overtime, unclear bonuses, allowances, or in-kind benefits with a vague definition?
And third: is the comparison transparent and up to date? A company should explain which salary data was compared with which Living Wage estimate, for which workers, locations and year. So, for example, no comparing 2026 wages with 2024 or 2023 Living Wage data and then claiming success.
So for me, the test is: can an investor actually check the claim? If the company shows the wage data, the benchmark, the year, the location, and the gap or progress, then it becomes credible. If it stays vague, that’s where I would be more cautious.

Living Wages For All Workers

Paulien: Dani, some companies say that they pay a Living Wage, but when we ask more questions, it means they pay a Living Wage only to full-time employees. How do you see this?

Dani: Well, to be honest, a Living Wage should be there for all employees, at least. So that means full-time, part-time, and seasonal workers.
Of course, you compare them in the right way. For a part-time worker, you don’t compare their salary to a full monthly Living Wage, but to the correct part-time or hourly equivalent. And for seasonal workers, you look at the wage during the months they are actually employed.
But the principle is very simple: a company cannot really say “we pay a Living Wage” if this only applies to one group of workers and leaves out others. Then the claim needs to be much more specific.

Should the Self-Employed be paid a Living Wage?

Paulien: Dani, and what about self-employed people, or people who work via a temporary agency?

Dani: Yes, that is a very important question. Ideally, self-employed people should earn a Living Tariff, because they have to cover costs that employees normally do not pay themselves, like equipment, administration time, insurance, and social security.
For people employed through a temporary agency, the principle is simpler: they are employees, so they should receive a Living Wage as well.
Of course, we understand this is not always easy. Paying your own workforce a Living Wage is becoming more common. Paying self-employed people a Living Tariff is still quite rare. Temporary agency workers are more in the picture at the moment, because companies can address this through contracts and procurement rules.
But the direction is clear: if people work for your company, directly or indirectly, they should not fall outside the Living Wage conversation.

How to Spot Wage-Washing

Paulien: Dani, what are the greenwashing tricks investors should watch out for?

Dani: Well, the roughest trick would be: you remove the people who are below the Living Wage from your own workforce, and then tell investors: look, we are doing perfectly. Technically the numbers may look better, but socially, of course, nothing has improved.
A more sneaky one is reporting only on full-time employees. A company may say: “Our full-timers earn a Living Wage, and we will look at part-timers later.” But if 90% of the workforce are part-time workers, and many of them are women, then that is a very selective claim.
Another trick is to stretch the definition of wages. For example, including performance bonuses, allowances, or in-kind benefits in such a broad way that the basic wage itself is actually still too low. And then the company writes in the annual report: “according to WageIndicator”. That is risky, because it makes it sound as if we endorsed the interpretation, while actually the company made its own choices.
So for investors, the key question is: who is included, who is excluded, and what exactly is counted as wage? That is where greenwashing often becomes visible.

The Signs of True Commitment

Paulien: Dani, but now that we understand the tricks, do investors actually have the time to check all these tricks before they invest?

Dani: I think this is exactly why auditors and analysts need to be smart, and also a bit strict. Investors cannot check every payroll detail themselves.
But they can look for signals. And honestly, it is better for a company to say: “We are close to paying a Living Wage, and here is our plan to close the gap,” than to pretend everything is perfect.
For investors, I would look beyond the Living Wage claim itself. Is the company resilient? Is staff turnover low? Are sickness rates not unusually high? Is there a clear pay structure linked to skills and responsibilities? And is the company prepared for different age groups, not only young workers aged 18 to 23, but also workers with families and longer-term careers?
So no, investors do not need to check every trick themselves. But they should ask the right questions, and they should be careful with claims that sound too perfect. A serious Living Wage policy usually comes with transparency, not with marketing language.

Where Living Wages Stand for Investors

Paulien: And what about investors? Where should Living Wage sit in their work?

Dani: Ideally, investors should not treat Living Wage only as a nice social topic. It belongs in the core of their work: human rights due diligence, ESG risk assessment, and long-term company analysis.
The first question is very simple: do we actually know whether the companies we invest in pay workers enough to meet basic living costs?
And from there, investors can ask more practical questions. Is the company transparent about wages? Does it report who is covered? Does it include part-time, temporary and seasonal workers? Is there a plan to close gaps where they exist?
So Living Wage should not sit in a separate “nice to have” box. It should be part of how investors understand risk, resilience and responsible business.

The Questions You Need to Ask

Paulien: If an investor wants to take Living Wage seriously, what should they ask companies?

Dani: They should start by checking the claim. When a company says, “we pay a Living Wage,” investors should ask: what exactly do you mean?
Does it cover everyone, or only full-time employees? Are part-time, seasonal, temporary agency workers and lower-paid groups included? Which wage elements are counted — only the basic wage, or also bonuses, allowances and benefits? And which Living Wage data was used: which benchmark, which year, and which location?
So I would keep it practical. Don’t only ask, “Do you pay a Living Wage?” Ask: “Show us the calculation.” That is where you see whether the claim is strong, or whether it is mostly communication.

First Step: Transparency

Paulien: What would you see as a good first step for investors who are not yet working on Living Wage?

Dani: I would say: start by asking for transparency.
Investors do not need every company to be perfect tomorrow. But they should expect companies to know where their wage gaps are, explain how they measure them, and show a credible plan to close them over time.
So the first step is not necessarily: “prove that everyone is already paid a Living Wage.” The first step is: “show us that you know your situation, that you use reliable data, and that you are taking the gap seriously.

Living Wages as a Core Standard

Paulien: How can Living Wage become part of investor engagement, in the same way we now see engagement on climate, gender or human rights?

Dani: Investors can make Living Wage part of the normal engagement conversation. Not as a one-off question, but as something they come back to over time.
They can ask companies to disclose wage gaps, set timelines, include non-standard workers, and explain how Living Wage is connected to HR, procurement and finance.
And for supply chains, investors should also ask a very practical question: do the company’s own purchasing practices make Living Wage progress possible? Because if prices, deadlines or contracts create pressure on suppliers, then it becomes very difficult to expect those suppliers to pay higher wages.

The Risks of Ignoring Living Wages

Paulien: What are the main risks for investors if they ignore Living Wage?

Dani: I would say the risk is that investors miss an important signal about how a company is managed.
If wages are too low, you may see higher turnover, more absenteeism, lower motivation, or difficulties attracting workers. So it is not only a social risk; it can also become an operational risk.
There is also a reputational risk. A company may say it is committed to human rights or decent work, but if workers still cannot meet basic living costs, that claim becomes a bit vague.
And finally, there is a regulatory and reporting risk. Expectations around human rights due diligence and sustainability reporting are increasing. So investors who ignore Living Wage may also miss where companies are underprepared for future checks on this.

Where Should You Get Started?

Paulien: If you could give investors five minimum questions, what would they be?

Dani: I would keep it very practical. The five minimum questions would be:
- Which workers are included, and which workers are excluded?
- Which Living Wage estimate are you using, and from which year?
- Which wage components are counted in the comparison?
- Are the lowest-paid workers above the Living Wage, not just the average worker?
- What is your plan, budget and timeline for closing any remaining gaps?
And I think the last point is important. A company does not have to pretend everything is solved already. But it should be able to show that it knows the gaps and has a serious plan to close them.