Companies facing high levels of labour and environmental risks in India and Philippines – new reports
As companies expand into the emerging markets to take advantage of the economic growth opportunities there, they expose themselves to a range of labour and environmental risks that could have operational and reputational impacts.
Maplecroft’s in-depth Labour Standards and Environmental Reports have been developed to enable companies to navigate such risks. They include in-depth analysis and maps of the key labour issues including: working hours; wages; health and safety; trade unions and labour unrest; discrimination; and forced and child labour. In addition, environmental risks, such as regulations; waste management; water stress; and energy are covered, to provide a comprehensive picture of the associated risks.
In-depth Labour Standards & Environment Report - India
The extremely ineffective enforcement of labour laws in India can pose substantial reputational and operational risks to foreign companies. Indian labour laws rank among the most complex in the world. Regulations on workplace standards and employment relations are contained in a multitude of national and regional acts. Responsibility for their implementation and enforcement is attributed to the state level, and is significantly undermined by an extremely weak labour inspectorate that is unable to monitor legal compliance. As a result of the complexity of labour laws, more than 93% of India’s close to 500 million workers are engaged in the informal economy, where they effectively fall outside the reach of labour law protections.
Additionally, national labours fall short of internationally-recognised labour protections in several respects, especially regarding child labour and basic trade union rights. Exacerbating factors include high levels of poverty, especially in rural areas, the widespread use of contract labour and institutionally-entrenched discrimination against vulnerable groups. Companies therefore face a considerable risk of unwitting complicity in violations of national laws and international labour standards in their commercial activities, which can result in breaches of internal company standards and international best practice guidelines.
In addition to social risks, unsustainable use of natural resources, especially land and water, can pose environmental challenges for investors. Water stress presents a key risk for the country’s long term economic development. Large parts of the country, including the entire state of Gujarat, are already seriously water stressed. This is in part a result of that fact that India’s urban areas have historically been subject to an unsustainable approach to urban planning, placing the onus on foreign investors to implement mitigation plans, especially in water-intensive sectors.
In-depth Labour Standards & Environment Report - Philippines
Weak labour enforcement and the prevalence of poor working conditions can pose operational and reputational risks to companies operating in the Philippines. While labour rights are protected by law, monitoring and enforcement is weak. This is mostly a result of the large informal economy, which accounts for an estimated 44% of employment.
Although foreign companies face lower risk of labour rights violations in their own operations, there is a risk for them to be associated with violations committed by suppliers and service providers. Due to informal employment and weak protections, low-skilled workers commonly work in conditions that contravene national laws and international standards. Casual workers, for example, often experience wages below and working hours above national legal limitations. Poor health and safety practices are another serious concern, exposing investors to risks of association with exploitative labour practices. These risks are especially pronounced in low-skilled industries such as construction and manufacturing.
Reputational and compliance risks also stem from the country’s weak environmental regulatory framework, which is threatened by decentralised implementation and enforcement. For example, investors face complicity risks in releasing pollutants and waste into the country’s increasingly threatened water bodies, especially in light of high levels of urbanisation. Low or non-existent standards of waste treatment and management services pose further concerns, requiring companies to implement international best practices to safeguard operational efficiencies.
In-depth country risk reports, briefings and In-depth Labour Standards & Environment Reports are available for all countries and sectors. Register for trial access to see examples.
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