Aviva Investors and the US investment arm of Legal & General are part of a $3.6trn coalition behind a letter published this week, which was sent to 40 US corporate giants, urging them to adopt better paid sick leave policies for all workers, including “part-time, subcontracted, and temporary” ones.
The letter, which was sent to companies including Disney, McDonald’s and FedEX, was coordinated by the Interfaith Center on Corporate Responsibility (ICCR), which has been focused on the issue for several years. At the beginning of the pandemic, for instance, the US non-profit joined forces with US SRI investor Domini Impact Investments and the Office of the then New York City Comptroller Scott Stringer to lead a coalition of 335 institutional investors who backed a 5-point plan for businesses designed to protect workers amid the crisis, with paid sick leave as the first principle.
Signatories to the latest letter include the likes of Achmea Investment Management, BMO Global Asset Management, Boston Common Asset Management, EOS, Future Super, NEI Investments, Trillum Asset Management and Seth Magaziner, the General Treasurer of the State of Rhode Island.
The investors call on companies to provide investors with enhanced disclosures around the size of their workforce; a “detailed description” of their sickness policy “by worker classification”; and more information on sick pay benefits related to the pandemic.
Members of the 150-strong investor coalition have also filed shareholder proposals on the issue at retailers CVS, Kroger, Target and TJX.
Last year, the US Securities and Exchange Commission (SEC) allowed CVS, Kroger, McDonald’s and Walmart to exclude proposals on their sick pay policies on the grounds that they breached the powerful securities regulator’s rule on ordinary business. Since then, however, the SEC has published new guidance on the rule which may mean this year target companies will have less success in avoiding it.
Signatories to the new letter warn the companies of the “growing reputational, financial, and regulatory impacts associated with the lack of a comprehensive paid sick time benefit for all employees”, particularly in the wake of the Covid-19 pandemic. It urges the companies “to help make the recovery and the future operating environment more equitable by providing permanent paid sick time for all workers.”
The letter also points out the benefits to businesses when employees have access to paid sick days, such a reduction in staff turnover and associated costs. It noted that this is “particularly important in lower-wage industries where turnover is highest” – a situation particularly relevant currently, the letter added, given the current “tight labor markets”.
The investor group has focused on companies that operate in the retail and restaurant sectors, as frontline workers there are most exposed to the “public and, by extension, potential illness”.
According to the ICCR more than 26m people working in the private sector in the US have no access to paid sick days.
Companies have been given until the 18 February to respond to the investors.
“We view the availability of paid sick leave for all workers to be a basic tenet of good human capital management,” said Emily DeMasi, Director, Engagement at EOS, the stewardship services arm of Federated Hermes. “Investors require more transparency from companies to understand which are leading and which are lagging in employee retention for this potentially material long-term value driver.”
“Even before the Covid-19 pandemic, guaranteeing paid sick leave benefits had become a best practice of companies nationwide and around the world,” added Rhode Island General Treasurer Seth Magaziner. “Paid sick leave benefits everyone – workers as well as employers, customers, and investors.”